Court Refuses NYRA Appeal in OTB Case

Millions of dollars at stake

The New York Racing Association lost a five-year-old lawsuit Feb. 24 when the state’s highest court refused to hear its appeal in a case potentially worth millions of dollars in back simulcasting payments to the racing entity.

The New York Court of Appeals rejected an appeal motion by NYRA in a case brought in 2004 against the New York City Off-Track Betting Corp. A lower appellate court had found NYRA did not timely file its legal action against NYCOTB within a 90-day period of its claims that the OTB had breached a simulcasting contract.

At issue is a contract that dates back to 1996 involving annual payments from NYCOTB to NYRA for its simulcasting signals. Under the terms of the original deal, NYCOTB pays NYRA $675,000 a month for the signal. When the contract expired in 2002, a clause was to have kicked in permitting the terms to continue, but with NYCOTB paying an increased fee -- 7.75% on a base of $9 million beyond the $675,000 monthly level.

The court’s action upholds a 2007 decision by Supreme Court Judge Bernard J. Fried in Manhattan, who found several legal flaws in NYRA’s action, including a notice to sue the wrong party – New York City instead of NYCOTB – by NYRA and failure to bring the case within 90 days of the contract breach. The deal expired in 2002, but NYRA’s case was not brought until early 2004, court papers show.

In its original legal papers in 2004, NYRA had sought $10 million against NYCOTB for breach of contract and $10 million for “unjust enrichment’’ by NYCOTB for failing to pay the higher contract terms.

The state’s highest court, in rejecting NYRA’s appeal, did not consider the merits of NYRA’s breach of contract assertions. The court issued its decision February 24 without comment.