10/29/2010 1:34PM

New York City Off-Track Betting Corporation reorganization plan faces opposition


New York Gov. David Paterson has called for a special session on Nov. 15 for legislators to vote on statutory changes that are part of a reorganization plan for New York City Off-Track Betting Corporation, but a top legislator has said that many of the proposed changes cannot be supported.

The opposition to the changes presents a significant hurdle in front of a reorganization plan that has been endorsed by the state-owned off-track betting company’s creditors’ committee and the union representing the majority of the company’s 1,300 employees. According to officials, OTB’s chief executive, Greg Rayburn, has said that the changes must be approved as offered or the plan will fall apart.

But State Assemblyman J. Gary Pretlow, chairman of the assembly’s Committee on Racing and Wagering, said this week that legislators would be hard-pressed to support several of the changes, including a provision that would put the state on the hook for the health-care costs of OTB’s workers and a reduction in the minimum number of live racing dates that harness tracks would be required to run.

“A lot of stuff in there I can’t see how we can support,” said Pretlow, who noted that Paterson’s office has not yet forwarded the exact legislation, though it has distributed a memo outlining the plan.

Opposition also is coming from New York City Mayor Michael Bloomberg and the state’s harness horsemen. Bloomberg has complained that the city should not be required to pay for the workers’ health-care costs because of the state’s takeover of New York City OTB in 2009, prior to the company filing for bankruptcy. The state’s harness horsemen have vociferously objected to the proposed reduction in live racing dates and a cut in the amount of money that will go to racetracks and horsemen from betting through the OTB.

Joe Faraldo, president of the Standardbred Owners Association of New York, called the reorganization plan a “bailout” of the OTB company and said that it contains “pricey givebacks” to the owners of New York’s harness tracks. All of the state’s harness tracks operate casinos.

“We cannot and should not forget that NYCOTB was originally formed to benefit both the New York racing industry and the state, yet it continues to actually hurt both racing and the state in general,” Faraldo said in a prepared statement. “Simply bailing them out once again [and in the middle of a financial crisis] without enacting structural reforms to finally assist racing makes no sense, and buying the support of the cash-rich casinos – to the long-term detriment of the racing and agriculture industries – tips this new bailout plan from the plain old bad to the potentially scandalous.”

Marc La Vorgna, a spokesman for Bloomberg, said that the mayor would “use all available means” to kill the legislation if the bill did not transfer the health-care obligations to the state. La Vorgna said that the liabilities amounted to $100 million or $200 million. The OTB’s employees remain members of the city’s pension and health-care programs, despite the state takeover of the operation.

“Our point is that the state made an agreement to assume all assets and all liabilities,” La Vorgna said. “Having the city pay those costs breaks that deal.”

Pretlow said that the memo distributed by Paterson’s office says that the legislation will transfer the liabilities to the state.

“How can I possibly support that?” Pretlow said. “We haven’t done that for any other union in the state, so I don’t see how we can do it for this one union just to satisfy Mayor Bloomberg. The fact is, they are, or they were, his employees.”

Under the plan, OTB would pare its work force by 550 employees, mostly through a buyout plan approved by the union. A significant number of those workers are employed in the OTB company’s account-wagering division, which would be transferred to state racetracks that are creditors of the company in exchange for the forgiveness of $65 million in debt. The New York Racing Association, which operates Aqueduct, Belmont, and Saratoga, would be one of the major stakeholders in the transferred operation as New York City OTB’s second-largest creditor.

Although NYRA officials have not returned phone calls requesting comment on the plan, Rick Violette, president of the New York Thoroughbred Horsemen’s Association, said that his organization supports the plan, despite proposed cuts in the amount of money flowing to tracks and horsemen.

“Obviously, there are parts of it that we’re not happy with as horsemen,” Violette said. “There are some things to like and dislike. But the options aren’t nearly as clear-cut as some of the outsiders make it. When you dig really deep into it, you see that there are trade-offs, but OTB had dug such a deep hole, it was going to be painful for everyone to dig out of it.”