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Bills seek to avert OTB closure

4/3/2010

New York legislators will be greeted with more than a dozen bills designed to address the financial plight of the bankrupt New York City Off-Track Betting Corporation when they return to session on Wednesday, four days before a threatened shutdown of the state-owned company.

The bills include several that would allow the state's six OTB companies to operate electronic gambling machines, a bill that would combine Nassau OTB with New York City OTB, and a bill introduced on Friday that would transfer control over the OTB company's operations to a state agency that would subsequently award a management contract to a private company.

The transfer bill was introduced by Rep. J. Gary Pretlow, the chairman of the Assembly's Racing and Wagering Committee. The legislation, introduced while the legislature is on holiday recess, would put control of the OTB corporation under the Non-Profit Racing Association Oversight Board, which was set up in 2008 to oversee the New York Racing Association, the not-for-profit operator of Aqueduct, Belmont, and Saratoga.

The bill includes a provision that would transfer control of the OTB company's wagering accounts to the oversight board, opening up the possibility that the board would assign the management of those accounts to the New York Racing Association. Over the past two weeks, NYRA's lobbyists have offered to take over the corporation's Internet and telephone account-wagering operations, but that offer has been rejected by Gov. David Paterson.

A NYRA official who has been close to the lobbying effort said that management of the telephone and Internet betting accounts would mitigate any negative impact of the OTB's closure on April 11 while also giving NYRA an additional revenue stream to address its own financial problems.

"If all they did was graft the phone and Internet wagering to us, and let the parlors sort themselves out over the next six months, we'd probably be all right," the official said.

The Thoroughbred industry in New York receives approximately $160,000 a day in fees from New York City OTB operations, and New York City OTB owes NYRA approximately $15 million. NYRA has also said that it will run out of cash this summer, partly because it included revenues from a long-stalled casino at Aqueduct in its 2010 budget.

New York City OTB's account-wagering operation is one of the few bright spots in its overall financial picture. Account-wagering operations have especially low costs compared to the expenses related to OTB's 61 bricks-and-mortar parlors, and OTB officials have said that the account-wagering operation would be a primary focus of a reorganization plan that would entail the closing of approximately two-thirds of the parlors.

"If there's a long-term future for OTB, it has to be on the Internet and technology side," said New York City OTB's chairman, Meyer Frucher.

New York City OTB has said it will shut down on April 11 unless the legislature approves a host of controversial and complex statutory changes or allows the company to suspend its payments to the state's harness and Thoroughbred industries while an agreement is negotiated.

As part of its reorganization plan, New York City OTB wants to install 1,100 to 1,300 self-service betting machines at New York bars and restaurants. The betting machines could easily be converted into electronic gambling machines similar to slot machines, and four bills - two in the Senate and two in the Assembly - would authorize video gambling machines at all offtrack betting facilities in the state. The measures have so far met with deep resistance in the legislature, however.