More than two dozen major changes—from New York City Off-Track Betting Corp. being forced to impose a 1% surcharge on its bets to introduction of electronic table games at racetrack casinos—have been suggested by a group of racetrack-led creditors involved in NYCOTB’s bankruptcy proceeding.
The plan to reorganize NYCOTB and “restructure’’ racing in New York was put together in June by the Official Committee of Unsecured Creditors of NYCOTB, a group that includes the New York Racing Association, Churchill Downs, Finger Lakes Gaming and Racing, Yonkers Raceway, and Monticello Raceway.
It is uncertain which components of the ambitious wish-list are still on the table given the fact NYCOTB has been taken over by a new president, but the document, obtained by The Blood-Horse, provides an interesting peak into the thinking of the racing industry. The group also includes a union representing NYCOTB workers and a group tied to the owner of Vernon Downs and Tioga Downs racetracks in upstate New York. Its recommendations passed by a majority vote of its committee members.
The June 9 memorandum, sent from lawyers representing the creditors committee to NYCOTB and members of the state legislature, sought a remarkable array of steps to “ensure the viability of the racing industry as a whole for the foreseeable future.’’ A number of the plans, though, would be dead on arrival at the state capital.
The plan calls for the 1% surcharge on bets at NYCOTB, which the creditors said would be worth $6 million in revenue for the ailing corporation. But industry insiders said the surcharge could drive away bettors.
The plan also wants all OTB corporations in the state to be required to carry New York racing products “first on all of its wagering outlets and platforms,’’ with out-of-state signals shown “only after all in-state signals are prominently displayed.’’ OTBs would only be permitted to carry one, instead of two, signals a night from out-of-state harness tracks.
In return, tracks, except those run by NYRA, would agree to cap “direct commission payments’’ at or below 2009 levels for two years. NYRA would agree to a one-year deferral of 15% of certain payments due from NYCOTB.
The memo also seeks legislative approval for statewide cable and satellite television channels to include racing as part of their basic packages, and to permit live streaming of races on the Internet.
Racetrack casinos, under the creditors’ plan, would also be permitted to offer limited, non-taxable free play to bettors, expand the number of hours they could operate in a week, be given authorization for electronic table games, and have the state’s video lottery terminal law extended until 2030.
NYCOTB would be forced to let racetracks in New York join its out-of-state racing simulcast contracts; be required to agree to a number of union concessions, including retroactive pay raises and a severance package for workers leaving the payroll; and get a hiring freeze in management positions. The committee set specific target ideas for reducing NYCOTB management posts and for creation of a new board of directors whose membership would have to include representatives from the racing industry and labor unions.
The tracks would agree to certain statutory payment reductions or deferrals from NYCOTB under the plan presented, but they are also seeking establishment of a profit-sharing scheme from future NYCOTB revenue, which would be given not only to certain racetracks but also “organized labor.’’
The committee also called for the creation of a panel—composed of industry and state legislative representatives—to study “how to treat’’ advance deposit wagering in the state.
The creditors’ memorandum to NYCOTB came five days after Meyer “Sandy” Frucher in early June stepped down as the embattled chairman of NYCOTB. He was replaced by Larry Schwartz, who is chief of staff to New York Gov. David Paterson.
NYCOTB is a state-owned entity, having been abandoned several years ago by the New York City government after years of losing money.
The memo called for the hiring of a “turnaround’’ firm or manager to develop a restructuring plan for NYCOTB. Earlier in July, the corporation hired Greg Rayburn, for $125,000 a month, to devise a salvation plan for NYCOTB; Rayburn has been involved in numerous corporate restructuring efforts over the years, mostly recently at Magna Entertainment Corp.
Since he arrived on the job, Rayburn has fired some executive staff and is looking to close a dozen or so betting parlors in the city as he seeks a broader restructuring plan for the nation's largest OTB operations. Options include a takeover of some of its business by NYRA or others.
