Three months after the closure of the state’s largest off-track betting corporation, Suffolk Regional OTB has now gone through with its threat to seek Chapter 9 bankruptcy reorganization protection.
As New York City OTB claimed when it filed for Chapter 9 in 2009, Suffolk OTB says it will emerge from the proceeding in better financial health. NYCOTB closed in December after the state Senate failed to go along with its reorganization plan.
“While in bankruptcy, Suffolk OTB’s officers will develop a new business model for Suffolk OTB that will position the corporation to emerge from bankruptcy on a strong financial footing,” Debbie Pfeiffer, a Suffolk OTB spokeswoman, said in a written statement.
The filing, in federal bankruptcy court in the Eastern District of New York, was not unexpected. The board had already sought and got the approval of going the Chapter 9 route from the Suffolk County Legislature, and the OTB’s financial problems have been rapidly growing over the months.
The Long Island OTB has 12 simulcast branches, one tele-theater and 14 remote wagering locations. An annual report by the state Racing and Wagering Board said the Suffolk OTB’s total handle fell sharply from $188.2 million in 2007 to $153.5 million in 2009.
The Suffolk bankruptcy filing gives further ammunition to proponents at the state Capitol of merging all the state’s off-track betting corporations or privatizing them in some fashion--efforts long discussed in New York. Off-track betting corporations claim the business model for them to succeed is broken, and that they have to give away too much money in statutory payments to the racing industry. The OTB’s are public benefit corporations.
Suffolk is unlike the former NYCOTB in that it is not owned by the state. The Republican-led Senate is trying in current budget talks to let private companies bid on taking over the pieces left of NYCOTB, and there is some language in one Senate budget bill that could provide some fiscal relief to Suffolk OTB.
Suffolk’s Chapter 9 plan was filed late on March 18.
Officials stressed that the OTB will not be closing during the proceeding and that surcharge payments will continue flowing to Suffolk County. The written statement by the OTB, though, said nothing about its statutory payments to the racing industry; New York Racing Association officials have previously said Suffolk OTB is behind on its legal payments to the racetrack company.
“Suffolk OTB will diligently restructure its operations under Chapter 9, with the goal being the development of a more profitable corporation,” Pfeiffer said.
Off Track Betting
Courtesy NYCOTB