Suffolk County OTB Eyes Bankruptcy Protection

Off-track betting corporation in New York State is facing mounting fiscal problems.

Another off-track betting corporation in New York State is facing mounting fiscal problems and is considering Chapter 9 bankruptcy protection.

The Suffolk County Off-Track Betting Corp. board has approved a bankruptcy move if its officials believe the potential dire step is needed. The move comes just three months after New York City OTB, the nation’s largest off-track betting corporation, shut its doors after the state could not pass a restructuring plan.

Debbie Pfeiffer, director of public and government affairs for Suffolk OTB, said the corporation's board of directors authorized a reorganization plan "when, and if, they deem it necessary." In the event the president and vice president decide to move ahead with a reorganization plan, the next step would be for the Suffolk County legislature to pass a resolution approving such a move, she said.

The Suffolk County legislature is scheduled to meet in special session March 3 to consider an unrelated matter. Pfeiffer said a decision whether to proceed with reorganization will be made sometime the week of Feb. 27.

"Suffolk OTB is open for business; branches, the phone room, and Suffolk OTB's Internet site are all fully operational," Pfeiffer said. "We look forward to continuing to provide our customers with the high level of service they have come to expect from Suffolk OTB."

One top lawmaker said the Suffolk OTB problem is part of a widespread concern for much of the state's OTB industry--are all publicly owned and share proceeds with local governments, the state, and the racing industry.

“This shows the need for consolidation of all the state OTBs,” Assembly Racing Committee chairman Gary Pretlow said.

The veteran lawmaker said Suffolk OTB's problems give further evidence to his belief that New York’s tracks either should take over the off-track betting business in the state or there should be one operation to cover the entire state. Pretlow disputed the longstanding complaint that the state-imposed business model for the off-track corporations is financially unworkable.

“The OTBs overspend,” Pretlow said.

The state's chief fiscal watchdog warned other OTB corporations could face the same problems as NYCOTB and the worsening situation at Suffolk OTB.

"New York still has not taken any substantive actions to bring back the bettors and fix OTB, a source of revenue for our hard-strapped municipalities and a support for the state’s horse industry,'' state Comptroller Thomas DiNapoli said in a statement Feb. 25.

The comptroller noted his office nine months ago released a report raising concerns about the fiscal health of OTB corporations outside New York City, and offered a series of recommendations to improve their operations.

"It's clear OTB’s current business model just doesn’t work. It’s time we make some much-needed changes and find a model that does,'' DiNapoli said.

Suffolk OTB has annual pari-mutuel handle of between $150 million and $200 million--about one-fifth the handle of NYCOTB at the time of its closure in December. Suffolk OTB operates 14 parlors, including one teletheater. It first opened in 1975--five years after the state authorized off-track betting in New York.

A state task force on the future of off-track betting last year said Suffolk OTB had about $3 million in post-retirement obligations for its current and former workers--higher than the nearby Nassau County OTB, which does about twice as much business.

State officials were closely monitoring the possible shutdown of another OTB corporation in New York.

“Chairman (John) Sabini and the Racing and Wagering Board are going to take every step to ensure the betting public is protected during this period while Suffolk OTB deals with its financial condition,” agency spokesman Joseph Mahoney said.

Officials at the New York Racing Association, which was the largest creditor during the NYCOTB Chapter 9 proceeding, could only immediately say Suffolk OTB owes the betting entity “a significant amount of money,” according to NYRA spokesman Dan Silver.

“We have been discussing our growing concerns over the viability of Suffolk OTB with both Suffolk OTB and the state for several months now,” Silver said. He noted NYRA president Charles Hayward raised the topic during public meetings earlier this year before the Senate and Assembly racing committees.

“The New York off-track betting model is broken, and we have been saying this for years,” Silver said.