Senate bill could bankrupt NYRA
Updated: December 7, 2010, 2:03 PM ETBy David Grening | Daily Racing Form
The New York Racing Association claims it would go out of business if a bill proposed by the State Senate designed to help New York's troubled Off-Track Betting network becomes law. According to a press released issue by NYRA prior to the State Senate going into session presumably to vote on the bill, the legislation would cost NYRA - which operates Aqueduct, Belmont and Saratoga - approximately $20 million annually in revenue and force it into bankruptcy. "NYRA cannot sustain a revenue reduction of $20 million and continue to operate the three racetracks," NYRA's president and CEO Charles Hayward said in a press release. "The consequence of the legislation being advocated by the regional OTBs is that NYRA would be forced to close." New York City OTB is expected to close at the end of business Tuesday if the State Senate votes on a different bill than the one passed by the State Assembly last week and one that has the support of Gov. Paterson and NYRA. That bill would enable New York City OTB to emerge from bankruptcy by allowing it to reduce the amount of money it pays the industry by millions of dollars annually. However, the Senate did not act on that bill. Instead, Senate Republicans late last week introduced a bill of their own which would extend the provisions afforded NYC OTB to the state's five other regional OTB systems. According to Hayward, NYRA, which is the largest creditor of NYC OTB, has supported the Assembly's legislation "that would give NYC OTB some short-term relief in the amounts that NYC OTB is required to pay the racetracks in exchange for the corporation deeding its account wagering business to the tracks, which in essence would give the racetracks an opportunity to re-coup the amounts being forfeited to NYC OTB as part of its reorganization in bankruptcy." By supporting the Assembly's legislation, NYRA would forfeit millions of dollars in revenue, but would become the largest stakeholder in a new company - called the New York Racing Network - that would take over NYC OTB's phone and internet wagering, thus enabling it to recoup some of the lost revenue. "Although the short-term concessions made by the racetracks in order to allow NYC OTB to reorganize will be painful to each racetracks' bottom line, NYRA felt that the pain could be justified because NYC OTB is the single largest distributor of NYRA's racing product and the largest provider of handle on NYRA races," Hayward said. "Moreover, under the legislation NYC OTB would be required to implement a plan of reorganization that would cut its overhead and align its operating costs with its revenues, resulting in a leaner, more efficient, and hopefully profitable OTB corporation." NYRA contends that it is unfair that the other five regional OTBS would be able "to reap all the benefits of the concessions the racetracks have made to NYC OTB without similarly agreeing to transfer their account wagering businesses to the racetracks or take any of the steps being required of NYC OTB to make their business operations viable. "No regional OTB can survive long without the NYRA product," Hayward continued. "The net result of the legislation being sought by the regional OTBs would be the eventual closure of their own corporations, and the elimination of Thoroughbred racing in New York State."