NYRA OK, But OTB Closure Looming
Photo: AP
New York governor Eliot Spitzer

Legislation giving the New York Racing Association a 25-year extension of its exclusive Thoroughbred franchise was signed Feb. 19, Gov. Eliot Spitzer said. Meanwhile, the mayor of New York City reiterated that New York City Off-Track Betting Corp. can't continue under its current arrangement with the state.

The approval by Spitzer, which was expected, comes after the legislature last week approved legislation extending NYRA’s franchise to run Aqueduct, Belmont Park, and Saratoga. In addition to a $105-million bailout by the state, NYRA will also see about $120 million in past loans from the state forgiven as part of an overall effort to help what will be a not-for-profit entity emerge from its Chapter 11 bankruptcy protection.

Spitzer said the measure will result in a “reformed NYRA."

Besides NYRA giving up its ownership land claims for the three tracks, there will be more state appointees to the new NYRA board, including state members on the group’s executive committee. The state comptroller will have oversight abilities, as will the state attorney general. A state panel created during NYRA legal and financial troubles a couple years ago will remain in place, but will be controlled now by Spitzer appointees.

“We have imposed upon racing the reforms that we wanted," Spitzer said Feb. 19.

The deal still has to be approved by a federal bankruptcy judge, which NYRA officials anticipate will happen at a March 5 hearing. Still undecided is who will run an approved, though not yet constructed, video lottery terminal casino at Aqueduct.

Also still in the mix is the fate of New York City Off-Track Betting Corp., which continues to lose money. On Feb. 19, New York Mayor Michael Bloomberg issued a scathing assessment of the state's treatment of NTCOTB, saying unfair revenue-sharing arrangements for tracks and other mandates are driving the OTB into insolvency.

Bloomberg, making a rare appearance for a mayor at NYCOTB board meeting, urged the board to proceed with its plan to shut down the operation in June. The board agreed, and plans to start with a first phase -- closing two OTB parlors -- the week of Feb. 24.

The mayor's office said OTB revenue exceeds operating costs by $129 million a year, but that it will run out of money because the state takes too large a share of that for tracks and others as part of revenue-sharing arrangements.

"If we did nothing, by the end of June, OTB would be running a cash-negative operation for the first time in its history," Bloomberg said in statement. "I believe that if OTB is unable to operate without taxpayer subsidies, then it should not operate, period.

"The city simply cannot take dollars away from schools and hospitals to pay for a gambling operation. We have no business subsidizing betting parlors at the expense of city taxpayers, particularly at a time when we're asking all agencies to cut their budgets. OTB has made every effort to remain profitable."

Bloomberg has dismissed state and industry officials who say he is bluffing with the shutdown threat as a way to move discussions his way with the state. An actual closing of the OTB would result in 1,500 layoffs. The board's new plan calls for the OTB to be shuttered June 15.

The city said NYCOTB has annual sales of more than $1 billion. It criticizes state law for requiring distributions to tracks based on OTB revenue instead of on its profits, which turns it into a money-loser for the city.

The city is also upset with the new NYRA deal, and has faulted the state for not including a resolution of the OTB situation as part of the franchise extension. Spitzer has said the OTB matter will be resolved during the current legislative session.

New York Mayor Michael Bloomberg issued a scathing assessment of the state's treatment of the New York City Off-Track Betting Corp., saying unfair revenue sharing arrangements for tracks and other mandates are driving the OTB into insolvency.

Bloomberg, making a rare appearance for a mayor at an OTB board meeting, urged the board to proceed with its plan to shut down the OTB in June. The board agreed, and plans to start with a first phase--closing two OTB parlors--next week.

The mayor's office said OTB revenues exceed its operating costs by $129 million annually, but that it will run out of money because Albany takes too large a share of that for tracks and others as part of revenue-sharing arrangements.

"If we did nothing, by the end of June, OTB would be running a cash-negative operation for the first time in its history," Bloomberg said in a statement. "I believe if OTB is unable to operate without taxpayer subsidies, then it should not operate--period. The city simply cannot take dollars away from schools and hospitals to pay for a gambling operation. We have no business subsidizing betting parlors at the expense of city taxpayers, particularly at a time when we're asking all agencies to cut their budgets. OTB has made every effort to remain profitable."

Bloomberg has dismissed state and industry officials who say he is bluffing with the shut-down threat as a way to move discussions his way with the state. An actual closing of the OTB would result in 1,500 layoffs. The board's new plan calls for the OTB to be shuttered June 15.

The city says the OTB has annual sales of more than $1 billion. It criticizes state law for requiring distributions to tracks based on the OTB's revenues instead of on its profits, which turns it into a money-loser for the city.

The city is also upset with the new NYRA deal, and has faulted the state for not including a resolution of the OTB situation as part of the franchise extension. Spitzer has said the OTB matter will be resolved during this legislative session.

 

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