04/08/2010 11:00PM

New York City OTB to remain in operation


New York City Off-Track Betting Corporation postponed a plan to close on Sunday by at least a week after officials said state's legislators have shown progress in devising a plan to shore up the company's financial position, at least temporarily.

The board of the corporation met on Friday to approve the postponement. During the meeting, Sandy Frucher, the corporation's chairman, said that "significant progress" had been made in discussions on a rescue plan over the last several weeks between officials with OTB and the state, including the staff of Gov. David Paterson.

"We have been told that there is good-faith, constructive dialogue going on between the executive branch and the legislative branch, that ideas have been put on the table, and that those ideas are being worked into the language of legislation, and that that legislation can be passed early in the week," Frucher told the board. "That being the case, it would be irresponsible . . . for us to go forward with shutting the doors, because that is an act that cannot be reversed."

Details of a rescue plan remain unclear. Legislators working on the plan did not return phone calls on Thursday and Friday.

A shutdown of New York City OTB would have significant financial impacts on the entire racing industry. New York's Thoroughbred industry receives approximately $160,000 in payments from OTB each day, and the corporation's parlors and account-wagering operation take in approximately $500 million a year in wagers on out-of-state tracks. The corporation is the largest single bet-taker in the United States.

Efforts to rescue New York City OTB are complicated by a wide range of factors. New York State is facing a $9 billion budget deficit, creating resistance to any solution that requires taxpayer assistance. The state's harness and Thoroughbred industries are blocking any cut in the statutory payments they receive from the company, In addition, New York City OTB officials themselves acknowledge that the corporation's problems are largely structural and in need of a massive, politically challenging overhaul.

Frucher told board members that the legislation would take the form of a "temporary lifeline," possibly through a reduction or deferral of statutory payments. In the meantime, OTB remains committed to a long-term restructuring that would entail the permanent closing of two-thirds of its parlors, a 50 percent reduction in staff, and a proposal to install betting kiosks in bars and restaurants, Frucher said, calling the company's business plan and reliance on brick-and-mortar parlors "outdated."

"The future of this enterprise, and all enterprises like it, rests on technology," Frucher said.

Although Friday's decision averts the Sunday shutdown, the board's approval sets a new shutdown date of April 18. New York's legislature went on a temporary recess on Thursday, but it is scheduled to return to session on Monday. New York City OTB's board is scheduled to meet on Wednesday to discuss any additional plans, Frucher said.

New York City OTB owes the state's largest racetrack operator, the New York Racing Association, $15 million. NYRA officials have refused to comment publicly on their lobbying efforts in regards to New York City OTB, but officials of the organization have privately said that they continue to resist any effort by OTB to cut its payments to the racing industry.

OTB currently pays approximately 6.4 percent of handle to the state's harness and Thoroughbred racing industries. Racing officials who have been critical of the structure of New York's offtrack betting business have pointed out that OTB networks in other states typically return 15 to 20 percent of the handle to the racing industries in their states, but those parlors are usually owned by racetracks.

Frucher criticized media coverage of the corporation's plight, and said that most of the complaints about New York City OTB were based on a misreading of the structural problems. All three of New York's major daily newspapers have run recent editorials that have cautioned the OTB from seeking taxpayer assistance, and several have called for the OTB to be shutdown permanently.

"It's time people started working together, rather than casting aspersions," Frucher said.