How can this possibly happen? A legally created monopoly for gambling seeks bankruptcy protection. Your average idiot can make a living illegally as a bookie. The government screws it up.
Is there anything that the government can run decently? I know of nothing. Social Security, Medicare, the Post Office, Amtrak, DMV, municipal transportation, garbage collection, etc. etc. are either total failures or would be if there were anyone allowed to compete with them. Oh yes, I forgot, they are going to run our entire health care system efficiently! After all, look how successful they have been with Education, Energy, simplifying the income tax and on and on ad nauseum. If you want small problems to grow into big ones, call the Feds.
I am beginning to wonder whether the citizens of this country are bigger morons than those in Washington, DC. How else does one explain why we continue to put up with this?
NYC’s Off-Track-Betting Seeks Bankruptcy Protection (Update1)By Michael Quint and Tiffany Kary
Dec. 3 (Bloomberg) – New York City Off-Track Betting Corp., operator of storefront horse-race wagering parlors, filed for bankruptcy and plans to reorganize after five years of losses totaling $45 million.
A lack of resources to build the type of modern race tracks that exist in neighboring states and dwindling cash levels were cited as reasons for the filing. The Chapter 9 filing in U.S. Bankruptcy Court in New York today listed as much as $500 million in debt and as much as $50 million in assets.
The filing won’t halt gambling operations, though some bills due in November won’t be paid, said Meyer Frucher, chairman of the state-run corporation, in a conference call with reporters. Chapter 9 bankruptcy allows municipalities to reorganize rather than liquidate.
“We’re not going to be asking for any taxpayer dollars,” Frucher said. The reorganization plan calls for a $250 million bond sale to pay debts and provide funds to buy new technology and improve betting parlors.
New York City OTB employs about 1,365 people at 68 betting parlors in the city’s five boroughs. Betting volume may increase as much as four-fold to $4 billion with updated technology, such as an around-the-clock horse-racing TV channel or virtual racing, Frucher said in September.
The corporation paid $760.9 million to winning bettors in fiscal 2008, according to the latest data available. 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, or $17.8 million less than its operating expenses.
$1.4 Billion to City
New York City OTB said in court papers it needs to reorganize to begin contributing money to the state again. Since its 1971 inception, it has made payments of $2 billion to the horse-racing industry, about $1.4 billion to New York City, and about $600 million to the state, according to court documents.
If the betting operation were closed instead of reorganized, New York City OTB would face debt of more than $600 million, Frucher said. The largest portion of that would be to cover workers’ pension and health-care benefits, which the city and state are disputing, he said.
The plan also calls for New York lawmakers to change the formulas for distributing funds among the horse-racing industry, the state and New York City, Frucher said.
New Legislation
New legislation is needed before the end of February, when the corporation expects to run out of cash, Frucher said. Labor unions will be asked to accept “very large-scale reductions” as some locations are closed. The workers are represented by District Council 37, New York City’s largest public employees union.
JPMorgan Chase & Co. has said the $250 million of bonds may receive the highest ratings if investors are first in line to collect, after winning bets are paid, Frucher said in September 2009, when the bankruptcy plan was announced.
Richard Levin, a partner at Cravath, Swaine & Moore LLP, is representing the betting corporation.
The state took control of New York City OTB’s operations in 2008 after MayorMichael Bloomberg said he would shut it down to stop losses. The mayor is founder and majority owner of Bloomberg News parent, Bloomberg LP.
Governor David Paterson asked Frucher to lead the reorganization. Frucher was chairman of the New York City School Construction Authority and chief executive of Battery Park City Authority, where he helped arrange bond sales to finance that development.
The case is: New York City Off-Track Betting Corp., 09-17121, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Michael Quint in Albany, New York, atmquint@bloomberg.net; Tiffany Kary in New York at tkary@bloomberg.net.
Last Updated: December 3, 2009 16:48 EST
I’m curious about Monty’s opinion on why health insurance can not be sold across state lines.
I am not too familiar with this issue. Each state apparently has its own insurance commission which provides them importance, opportunity for plunder, etc. They obviously don’t want to give up their power. Don’t know why Washington won’t address this issue other than it would provide options to buyers and presumably lower costs (for both consumers and companies) and provide another obstacle to Washington’s desire for universal health care. Boddy, I hope you understood my title was in jest.