Updated on 11/30/2010 6:10PM

N.Y. legislature fails to act on OTB reorganization in special session

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The New York legislature failed to take up a bill Monday night that would allow New York City Off-Track Betting Corporation to implement a controversial reorganization plan.

Legislators were called by Gov. David Paterson into special session Monday afternoon in order to address the OTB legislation and bills that would target a $315 million budget deficit. But the legislature recessed Monday night without taking any significant action.

The reorganization plan has been approved by New York City OTB’s creditors and was supported by the Paterson administration and the state’s Thoroughbred industry. New York City OTB filed for bankruptcy late in 2009 after the state took over the company from the city.

Officials of Paterson’s office and New York City OTB have said that the company will run out of money in mid-December and could face a complete closure at that time.

However, the company is operating under the protection of Chapter 9 bankruptcy, giving the company several options for addressing any cash shortfalls, and legislators have pointed out that New York City OTB has threatened to close several times already without following through on the threat.

The reorganization plan 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 also would allow the company to transfer its account-wagering operation to its state racetrack creditors to satisfy a $65 million debt. Under the plan, the New York Racing Association, which operates Aqueduct, Belmont, and Saratoga, would receive the largest stake in the account-wagering platform, at 45 percent.

Legislators may be called back into session late in December to address the budget deficit and other outstanding issues. Negotiations on the OTB reorganization bill had been conducted between Paterson’s office and the Democratic leadership, and supporters of the legislation may use the next several weeks to reach out to Republicans for support on the bill.

Austin Shafran, a spokesman for the Senate Democrats, said that legislators were hesitant to act on the bill because the legislation was not provided “in a timely fashion” and because competing versions of the bill were being circulated late Monday.

“Details matter, and legislation that cannot be adequately examined can have profound implications for taxpayers,” Shafran said. “If the Senate is to act, there must be a thorough and deliberative process which allows members and the public to review and provide input regarding this important piece of legislation. The Senate stands ready to be a partner in this process.”

Republicans are set to take control of the Democratic-led Senate beginning Jan. 1, the same date that Paterson will be replaced by governor-elect Andrew Cuomo. Because of those changes, it’s likely that no major legislative initiatives will be passed until 2011.