The New York legislature goes into special session today under a request by Gov. David Paterson to pass legislation that would enable New York City Off Track Betting Corp. to implement several controversial measures as part of its bankruptcy reorganization.
It was unclear on Monday morning whether legislators would support the bill, which would cut the amount of revenue that New York City OTB sends to the state's racetracks and enable the company to transfer its account-wagering operation to its racetrack creditors. The bill also includes several provisions unrelated to the bankruptcy reorganization that would benefit harness tracks, but those measures have drawn fire from the state's Standardbred owners and breeders.
Officials of Paterson's office and at New York City OTB warned over the weekend that a failure to pass the legislation could lead to a complete shutdown of New York City OTB by mid-December. On Sunday, Paterson's office released a letter from the chief auditor of the New York State Racing and Wagering Board requesting a detailed plan about how the company would address its cash shortfalls.
"Given the current desperate financial conditions of NYCOTB it is imperative that NYCOTB notify the board how it plans to meet its statutory obligations and the date it will cease operations prior to running out of available funds," wrote Tom Casaregola, the board's director of audits and investigations, in a letter dated Nov. 24.
The special session was also called to close a $315 million deficit and to confirm nominees for several state posts. According to New York news reports, many lawmakers are not planning to attend the lame-duck session, casting doubt as to whether any legislation will be passed. Republicans are set to take control of the Democratic-led Senate on Jan. 1.
The session is not scheduled to start until 3 p.m. Eastern time, after the Republicans meet for a conference.
Scott Reif, a spokesperson for the Senate Republicans, said on Monday morning that the Republicans have not decided whether to take up any legislation at the special session.
"We just don't know at this point," Reif said. "We haven't seen any specific bills yet. A lot of different things have been talked about, but nothing concrete."
New York City OTB was taken over by the state in 2009 and declared bankruptcy shortly thereafter. Since declaring bankruptcy, it has stopped sending the racing industry approximately $2 million in monthly statutory payments. The New York Racing Association, which operates Aqueduct, Belmont, and Saratoga, is the company's largest creditor.
The Thoroughbred racing industry has been supportive of the current reorganization plan despite the potential loss of an estimated $30 million a year in statutory payments under the plan. Offsetting that loss would be revenues derived from New York City OTB's account-wagering operation -- NYRA would receive a 45 percent stake in the platform under the plan, the largest share among the company's creditors.