Shut-Down Approved for NYCOTB
The New York City Off-Track Betting Corp. board of directors approved a resolution to shut down the betting giant Dec. 1, affecting 1,000 workers and leaving an uncertain future where its $800 million or so in annual wagers could go.
State officials say the OTB will cease all operations at the close of business on Dec. 3, though the shut-down resolution adopted by the board said the shuttering will happen “as soon as” Dec. 3.
The OTB’s closure comes after the state Senate failed to go along with the Assembly on a reorganization plan—opposed by some tracks and other OTBs—to bring the NYCOTB out of its Chapter 9 bankruptcy protection.
Uncertain for many industry officials is what’s next if the OTB actually closes. Where will its bettors go, how deeply will tracks and other OTBs that rely on revenues from the NYCOTB get hurt, and will a new entity of some sort emerge from the ashes to create an off-shoot corporation?
Senate Democrats and Republicans earlier this week dismissed as empty threats—heard many times over the years—claims from the Paterson administration that the shutdown for NYCOTB this time is real.
But Larry Schwartz, the OTB chairman, said at the closure authorization meeting that the shutdown is necessary because the corporation is running out of operating cash in December. “We no longer have a good faith expectation that a solution is likely,” he said. He called on the Senate to return to Albany by Dec. 3 to take up the Assembly bill.
But senators say Paterson still does not have the guaranteed 32 votes needed to pass the bill, and the Senate has little interest in returning without a certain deal in place.
“There are many murderers of this corporation, and I think, unfortunately, they’re going to go free after this,” said NYCOTB board member David Cornstein. He blamed a revenue distribution dating back to the 1970s, which drove its revenue-sharing based on its gross instead of its net, for its ultimate failure. “It was a mistake then. It’s a mistake today,” he said of the formula that governors and legislators over the years refused to change.
Steven Newman, another board member, said the structure was also flawed and that the state should have only permitted one statewide OTB, or merged the OTBs with track operations to avoid the decades of competitive warfare for the dwindling betting dollar.
“It wasn’t a bailout. It wasn’t a handout,” said Schwartz, who is also Paterson’s chief of staff. He said the reorganization involved no state funding, but featured givebacks from employees, Chapter 9 creditors, and segments of the racing industry.
The New York Racing Association wasted no time trying to capture NYCOTB patrons that want to bet this weekend. The racing group announced free bus rides to and from OTB parlors in Brooklyn, Queens, and Manhattan to Aqueduct beginning Dec. 4 if the OTB shuts down the previous night. It is even tossing in free hot dogs, soda, and a program to the bus riders who come to the track.
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