07/13/2010 12:00AM

Court may defer in New York OTB case

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A bankruptcy court judge on Tuesday raised the possibility that New York State regulators may be better suited than the court to determine whether New York City Off-Track Betting Corporation is violating the law by withholding some payments to the state's racetracks and horsemen, according to attorneys.

Deborah Piazza, an attorney representing Finger Lakes racetrack, said that U.S. Bankruptcy Judge Martin Glenn, during a hearing on Tuesday, indicated that the New York State Racing and Wagering Board may be given the opportunity to settle a dispute between the state's racing industry and New York City OTB over the payments. The Tuesday hearing was scheduled to consider arguments on a motion by Finger Lakes and Yonkers Raceway to compel New York City OTB to make the payments.

Glenn did not rule on the motion on Tuesday, but instead asked the parties to provide "supplementary briefing materials" on legal matters pertaining to the motion to the court by July 21, according to Piazza. Glenn did not make it clear if he intended to rule on that date on the motion, Piazza said.

New York City OTB, which filed for chapter 9 bankruptcy earlier this year, decided to delay payments to the racing industry in April as part of a cash-management policy. The policy has been criticized by the state's racetracks and horsemen.

Robert Garry, OTB's chief financial officer, said in a filing with the court on July 12 that the decision to delay the payments has allowed OTB "to manage its cash flows, maintain operations, pay all current operating expenses and generate handle for current and future distribution to the racetracks."

In court filings, attorneys for the plaintiffs have said that the decision violates state laws that require all handle-generated revenues to be distributed by statutory formula.