NY OTBs Ordered to Pay Harness Track Millions

NY OTBs Ordered to Pay Harness Track Millions
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New York’s Byzantine rules governing racetrack and off-track revenue-sharing took another twist Dec. 15 as state racing regulators ordered four downstate off-track betting corporations to pay millions of dollars to Yonkers Raceway.

The decision, approved 2-1 by the New York State Racing and Wagering Board, comes at a time when the various entities have stepped up their internecine battles at the state Capitol over the future shape of racing in the state.

But whether the money to Yonkers can or will ever be paid remains a question, especially for one of this country’s biggest bet handlers—New York City Off-Track Betting Corp., which, after losing tens of millions of dollars in recent years, filed for federal bankruptcy protection earlier in December. The Chapter 9 filing allows for it to reorganize itself as it remains open, rather than liquidate its operations.

In its court filing, NYCOTB, which is now an arm of the state government, already listed Yonkers—with $18 million owed—as one of its two top creditors along with the New York Racing Association. State officials said the racing board’s decision will cost NYCOTB $3.6 million in additional payments to Yonkers had the panel not agreed to the funding.

The matter goes back six years ago when the state permitted tracks and OTBs to accept nighttime wagers on out-of-state Thoroughbred races. As part of that legislation, harness tracks were guaranteed certain “maintenance of effort’’ payments, or MOE, from the OTBs to help the harness tracks cover losses caused by the new nighttime competition.

In the case of Yonkers, though, the track was shut down from June 2005 until June 2006 for construction of its video lottery terminal casino. Yonkers argued that it was still owed the MOE funding during the shutdown period. The OTBs said no money should be paid to Yonkers for the days in which live harness racing was not offered.

A month ago, the racing board invited comments on the matter from the warring parties. On Dec. 15, it ruled the full MOE payments were owed Yonkers.

Besides NYCOTB, the issue affects the Nassau, Suffolk, and Catskill OTB corporations for payments they did not make to Yonkers in 2005 and 2006. The board MOE ruling will cost Nassau an additional $1.8 million in MOE payments to Yonkers for the construction shutdown period, while Suffolk owes $1.2 million and Catskill is on the hook for an additional $940,000, state officials said.

NYCOTB, which has the most at stake given its recent bankruptcy filing, did not comment.

But racing board officials appeared to acknowledge that the matter is not over. “This sets the stage for further negotiations between the parties,” said Joseph Mahoney, a racing board spokesman.

The board also ordered other OTB payments to the state’s harness tracks dating back to 2003 as part of the successful court case by the racing board last year involving dark-day payments to tracks. Exact numbers owed to the tracks were not immediately available.

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