02/25/2011 11:39AM

Suffolk OTB on Long Island considering bankruptcy protection


Officials of Suffolk Regional Off-Track Betting Corporation in New York are expected to decide over the next several days whether the company will pursue the protection of bankruptcy, a spokeswoman for the company said Friday.

Suffolk’s board on Thursday authorized the company to elect to enter bankruptcy, and on Friday, officials for the OTB company met with the chairman of the New York State Racing and Wagering Board to address concerns that the company’s financial condition was deteriorating. In order to declare bankruptcy, Suffolk would need the approval of the Suffolk County legislature, which is next expected to convene Thursday.

Debbie Pfeiffer, a spokeswoman for Suffolk, said that the company does not plan to close if it decides to go into bankruptcy.

“With something like a reorganization, it would give us the breathing room we need as far as renegotiating some leases and considering whether to close some less profitable parlors,” Pfeiffer said. “We would remain open.”

Suffolk would be the second New York offtrack betting company to declare bankruptcy, if the company goes ahead with a filing. New York City OTB, once the largest bet-taker in the United States, declared bankruptcy late in 2009, and the company folded late last year after failing to win concessions from the state legislature that would have enabled the company to implement a reorganization plan.

John Sabini, chairman of the New York State Racing and Wagering Board, said that auditors from the board had spent Wednesday and Thursday at Suffolk’s headquarters reviewing the company’s books. He declined to provide specifics of the findings but said that Suffolk had been required to provide additional updates about its financial condition over the past several months because of concerns raised by the board.

Jeff Casale, the OTB’s chief executive, and Anthony Pancella, the company’s vice president, were scheduled to meet with Sabini on Friday afternoon at the board’s headquarters in Schenectady. The board has the power to rescind the company’s operating license, but it’s unlikely that the board would take such action unless Suffolk had violated a material term of the license, such as failing to pay off on winning wagers.

“We want to know where they see themselves in the very near future,” Sabini said prior to the meeting.

Suffolk and the state’s other OTBs have argued that state laws need to be changed in order to restore the corporations’ financial viability.

The companies have complained that racing statutes direct too high of a share of their revenue to the state’s harness and Thoroughbred racing industries, an assertion that has been attacked by horsemen and racetracks.

Suffolk operates 12 bricks-and-mortar OTB parlors on the eastern half of Long Island. The company has self-service betting machines in 16 other locations. In 2009, the latest year in which figures are available, the company processed $153 million in bets, down from $178 million in 2008 and $188 million in 2007.

Charles Hayward, chief executive of the New York Racing Association, claimed at a hearing in the New York Senate earlier this month that Suffolk owes the association $1 million. Pfeiffer disputed that characterization, saying that the OTB company was “lagging” in its payments to NYRA but that the company intends to pay the debt.

The failure of New York City OTB has ratcheted up pressure to revamp the state’s offtrack betting system, which has been criticized for decades. Many racing officials have supported the consolidation of the OTBs under one operating company, but OTB companies have claimed that their problems stem instead from the amount of money that they must contribute to the state’s harness and Thoroughbred racing industries.

The other five OTBs succeeded in attaching amendments to the legislation that would have paved the way for New York City OTB to implement its reorganization, an effort that contributed to the failure of the legislation to pass. Under the amendments, Suffolk and the other OTB companies would have received the same concessions on contributions to the racing industry that were being sought by New York City OTB.

If Suffolk enters bankruptcy, it is likely that it would seek similar concessions from the legislature, though support for those efforts could be difficult to round up. Since New York City OTB closed, the state’s racing industry has succeeded in re-capturing a large percentage of the money previously bet through the company’s parlors and account-wagering operation, and NYRA, for one, has said that the closing has been revenue-neutral for the association.