11/30/2010 5:36PM

New York OTB faces Friday closing

Email

The bankrupt New York City Off-Track Betting Corporation will close all of its branches in the city’s five boroughs and shutter its account-wagering operation at the close of business on Friday unless the company gets some relief, officials for Gov. David Paterson and the state-owned company said on Tuesday.

The threat to shutter the operation comes one day after the state legislature failed to take up a bill that would have allowed New York City OTB to implement a controversial reorganization plan. Paterson had called the special session to address the OTB legislation and several other bills that would close a $315 million budget deficit, but legislators declined to act on any of the bills.

New York City OTB filed for bankruptcy in December of last year, and the company has threatened to shut down on two other occasions since then without making good on its threat.

Sylvia Hamer, Paterson’s chief of staff, said in a letter to New York City Mayor Michael Bloomberg that the shutdown would “permanently” close all of its branches and the account-wagering operation. In another document, the governor’s office said the closure would result in the permanent loss of 1,026 employees. Paterson’s office publicly released the documents.

“This action is necessary because the corporation will have exhausted all unrestricted funds available to continue its operations beyond [Dec. 3] unless circumstances materially change,” Hamer wrote in the letter to Bloomberg, who had previously threatened to shutter the organization until the state took it over from the city in early 2009.

New York City OTB operates 44 branch locations, three relatively upscale “betting teletheaters,” and seven operations located within restaurants, along with the account-wagering platform. The branches and account-wagering operations are expected to take in $800 million in bets this year.

The documents released late on Tuesday said that three locations will remain open past Friday to cash outstanding tickets. Account-wagering customers with balances higher than $5 will be issued checks over the next four to six weeks for their remaining deposits, the documents said.

New York City OTB’s reorganization plan has been approved by the company’s creditors’ committee, but it hinges on several statutory changes that would cut the amount of money that New York City OTB provides to the state’s Thoroughbred and Standardbred industries from its betting. The plan would also allow the company to transfer its account-wagering operation to its state racetrack creditors to satisfy a $65 million debt.

New York City OTB is operating under the protection of Chapter 9 bankruptcy, which would appear to give the company several options for addressing any cash shortfalls. Several legislators on Monday pointed to the company’s earlier threats to shutdown in their decision to hold off on addressing the reorganization bill.