While five bidders await a decision on who will run the Racino at Aqueduct Racetrack, the New York Racing Authority (NYRA) and the Off-Track Betting Corporation (OTB) are trying to make money taking bets on thoroughbred horse racing.
OTB chair Meyer “Sandy” Frucher and NYRA President Charles Hayward each revealed plans to make their respective operations profitable after years of losses, at a joint Senate-Assembly hearing in downtown Manhattan on Friday, January 8.
Frucher asked that the company be allowed to proceed with its Chapter 9 Bankruptcy filing, keep more of the money it collects, close half of its 64 betting parlors and restaurant locations and cut its 1,350-person workforce by 55 percent, according to reports.
He proposed installing up to 1,300 Internet-based kiosks in bars, restaurants, bowling alleys and possibly including bodegas around the city. The machines could be similar to self-betting machines at the track, accepting cash cards. Winners currently redeem their bets at a teller window, though how the kiosk system would pay off was not made clear.
OTB has debts approaching $100 million according to reports and the company could be out of cash on March 31, Frucher said. At present, OTB is required to pay NYRA and the industry before covering its operating costs.
“This left New York City OTB [in 2008] with $116.1 million to cover $133.9 million in operating expenses,” Frucher said.
OTB officials also blame their financial condition on the “outdated” parlors that Frucher described as “much too expensive.” “They are a disaster," he said.
But he turned aside a suggestion from Maspeth Assemblymember Margaret Markey that local Community Boards approve kiosk locations, saying, “If you put it through that kind of mechanism, we’d be here 100 years from now trying to get the third machine up.”
Responding to the suggestion that the move would be “an expansion of gambling,” Frucher said, “Believe me, if I could come up with another way of harvesting the revenues, I would do it.”
To proceed, OTB would sell $250 million in bonds to settle debts, pay $50 million in severance costs and build five “super-parlors.”
NYRA President Charles Hayward revealed a completely different notion, saying the not-for-profit track operator will introduce a plan to take over the OTB in the immediate future.
Hayward gave no details at the hearing, but pointed out that “The current NYRA/New York City OTB configuration has a tremendous amount of duplicative costs and redundant infrastructure.”
“This proposed consolidation would yield further savings in information technology, finance, legal, human resources, and other departments,” he added.
NYRA is currently owed more than $14.7 million by OTB. The association and New York breeders say they cannot afford reduced payments.
In 2008, New York City OTB handled $272 million in wagering from NYRA races, according to Hayward. In return, NYRA received $7.4-million while $10.3 million went to purses.
“NYRA gets $7.4-million … New York City OTB gets $39.4 million. How much more can they take from the Thoroughbred industry?” he said, adding that in Pennsylvania and New Jersey, where the racetracks control the OTB networks, payments to purses from OTBs are far higher than they are here.
Although NYRA had been generally supportive of the OTB bankruptcy in the past, on Monday, January 4, it filed a legal objection to the petition, charging that it allows OTB to develop its reorganization plan unilaterally without input from NYRA or other creditors.
