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September 1, 2009

 

Statement From State Comptroller Thomas P. DiNapoli on Paterson Executive Order to Allow NYC OTB to Declare Bankruptcy

“New York City Off-Track Betting Corporation is facing financial insolvency,” State Comptroller Thomas P. DiNapoli said. “While the NYC OTB takes in about $1 billion a year in wagers, its operating expenses and losses have increased steadily in the last four years, resulting in an operating deficit of approximately $38 million and an accumulated deficit of more than $228 million.

“Our recent audit clearly shows that even with an influx of cash and reduction of expenses, NYC OTB’s long-term outlook is not promising if business continues as usual. My office will monitor the bankruptcy proceedings and the impact on the long-term financial viability of the NYC OTB. My auditors are also reviewing the other five regional OTBs in the state to assess their financial condition and determine whether they are facing similar issues to the NYC OTB.

“There are serious questions about the future of the off-track betting industry, and there are thousands of jobs at risk. Serious consideration must be given to broader solutions for the NYC OTB. The state must look at changing the mandated distribution formula and fully restructuring operations to coordinate different aspects of the racing industry.”

DiNapoli’s audit, released in August 2009, began after the state took over operations in June 2008. The audit found that after statutory distributions the NYC OTB was left with $116.1 million to cover its operating expenses in 2008, which were $133.9 million, leaving it with an operating deficit for the year of $17.8 million. Legislative changes in June 2008 to allow the NYC OTB to retain more of its revenue did not have a significant impact on the organization because wagers were down and are expected to remain down due to economic conditions. While management has taken action to address operating deficits, it has not performed a detailed assessment of its operations or developed a plan for achieving cost reductions by specific dates. DiNapoli’s audit also recommended significant management changes.

Click here for a copy of the audit.

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