New York City Off-Track Betting Corp. plans to seek Chapter 9 bankruptcy protection in an attempt to reorganize its business.
During a Dec. 3 media teleconference, NYCOTB chairman Meyer “Sandy” Frucher said the corporation, the largest off-track betting operator in New York State, must file a reorganization plan within 30 to 60 days. NYCOTB also needs to work with the state General Assembly, he said.
Chapter 9 bankruptcy is about reorganization, not liquidation. Frucher said it would cost a minimum of $600 million to shut down NYCOTB, and in addition, its benefits to the state, city, and horse racing industry would be lost.
“It’s easy to justify why you want to keep this enterprise going,” Frucher said.
Frucher said the plan is to pay existing debts and build a foundation for growth. Taxpayers wouldn’t be asked for money, he said, noting there is a “misconception” NYCOTB has been subsidized by taxpayers. “We have been a contributor,” Frucher said.
Frucher said the way distributions—to the state, city, racetracks, horsemen, and breeders—are paid is at the heart the problem. State statute requires NYCOTB to make such payments before operating costs are paid.
“You can’t pay a de facto dividend before you pay operating costs,” Frucher said. “The framework for the problem is embedded in the original statute, and it’s time it needs to be fixed.”
Frucher said NYCOTB, as part of the reorganization, will ask the legislature to revise the “distribution” system. He also said the corporation doesn’t lose money; NYCOTB handles about $1 billion a year in bets.
The New York Racing Association, which operates Aqueduct, Belmont Park, and Saratoga, said in a statement it expects to be one of the largest creditors in the bankruptcy action, "and therefore it would not be prudent for NYRA to comment on the filing outside of the court proceedings."
NYCOTB customers' funds are protected despite the action, Frucher.