NYRA Claims $3.5 Million Undercutting by OTB

The New York Racing Association is filing paperwork stating its intent to sue the New York City Off Track Betting Corporation for undercutting simulcasting fees, the latest in a long line of tussles between the two influential industry groups.

The notice of claim states that NYRA's damages have totaled at least $3.5 million.

The claim alleges breach of contract and tort damages by the OTB's "continued failure'' to comply with the terms of a contract involving simulcasting signals and fees between NYRA and the OTB, which is an agency of the New York City government. The filing notice, obtained by The Blood-Horse, is dated Jan. 26.

NYRA claims it has "incurred extensive damages'' by the OTB's failure to pay $2.2 million of the $9.6 million in simulcasting charges that NYRA says it is owed.

Additionally, NYRA states that it has paid $1.3 million in New York City property taxes, "an equal sum of which should have been paid to NYRA by NYCOTB'' as a supplemental simulcast fee. NYRA has an agreement with New York City providing that NYRA does not have to pay more in property taxes to the city than it did in 1998. If it did, the OTB would reimburse the difference. NYRA claims the OTB has failed to provide the reimbursement.

The claim states that "NYRA intends to institute legal proceedings'' against the city to recoup the money it is owed.

NYRA Chairman Barry Schwartz could not be reached for comment.

NYCOTB President Ray Casey, informed of the legal filings, said the two sides were negotiating as late as Friday afternoon. He said the disputed amount, as far as he knows, is less than $1 million.

"There is some money argument on both sides that I thought we were negotiating over. I am genuinely surprised by this action,'' he said. Casey said racing fans will be "the losers in the end'' if NYRA takes the OTB to court. "I would hope that they wouldn't do that,'' he said.

Casey cautioned that NYRA's legal filing – a notice of claim – does not automatically mean NYRA will sue. He said he hoped the two sides will continue negotiating a resolution.

A written contract involving simulcasting fees between NYRA and NYCOTB expired about a year ago. Since then, they have been operating under a verbal agreement.

NYRA and NYCOTB have feuded for years over a host of issues.

Most recently, NYCOTB officials have said they are examining whether they must pull NYRA's simulcasting signal from its OTB parlors because of NYRA's indictment and admission of wrongdoing involving various tax evasion and other illegal schemes by a number of its employees. Prosecution of the case was deferred by federal authorities in return for payment of a fine, removal of a number of top officials and oversight of its operations during the next 18 months by a monitor appointed by the U.S. Attorney's office.

In the aftermath of the indictment, Casey said lawyers for the city agency have been looking into whether NYRA's signal can still be taken. He said the New York City Charter bars the OTB from doing business with entities judged to be "lacking integrity.'' That has generally applied to anyone under indictment. But pulling NYRA's signal would be costly to both the OTB and NYRA. The OTB brings in about $300 million a year in NYRA simulcasting fees.