New York's OTB Facing April 11 Shutdown

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The nation’s largest off-track betting corporation will be shut down on the night of April 11 if a deal to provide it with financial help does not come together over the weekend, officials warn.

“If there isn’t a deal or we are not close enough to a deal then we will have no alternative but to proceed with a shutdown,’’ said Meyer Frucher, chairman of the New York City Off-Track Betting Corp.

Talks are going down to the wire over a temporary stop-gap plan to provide assistance to the money-losing OTB, which is owned by the state of New York that is itself is facing a $9.2 billion deficit.

But racetracks are pushing back on a plan to let the OTB suspend certain statutory revenue-sharing payments to them, saying the state would create a fiscal nightmare for the industry if plans now being considered are adopted. New York Racing Association officials have privately warned state officials it could be forced into insolvency if NYCOTB payments to NYRA are cut, and Yonkers harness track says one plan under consideration would cost it $28 million.

“It’s a perfect storm,’’ one state negotiator said of the situation the OTB fiscal crisis is creating across the industry.

Other officials sought to portray optimism. Gov. David Paterson said talks have been “cooperative,’’ but he doesn’t yet know the outcome.

NYCOTB has said it is running out of operating funds. Layoff notices sent weeks ago to its 1,300 workers said the OTB will shut down at the close of business April 11 unless a resolution is reached.

“I think we’re close,’’ said Sen. Eric Adams, chairman of the Senate racing committee. “We’ve got until Sunday, and I don’t believe that OTB is going to shut down.’’

Some in the industry, as well as the Legislature, say an OTB shutdown would be acceptable, leaving room for NYRA and other private entities to come forth and take over parts of the OTB operations. The Assembly already floated a plan to let NYRA run the OTB’s wagering platforms.

“A shutdown would be a disaster for everyone,’’ Frucher countered.

The Senate and Assembly left town April 8 and won’t be back until April 12, leaving no time in between to pass any legislation to resolve the financial matter. But Frucher said the OTB just has to have “sufficient assurance’’ before the close of business April 11 to be able to remain open the next day.

Frucher said a resolution will have to involve “a distribution of pain’’ across the industry.

“The discussions are involving cuts to both the industry as well as to OTB,’’ he said. “The reality is that there are parts of the industry that can sustain those cuts,’’ he added, referring to tracks with VLT revenues.

Those tracks, such as Yonkers, have dismissed Frucher’s claims. NYRA, as well, claims NYCOTB already owes it $15 million in back payments.

NYCOTB is in Chapter 9 bankruptcy reorganization. NYCOTB officials recently talked of going to the bankruptcy judge to seek relief from statutory payments to the state and tracks, but Frucher said there are no current plans to go that route.

Frucher, who has been butting heads with NYRA, said tracks with VLT revenues could take some fiscal steps to help resolve the NYCOTB situation.

He said a resolution of NYCOTB’s issues should include “recognition that there is a NYRA problem that needs to be addressed.’’

Asked if that meant payment cuts to NYRA from NYCOTB should not be a part of a rescue plan this weekend, Frucher said, “I didn’t say that.’’ But, he added, “There’s a recognition that cuts to NYRA are going to be hurtful.’’

A host of possible timetables are under consideration. One plan gives relief to the OTB for a couple of months. Other plans stretch out a solution for a year. Frucher said, “Temporary solutions are fine, but they are akin to band-aids. In the longer term, the whole industry is going to require surgery, not band-aids.’’

The state is in no position to provide direct financial assistance to NYCOTB. State budget plans already call for cuts to schools, hospitals, and others that rely on government assistance, and no one in Albany has any stomach, in an election year, to be perceived as providing public cash to a gambling enterprise during a fiscal crisis in the government.

Frucher said the talks have come down to “who gives and who gives more and how long is that sustainable.’’

“I will be optimistic up until the last second. It would be so irrational to allow this to go down with all the consequences that it would create. I believe, in the end, that people will act rationally,’’ the OTB boss said.