By Matt Hegarty
The New York City Off-Track Betting Corporation will shut down as of the close of business on March 30 if it does not receive assurances from the state legislature that elements of its reorganization plan will be approved, according to officials of the organization.
The board of the corporation met on Monday and approved the plan to close of all the company’s storefronts and its account-wagering operation, which together account for approximately $1 billion in handle each year. According to members of the organization, the board was required to announce that it would seek to close within 60 days in order to comply with statutes requiring the distribution of notices to unions representing its employees.
The announcement will likely put pressure on the legislature to begin deliberations on the OTB’s reorganization plan, which would entail the reworking of statutory obligations to the racing industry and state and local governments. Since OTB filed for Chapter 9 bankruptcy late in 2009, the state legislature has failed to weigh in on the reorganization.
Also Monday, a state task force released a report with recommendations on how to overhaul the state’s six off-track betting corporations, including New York City OTB. The report recommended that account-wagering operations based outside of the state should be required to pay the same amount to horsemen’s organizations and local governments as OTB companies. It also recommended that the state’s six OTB companies should consolidate business and marketing functions and streamline management.
In addition, the state government should eliminate restrictions on in-home simulcasting and video streaming of races on websites, according to the report, and the state’s tracks should "set the stage" to earn more revenue from simulcasting by increasing the rate for their signals.
Of the six OTBs, only New York City OTB is believed to be facing dire financial circumstances. Robert Garry, the OTB’s chief financial officer, told the board during the Monday meeting that, under current projections, the company would run out of cash after the first week in April and post a $5 million deficit for the second week of that month. If the OTB shuts down, all but a handful of the company’s 1,400 employees will be laid off, officials said.
The threat to completely shut down is the second made by the OTB corporation in two years. In February, 2008, the board also authorized a shut down, when the city owned the company. As a result of that threat, the state of New York took over the company’s operations late in 2008.
The racing industry has resisted the company’s plan to change the statutes governing OTB’s distributions. In 2009, the company provided approximately $100 million to both the Thoroughbred and harness racing industries, according to financial documents.
The New York Racing Association, which operates Aqueduct, Belmont, and Saratoga, has filed an objection to the reorganization plan, and a hearing has been scheduled for Feb. 22 to hear the association’s arguments. NYRA is owed $14 million by the company, according to bankruptcy filings.
Dan Silver, a spokesman for the association, said on Monday that OTB’s proposal to close was consistent with the company’s statements over the past several months.
"NYCOTB has been consistently saying that they will run out of money at the end of March, and we are monitoring the situation closely, as they are NYRA’s largest customer," Silver said.