Suffolk County OTB files for bankruptcy

Suffolk Regional Off-Track Betting Corporation filed for Chapter 9 bankruptcy protection in the Eastern District of New York on Friday, according to the company, becoming the second OTB company in New York to enter bankruptcy over the past two years.

In a statement, Suffolk officials said the company’s branches and other operations will remain open as it reorganizes. Suffolk operates 12 bricks-and-mortar OTB branches on the eastern half of Long Island, and has self-service betting machines in 16 other locations. The company also operates an account-wagering site.

“Suffolk OTB will diligently restructure its operations under Chapter 9, with the goal being the development of a more profitable corporation,” the statement said.

The company also said in the statement that “customer funds, as always, are secure and available for wagering.”

Suffolk is following in the path of New York City Off-Track Betting Corporation, which filed for Chapter 9 bankruptcy in 2009. Over the course of 16 months, New York City OTB attempted to build support for several reorganization plans that depended on changes to the state’s laws governing distribution of wagering dollars, but after those changes failed to gain legislation support, the company shuttered late in 2010.

Suffolk has contended that it is required to pay a too-high share of its wagering to the state’s racing industry, and it is likely that the company will also seek statutory changes that would enable it to retain a larger share of the handle through its sites. New York City OTB’s effort to change the statutes failed, in part, because of lobbying by the state’s other five OTB corporations to be entitled to the same cuts being sought by New York City OTB.

Like nearly all racing operations nationwide, betting handle over the past three years through Suffolk has declined significantly, falling from $188 million in 2007 to $153 million in 2009, the latest year for which figures are available, a decline of 18.6 percent.

Suffolk said in the statement that it will continue to make surcharge payments to local counties, but it is unclear if the company plans to make statutorily required payments to the racing industry while in bankruptcy. New York City OTB suspended some payments to the racing industry while attempting to reorganize, a tactic that frustrated Thoroughbred and harness tracks and their horsemen.

Charles Hawyward, the chief executive officer of the New York Racing Association, which operates Aqueduct, Belmont, and Saratoga, has said that Suffolk owns the association $1 million. However, a spokesperson for Suffolk, Debbie Pfeiffer, has disputed that characterization, saying that Suffolk is “behind” on its payments, but that it intends to pay the association.

Earlier this year, the New York State Racing and Wagering Board said that it had been closely monitoring Suffolk’s operations because of concern over whether the company could pay its bills.