ALBANY—David Paterson just announced that, within two months, the New York City Off-Track Betting Corporation will file a restructuring plan in federal bankruptcy court. The corporation loses money and has accumulated over $220 million in debt.
The corporation is statutorily obligated to send a portion of its winnings to support municipalities and other racing causes in the state, obligations which remained in place as operating costs rose. Earlier this year, Mayor Bloomberg recommended shutting the corporation down; Paterson stepped in and took it over, appointing Sandy Frucher to lead the state-sponsored turnaround effort.
Frucher said such a shut down would have been "unthinkable," citing some $500 million of pension and other costs that would have been unfunded in the event of closure. Frucher and Paterson estimated that roughly $250 billion would have to be bonded for as part of the eventual restructuring deal, which would also close some branches, result in fewer workers and change the statutory obligations for payout. That last part, of course, would require approval by a state legislature not known for rubber stamping anything.
Paterson was asked why this was allowed to fester for so long. "I don't understand." Frucher offered a quip from Stanley Steingut, the former speaker of the Assembly, who noted that "Rome wasn't burnt in a day."
Both men talked about the need to reinvent off-track betting for a new age, noting that OTB was established to counter local bookies in the mid 20th century, and is now flawed and outdated.
"We can do virtual racing," Frucher said, even envisioning a way for people to bet from hotel rooms.
"We can go nose to nose with pornography and win."