NEWS
New York City OTB to file for bankruptcy
Posted: Thursday, December 03, 2009 11:23 AM
NEW YORK CITY OTB
Mark Wyville photo
by Jeff Lowe
New York City Off-Track Betting Corp. planned to file for Chapter 9 bankruptcy protection on Thursday, initiating a restructuring process that centers on changing its payment formula to the racing industry.
Calling for legislative changes to the model in which wagering revenue is distributed, company chairman Meyer “Sandy” Frucher said New York City OTB is operating with a projected deficit of $40-million this year.
“We’re going to be asking for some paradigm changes in order to accomplish what we think is a reasonable reorganization,” Frucher said. “We want to pay all existing debts. These are obligations that people have expected to receive, and in a lot of cases, would cause irreparable damage if they weren’t paid. Currently we don’t have the cash to do it. We believe through the process we will.”
Frucher said New York City OTB’s handle is currently distributed with “no regard” to the company’s operating costs.
“It’s easy for people to say, ‘I can’t see how a booking operation can lose money,’” Frucher said. “The answer is, it doesn’t. The operating side is insolvent because the distributions that are made take out too much. … We have to rationalize some of this process, but we also have to be mindful of not taking the industry down.”
In the fiscal year ended June 30, 2008, New York City OTB handled around $1 billion and took in $250-million in revenue. The company paid out approximately $93-million to Thoroughbred and harness racing, $20-million to the city, and $15-million to the state.
Frucher said New York City OTB would not pay its November bills as the restructuring begins, with a plan to be submitted to the U.S. Bankruptcy Court for the Southern District of New York within 60 days. Day-to-day operations will continue, but the company will seek to reduce its work force of around 1,400 employees.
The New York Racing Association, operator of Aqueduct, Belmont Park, and Saratoga Race Course, said it expects to be one of New York City OTB’s largest creditors.
“[T]herefore it would not be prudent for NYRA to comment on the filing outside of the court proceedings,” NYRA said in a statement.
Jeff Lowe is a Thoroughbred Times staff writer
