Lawmakers Working on NYCOTB Deal

The deal would allow NYCOTB to pay racetracks less in the coming year

Negotiators are closing in on a deal to keep the money-losing New York City Off-Track Betting Corp. alive for another year, but last-minute sticking points have been jamming up a final agreement the past 24 hours.

Terms being negotiated would permit the nation’s largest OTB to cut its statutory payments to racetracks and others by 15% over the coming year. Numbers have floated wildly, but negotiators say the percentage could translate to $10 million or more in lower-than-expected industry payments from the OTB.

By nightfall, sources said the OTB talks were again facing mounting obstacles. Tracks and horsemen, whose purses would dip under the deal, were fighting both the 15% cut and a drop in "maintenance of effort’’ funding and "dark day’’ payments the OTB makes to tracks as part of a decade-old deal permitting OTBs to simulcast out-of-state Thoroughbred races at night.

To entice racetrack opponents, officials in the Paterson administration were floating plans to permit tracks to extend the number of hours VLT casinos could remain open and to permit electronic table games at the facilities. But some tracks say the sweeteners still don’t make up for the loss in OTB payments.

Moreover, negotiators have moved beyond just a rescue effort for NYCOTB and want to lower payments all OTBs in the state have to make to racetracks.

Paterson will formally propose his OTB bailout measure on April 14.

Another plan on the table calls for diverting of unclaimed winnings by OTB bettors -- upwards of $7 million or so -- from the state’s general fund to OTBs. Some Senate sources privately called that a direct bailout by the state that removes money the state uses as revenues for its budget – at a time of soaring red ink in New York’s fiscal plan.

Sources said part of the money NYCOTB will save will go to an incentive program to get hundreds of the 1,300 workers at the OTB to retire.

While the New York Racing Association would also see reduced revenue-sharing payments from the OTB, NYRA would be in line for an infusion of $17 million in cash from a government-backed loan. The $17 million would come from a $250 million borrowing program the state envisions providing capital backing for a future operator of the long-stalled Aqueduct casino project.
Government officials said the $17 million would provide enough funds to largely resolve NYRA’s cash flow problems. NYRA has said it could face running out of money this summer.
“It’s a little better for NYRA,’’ said Assembly Racing Committee Chairman Gary Pretlow.
Pretlow criticized a plan being pushed by the Paterson administration to save $40 million for the OTB in the coming year. “I don’t think horsemen or tracks should be forced to pay for New York City OTB’s horrific management,’’ Pretlow said.
Pretlow said NYCOTB has refused to cut more deeply its management ranks, or to move from what he said was its expensive headquarters space in Manhattan.
In the past 48 hours, the terms of the deal has moved from cutting NYCOTB’s statutory payments to the industry from 15% to 48% and now back to 15%. Officials warned that number could change again in the coming hours.
Despite talk of trying to get actual legislation passed April 13, lawmakers said that was looking increasingly impossible as the day went on. Either way, the final agreement will not resolve the OTB’s longstanding problems—or those facing other OTBs or the larger questions of destructive competition between OTBs and tracks. Instead, it will merely punt those long-term issues until a year from now and after a new governor takes office in January.
In the Democratic-led Senate, lawmakers expressed frustration about being part of an effort that would be perceived as bailing out a gambling enterprise at a time when the state is facing a $9.2 billion deficit with plans for deep cuts to schools, hospitals, and others.
But Senate Racing Committee Chairman Eric Adams insisted he convinced his Democratic colleagues that the measure is not a bailout. “This is tied to the New York state economy,’’ he said after a closed-door conference April 13 of Democratic senators in which the OTB issue consumed more than an hour of talks.
“We’re not there yet,’’ he said of a deal, but he predicted an agreement before the end of the day.

But Adams later in the day was not sounding so optimistic. "I’m not feeling so good now,’’ he said. He declined to elaborate, but one Senate source said Adams could face a tough time getting the NYCOTB bill out of his own committee unless major changes are made to the legislation.

“It’s a tough sell,’’ one Senate Democratic lawmaker said of the OTB rescue.
Union officials for NYCOTB workers were at the Capitol trying to get details on legislation to keep the OTB from shutting down later this week. NYCOTB officials had insisted the OTB was to have shut down April 11, but delayed the closing to give more time for negotiations this week.
OTB backers have described the entity as too big to fail, while some have suggested the gambling enterprise has been losing money for too long and that a shut-down would permit others, including possibly NYRA, to pick over its potential profitable operations, such as internet and phone wagering.
“We’re not bailing anyone out,’’ Pretlow said of a plan to move around industry proceeds and re-direct them to NYCOTB.
The OTB was taken over by the state in 2008 from the New York City government, which threatened to close down the OTB and its 60 or so parlors that year after facing insolvency. The OTB late last year filed for Chapter 9 bankruptcy protection.