Authorizes the Suffolk regional off-track betting corporation to file for bankruptcy

2 Co-sponsors

• Owen H. Johnson
• Kenneth P. LaValle

BILL NUMBER:S6293

Title of bill

An act to amend the racing, pari-mutuel wagering and breeding law, in relation to authorizing the Suffolk regional off-track betting corporation to file for bankruptcy; and providing that all funds in the capital acquisition fund shall be available to the Suffolk regional OTB for any corporate purpose

Purpose or general idea of bill

This bill would provide Suffolk OTB with the specific power to file for bankruptcy under the United States Bankruptcy Code. The ability to file for bankruptcy protection would allow Suffolk OTB to address its debts and long-term obligations in an orderly manner, while continuing to operate and generate revenue to pay creditors and Suffolk County. The bill also allows Suffolk OTB to access funds in its capital acquisition fund for general corporate purposes of the Suffolk OTB.

Justification

Suffolk OTB was created in the early 1970s to raise revenue for Suffolk County as a participating municipality, curb illegal bookmaking, and support the State's horse racing industry. It is required by statute to make payments to the State, Suffolk County, other municipalities and the horse racing industry. In recent years it has faced fiscal challenges.

This bill would amend the Racing and Wagering Law to specifically empower Suffolk OTB to file for bankruptcy. This specific authorization to allow Suffolk OTB to file for bankruptcy will protect taxpayers as well as the horse racing industry in New York. Without bankruptcy protection, in the face of fiscal difficulty, Suffolk OTB could be forced to shut its doors and terminate hundreds of employees. This has devastating consequences for employees, suppliers, landlords, neighborhoods and creditors, and creates complicated and expensive issues for taxpayers. In addition, it causes New York horse racing enthusiasts and racing revenue to shift from New York State-based operations to out-of-state horse racing ventures.

In March, 2011, Suffolk OTB filed for bankruptcy protection. It filed a Plan of Debt Adjustment with the bankruptcy court, providing for the 100 percent payment of its creditors over time according to specific schedules. The bankruptcy allowed Suffolk OTB to continue to operate and generate revenue to pay creditors, while addressing its debts and long-term obligations in an orderly manner. However, an objection to the bankruptcy petition filed by an out-of-state competitor, challenging the OTB's legal authority to declare bankruptcy, was ultimately sustained.

Amending the Racing and Wagering Law to specifically authorize Suffolk OTB to file for bankruptcy protection will provide Suffolk OTB with the tools to methodically address debts and long term obligations

such as leases and health care coverage while continuing to operate, serve the public, generate revenue for the State and Suffolk County and pay creditors; and then exit bankruptcy as soon as practicable. Suffolk OTB is not on the expense side of State or local budgets.

Section 509-a of the Racing and Wagering Law expressly authorizes regional OTBs to create capital acquisition funds, funded by pari-mutuel wagering pools, for the purpose of financing the future acquisition, construction or equipping of facilities. This bill would provide that all funds accumulated in Suffolk OTB's capital acquisition fund created pursuant to section 509-a of the Racing and Wagering Law or deposited into such fund thereafter will be available to Suffolk OTB for any corporate purpose. It will allow Suffolk OTB to access and use for corporate purposes funds that are simply not needed for the future acquisition, construction and equipping of facilities.

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.