New York City Off-Track Betting Corp. will shut down at the close of business Dec. 3 if the state Senate does not return to approve a reorganization plan for the entity that has been operating under Chapter 9 bankruptcy protection for a year.
NYCOTB officials notified various authorities, including New York City Mayor Michael Bloomberg, of the looming closure of all its parlors and advance deposit wagering operations and the lay-off of 1,034 employees. The shutdown threat came less than 24 hours after the Senate gaveled out of a special session ordered by Gov. David Paterson without taking up a measure to reorganize the state-owned corporation.
Paterson aides had warned that NYCOTB would be out of cash in December and could not survive without the legislation’s approval.
The measure—which calls for all segments of the industry to take some level of financial hits to help get NYCOTB out of bankruptcy protection—passed the Assembly Nov. 30. But it cannot become law without the Senate’s backing, and a number of lawmakers in that house have expressed skepticism over the shutdown threat and the need to act now.
They also said a number of stakeholders, such as racinos and other OTB corporations in the state, are facing deep and unfair cuts in certain statutory payments they now receive from NYCOTB.
Shutdown threats are nothing new to NYCOTB, but officials insist this one is real.
“I think it’s very real,” Assembly racing committee chairman Gary Pretlow said. “If you look at the books and records of New York City OTB, they are definitely out of cash, and New York State is not in a position to forward or advance them any money. I’m hopeful the Senate acts. It’s extremely important that they do something--quickly."
The Senate has talked about returning to Albany Dec. 16, but officials with Paterson’s office said that will be too late.
In a letter to Bloomberg, whose city government several years ago unloaded the money-losing operation, NYCOTB said all business operations will cease Dec. 3. “This action is necessary because the corporation will have exhausted all unrestricted funds available to continue its operations beyond that date unless circumstances materially change,” the letter states.
The Paterson administration has said the state will be on the hook for the $100 million NYCOTB owes its creditors, which includes the New York Racing Association, Churchill Downs Inc., and a number of other industry companies. In addition, they said about $500 million in pension and health care liabilities will also have to be funded by the government if it closes.
“It will be a real blow to the racing industry,” Gov.-elect Andrew Cuomo said of a shutdown. “I believe it’s important that we resolve this issue.”
“Without the passage of the bill, we will run out of cash very quickly, and we will have no alternative but to cease all operations,” NYCOTB president Greg Rayburn said in a letter to employees.
Besides revenue-sharing cuts to other OTB corporations and racetracks, the Paterson plan also creates a new racetrack-controlled corporation to take over NYCOTB’s ADW operations. Several hundred workers would lose their jobs under the reorganization effort, while racinos would get an expansion of “free play” betting programs.