PRESSROOM

BLOODHORSE.COM

Document Outlines Suggestions for NYCOTB

By Tom Precious

Updated: Monday, July 26, 2010 8:10 PM
Posted: Monday, July 26, 2010 5:44 PM

More than two dozen major changes—from New York City Off-Track Betting Corp. being forced to impose a 1% surcharge on its bets to introduction of electronic table games at racetrack casinos—have been suggested by a group of racetrack-led creditors involved in NYCOTB’s bankruptcy proceeding.

The plan to reorganize NYCOTB and “restructure’’ racing in New York was put together in June by the Official Committee of Unsecured Creditors of NYCOTB, a group that includes the New York Racing Association, Churchill Downs, Finger Lakes Gaming and Racing, Yonkers Raceway, and Monticello Raceway.

It is uncertain which components of the ambitious wish-list are still on the table given the fact NYCOTB has been taken over by a new president, but the document, obtained by The Blood-Horse, provides an interesting peak into the thinking of the racing industry. The group also includes a union representing NYCOTB workers and a group tied to the owner of Vernon Downs and Tioga Downs racetracks in upstate New York. Its recommendations passed by a majority vote of its committee members.

The June 9 memorandum, sent from lawyers representing the creditors committee to NYCOTB and members of the state legislature, sought a remarkable array of steps to “ensure the viability of the racing industry as a whole for the foreseeable future.’’ A number of the plans, though, would be dead on arrival at the state capital.

The plan calls for the 1% surcharge on bets at NYCOTB, which the creditors said would be worth $6 million in revenue for the ailing corporation. But industry insiders said the surcharge could drive away bettors.

The plan also wants all OTB corporations in the state to be required to carry New York racing products “first on all of its wagering outlets and platforms,’’ with out-of-state signals shown “only after all in-state signals are prominently displayed.’’ OTBs would only be permitted to carry one, instead of two, signals a night from out-of-state harness tracks.

In return, tracks, except those run by NYRA, would agree to cap “direct commission payments’’ at or below 2009 levels for two years. NYRA would agree to a one-year deferral of 15% of certain payments due from NYCOTB.

The memo also seeks legislative approval for statewide cable and satellite television channels to include racing as part of their basic packages, and to permit live streaming of races on the Internet.

Racetrack casinos, under the creditors’ plan, would also be permitted to offer limited, non-taxable free play to bettors, expand the number of hours they could operate in a week, be given authorization for electronic table games, and have the state’s video lottery terminal law extended until 2030.

NYCOTB would be forced to let racetracks in New York join its out-of-state racing simulcast contracts; be required to agree to a number of union concessions, including retroactive pay raises and a severance package for workers leaving the payroll; and get a hiring freeze in management positions. The committee set specific target ideas for reducing NYCOTB management posts and for creation of a new board of directors whose membership would have to include representatives from the racing industry and labor unions.

The tracks would agree to certain statutory payment reductions or deferrals from NYCOTB under the plan presented, but they are also seeking establishment of a profit-sharing scheme from future NYCOTB revenue, which would be given not only to certain racetracks but also “organized labor.’’

The committee also called for the creation of a panel—composed of industry and state legislative representatives—to study “how to treat’’ advance deposit wagering in the state.

The creditors’ memorandum to NYCOTB came five days after Meyer “Sandy” Frucher in early June stepped down as the embattled chairman of NYCOTB. He was replaced by Larry Schwartz, who is chief of staff to New York Gov. David Paterson.

NYCOTB is a state-owned entity, having been abandoned several years ago by the New York City government after years of losing money.

The memo called for the hiring of a “turnaround’’ firm or manager to develop a restructuring plan for NYCOTB. Earlier in July, the corporation hired Greg Rayburn, for $125,000 a month, to devise a salvation plan for NYCOTB; Rayburn has been involved in numerous corporate restructuring efforts over the years, mostly recently at Magna Entertainment Corp.

Since he arrived on the job, Rayburn has fired some executive staff and is looking to close a dozen or so betting parlors in the city as he seeks a broader restructuring plan for the nation's largest OTB operations. Options include a takeover of some of its business by NYRA or others.

BLOG.NJ.COM

A bold and sensible plan for a fresh start in Atlantic City and the Meadowlands

Published: Thursday, July 22, 2010, 5:45 AM

Star-Ledger Editorial Board

Gov. Chris Christie’s plan to revive the Meadowlands and Atlantic City is packed with common sense and gives the Legislature a running start at solving problems that have festered too long.

Begin with its plan to end the subsidies for horse racing. The state is frittering away $20 million a year at the Meadowlands and Monmouth Park on a sport that is slowly dying everywhere. But the governor isn’t waiting for the slow-moving funeral procession.

“I don’t have the money to subsidize failure,” he said yesterday.

Amen to that. These payments can’t be remotely justified at a time when we’re firing cops and teachers all over the state and cutting health coverage for low-income families.

The plan calls for both racetracks to be privatized. It offers a $1-a-year lease to the standardbred owners and breeders if they want to try to save racing at the Meadowlands. But they would suffer any future losses, not taxpayers.

The governor’s plan also calls for selling Izod Center and eliminating all subsidies at the Sports and Exposition Authority. Good calls.

The bigger challenge at the Meadowlands is the Xanadu project, the white elephant famous for the monstrously ugly multicolored exterior visible from the Turnpike.

It’s tempting to burn the eyesore down, but jobs are at stake. Investors sank $2 billion into what was supposed to be a pioneering sports and entertainment destination. But when the recession hit, creditors pulled back and the work stopped nearly $1 billion short of the finish line.

If this project is revived, it could create 10,000 jobs during development and 4,000 permanent positions. It’s stalled because its partners can’t raise the needed funds.

The governor suggests selling bonds to fill the funding gap, provided that most of the investment comes from private sources. The bonds would be financed with sales tax revenues generated by the project. And if the private investors make profits, the state would be entitled to a share.

It’s a sensible strategy. The question is whether willing investors can be found, and whether the state negotiates skillfully. Given the jobs at stake, it’s worth a try.

A final note: Jon Hanson, chairman of the group that devised this plan, was one of the men who built the Sports Authority back when it made sense and was making money. Give him some credit for seeing that times have changes, and so must our strategy.

The problems in Atlantic City are more profound and the governor’s solutions more dramatic.
In the past three years, casino revenues have dropped by 25 percent and 12,000 jobs have disappeared. If this keeps up, Atlantic City will soon become Camden East.

This crisis was sparked by the recession and by the competition that has sprouted up in neighboring states.

But there’s more to it. Atlantic City is a corrupt and dingy place. The city spends four times the money that comparable cities spend per capita, and has little to show for it but a string of embarrassing convictions.

On the Boardwalk, you’re more likely to find a prostitute than a cop. The cigarette butts on the beach give it the feel of an ash tray. And the casinos do all they can to keep their gamblers away from the ocean, squandering what could be a major draw.

Atlantic City can no longer make it as a day-trip destination. Gamblers have options closer to home. To survive, the city will have to attract vacationers and conventioneers, as Las Vegas does. And that won’t happen without dramatic change.

On that measure, the governor delivers. He would begin by having the state take over local government functions in a zone around the casinos. The area has to be safe and clean, or this game is lost. Local leaders have blown it for too long.

He would then establish a private-public partnership to encourage investments — not just in casinos, but in an improved Boardwalk area with amusement rides, restaurants, theaters and maybe even a NASCAR track.

This partnership would be funded with about $100 million a year, all from the casino industry. The partnership would create a master plan for development and negotiate with investors. It would promote the city and develop a new South Boardwalk.

Watch now for the political fights. Improvements can surely be made in this plan. But those who challenge it have an obligation to come up with something better. So far, we haven’t heard it.

TIMESUNION.COM

Queries at NYC OTB

By JAMES M. ODATO

First published in print: Monday, July 19, 2010

As questions linger over the state's hiring of corporate restructuring expert Greg Rayburn for $125,000 monthly at New York City OTB, the Paterson administration will be in for another test.

The state comptroller is demanding documentation concerning Rayburn's hiring as CEO; two Assembly Democrats are calling for an independent probe; and some OTB board members say they aren't going to be rubber stamps. There are concerns in some quarters that Rayburn may be too cozy with the New York Racing Association. Today, NYRA is loaning Rayburn one of its top financial professionals, David O'Rourke. NYRA will keep paying him during his assignment on Rayburn's team.

This is all happening since Gov. David Paterson installed his chief deputy, Larry Schwartz, as chairman of the bankrupt NYCOTB. Schwartz abruptly brought in Rayburn as the new president this month. Board members are steaming upon learning of Rayburn's past, including his business relationship with NYRA's bankruptcy lawyer and his former leadership of a company investigated by federal securities regulators.

"The board was certainly not advised of it ... and it should have been," said Steven Newman, Assembly Speaker Sheldon Silver's appointee on the NYCOTB board. Newman also is a member of the state's NYRA oversight board, which is supposed to keep an eye on the racing association during its 25-year franchise to run the state's Aqueduct, Belmont and Saratoga tracks.

Rayburn worked with Brian Rosen, NYRA's bankruptcy lawyer -- which is either a potential conflict or something that presents the appearance of one, Newman said. NYCOTB is NYRA's biggest business partner and owes the association more than $17 million. At the same time, NYRA has desires on some of the OTB's core assets -- including the highly valuable Internet and telephone betting units -- and Rayburn's plan for the OTB could include mergers or sell-offs.

Newman wonders if NYRA had a hand in Rayburn's candidacy. NYRA has refused to answer questions about Rayburn, although it has been publicly supportive of his hiring. Rosen did not return a call. "In government, it's important to assure the public of the fairness of the process and the independence of its officials," said Newman. OTB board veteran David Cornstein said Rayburn is getting an exorbitant salary and was quickly hired without the normal due diligence. He promised to fight any proposal to turn over some of the business to NYRA ("the most incompetent entity I have ever run into in business").

Rayburn said discussion about any conflict is "silly". He did not discuss Syntax-Brillian, a company he joined two years ago just before it went bankrupt, an experience Paterson's spokesman called "a non-issue." Rayburn was elevated to CEO and faced criticism for expensive perks from some shareholders angry at the prior management's alleged siphoning of tens of millions of dollars. Some investors alleged in bankruptcy court that Rayburn was part of a culture of corruption because he did not expose alleged widespread fraud even though he is a certified fraud examiner.

"I was not retained as a fraud expert. I was retained to try to fix the operations of this business," Rayburn told the court, adding that the Securities and Exchange Commission was investigating and he didn't believe in duplicating services.

NYPOST.COM

OTB still kicking: boss

By DAVID SEIFMAN

Last Updated: 7:26 AM, July 17, 2010

Posted: 2:17 AM, July 17, 2010

The new $125,000-a-month president of the Off-Track Betting Corp. pledged yesterday to have a plan in place within 30 days to rescue the bankrupt operation.

"I view this as a very short-term effort," declared Greg Rayburn, a restructuring specialist tapped a week ago by Gov. Paterson in a last-ditch effort to revive the city's fading legalized bookie.

Although Rayburn said he was not ruling out anything at this stage -- including liquidation -- he pointed out that OTB contributed $550 million to the horse-racing industry and $200 million to state and local governments since 2004.

THOROUGHBREDTIMES.COM

New OTB chief hopes to have restructuring plan in 30 days
by Paul Post

The new head of bankrupt New York City Off-Track Betting Corp. says he will have a plan in place for restructuring the entity within 30 days.

Greg Rayburn, hired last week at a salary of $125,000 per month, says all stakeholders—race tracks, breeders, unions, and government—will have to share some of the pain involved with getting New York City OTB back on solid financial ground.

He said he is not convinced that the New York Racing Association should ultimately run the company. In most states, the racetrack operator controls distribution of the racing product.

“They have their own issues,” Rayburn said of NYRA on Friday during a conference call, adding that “collapsing pieces into other pieces” might or might not work.

“We’re evaluating everything,” he said. “I view this as a very short-term effort. We need to have a plan in 30 days. There’s no question that participants in our creditors’ group are suffering because of our bankruptcy and inability to make full [statutory] payments.”

New York City OTB owes NYRA more than $20-million and is underpaying it nearly $2-million per month. NYRA says most of its recent $25-million state loan will be gone by 2011 because of New York City OTB’s inability to make mandated monthly payments.

New York City OTB also owes New York’s breeding industry several million dollars.

Rayburn specializes in corporate restructurings involving bankruptcy. Most recently, he was chief executive officer of Magna Entertainment Corp.—North America’s largest racetrack operator—and has been credited with its reorganization.

Former New York City OTB Chairman Meyer Frucher wanted to close more than two-thirds of the company’s betting shops and lay off hundreds of workers, replacing them with self-service betting machines at venues such as New York sports bars. Rayburn said some closures and layoffs are needed, but not as many as called for by Frucher.

Rayburn said New York City OTB should be run by someone with more gaming expertise. At present, it has no rebate rewards program, making it difficult to compete with account deposit wagering firms that do. He also said that the company needs to establish a capital reserve fund, allowing it to invest back into the business.

“All possibilities are on the table,” he said.

Paul Post is a New York-based Thoroughbred Times correspondent

ESPN.COM

New York OTB may cut funds

By Matt Hegarty
Daily Racing Form

New York City Off-Track Betting Corporation will develop a comprehensive restructuring plan over the next 30 days that will likely include proposed cuts in the amount of money that the state's racing industries receive from the company's betting revenue, according to the corporation's new chief executive, Greg Rayburn.

Rayburn, a reorganization specialist who was installed as New York City OTB's chief executive last week by Gov. David Paterson, said on Friday that the various constituencies that receive a piece of New York City OTB's revenue will be expected to "compromise" on changes to the formulas governing the distribution of the money. Since New York City OTB filed for bankruptcy earlier this year, both the Thoroughbred and Standardbred racing industries in the state have steadfastly resisted any efforts to dip into their shares of the wagering revenue, which, on the Thoroughbred side, reaches $100 million a year.

"It's pretty hard for me to imagine a process . . . not involving some level of compromise from each constituent," Rayburn said. He said that the statutorily set formulas would need to be reset in order to generate enough cash flow to make New York City OTB "fundamentally viable, with some sort of capital reserve."

In the week that Rayburn has been at New York City OTB, he has sought to identify areas in which the company can immediately cut costs, he said, including firing a handful of top executives. An official in Paterson's office confirmed Friday that those executives included Ira Block, the company's longtime chief counsel; Robert Garry, the chief financial officer; Ron Ceisler, the vice president of marketing; and Robert Unger, the company's facilities manager. Rayburn also severed the company's relationship with a public-relations firm, the Edelman Group, that was hired by former chief executive Sandy Frucher after New York City OTB filed for bankruptcy earlier this year, according to the officials.

The effort to restructure New York City OTB will have significant repercussions on the New York racing industry, and officials of the New York Racing Association have made attempts to convince legislators and the governor to support proposals that would transfer some of OTB's operations to the association, including the OTB company's account-wagering operation. A transfer could form a bargaining chip that the industry may use if forced to accept a lower cut of OTB's betting revenues.

Rayburn said that he had considered "collapsing some pieces [of OTB's operations] into other pieces," including transfers to NYRA, but he said that those plans were not specific. Rayburn is scheduled to meet with the New York City OTB's creditors' committee on Wednesday to discuss a reorganization plan, and Rayburn said that "everything is on the table" for consideration.

"It will probably be one in which everyone is equally unhappy," Rayburn said.

BLOODHORSE.COM

NYRA Among Groups Trying To Take Over OTB

By Tom Precious

Updated: Thursday, July 15, 2010 7:28 PM
Posted: Thursday, July 15, 2010 6:55 PM

A number of groups, including the New York Racing Association, have approached state officials about taking over all or part of the New York City Off-Track Betting Corp.

“We’re moving at warp speed,’’ NYCOTB Chairman Larry Schwartz said of a process to reorganize the money-losing operation in its seven-month-old Chapter 9 bankruptcy case.

Schwartz, who is also the chief of staff to New York Gov. David Paterson, said NYRA and others have expressed possible interest in taking over the NYCOTB’s betting platform or managing betting branches.

“I believe the only way New York City OTB survives is if somebody takes it over or we create a partnership,’’ Schwartz said.

The new OTB chairman said a number of top officials at the agency, which has been owned by the state for a couple of years, have been let go. They are also getting rid of  OTB’s controversial fleet of cars as well as several consulting contracts, and are actively planning the closure of at least 11 betting parlors.

“The things we said… should have been done a year ago have begun," Schwartz said.

NYRA in the past has expressed interest in getting a piece of t NYCOTB’s betting operations, and there has long been talk about the various OTBs in the state merging with NYCOTB.

“It can’t be any longer 'let’s talk about it, meet about it.’ And then everybody gets into a turf battle. I’m not going there. I’m determined, on behalf of the governor, to solve this problem before he leaves office,’’ Schwartz said. Paterson’s term ends Dec. 31.

Besides NYRA, Schwartz said some OTB agencies and harness tracks have discussed having a possible role or stake in NYCOTB. He did not name them. He said he was doubtful there could be enough administrative- or legislative-approved savings to permit OTB to remain as a stand-alone corporation.

“The corporation is in bankruptcy, and we’re not going to get out of bankruptcy unless we restructure and reorganize the organization,’’ the OTB chairman said. “Part of that is reducing costs, eliminating inefficiencies.’’ He said at least 11 branches will close within the next one to four months; how far the workforce will be cut to save money is uncertain.

“Everything is on the table,’’ Schwartz said of an OTB reorganization plan. He added, “So, if you want to be part of the solution you’ve got to get on the same path. We’re not interested in having prolonged discussions.’’

Greg Rayburn, the new president of NYCOTB, said the first task during his first week on the job has been to deal with the corporation’s immediate cash-flow problems. “In my line of work, cash is oxygen. I need to maximize the oxygen so we can be viable long-term,’’ said Rayburn, a corporate reorganization expert whose most recent stint was at Magna Entertainment Corp.

Rayburn said that has meant some high-level terminations at the agency over the past week and making plans to close “negative cash flow’’ branches.

“The company is living on borrowed time,’’ Rayburn said of the cash-flow crunch affecting its bottom line. He said it is uncertain where OTB is headed--whether it will be privatized or face some sort of cooperative deal with NYRA or other OTBs in the state. But he said it will take the backing of its bankruptcy creditors, the unions that represent its 1,000 or so workers, and the legislature.

“Before we go out and start negotiating a plan and a vision, we have to do everything we can on the internal things we can control,’’ Rayburn said.

Rayburn was appointed to what state officials say will be a temporary job overseeing NYCOTB's restructuring. He is making $125,000 a month.

BLOODHORSE.COM

Aqueduct Casino Bidding Process Halted Again

By Tom Precious

Updated: Thursday, July 15, 2010 8:39 AM
Posted: Wednesday, July 14, 2010 2:57 PM

A New York state judge has temporarily halted the bidding process for the Aqueduct casino project to give time to consider a lawsuit brought by a consortium that had won the casino rights in a previous bidding round.

The latest in a long line of legal, political and financial twists that the project has taken is being seen by industry insiders as another factor that could delay any final decision on the casino until the next governor takes office in January.

"It’s a good thing when the court can recognize that administrative agencies are doing screwy things," said Latif Doman, a lawyer for Aqueduct Entertainment Company, formerly known as Aqueduct Entertainment Group.

Aqueduct Entertainment beat out several other bidders last year, but then was suddenly rejected earlier this spring by the state Lottery Division on the grounds that it was not licensable for the racetrack casino. At the time, investigations had already begun by federal and state agencies into the bidding process used to select the company.

The state has subsequently started another bidding process--the fourth since the casino was first okayed by the Legislature in 2001--that has taken its own strange twists. Genting New York, a subsidiary of a large Malaysian-based casino company, is the sole remaining bidder in that process after the lottery agency tossed out two other groups for not complying with its bidding rules.

State Supreme Court Judge Barry Kramer in Schenectady County, which is home to the Lottery Division’s headquarters, issued a temporary restraining order blocking the state from continuing with the current process involving Genting. The state is vetting the company and its officials and had been expected to make a decision by early August.

But Kramer has approved Aqueduct Entertainment Company’s request for a July 23 hearing. The company is seeking to overturn the Lottery’s decision that tossed out its award this spring.

Lottery officials declined comment.

Doman said the temporary restraining order stops Lottery from its vetting process of Genting or making any final decisions. Aqueduct Entertainment--a consortium whose major investor later moved on to join another group in the bidding process--wants to be reinstated as the casino winner.

"Everything has to wait until the judge decides if the injunction is going to be made permanent," said Doman, a partner with Doman Davis LLP. He said there was "no basis" for Lottery’s decision to oust Aqueduct Entertainment.

"The court has recognized that there is a likelihood that we’re going to be successful," Doman said.

Aqueduct Entertainment has filed its litigation against the Lottery Division, as well as Gov. David Paterson and legislative leaders.

DRF.COM

Headlines | Posted 7/13/2010, 4:08 pm

Court may defer in New York OTB case

By Matt Hegarty

A bankruptcy court judge on Tuesday raised the possibility that New York State regulators may be better suited than the court to determine whether New York City Off-Track Betting Corporation is violating the law by withholding some payments to the state's racetracks and horsemen, according to attorneys.

Deborah Piazza, an attorney representing Finger Lakes racetrack, said that U.S. Bankruptcy Judge Martin Glenn, during a hearing on Tuesday, indicated that the New York State Racing and Wagering Board may be given the opportunity to settle a dispute between the state's racing industry and New York City OTB over the payments. The Tuesday hearing was scheduled to consider arguments on a motion by Finger Lakes and Yonkers Raceway to compel New York City OTB to make the payments.

Glenn did not rule on the motion on Tuesday, but instead asked the parties to provide "supplementary briefing materials" on legal matters pertaining to the motion to the court by July 21, according to Piazza. Glenn did not make it clear if he intended to rule on that date on the motion, Piazza said.

New York City OTB, which filed for chapter 9 bankruptcy earlier this year, decided to delay payments to the racing industry in April as part of a cash-management policy. The policy has been criticized by the state's racetracks and horsemen.

Robert Garry, OTB's chief financial officer, said in a filing with the court on July 12 that the decision to delay the payments has allowed OTB "to manage its cash flows, maintain operations, pay all current operating expenses and generate handle for current and future distribution to the racetracks."

In court filings, attorneys for the plaintiffs have said that the decision violates state laws that require all handle-generated revenues to be distributed by statutory formula.

NYPOST.COM

DiNapoli probes OTB over $1.5M exec

By BRENDAN SCOTT, Post Correspondent

Last Updated: 5:16 AM, July 13, 2010

Posted: 2:58 AM, July 13, 2010

ALBANY -- State Comptroller Thomas DiNapoli has announced a probe into Off-Track Betting Corp.'s hiring of a $1.5 million-a-year executive yesterday, as he warned the agency could go broke again next year.

The comptroller sent a letter to Lawrence Schwartz, Gov. Paterson's chief lieutenant, demanding details about his decision last week to appoint bankruptcy consultant Greg Rayburn (pictured) to lead the teetering bookmaking operation for eight times more than the previous OTB president's monthly salary.

"It's certainly a lot of money for an organization that is insolvent," DiNapoli said.

Last week, Schwartz, installed as OTB chairman by Paterson, secured the authority to hire and fire agency brass and tapped Rayburn to lead the shakeup.

DiNapoli also cautioned that the New York Racing Association could face its own bankruptcy next year if state leaders don't finalize a decade-old plan to bring video slots to the Aqueduct Race Track in Queens.

BLOODHORSE.COM

Report: NYRA Could be Insolvent by 2011

By Blood-Horse Staff

Updated: Tuesday, July 13, 2010 8:24 AM
Posted: Monday, July 12, 2010 1:26 PM

A report issued July 12 by New York state comptroller Thomas P. DiNapoli took the New York Racing Association to task for failing to rein in spending after going into bankruptcy and says the organization faces insolvency by 2011 if revenues from a proposed racino fail to materialize and expenses are not curtailed.

Also, DiNapoli said in a release accompanying the report that in an effort "to provide intensive monitoring of its fiscal condition and efforts to restructure operations," he is assigning auditors to work on-site at NYRA.

"NYRA is still on very shaky financial ground," DiNapoli said in a release accompanying his audit report. "After declaring bankruptcy and getting bailed out by taxpayers, NYRA continued business as usual for too long. There’s too much at stake to let NYRA continue its fiscal mismanagement. My auditors will begin real-time auditing of NYRA’s books."

While the comptroller criticized NYRA for its inability to bring spending under control, he acknowledged that some of the racetrack operator’s financial problems and future outlook are related to the inability of the state to select a franchise to operate video lottery terminals at the Aqueduct racino. The auditors concluded NYRA would not have been able to continue operations past early June of this year were it not for a $25 million loan approved by the legislature.

"The state also has to live up to its end of the deal," DiNapoli said. "But it looks like the selection of a VLT operator for Aqueduct is still an open question. When you start with six potential bidders and end up with only one, it begs the question of how the process was handled and whether the state can actually close the deal. The fact is NYRA can’t make it long without significant restructuring and revenues from VLTs."

The audit examined NYRA’s financial condition as of May 20, 2010 and operations from Sept. 12, 2008 to March 31, 2010.

NYRA initially declined to cooperate with DiNapoli’s request for records related to the audit, contending DiNapoli had no jurisdiction over its finances. After the state comptroller issued subpoenas for the records, NYRA relented and cooperated.

According to DiNapoli’s release, among the reasons for NYRA’s financial problems were:

--After emerging from bankruptcy in 2008, NYRA continued spending more than it was taking in rather than restructuring its operations. NYRA incurred an operating deficit of $8.9 million in 2009 and is projecting a $19 million deficit in 2010;

--NYRA has not received more than $47 million in expected revenue: $30 million from the VLTs at Aqueduct and more than $17 million from the bankrupt New York City Off-Track Betting Corporation; and

--Most of NYRA’s revenue is generated from wagers on horse races, which declined by 13.2% from $2.56 billion to $2.22 billion from 2006 to 2009.

In a July 2 letter to DiNapoli’s office, NYRA president and CEO Charles Hayward challenged some conclusions in the audit and agreed with the report’s conclusion that NYRA’s financial stability had been threatened by its inability to receive anticipated VLT revenues and NYCOTB’s default on its payments.

Hayward said that from 2008 to 2010, NYRA’s operating expenses declined 2.2% and that 2010 budgeted operating expenses of approximately $146 are $9 million below the amount budgeted in NYRA’s bankruptcy reorganization plan. Also, as of May of this year, year-to-date operating expenses are $1.5 million, more than 3.1%, below budget, Hayward said.

"By actively managing expenses, NYRA successfully operated for almost two years without the required VLT financing or financial support from the state of New York," Hayward wrote. "NYRA management has demonstrated a willingness to reduce operating expenses where feasible and will continue to explore further opportunities to reduce costs and improve the efficiency of its operations."

NYRA also sent the comptroller’s office a letter from James P. Heffernan, NYRA’s board vice chairman and chairman of the Special Oversight Committee.

Auditors found that although NYRA did not act quickly to curtail costs, it "finally began to identify significant spending reductions in February 2010, more than a year after it declared bankruptcy and only after the Aqueduct VLT contract was rejected," the report said. "NYRA reduced purses for some races and laid off 12 professional staff, for a total annual savings of $5 million. NYRA also plans to close the Aqueduct training facility for a savings of about $3.5 million, as well as a backstretch security barn saving another $1.2 million annually."

The audit detailed three steps NYRA could take to achieve $1.2 million in immediate saving. They are:

--"Since emerging from bankruptcy, NYRA’s overall payroll costs increased by $1.9 million to $69.2 million. Seven executive staff make from $255,000 up to $460,000. NYRA has not performed a formal staffing analysis to determine the optimal number of employees and salaries for its operations;

--NYRA spent more than $6 million on contracts for personal and miscellaneous services. NYRA did not justify the need for  price of these contracts so it is unclear whether some of these contracts were necessary; and

--NYRA spent $900,000 to transport horses between tracks at no cost to the trainers or owners. NYRA should evaluate whether, and to what extent, the practice of transporting horses between NYRA tracks at no cost is necessary for NYRA to remain competitive and, depending on the results of the evaluation, consider either charging a fee for the service or discontinuing it."

Hayward said paying for transportation of horses between tracks was part of NYRA’s efforts to encourage entries and maintain field sizes in its race program. He said the practice is consistent with that employed by other racing entities. He also said NYRA achieved cost savings from using a media consultant, a practice that was questioned in the report.

New York Comptroller Report on NYRA

NYRA’s Response to Audit Report

TIMESUNION.COM

AEG sues Lottery, gov, leaders

Monday, July 12, 2010 at 12:32 PM by Casey Seiler in Aqueduct, John Sampson

As the countdown to the Saratoga race meet begins, horse racing news is bubbling up all over: In addition to Comptroller Tom DiNapoli’s dire audit of NYRA, today brings news that AEG has brought suit against the state Lottery Division in addition to the men charged with initially approving the firm as the winner in the Aqueduct racino race: Gov. David Paterson, Assembly Speaker Sheldon Silver, Senate Conference Leader John Sampson and Temporary President Malcolm Smith.

The action, filed Friday afternoon in Schenectady Civil Supreme Court, relates to AEG’s controversial selection as the winning bidder in the agonizingly drawn-out process of selecting a developer for a video lottery terminal gaming center at Aqueduct.

AEG is represented by Doman Davis LLP. Attorney Latif Doman said the firm was pursuing court action to immediately halt the current bidding process for the Aqueduct franchise.

Doman said one key claim in the suit is that Silver changed the rules “in the middle of the process” by requiring “passive investors” to be subject to the same level of disclosure as AEG’s managers.

After AEG’s selection, questions were raised about the strong connections between onetime principal the Rev. Floyd Flake and Smith — officially one of the three people required to sign off on the selection, though he handed that role off to Sampson.

In early March, the Lottery Division scratched AEG after concluding — among other reasons cited — that the consortium hadn’t made sufficient disclosures about Flake and other principals, including Jay-Z. By that point, both men had left the consortium.

At the time of the rejection, AEG’s reps said that state should brace for litigation.

The AEG selection process has attracted the interest of state Inspector General Joseph Fisch. The Senate initially decided to fight Fisch’s subpoenas, but decided to cooperate after achieving limited success in court.

Just last month, Sampson admitted to showing a previously unreleased memo to another AEG principal, former state Sen. Carl Andrews — who, like Sampson, hails from Brooklyn.

BLOODHORSE.COM

High Salary of NYCOTB President Challenged

By Tom Precious

Updated: Saturday, July 10, 2010 9:00 AM
Posted: Friday, July 9, 2010 5:13 PM

The high-priced salary given to the new president of New York City Off-Track Betting Corp. is illegal, two state legislators say, and should be investigated by an oversight agency.

“What they’re doing is totally out of bounds,” Assemblyman Gary Pretlow, chairman of the Assembly racing committee, said of NYCOTB’s hiring of Greg Rayburn for $125,000 a month. The corporation is in Chapter 9 federal bankruptcy reorganization protection and has been unable to pay its bills to various industry stakeholders.

Assemblyman Richard Brodsky, chairman of the Assembly corporations committee, said the salary for Rayburn violates a new law governing public authorities that prohibits no-bid contracts. He said any contract worth more than $1 million—Rayburn would be paid $1.5 million if he’s on the job a full year—must be approved by the state comptroller.

The two lawmakers called for the state’s new Authorities Budget Office to investigate the hiring of Rayburn. NYCOTB the week of July 5 defended the salary as necessary to get someone on the job experienced in corporate restructuring.

Rayburn’s stints have included overseeing the restructuring of Magna Entertainment Corp. NYCOTB declined requests to make public Rayburn’s employment contract.

Pretlow said he and Brodsky, both Democrats from Westchester County, are poised to hold hearings to publicly look into the matter. “Just on the face of this, it is a slap in the face of the employees at OTB, who are trying to keep their meager-paying jobs,” Pretlow said.

Pretlow noted the hiring came on the same day Gov. David Paterson vetoed $700 million in spending, including to schools, health groups, and a variety of social programs. “It’s an insult and it’s outrageous,” Pretlow said.

Brodsky, who is also running in the Democratic primary to become state attorney general, said the hiring violates the principles of a law enacted only a year ago to clean up and make more transparent the operations of off-budget public authorities. He said NYCOTB is legally defined as an authority.

“They are clearly out of compliance,” Brodsky said of NYCOTB, which is owned by the state of New York.

NYTIMES.COM

Off-Track Betting’s Defunct Rescue Plan Was a Winner for Consultants

By RUSS BUETTNER

Published: July 7, 2010

The New York City Off-Track Betting Corporation — burdened by its unique blend of politics, bureaucracy and horse racing interests — has long excelled at finding new ways to burn through the millions of dollars that pour under its tellers’ windows each year.

And even with the parlors on their deathbeds, the last year has been no exception.

Meyer S. Frucher, the trusted hand Gov. David A. Paterson persuaded last year to develop a plan to save OTB, spent hundreds of thousands of dollars on consultants. But Mr. Paterson’s office refused to embrace a key aspect of the plan that Mr. Frucher and his consultants had devised, and Mr. Frucher, known as Sandy, who had worked free, abandoned the effort and left as chairman in June.

The governor’s choice to replace him, Lawrence S. Schwartz, made clear at a public board meeting on Wednesday that he does not think much of the Frucher team’s efforts. For now, the consultants’ expensive work product appears to have no more value than a torn race ticket on a dirty linoleum floor.

Here, a partial accounting:

Vishal Rawal, 26, of Edison, N.J., was hired to develop a financial model for a reformulated OTB, with expensive parlors replaced by kiosks in bars and restaurants. Invoices show that Mr. Rawal had been paid a total of about $384,000 in fees through the end of May.

Jasper J. Jackson, a lawyer in Montclair, N.J., was hired to help formulate the latest reorganization of OTB. A former deputy insurance commissioner in New Jersey, Mr. Jackson was paid $331,500 through June, and is owed about $50,000 more in deferred fees, invoices show.

Part of Mr. Frucher’s plan also included obtaining as much as $300 million through tax-free bonds, in order to get OTB on its feet and ease the pain of the transition on the racing industry. The Innovation Group of New Orleans, a consultant to the gambling and hospitality industries, was paid $86,447 to do a feasibility study required by financial institutions for the bond offering.

Mr. Frucher’s financial team was led by Bret Engelkemier, who had previously headed trading divisions at Citigroup. He has yet to be paid for his efforts.

To renegotiate or get out of leases on the betting parlors and find other locations to install kiosks, the Frucher team hired Susan Fine, the former head of real estate projects for the Metropolitan Transportation Authority.

Ms. Fine’s firm recruited some 85 bar and restaurant owners to sign “nonbinding letters” agreeing to install kiosks, should OTB eventually acquire some. She paid some of her sales people a bonus, typically $250, for each bar that signed the agreement.

A tally in OTB’s contract documents shows that through June 2, Ms. Fine’s firm was paid $237,000, with a 3 percent administrative fee going to GMAC Real Estate, a firm with which OTB had a pre-existing contract.

Much of the Frucher team’s effort involved wrestling with unpleasant perceptions of OTB parlors and clientele. Ms. Fine, who billed her time at $225 an hour, anticipated facing that obstacle in pursuing “major targets” for satellite betting.

Ms. Fine, apparently referring to betting in France, noted in a document, “Pictures of how it looks in Paris should be used to show prospective major targets who might shy away because of NYCOTB’s current image.”

For marketing and public relations, OTB selected Edelman, an international firm, though contract documents show that Edelman’s bid was on the high end of those received.

In its proposal, Edelman said it would research and change negative public perceptions about OTB, including the belief that it wastes money, in order to meet its fundamental objective to “restructure and shape public opinion among key stakeholder groups” and “create a favorable environment for reform.”

The firm was paid $472,625 from November 2009 through May, invoices show.

David Vermillion, the Edelman executive who took the lead on the OTB account at a rate of $300 an hour, said Edelman had billed below its usual rates for similar work and had done well at meeting its objectives.

“I would say that we have been very successful in executing the strategy outlined by the client, communicating complex concepts to diverse audiences and helping generate influential editorial support,” Mr. Vermillion said.

Mr. Frucher also asked Albany to restructure OTB’s legal commitments, which require it to pay horse and racing interests from its receipts before covering its own expenses. He had planned to cut the 1,300-person work force by more than half.

Some part of Mr. Frucher’s plan still has impact. In late April, OTB laid off 35 nonunion employees, trimming $2 million in costs.

In December, facing $83 million in debts, OTB filed for Chapter 9 bankruptcy protection, which is expected to run up significant legal bills. The state took over control of OTB from the city two years ago.

Though Albany had been aware of the outlines of Mr. Frucher’s plan for months, in late May Robert L. Megna, the state’s budget director, rejected Mr. Frucher’s request for tax-free municipal bonds.

Mr. Frucher, who declined to comment for this article, said in his resignation letter to the governor that he had met the governor’s requirements that his plan require no public funds and treat OTB’s workers with respect.

Governor Paterson replaced him as chairman of the OTB board with Mr. Schwartz, the secretary to the governor.

Mr. Schwartz halted all payments to the Frucher consultants and has moved on to a new expensive effort to save OTB.

During the meeting on Wednesday, Mr. Schwartz won board approval to replace Raymond V. Casey, OTB’s longtime chief executive, who had submitted his resignation the day before, with Greg Rayburn, a senior managing director of FTI Palladium Partners who served a similar role in the bankruptcy of Magna Entertainment, a horse track owner.

Mr. Schwartz did not mention Mr. Rayburn’s salary. But Steven Newman, who was appointed to the board by Assembly Speaker Sheldon Silver and opposed the hiring, expressed concern that Mr. Rayburn would be paid $125,000 a month — or $1.5 million a year — an amount Mr. Newman said was almost ten times what Mr. Casey had earned and so large that it would limit what OTB could do to right itself.

In response, Mr. Schwartz said it was “unfair” to suggest Mr. Rayburn “is coming in here overly paid,” adding that OTB “has spent nearly $2 million over the last year on outside consultants and has really very little to show for it.”

NYDAILYNEWS

Bankrupt NYC Off Track Betting names Greg Rayburn new CEO as critics blast $125,000 per month salary

BY Kenneth Lovett AND Barbara Ross
DAILY NEWS STAFF WRITERS

Thursday, July 8th 2010, 4:00 AM

NYC Off Track Betting CEO Greg Rayburn

The city's bankrupt Off Track Betting Corporation hired a new CEO yesterday who could rake in as much as $1.5 million a year - a whopping 10 times more than his predecessor.

At the urging of unpaid board chairman Lawrence Schwartz, Gov. Paterson's top adviser, the NYC OTB hired Greg Rayburn for $125,000 a month.

Rayburn is a consultant who specializes in restructuring bankrupt companies. His predecessor, Raymond Casey, who resigned Tuesday, made a paltry $175,000 a year by comparison.

OTB directors also agreed to give Schwartz total control over hiring and firing for as long as he remains chairman.

The lone opponent to the two moves among OTB's five directors was Steven Newman, an appointee of Assembly Speaker Sheldon Silver.

"We're about to pay out four times as much as we've paid any consultant we've been criticized for hiring, and 10 times as much as the prior CEO," he said.

Schwartz defended the moves, saying it was a "mischaracterization" to say OTB overpaid for Rayburn's services.

"We've spent $2 million in the last two years on outside consultants and have nothing to show for it," he said.

Schwartz defended Rayburn's salary, saying he was hired on a month-by-month basis and he should be on the job for only "three or four months."

Schwartz called it "fiction" to think OTB "could hire someone for $150,000 a year" to help it successfully restructure and become solvent.

"I believe Greg will be the solution to once-and-for-all solve this ongoing problem," he said.

Schwartz's move was a slap at his predecessor, Meyer Frucher, who resigned last month after failing to get the Legislature's support for a bailout.

Schwartz told board members Rayburn was picked for his experience in restructuring other racing industry firms.

But Assemblyman Gary Pretlow (D-Westchester), head of the Racing and Wagering Committee, blasted OTB's decision: "I can't think of a word big enough to describe how bad this is. Iniquitous comes to mind. Outrageous comes to mind. Sinful comes to mind. Ridiculous comes to mind."

NYPOST.COM

new OTB jockey
By BRENDAN SCOTT in Albany and DAVID SEIFMAN in NY

Last Updated: 7:59 AM, July 8, 2010

Posted: 3:26 AM, July 8, 2010

Gov. Paterson yesterday bet a staggering $1.5 million a year on the salary of a Manhattan bankruptcy consultant to save the beleaguered city OTB -- a move one critic called "nothing short of fiscal insanity."

The surprise decision to install financier Greg Rayburn as president of the bankrupt bookmaking agency yesterday came moments after the OTB board accepted the resignation of longtime agency head Raymond Casey.

The shake-up was orchestrated by Lawrence Schwartz in his first official action as chairman of the OTB's board.

Observers blasted the decision to hire another high-priced consultant at a betting operation that is drowning under a $220 million deficit.

"For Larry Schwartz to be giving out more than $1 million a year in taxpayer money to an employee of a bankrupt agency that has been looking for additional money from the state is nothing short of fiscal insanity," one senior legislative aide said.

A source said the state plans to keep Rayburn's month-to-month contract for "90 to 120 days."

THOROUGHBREDTIMES.COM

Posted: Wednesday, July 07, 2010 3:47 PM

$1.5-million/year CEO takes over at NYC OTB
by Paul Post

Greg Rayburn’s $125,000-per-month appointment as president of bankrupt New York City Off Track Betting Corp. has drawn sharp criticism from the horse racing industry considering the corporation’s inability to make statutory payments.

Rayburn on Wednesday replaced long-time president Raymond Casey, and he will work with new Chairman Larry Schwartz to restructure the financially troubled organization. Rayburn previously worked for bankrupt Magna Entertainment Corp.

“There’s certainly some concerns about the amount of money, when OTB isn’t paying NYRA $2-million per month and breeders $200,000 per month,” said Rick Violette, New York Thoroughbred Horsemen’s Association president. “But if he can come in and quickly downsize and restructure OTB, then he probably couldn’t be paid enough. People who have been there haven’t been producing. They still haven’t closed one betting shop.”

The state took over New York OTB, which handles more than $800-million annually, last July after New York City Mayor Michael Bloomberg refused to bail it out. However, its fiscal woes have continued to mount. The firm declared bankruptcy last December and threatened to close this spring. After deciding to stay open, OTB has reduced payments to New York’s racing and breeding industries. NYRA alone is owed more than $20 million.

Assembly racing committee Chairman Gary Pretlow (D-Yonkers) said Rayburn’s salary is not justifiable no matter how good a job he does.

“I’m incensed,” he said “I can’t think of an adjective superlative enough to describe $125,000 a month to run OTB. It’s ludicrous to be paying someone that exorbitant a salary. I can’t imagine what he could be doing to earn that. It’s the absolute wrong signal to be sending.”

Schwartz, a top aide to Gov. David Paterson, recently replaced Meyer Frucher as OTB board chairman. The five-member OTB board is comprised of three gubernatorial appointees, and one each from the senate and assembly.

Assembly appointee Steven Newman cast the lone dissenting vote against Rayburn’s hiring, citing his salary and alleged lack of experience dealing in the government and political spectrum.

Paul Post is a New York correspondent of Thoroughbred Times

BLOODHORSE.COM

New York City OTB President Resigns

By Tom Precious

Updated: Wednesday, July 7, 2010 12:05 PM
Posted: Wednesday, July 7, 2010 12:05 PM

The financially struggling New York City Off-Track Betting Corp. has accepted the resignation of its long-time president, and quickly filled his job with a replacement making nearly 10 times as much.

Raymond Casey, president of the nation’s largest OTB for the past eight years, offered his resignation to the group’s new chairman, Larry Schwartz, who is also the top advisor to New York Gov. David Paterson.

"I want to thank Ray Casey for his service," Schwartz said July 7 at an OTB board meeting.

But the salary given to his replacement, Greg Rayburn, was sharply criticized by board member Steve Newman. The board member said Rayburn will make $125,000 a month – which he said is about equal to six weeks of salary made by Casey. Newman called the payment a concern for an OTB in financial trouble--it is still operating under federal bankruptcy reorganization--and sought to put a two-month window on Rayburn’s hiring to give time for the board to re-consider the matter.

Rayburn has been involved with a number of different corporate reorganizations. He is a former top official with Magna Entertainment Corp.

The resolution was struck down.

Schwartz criticized Newman, saying he had misrepresented Rayburn’s situation and was "unfair" to the new president and chief executive officer. "In very short order you will be proven wrong," Schwartz told Newman. He said Rayburn is "going to be the solution for the health and future success of this corporation."

Newman said he is also worried the salary for Rayburn could be a precursor for other big pay spikes for new people Schwartz may want to bring onto the struggling OTB.

BLOODHORSE.COM

NY Disqualifies Two of Three Casino Bidders

By Tom Precious

Updated: Tuesday, July 6, 2010 10:21 PM
Posted: Tuesday, July 6, 2010 10:16 PM

Two of the three remaining bidders for the Aqueduct casino project have been disqualified, leaving a Malaysian-based company as the sole bidder left in the running.

But Genting New York is still not guaranteed the rights to the Aqueduct casino, which has been delayed by a remarkable array of legal and political twists since the Legislature first approving the gambling facility nine years ago.

The state Lottery Division, which is running the racino bidding process, said two different bids—by Penn National Gaming and by a separate consortium led by SL Green, Hard Rock Entertainment and Toronto-based Clairvest Group—were disqualified after failing to “conform” with the bidding requirements.

But all is not as it seems in the chaotic process that has caused three different gubernatorial administrations in New York to be involved in the Aqueduct casino bidding project. The latest moves threaten to delay final action until 2011—during yet another new gubernatorial administration that will take office January 1.

Though Genting on the surface would appear to be the sole survivor of the bidding wars, its selection is far from certain. The company, owned by Genting Malaysia Bhd., will still have to be tapped by the Lottery Division, and then by Gov. David Paterson and the heads of the state Legislature in a unanimous vote. That is far from certain at this point.

Gordon Medenica, the lottery director, said in a statement July 6 that Penn National and the consortium led by SL Green “did not confirm with the requirements of the competition and, instead, attempted to negotiate for terms more favorable to the bidders.”

The decision creates more uncertainty for the Aqueduct casino, which horsemen, breeders and the New York Racing Association have been counting on to provide a positive shot to the moribund racing industry in the state. The casino is approved for at least 4,500 slot machines. The state is banking on at least $1 million a day in revenue-sharing proceeds, and the racing industry sees the casino as providing a counter-punch to competition to purse offerings in neighboring states.

State lottery officials would only say that Genting appears to “conform with all requirements” of the bid details.

Bidders have raised concerns that a minimum $300 million upfront payment from the winning casino developer to the state is not refundable—whether or not final terms are agreed to between the winning bidder and the state. There are also worries that the state will change future revenue-sharing arrangements to make the winning bidder’s deal less profitable and concern that talk of a possible casino—maybe owned by Long Island Indian tribe—at nearby Belmont Park racetrack would dilute the Aqueduct casino investment.
The state, under the latest bidding procedure, expects to name the Lottery’s selection by August 3.

NYPOST.COM

Mutiny on a sinking ship

Last Updated: 4:48 AM, July 5, 2010

Posted: July 05, 2010

That was some performance put on Friday by the board members of the financially embattled New York City Off-Track Betting Corp.

Open revolt is more like it.

It was the first board meeting presided over by Larry Schwartz, installed by Gov. Paterson last month to head the agency after he forced Meyer "Sandy" Frucher to step down as chairman.

And the board members made it clear from the outset that while Schwartz may have Paterson's support, he's not about to enjoy theirs.

When Schwartz -- presiding by video feed from Albany -- moved that the board go into executive session to discuss personnel matters, no one would second the motion.

"Second? Do I hear a second?" pleaded Schwartz, who also serves as Paterson's secretary.

For literally minutes, the board sat in silence, until Schwartz called on a non-voting member, who provided the legally required second.

Bizarre?

Not for OTB, which has led a surreal "Night of the Living Dead" existence for several decades.

But it is more evidence of the need for Albany to send the old nag to the glue factory once and for all.

OTB -- which, as we've long noted, may be the only bookie operation in the universe that consistently can't turn a profit -- is only alive today because Paterson agreed to have the state take over its operations.

Frucher outlined a plan to streamline the bankrupt agency -- but then demanded a $250 million bailout package. And he withheld millions in required payments to the New York Racing Association, forcing Paterson to back a $25 million emergency loan.

New York City should have privatized OTB back in the '90s, when Rudy Giuliani proposed doing just that.

And now this -- a virtual mutiny.

Sell OTB or -- better yet -- shut it down once and for all.

NYPOST.COM

OTB director disses top Paterson aide

10:22 AM, July 2, 2010 ι

BRENDAN SCOTT, Post Correspondent

ALBANY – Larry Schwartz gets no respect.

Gov. Paterson’s top lieutenant was forced to put down an open revolt yesterday just moments into his first meeting as chairman of the financially troubled New York City Off-Track Betting Corp.

The rebellion came after Schwartz, who Paterson put in charge of the book-making agency last month after forcing Meyer Fruscher from the job, called for a closed-door session to discuss “matters of personnel of the corporation.”

“So moved,” chimed in OTB board member Anthony Bogamo from the agency’s Manhattan office. But there was no second.

Schwartz – participating via video feed from Albany – appeared perplexed. He nudged board member Steven Newman, also in Manhattan, to act.

“Second? Do I have a second?” said Schwartz, who’s official title is secretary to the governor. “Stevie, are you going to make the second?”

“Not unless I get more information about why,” Newman replied defiantly.

An awkward silence ensued, which can be seen on the OTB’s online video archive. Schwartz leaned back in his chair. He sipped his water. People gathered in the Manhattan conference room looked around.

“I’m asking you to give me that courtesy by seconding the motion,” Schwartz eventually said.

“I asked for more information,” Newman insisted. “I received a resolution about five o’clock last night. I would have preferred in a collegial way if someone had talked to me about the resolution.”

Schwartz, clearly annoyed, found a work-around. He called on Lawrence Graham, a non-voting board member, to make the motion. Newman protested, but the motion carried.

brendan.scott@nypost.com

DRF.COM

Aqueduct | Posted 6/29/2010, 5:47 pm

Three groups submit bids for Aqueduct casino

By Matt Hegarty

Three groups submitted bids to operate a casino at Aqueduct racetrack in Queens by a late-afternoon deadline on Tuesday, according to the New York Lottery, which is overseeing the process to evaluate the bids.

The three groups - the casino and racetrack operator Penn National Gaming Inc., the Malaysia-based casino company Genting New York, and a partnership of SL Green, Hard Rock, and the Clairvest Group - will compete to win the rights to operate the casino over a span of 30 years. The casino is expected to be one of the highest-grossing gambling properties on the East Coast.

Details of the bids will not be released until the lottery has made its recommendation on the winning bidder, according to Jennifer Givener, a spokeswoman for the lottery. In addition, Givener said that the bidders were told to include the amount of money that they would be willing to pay the state as a license fee in a separate, sealed envelope from their bid, and that the lottery would not review the contents of those letters until it had finished evaluating the bidders for their suitability to run the casino.

Earlier this month, six companies complied with a condition of the licensing process to submit a $1 million entry fee to bid on the casino, which was first approved in 2001. Two of those companies, Delaware North Gaming and Empire City Casino at Yonkers Raceway, did not submit a bid on Tuesday. In addition, Clairvest, a Canadian venture-capital fund, had submitted its own $1 million entry fee, only to partner with SL Green and Hard Rock in its Tuesday bid.

Lottery officials said that they plan to announce a winning bidder on Aug. 3. The bidder will be required to pay at least $300 million to the state in an up-front licensing fee, but the state has agreed to back $250 million in bonds to fund the construction of the casino, which has been authorized for 4,500 machines.

The winning bidder will be subject to the approval of Gov. David Paterson and the leader of the state's Assembly, Sheldon Silver, and the Senate's temporary president, Malcolm Smith. All three are Democrats. Paterson has already said that he will approve the lottery's recommendation.

Two previous attempts to name an operator of the casino have been scuttled. In the first instance, in 2008, Delaware North was selected to operate the facility, but the company reneged on a promise to pay the state a $370 million licensing fee, citing the instability of the markets.

In the second instance, earlier this year, the state's legislative leaders selected a sprawling politically connected partnership called Aqueduct Entertainment Group, but the selection was immediately criticized as being politically motivated. The process was scrapped and restarted. Clairvest was a member of the Aqueduct Entertainment partnership.

In a prepared statement, William Bissett, the president of Delaware North Gaming and Entertainment, said that the company had decided not to pursue the license because of a variety of concerns, including "non-refundability" of the minimum $300 million license fee, the unpredictability of state tax rates on casinos, and the "indefinite amount of financial support that the developer will be required to provide to the New York Racing Association."

Delaware North owns Finger Lakes Gaming and Racetrack in western New York, Fairgrounds Gaming and Raceway in Hamburg, N.Y., and it operates the casino at Saratoga Gaming and Raceway.

As part of recent budget deliberations, state legislative leaders have proposed increasing the tax on casinos by 1 percentage point, with the share being taken from the operator. New York has eight racetrack casinos already in operation.

NYRA and its horsemen are expected to receive about $60 million a year in subsidies from the casino once it is up and running. The association, which operates Aqueduct, Belmont, and Saratoga, has faced financial difficulties in the past, and emerged from bankruptcy in 2008 after reaching an agreement with the state to hand over the deeds to its tracks in exchange for a 25-year franchise to operate the tracks and the forgiveness of its debt to the state.

ZWIRE.COM

New oversight board proposed for OTB

by Bryan Yurcan, Assistant Editor

06/24/2010

   Cash-strapped New York City Off Track Betting Corp. may have to answer to a newly created government agency designed to oversee its spending.

   Last week, the state Senate passed a bill in committee that would create a new Franchise Oversight Board, which would oversee OTB’s policies, capital and operating plans, simulcasting and budget. OTB operates nearly 70 betting parlors across the five boroughs.

   State Sen. Joseph Addabbo Jr. (D-Howard Beach), a member of the Senate Racing, Gaming and Wagering Committee, said the oversight board would have the authority to approve or disapprove many of OTB’s functions.

   “This legislation amends the racing, pari-mutuel and breeding law to provide that NYC OTB shall transfer all wagering accounts to the new oversight board,” Addabbo said. “In addition, this proposal would prohibit the appointment of any former or current OTB member to the oversight board.”

   NYC OTB was created in 1970 by the state as a quasi-government agency. It is run like a private enterprise, but is legally required to turn over a portion of its earnings to the state, as well as horse racing tracks, which have long complained that OTB cuts into their revenue.

   While OTB flourished in the city in the 1970’s and 80’s, its popularity has waned in recent years.
   In December, the agency filed for Chapter 9 bankruptcy protection, and said it was on pace to run out of money by March.

   OTB later asked the state for $300 million in tax-free municipal bonds to finance its turnaround, a request that was denied.

   In April, OTB laid off 35 non-union employees in an effort to cut costs. The agency said the layoffs help cut about $2 million.

   Addabbo said that the days of “writing them a blank check financially” to continue operating are over.
   “I think they’ll be treated similar to the MTA, we’ll try to help them to an extent, but we also want to see how they’re operating financially,” he said, adding that OTB has operated with little oversight in the past.

   “We don’t want to be wasting money,” he said. “With this oversight board, the state can look at how they are operating and make recommendations if necessary on how they can operate more efficiently. And we can say that if they don’t comply, then future financial assistance may be in jeopardy.”

   A spokesman for OTB said the agency would not be able to comment on the legislation at this time.
   Under the provisions of the bill, a public bidding process would be undertaken to award the ability to conduct and manage account wagering to a third party.

   Any fee derived from such management would be dedicated to pay off any outstanding obligations or liabilities on the part of OTB.

   OTB would also be required to retain a unionized workforce pursuant to collective bargaining agreements.

   Addabbo said the oversight board could be created and appointed by the end of this year, once the bill passes both the Senate and Assembly, and that the new agency would add a “much-needed” oversight to the OTB and increase revenues to the state.

   “This is a win-win situation for both taxpayers and the racing industry in New York state.”

©Queens Chronicle 2010

SARATOGIAN.COM

Frucher's resignation from New York City OTB may expand NYRA's control over firm

Published: Tuesday, June 08, 2010

By PAUL POST, The Saratogian

SARATOGA SPRINGS — New York City Off Track Betting Corp.’s shakeup could pave the way for New York Racing Association to take over some OTB operations, an industry leader says.

Meyer “Sandy” Frucher resigned as OTB chairman on Friday and has been replaced by Larry Schwartz, a top aide to Gov. David Paterson.

With Frucher gone, NYRA should take control of OTB’s telephone and account wagering systems, a move that would help OTB emerge from bankruptcy while giving more money to racetracks and breeders, says Barry Ostrager, a NYRA board member and president of Saratoga Springs-based New York Thoroughbred Breeders Inc.

“For the New York racing and breeding industry to revive, the New York City OTB telephone account and Internet wagering platforms have to be transferred to NYRA,” Ostrager said. “This will eliminate truly stupid redundancies, increase the funds available to the breeders and the horsemen and go a long way toward rationalizing off-track wagering in New York to conform to the model that exists in every other state. New York City OTB has already announced plans to close approximately two thirds of its off-track betting parlors, many of which have been losing money for a decade. However, it is entirely possible that maintaining the profitable off-track betting shops would be sensible and would enable New York City OTB to keep some of its work force.”

NYRA President and CEO Charles Hayward declined comment about the OTB turnover. However, he’s previously called for a merging of some NYRA and OTB programs such as account wagering, marketing and tote contract.

“We stand ready to help the state if they ask for our assistance,” he said.

The state took over New York City OTB last July, rather than have the firm cease operations. The firm was previously owned by the city of New York, but Mayor Michael Bloomberg refused to bail it out.

It has continued to lose money and owes NYRA $17 million, thoroughbred breeders at least $3 million and harness tracks another $10 million to $12 million.

Recently, the state gave NYRA a $25 million loan to prevent a racing shutdown before the upcoming Saratoga meet, which begins July 23. The state is also in the process of selecting a gaming operator to run Aqueduct Race Track’s proposed racino, which would give NYRA and Saratoga Race Course a major boost.

OTB is the other big problem confronting the racing industry. Frucher had proposed selling at least $250 million in bonds to finance OTB’s restructuring. However, many viewed this as sheer folly. Who would invest in a firm that’s bankrupt and losing millions of dollars annually?

On May 28, state Budget Director Robert Megna informed Frucher the state “cannot endorse any form of state guarantee to securitize” OTB’s financing.

Also, the state Racing and Wagering Board recently said OTB had to put money in escrow for NYRA and breeders, or it wouldn’t be allowed to simulcast races from out-of-state tracks.

Frucher, in a letter to Paterson, said both steps prompted his resignation. “I have determined that it is time for me to step aside to allow you and your staff the opportunity to decide the next steps to resolve New York City OTB’s situation,” he said.

Now, NYRA should be allowed to take over some OTB operations, Ostrager said.

“That’s the logical direction for things to head,” he said.

NY1.COM

http://www.ny1.com/content/news_beats/politics/119898/otb-chairman-announces-resignation/

NYPOST.COM

OTB boss scratched
By FREDRIC U. DICKER

Last Updated: 8:05 AM, June 6, 2010

Posted: 3:11 AM, June 6, 2010

ALBANY -- Embattled New York City Off-Track Betting Corp. Chairman Meyer (Sandy) Frucher has resigned under pressure from Gov. Paterson, The Post has learned.

Paterson's secretary, Larry Schwartz, has been named interim chairman.

The Post reported last month that Frucher, who was named by Paterson to head the bankrupt bookmaker almost a year ago to the day, had lost the governor's confidence amid ongoing efforts to save the state's ailing thoroughbred racing industry.

"Sandy has no credibility left in Albany. He doesn't know when to compromise, and he's lied repeatedly to the officials he has to deal with," a source close to the Governor's Office said.

The source also said Frucher's policies at OTB risked "destroying New York's racing industry," a charge already made by associations of thoroughbred owners and breeders.

Attempts to reach Frucher, who submitted his resignation Friday, were unsuccessful.

BLOODHORSE.COM

NYCOTB Chairman Said to Have Resigned

By Tom Precious

Updated: Saturday, June 5, 2010 6:53 AM
Posted: Saturday, June 5, 2010 6:53 AM

The head of the embattled New York City Off-Track Betting Corp. has resigned at a time when the betting giant is attempting to create a financial survival plan, sources close to the matter said the evening of June 4.

Meyer “Sandy” Frucher, chairman of NYCOTB, has been on the job less than a year but has created a laundry list of foes at the state Capitol and within the racing industry over his ideas for salvaging the nation’s largest offtrack betting enterprise.

Frucher, appointed last June by Gov. David Paterson to the state-owned entity that handles nearly $1 billion in bets a year, found himself on the outs with top advisers to the governor, as well as legislative leaders, following the recent battle over a financial bailout plan.

Uncertain is who might take over the NYCOTB board. One name floated on an interim basis is Larry Schwartz, who serves as secretary to Paterson. Also being raised is the possibility the New York Racing Association is positioning itself to take over some of the NYCOTB’s more lucrative business, such as phone and Internet wagering, which would position NYRA well into to the future.

The racing industry was thrown into turmoil earlier this spring when Frucher and the NYCOTB board threatened to close the operation, which has been under Chapter 9 federal bankruptcy reorganization protection since last year. Frucher won no allies in state government during the controversy, during which the matter took center stage at the Capitol.

Frucher in an interview at the time insisted he was following by his legal fiduciary responsibilities, and needed to make changes to the money-losing corporation, such as reducing the number of parlors and favoring more sprawling entertainment centers and facilities for automated teller machines.

After asking for a state bailout and bonding authority, NYCOTB suddenly reversed course on its shutdown threat, which left many key lawmakers upset. For some time, NYRA has been interested in taking over NYCOTB’s Internet wagering operations.

Frucher said NYCOTB would work out its financial problems on its own and in bankruptcy court with its major creditors, which include NYRA. It then began delaying more statutory payments to tracks, a move that put it further up against the powerful interests of NYRA, which claims NYCOTB owes it more than $17 million in back payments.

NYCOTB, which employs more than 1,000 employees, was owned by the New York City government until the state stepped forward and took over the entity.

Speculation is rampant. One plan has Frucher putting together his own NYCOTB ownership team to take the betting entity out of bankruptcy.

PAULICK REPORT

MEYER “SANDY” FRUCHER TENDERS RESIGNATION FROM POSITION AS CHAIRMAN OF NYC OTB

On the eve of the Belmont Stakes, sources in Albany have told the Paulick Report that Meyer "Sandy" Frucher has tendered his resignation from his position as chairman of the NYC OTB.

Appointed to this post in 2009 by current Governor David Paterson, Frucher previously ran the Philadelphia Stock Exchange which was sold to NASDAQ for $690 million. He also held posts with the Cuomo administration and government jobs in Massachusetts and New York City.

No other details are available at this time.

TIMESUNION.COM

State workers: 55/25 bill OK'd

Early out action awaits governor's signature to reduce the public ranks

By RICK KARLIN, Capitol bureau

First published in print: Saturday, May 29, 2010

ALBANY -- State workers got a triple dose of good news on Friday, including word of an early retirement incentive.

Not only did a judge order a halt to a planned furlough and order Gov. David Paterson to pay the 4 percent raises that unionized workers were supposed to get on April 1, the Senate gave final approval to the retirement 55/25 retirement plan.

The bill passed the Senate late Friday 58 to 1, with Buffalo-area Republican Mike Razenhofer casting the sole vote in opposition. The Assembly approved the bill earlier.

"This legislation represents an important first step, but additional work force reductions are essential as we address the state's current $9.2 billion deficit," Paterson said in a statement. "I applaud the Legislature for passing this bill, and I look forward to signing it into law."

The state is hoping to save $95 million this fiscal year, and an additional $225 million in 2011-2012.

The measure has two broad components which workers can choose from if their employer participates: the 55/25 plan or the crediting of an extra month for each year of service.

Generally, employers have to agree to eliminate the jobs held by those taking the incentives, and they can say no to applicants serving in critical positions.

Under the 55/25 option, called Part B, state as well as local employees can retire at age 55 after 25 years of service without penalty. Typically, the workers have to spend 30 years on the job before drawing a full pension. Firefighters and most police can typically leave after 20 years.

Participating employers must provide a 90-day period to allow eligible employees adequate time to consider the incentive. Employers will decide if they want to participate by Sept. 1, or by July 1 for educational organizations.

For the second option, employees can get another month's credit for each year served, with a cap of three years of credit. Employees must be retirement-eligible or at least 50 years old with 10 years of service.

Employers will have to provide a 30- to 90-day open period to allow employees time to consider the offer. Local employers must opt into the plan by Aug. 31, or July 30 for school districts.

Critics say the savings from an early retirement plan can be hard to assess. Employers have to pay higher pension costs, and they will amortize the extra payments -- essentially borrowing against the state's retirement fund -- to meet those obligations.

The fiscally conservative Empire Center for New York State Policy earlier this month noted that between 1983 and 2002 lawmakers have approved 10 early retirement bills for state employees.

The most recent, in 2002, drew 5,562 participants but added $249 million in pension costs, which were financed over a five-year period -- similar to the way this plan is configured. They contend there has never been a rigorous cost-benefit analysis of the plans.

Senate passage removes some uncertainty for public employees who may have been considering retirement but have held off to see if the incentive appears. The Public Employees Federation, a major public employee union, advised members last month to postpone putting in their retirement papers in anticipation of the incentive.

TIMESUNION.COM

Retirement incentive passes Assembly

Tuesday, May 25, 2010 at 6:55 PM by Laura Northrup in Budget cuts, General, Retirement

Last night, the long-awaited early retirement incentive bill passed the Assembly, and is currently in committee in the Senate. The bill allows for employees of the state and participating municipalities who are age 55 or older with 25 years of service or more to retire with full benefits.

The Senate is expected to vote on the bill next week. The question remains–will agencies allow enough retirements to make an impact?

TIMESUNION.COM

Loan keeps tracks racing

Legislature signs off on lending cash-strapped NYRA $25 million

By JAMES M. ODATO, Capitol bureau

First published in print: Tuesday, May 25, 2010

ALBANY -- The Legislature passed legislation Monday night allowing for a $25 million loan to the New York Racing Association aimed at ensuring that the state's major thoroughbred tracks will continue offering horse racing the rest of this year.

Gov. David Paterson gave lawmakers a bill to provide a "working capital loan" for NYRA as part of a budget extender bill needed to avoid shutting government down.

Paterson had planned a stand-alone bill. The budget extender was an alternative route to getting NYRA the funds, and it was needed when a union representing employees with the New York City Off-Track Betting Corp. complained that NYRA was getting a bailout but OTB was not, several government officials said.

A read of the likelihood of difficult sledding in the Senate for the stand-alone bill caused Paterson and the Legislature to agree to put the NYRA bill in the budget measure.

An extender bill without the NYRA bill also was offered Friday by Paterson.

The bill is written so NYRA would have to pay the money back from its cut of video lottery terminal revenues from a 4,500-machine racino at Aqueduct Race Track, even though it is unclear when that VLT parlor will be built. The vendor of the racino, still yet to be picked, would lend NYRA the funds if necessary and get paid back either by NYRA or by a redirection of NYRA VLT revenues. The vendor stands to receive $250 million in bond proceeds to help build the racino, but the sum would be $225 million initially until the $25 million is repaid.

The loan must be repaid by March 31, or 30 days after the state signs a deal with the VLT vendor. Empire State Development Corp. would sell bonds for the racino project funds.

Assembly Racing & Wagering Committee Chairman Gary Pretlow said the bill makes sense since NYRA needs the $25 million loan to operate. But he said he wishes the Legislature had simply given NYRA the authorization to set up a VLT parlor itself.

Paterson has said he hopes to choose a vendor for the Aqueduct racino in August. NYRA has been complaining about the lack of funds to run racing at Belmont and Saratoga this year, and urging the state to come up with funds promised in the deal NYRA made in 2008 to emerge from bankruptcy and give the deeds to Saratoga, Belmont and Aqueduct to the state.

ALBANY RALLY VIDEOS

http://www.youtube.com/watch?v=V2Z4a7jihi0

http://www.youtube.com/watch?v=IEcp6zTPtX8&feature=PlayList&p=252DCCF278F2D65C&playnext_from=PL&index=0&playnext=1

LEGISLATIVEGAZETTE.COM

http://www.legislativegazette.com/Articles-c-2010-04-26-67166.113122_NYC_OTB_employees_are_worried_about_their_jobs.html

NYPOST.COM

OTB scratches jobs

AP

Last Updated: 1:59 AM, April 24, 2010

Posted: 1:46 AM, April 24, 2010

ALBANY -- New York City Off-Track Betting Corp. laid off 35 nonunion employees yesterday as it launched a plan to return to long-term solvency.

OTB Chairman Meyer "Sandy" Frucher said the action would save $2 million a year.

OTB has been reorganizing its finances under bankruptcy-court protection and had threatened to shut down twice recently.

NY1

http://www.ny1.com/1-all-boroughs-news-content/top_stories/117083/otb-board-reaches-deal-to-keep-business-open-another-year?ap=1&Flash

BLOODHORSE.COM

Lawmaker Seeks Additional Time for OTB Plan

By Tom Precious

Updated: Friday, April 16, 2010 7:24 PM
Posted: Friday, April 16, 2010 7:24 PM

A top state lawmaker in New York urged the New York City Off-Track Betting Corp. to remain open a few more days to give negotiators additional time to strike a financial rescue plan.

The urging by Senate Racing Committee chairman Eric Adams came in advance of a NYCOTB board meeting April 17 that will consider the options of the money-losing OTB, including whether to shut it down at the close of business the following day.

Negotiators at the state Capitol made no progress April 15 to devise a plan for the nation’s largest OTB -- two days after lawmakers left town when a plan collapsed under the weight of opposition by most tracks and the union representing about 1,000 workers at the OTB –- that would have provided a one-year bailout for the OTB.

"Folks are still meeting, but we haven’t gotten anywhere," Adams said late April 16.

Adams said he has been given no indication what the OTB board might do at its 11 a.m, April 17 meeting, and senior government officials say no final decision has been made internally about the immediate plans for the betting entity.

Some officials believe the OTB has the resources to remain open until lawmakers return to Albany on Monday to try again to pass a plan. With the state facing its own financial crisis, efforts have turned to letting the OTB, which is already in Chapter 9 bankruptcy reorganization, lower its statutory payments to tracks. The deal that died this week also included a $17 million borrowing plan for the New York Racing Association to resolve its own cash flow problems for the rest of the year; that funding led NYRA to lobby for the deal that fell apart earlier this week.

While Gov. David Paterson has said he expects the OTB board to shut down its parlors and wagering systems, Adams said the state-owned OTB should remain open to permit the talks to play out.

"What I’m hoping is that all parties involved realize that it’s time for us to all share the pain of what it’s going to take to keep the OTB afloat," Adams said. "Hopefully, the board will make a decision to buy a few more days. People have not stopped talking. If they were not talking that’s one thing, but people are really attempting to come to some sort of resolution."

Asked if he believed the OTB has the financial ability to remain open into next week, Adams said, "They have stated they didn’t have the resources. But sometimes when you look under the mattress you find another quarter."

There are several schools of thought at the Capitol. One is that the board votes to let the OTB remain open another few days or week so as not to disrupt operations to give talks in Albany another shot. The other is it closes down at the close of business April 18 as a way to put pressure on Paterson and lawmakers to strike a deal as early as the following day. Another option is closure, and it is reorganized into some new entity in whole or part. Officials say that in the end, an enterprise that handles nearly $1 billion of bets –- and is heavily counted upon by tracks and horsemen for revenue-sharing payments –- will have to exist in some form.

The OTB was to have shut down last Sunday, but the board extended its life another week.

The state’s top racing regulator, meanwhile, created a stir April 16 with the release of a statement that suggested money in OTB bettors’ accounts might not be safe.

State Racing and Wagering Board chairman John Sabini said his agency will "do everything in its power" to protect the open accounts of OTB customers and any uncashed winnings.

But after fielding calls from a number of worried customers, the OTB released its own statement to soothe the concerns raised by Sabini, saying all customer accounts and uncashed winning tickets are "safe and secure."

The OTB generally has a couple million dollars or so in customer accounts at any given time, sources said. That money, along with payroll payments owed to employees, are kept in segregated accounts and will be fully funded if the OTB shuts down.

If the OTB shuts down, several parlors will remain open for a week for patrons to cash in their tickets or vouchers, after which a central office will process the payments for another six weeks.

NYDAILYNEWS.COM

Horse hockey: Dysfunctional Albany mopes outdid themselves in killing OTB

Editorials

Thursday, April 15th 2010, 4:00 AM

Gov. Paterson's declaration that the New York City Off-Track Betting Corp. will be allowed to close for good on Sunday is the culmination of the worst Albany train wreck in years.

And that's saying a lot.

The fallout from OTB failing to open its doors Monday will be devastating. More than 1,300 employees will join the unemployment line. The state's withering racing industry will be crippled.

Worst of all, taxpayers will be saddled with a whopping $700 million in shutdown costs - mostly to cover the pension and health benefits of OTB retirees.

Paterson apparently hopes to dump that bill onto New York City as the former owner, which would be unconscionable.

But he is not the only one to blame. Also guilty in this colossal fiasco are Assembly Speaker Sheldon Silver, Senate Democratic chief John Sampson and the rest of the mess called the Legislature.

After draining OTB of millions to prop up racing, after throwing it into bankruptcy court, after being warned that closure was coming, after promising to come up with a rescue plan, the bums left town yesterday without doing a thing.

Paterson attacked Silver and Sampson for bolting without even taking up the bill reflecting what he says was a three-way deal.

There's no way to know if that or anything else is true, because all the wheeling and dealing went on, as usual, in back rooms.

In fact, this is a perfect storm of Albany dysfunction. The pols spawned the ultimate unworkable program - a money-losing bookie outfit. They gave the staff unaffordable perks. They used it to subsidize a struggling private business. And when everything finally came apart, they ignored the best advice of experts, kowtowed to special interests and left taxpayers with cleanup costs.

Can New York State's pathetic excuse for a government get any worse?

NEWSDAY.COM

Deal to save NY gambling agency eludes Albany

Originally published: April 14, 2010 7:12 PM
By The Associated Press  MICHAEL GORMLEY (Associated Press Writer)

Quick Summary

Deal to save NY gambling agency and 1,300 jobs eludes negotiators during weeklong reprieve

ALBANY, N.Y. - (AP) — A deal to keep New York City Off-Track Betting Corp. afloat and avoid 1,300 layoffs eluded negotiators Wednesday as lawmakers headed home for the weekend without acting on a bailout.

Talks fell apart during a one-week reprieve intended to give Gov. David Paterson and the Legislature time to work out a way to save the state agency, which has been fiscally troubled for decades.

Now workers face another Sunday deadline for a possible shutdown.

Lawmakers left Wednesday and aren't scheduled to return to session until Monday. They could be called back if there's an agreement between state officials, the unions that would have to accept cutbacks, and the agency.

Once a city government entity, the OTB is in bankruptcy court to reorganize its finances.

It collects $1 billion a year in bets on horse racing.

Talks had involved proposals that could cut the payroll by $5 million and eliminate some payments to harness tracks. The state wasn't offering to use taxpayers' money, but there was discussion in the complex dealing of borrowing from the funds expected when a video slot machine operator was chosen for Aqueduct race tracks. That would result in a $17 million loan to the New York Racing Association, which operates Aqueduct and the state's other thoroughbred tracks at Saratoga and Belmont.

"I expect the (OTB) board will carry out its planned shutdown," Paterson said. "Consequently, the closure of NYC OTB will have a profound impact on the 1,300 employees and their families. I am deeply saddened that we could not find a workable solution during this fiscal crisis to save any of these jobs."

OTB is supposed to return millions of dollars each year to the state and racing industry but has lost $45 million in the last five years, according to the agency. The corporation has been threatening to close since 2008 and has experienced decades of financial troubles.