Closing of New York City OTB Delayed

Closing of New York City OTB Delayed
Photo: Courtesy NYCOTB

The New York City Off-Track Betting Corp., facing a shutdown later in the day, was given a four-day reprieve Dec. 3 when the state Senate is due back to consider passage of a bankruptcy reorganization plan.

Despite threats all week by NYCOTB officials that the Dec. 3 closure decision was firm without a deal in the Senate to back the plan, the board of directors approved a delay to give more time for the parties to resolve the stalemate over how to reorganize the money-losing betting giant.

A NYCOTB official, speaking on condition of anonymity, said the closure delay is being permitted to not only avoid laying off NYCOTB workers and disrupting the racing industry, but also to keep the state from having to pay about $20 million in immediate bankruptcy administrative costs, as well as expenses related to unemployment insurance and keeping on a skeleton staff during a shutdown.

“But there are no second or third chances," the source said.

A shutdown would also cost cash-strapped Nassau County nearly $1 million in off-track betting surcharge revenue, while Yonkers Raceway could lose $400,000 and Saratoga County could see $600,000 in revenue loss from an immediate closure, the official said.

Senate Democrats are trying to lure some Republicans, such as Sen. Roy McDonald, who represents the Saratoga area, while Republicans are trying to change the terms of the Paterson administration's plan, which would require the Assembly to return to Albany–something Assembly leaders have said they have no plans to do.

“There will be no more delays or chances given to them," the NYCOTB official said of the Senate after Dec. 7. If the Senate fails to act that day, NYCOTB will shut down at midnight the same day, the source said.

The Assembly has already approved a bill NYCOTB officials said is needed in order to have the corporation emerge from its Chapter 9 bankruptcy protection--a case filed one year ago. The reorganization plan includes fewer betting parlors, hundreds of layoffs, and the spinoff to New York racetracks of advance deposit wagering operations. It also includes cuts in a variety of industry revenue-sharing payments now made by NYCOTB, a move that has caused considerable pushback by other OTB corporations in the state, some racinos, and lawmakers.

The Senate is due back at the Capitol Dec. 7 to consider the bill passed by the Assembly. But it is uncertain if the votes are there to approve it in the narrowly divided partisan chamber. Senate Republicans have voiced concerns that the cuts to other OTB corporations are unfair and potentially costly to taxpayers, and it is unlikely Democrats will have enough votes on their own to get the measure through.

Labor leaders at a rally Dec. 3 at City Hall in New York City turned up the lobbying pressure on the Senate to pass the bill, but also on Gov. David Paterson to delay the NYCOTB’s closing until after the Senate gets a chance to vote. A shutdown, according to Larry Schwartz, NYCOTB chairman and chief of staff to Paterson, would affect more than 1,000 jobs.

NYCOTB owes nearly $100 million to its creditors, nearly a third of which is due the New York Racing Association. A permanent closure would also force the state, which took over NYCOTB from New York City government two years ago when it was threatening to cease its operations, to come up with about $500 million in health and pension payments.

No one is certain what would happen if NYCOTB were to shut down. Its various pieces presumably could be sold off in some manner.

NYCOTB handles about $750 million a year in bets on New York and out-of-state tracks. With the looming fiscal crisis, there had been theories over the past year or two that the corporation's troubles could cause the industry and state to engage in discussions to reform the state’s embattled racing and OTB industry, whose competing stakeholders have been fighting with each other for years.
 

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