red states rule
09-02-2009, 10:00 AM
Once again, another government run program flops.
N.Y. Plans Off-Track-Betting Bankruptcy, Bond Sale
Sept. 1 (Bloomberg) -- New York Governor David Paterson ordered the New York City Off-Track Betting Corp. to prepare for a reorganization under Chapter 9 of federal bankruptcy law, after four years of losses totaling $38 million.
The filing, the first involving a New York State-run gambling operation, won’t halt operations. It will include the planned sale of $250 million of bonds to repay some accumulated debts and allow spending on new technology, said Meyer Frucher, whom Paterson appointed to develop a rescue plan.
With updated technology, “We could go head to head with pornography and win,” Frucher said, referring to possibilities such as an around-the-clock horse-racing channel or virtual racing.
The state took control of the 39-year-old betting operation a year ago after Mayor Michael Bloomberg said he would shut it down to staunch losses.
A reorganization plan, which must be approved by a federal bankruptcy court and state lawmakers, would trim the corporation’s workforce, reduce the number of betting parlors from 68 currently, and introduce technology that might eventually quadruple the $1 billion a year of bets now collected, Frucher said.
Talks with bankers at JPMorgan Chase & Co. in New York indicate that the bonds may have the highest ratings if they were first in line to collect revenue after winning bets are paid, Frucher said.
Frucher Experience
Frucher was previously chairman of the New York City School Construction Authority and chief executive of Battery Park City Authority in 1984 to 1988, when he helped arrange bond sales to finance that development.
Paterson said the changes at the New York City OTB could be a model for the six other betting corporations around the state, though they aren’t included in the reorganization plan.
“This is a necessary move” that will help protect 40,000 jobs around the state in the horse raising and racing business, Paterson said. State racing laws will need to be changed to lighten the burden of payments the betting corporation now makes to horse breeders, race tracks, the state, New York City and other local governments, he said.
Last year, the corporation paid winning betters $760.9 million, leaving it with $244.7 million. After providing $93.2 million to the horse racing industry, $20.2 million to local governments and $15.2 million to the state, the corporation was left with $116.1 million of revenue, or less than its $133.9 million of operating expenses.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aktUM3PbEC8Q
N.Y. Plans Off-Track-Betting Bankruptcy, Bond Sale
Sept. 1 (Bloomberg) -- New York Governor David Paterson ordered the New York City Off-Track Betting Corp. to prepare for a reorganization under Chapter 9 of federal bankruptcy law, after four years of losses totaling $38 million.
The filing, the first involving a New York State-run gambling operation, won’t halt operations. It will include the planned sale of $250 million of bonds to repay some accumulated debts and allow spending on new technology, said Meyer Frucher, whom Paterson appointed to develop a rescue plan.
With updated technology, “We could go head to head with pornography and win,” Frucher said, referring to possibilities such as an around-the-clock horse-racing channel or virtual racing.
The state took control of the 39-year-old betting operation a year ago after Mayor Michael Bloomberg said he would shut it down to staunch losses.
A reorganization plan, which must be approved by a federal bankruptcy court and state lawmakers, would trim the corporation’s workforce, reduce the number of betting parlors from 68 currently, and introduce technology that might eventually quadruple the $1 billion a year of bets now collected, Frucher said.
Talks with bankers at JPMorgan Chase & Co. in New York indicate that the bonds may have the highest ratings if they were first in line to collect revenue after winning bets are paid, Frucher said.
Frucher Experience
Frucher was previously chairman of the New York City School Construction Authority and chief executive of Battery Park City Authority in 1984 to 1988, when he helped arrange bond sales to finance that development.
Paterson said the changes at the New York City OTB could be a model for the six other betting corporations around the state, though they aren’t included in the reorganization plan.
“This is a necessary move” that will help protect 40,000 jobs around the state in the horse raising and racing business, Paterson said. State racing laws will need to be changed to lighten the burden of payments the betting corporation now makes to horse breeders, race tracks, the state, New York City and other local governments, he said.
Last year, the corporation paid winning betters $760.9 million, leaving it with $244.7 million. After providing $93.2 million to the horse racing industry, $20.2 million to local governments and $15.2 million to the state, the corporation was left with $116.1 million of revenue, or less than its $133.9 million of operating expenses.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aktUM3PbEC8Q