OTB Goes Bankrupt, But Will Remain Open
We believe it was Rudolph Giulliani, in one of his rare flashes of genuine wit, who called OTB the only bookie in the world that didn't make money. As state auditors predicted this summer, OTB has gone bankrupt with a debt of $100 million. The city passed OTB onto the state in 2008, and Governor Paterson authorized the chain of grim storefronts and busted dreams to file for Chapter 9 earlier this year. They'll sell $250 million in bonds to pay creditors...
OTB is not shutting down; that would yield $600 million in debts, says its chairman, Sandy Frucher, mostly in disputed employee pension and health benefits (of OTB workers, that is, not those gambled by patrons). "If OTB were to pay all of its obligations now," its lawyer says, "it would likely run out of cash by the end of the month."
The operation will negotiate new contracts as a bankrupt that will presumably save money -- unions have reportedly agreed already to concessions -- and spiff the joints up with technology, from which they expect added revenue. "All winnings are secure," the OTB Board chairman announced, which prompted a run on the windows, we're sure.
Crain's says it's not yet certain whether OTB's losing formula of paying out shares of the take to government, breeders and racetracks before addressing operating costs, as mandated by law, will be altered. (That's why the state kept running it, even as it sank deeper in debt.) "NYC OTB generates hundreds of millions of dollars annually for the region," says Frucher, "but it has been hobbled by statutes that make it impossible for the corporation to cover its own operating expenses." He calls for "common-sense legislative changes," which, given how Albany works, raises a horse laugh.
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