NYRA Considers Pulling Signal

The New York Racing Association is considering pulling the simulcast signal sent to New York City Off-Track Betting Corp.'s in-home bettors.

Frustrated with late payments by the OTB and facing a bankruptcy court meeting next week with its creditors, NYRA officials said Nov. 22 that pulling the signal to NYCOTB is one option under serious discussion. Charles Hayward, president of NYRA, said the option could be tapped before the Nov. 29 meeting with the bankruptcy creditors unless a deal is reached with NYCOTB.

"It's an option," said Hayward. "If we're not getting paid for a product that we're selling somebody, it's only logical you might discontinue selling to that individual."

Hayward said a move to pull the signal is "not imminent" and will be shaped by how much and how quickly NYCOTB can pay NYRA.

The talks come a day after NYRA placed third among bidders vying for the 20-year franchise rights to operate Aqueduct, Belmont, and Saratoga racetracks. A state committee awarded the winning bid – in a non-binding recommendation that will be forwarded to the governor and state Legislature for a decision – to Excelsior Racing Associates, a group with ties to the New York Yankees, a casino developer, and a major Manhattan development company.

Hayward said NYCOTB owes NYRA $9 million for past signals sent to betting centers and in-home bettors. He said $5 million of that is more than 30 days past due. "They owe us a lot of money," Hayward said.

NYRA, he said, has two options pertaining to its simulcast signal. He said state law provides that, if a signal is sent to one OTB, all OTBs have to be granted access to the signal. But the same rule does not apply to in-home betting accounts; that means, he said, NYRA could pull its signal that NYCOTB sends to in-home bettors. A 45-day notice is required before any signal is cut off. He estimated one-fourth of the more than $1 billion in bets made annually with NYCOTB is through its in-home phone wagering system.

"We've not even discussed that with them," Hayward said of talks with NYCOTB. But he made clear that NYRA is mulling the option internally.

"We've discussed getting paid," he said. Asked what NYCOTB has said in response, he said, "They're saying, 'we're broke.'"

Angry NYCOTB officials said NYRA has said nothing to them about cutting off any simulcast signals. Ira Block, executive vice president and general counsel at the OTB, said NYRA's claims about being owed money cannot be about funds for simulcast signal. NYCOTB has paid NYRA about $7.5 million annually for simulcast signals it receives; but the two have been embroiled in a fight in state court over that matter.

If NYRA is seeking to try to force the OTB to pay that money now, Block said, that would fly in the face of the deliberations by a state judge who has not yet ruled on the issue. He said NYCOTB is also up-to-date in its simulcast payments to NYRA.

Block said NYCOTB does owe NYRA about $4 million to $5 million for past payments due the racing entity for its share, which is set in law, on horse race wagers made at NYCOTB. But he said NYCOTB is behind in payments to other tracks and the state's breeding fund, and that NYRA is not being singled out. Block said state racing regulators are also well aware of the late payments.

"It is not in NYRA's interest to do that," Block said of any threat to cut off its simulcast signal for in-home wagering. He said the idea "makes no sense" since NYRA would – at a time it is in bankruptcy court saying it is insolvent – be losing simulcast revenues from NYCOTB in-home bettors.

"It's not going to improve their cash flow," Block said.

NYRA recently filed for bankruptcy protection. The first meeting of NYRA's creditors committee is next week in New York. Hayward said he expects the committee's members to ask NYRA officials about who owes NYRA money and what the racing entity is doing to collect it.

"We've got between now and Wednesday to give them an answer," Hayward said. He added that NYCOTB made a $1 million payment last week.
"Hopefully, we can move those discussions along" so that, he added, any talk of pulling a simulcast signal "will be moot."

Block said NYRA's move would also cut funds going to horsemen for purses.

"It doesn't seem to be a very intelligent way to proceed," he said.