Updated on 09/15/2011 12:21PM

City OTB deal is dead for now, NYRA boss says

Kim Pratt
NYRA chairman Barry Schwartz said Monday that it does not seem possible that a sale of New York City Off Track Betting Corporation will occur this year.

NEW YORK - The chairman of the New York Racing Association, which is a partner in one of the two groups bidding to buy the New York City Off Track Betting Corporation from the city, said Monday that time has run out for a deal this year.

Citing the state legislature's plan to adjourn in June, NYRA chairman Barry Schwartz said that lawmakers would not have enough time to pass a bill enabling the sale. The legislation must precede a sale because state law permits only the city OTB, as currently constituted, to accept wagers in New York city's five boroughs.

"I don't see how it's possible given the late date," Schwartz said. "From the way I read it, we have at most four weeks until the legislature gets out of there. I don't see it getting done in that time frame."

A sampling of opinions from other officials Monday indicated that much work remained before a sale could go through, but not all were convinced that the deal was dead.

Mike Hess, the city's chief counsel, denied that the issue was settled. "I'm very confident that that the sale will be completed this year," Hess said. "We're right on track, and the mayor will select a bidder very, very soon."

Schwartz's contention that there would be no sale this year came just five days before the running of the Belmont Stakes, New York's most important race, which is expected to draw nearly 70,000 people to Belmont Park on Saturday. The high-stakes race is a fitting backdrop to the battle for control of a betting company that took in $1 billion in wagers last year, or about 7 percent of the total national handle.

Acquiring New York City OTB has been Schwartz's highest priority since he was named chairman of NYRA in December. NYRA operates Aqueduct, Belmont, and Saratoga Race Course. To strengthen his bid, Schwartz forged a partnership with Kentucky-based racetrack operator Churchill Downs Inc. and horse-racing broadcaster Television Games Network.

In April, the city designated the NYRA partnership and a partnership headed by racetrack operator Magna Entertainment as the finalists for the acquisition, paring down an initial list of 10 groups. Both finalists bid at least $250 million and agreed to retain the city as a minority equity partner.

But since then, the city has failed to select a winning bidder, despite nearly daily assurances from city officials that Mayor Rudolph Giuliani was close to a decision. In the meantime, several groups have come out against the sale, including one of the city's largest unions and the City Council.

Robert Green, the president of Greenwood Racing, a principal in the Magna partnership, said Monday that he still believed there was time to designate the winning bid and pass a legislative package. But he acknowledged that it would require a substantial amount of work.

"If the mayor, the governor, and the legislature want this to happen, it can happen," Green said.

The legislature is scheduled to adjourn on June 20, but lawmakers have yet to approve a budget. The budget process typically stalls all other legislation because lawmakers are prohibited from passing any bills that would affect the pending budget.

Green said that Magna has prepared a legislative package that could be introduced almost immediately after the city selected a winning bidder. Schwartz said that NYRA had developed a list of the legislative changes it would need for the sale to go forward but nothing close to a bill.

Hess said the city's administrative staff was working on a legislative package to present in Albany, the state capital, but acknowledged that the package had not been shown to lawmakers.

In Albany on Monday, State Senator William Larkin, the chairman of the Racing, Wagering, and Gaming Committee, said that legislators have not been presented with any information on the sale of OTB.

"We cannot do anything until we are presented with the factual data," Sen. Larkin said, adding that legislators would need to work out details on how the sale would affect jobs, taxes, and regulation.

A long-time legislative aide with experience in racing said that he had would be "shocked" if a sale could be completed this year. "We don't have time to figure out any complicated issues," the aide said.

Giuliani, a Republican, made the sale of the OTB part of his platform in 1992. At the time, he called the OTB the "only money-losing bookie in town." The issue was complicated last March, when the union that represents nearly all of the city's 1,700 OTB employees filed suit, challenging the sale. The union's cause was later joined by the City Council, which complained that the costs and benefits of the sale had not been adequately analyzed.

Schwartz said that although he did not believe the sale could be completed this year, he was confident the issue could be re-examined next year, under a different mayor. "If it is dead, it's only dead temporarily," Schwartz said.