NYCOTB Could Be Reprieved by Senate

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Photo: Courtesy NYCOTB

New York City OTB

The New York City Off-Track Betting Corp. could get a last-minute reprieve from its threatened shut-down following a promise Dec. 2 by the New York state Senate to return to the Capitol next week to take up a reorganization bill for the state-owned entity.

NYCOTB is scheduled to cease its operations at the close of business Dec. 3, the first anniversary of its Chapter 9 bankruptcy petition filing, after the Senate left town this week following a one-day special session without taking up an OTB reorganization plan.

The bailout plan—backed by its bankruptcy creditors, including the New York Racing Association, but opposed by a number of racinos and other OTB corporations—was approved this week by the Assembly.

But aides to Gov. David Paterson were not yet willing to say the OTB will remain open after Dec. 3. “We need to hear from the Senate that they have 32 or more votes to pass the same-as Assembly bill,” said Jessica Bassett, a spokeswoman for the governor.

“If the Senate is coming back to pass the same-as bill the Assembly passed this week to reorganize New York City OTB, then this is welcome news. It’s good news for New York City OTB, it’s good news for the entire racing industry, and it’s good news for the people of New York,” she said.

But Senate officials say they do not yet have a deal between Democrats and Republicans to actually pass the measure. The Senate is in a state of transition as Republicans—if a GOP candidate’s lead holds up in a still-contested Long Island race—are set to take back control of the Senate in January after two years out of power. It is uncertain how many lame duck Democrats will show up Dec. 7 and some that will oppose the OTB measure, meaning it will not pass without some GOP cross-over support.

“I am calling the Senate back into session on Tuesday, Dec. 7, to vote on the proposed reorganization of the New York City Off-Track Betting Corporation,” Senate Democratic Conference leader John Sampson said in a statement. “I have spoken to our colleagues across the aisle to urge bipartisan cooperation and action on this and other outstanding issues before the state.”

A Senate Republican official said there has been no deal with Democrats to provide GOP support for the measure.

That leaves the Paterson administration’s NYCOTB in the position of choosing whether to shut down the parlors and advance deposit wagering operations Dec. 3 in hopes of pressuring the Senate to pass the bill next week, or holding things off in order not to disrupt operations in hopes the bill passes Dec. 7.

Republicans want a broader plan than the one now on the table. They have deep concerns about the Paterson administration's proposal and its financial impact on OTB corporations on Long Island and upstate, areas home to Senate Republicans. Other OTBs say they, too, are struggling and can't afford to subsidize the NYCOTB plan by taking cuts to statutory payments they now get.

Senate GOP Leader Dean Skelos, a Long Island lawmaker, said Republicans want a "comprehensive solution'' that doesn't just help NYCOTB. Earlier this week, he dismissed as hollow the threat by NYCOTB to shut down Dec. 3.

The GOP effort, though, has a problem: the Assembly. The 150-member house already voted for the NYCOTB reorganization legislation, and Assembly Speaker Sheldon Silver this week said his house is done with sessions in Albany until January. So even if the Senate Democrats and Republicans were to strike their own deal, there is no guarantee the Assembly would follow. Both houses would have to pass the same bill for it to become law.

Senate Democrats expressed frustration that the Paterson administration and NYCOTB will not delay the closure plan until after next week's one-day session. They say they are showing a good-faith effort to try to resolve the situation.

"Closing OTB three days before a vote to save it shows OTB Chairman Larry Schwartz would rather criticize the process than save a thousand jobs. That’s a holiday present no one wants,'' said Austin Shafran, a spokesman for the Senate Democratic conference.

The debt claims by the NYCOTB keeps rising, meanwhile. According to documents submitted with a federal bankruptcy court this week, NYCOTB says it has $98.6 million in pre- and post-petition debt. The top creditor, at $30.4 million, is NYRA, followed by $23.3 million owed to Yonkers raceway. The OTB also owes millions more to other racetracks and the state. It owes $4 million to a New York Thoroughbred breeding fund, and another $3.8 million to out-of-state tracks and tote companies.

The court filing said NYCOTB expects to have $18.8 million cash on hand as of the end of January. It also says its ADW business is valued at about $19.8 million.

State officials said the closure of NYCOTB will affect about 1,000 employees.

The court filing said the NYCOTB has considered a variety of alternative plans other than the reorganization proposal now on life support in Albany. Options looked to pay off its creditors and emerge from Chapter 9 included getting some sort of public financing—impossible given the state's own fiscal troubles—as well as "private ownership, the transfer of various components of operations to third parties and partnerships with third parties.''
 

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