The New York City Off-Track Betting Corp. gambled that its storefront gambling parlors would prosper and lead to the construction of the same modern racetracks that had taken hold in neighboring states.
According to a news report from Bloomberg, these ventures struggled to created the revenue the company was hoping for, and they are now filing bankruptcy.
The Chapter 9 filing comes on the heels of five straight years of financial losses at a combined loss of more than $45 million.
According to bankruptcy papers, the company reported more than $500 million in debt against $50 million in assets.
NYC Off-Track Betting will continue to maintain its storefront off-track horserace gambling operations, despite the bankruptcy filing. It also reported that some of its outstanding bills from November may not get paid.
The bankruptcy filing of this state-run corporation will allow it to reorganize its operations, rather than liquidating assets. There are 68 gambling parlors across New York City, employing over 1,300 people in all five of the city’s boroughs.
As a part of the reorganization process, the company will not be requesting any taxpayer money. Instead, NYC Off-Track Betting Corp. will issue $250 million in bonds. These funds will go towards paying debts, purchasing new technology, and improving the parlors and gambling facilities themselves.
According to chairman Meyer Frucher, the addition of new betting technology would significantly increase the level of gambling that goes on across the city. These improvements would include 24-hour-a-day television feeds of horse races, and virtual racing. The chairman went on to say that this could lead to an increase of betting volume that would raise the total to $4 billion.
NYC Off-Track Betting is a state-run company, which has been in existence since 1971. Designed to operate as a public-benefit corporation that runs as though it was a private entity, the company brings in revenue that goes to the city and the state. The company manages a number of novelty restaurants, storefronts and teletheaters across New York City. NYC Off-Track Betting Corp. claims on its web site to make 1.6 million sales transactions per day.
In 2008, NYC Off-Track Betting paid out about $761 million to those who placed winning bets, according to Bloomberg. About $93 million went to the horse racing industry, about $20 million to local government, and about $15 million to state government. This left about $116 million for the corporation. These remaining revenues fell about $18 million short of NYC Off-Track Betting Corp.’s operating costs.
Because of this shortfall, the company will need to reorganize in order to continue making payments to the necessary governmental outlets. Almost $2 billion have gone to state and local government since the early 1970s when the corporation came into existence.
The new legislation will be necessary before February, when NYC Off-Track Betting will run out of cash. With the reorganization, there would be a restructuring of the way that funds are paid out to the horse racing industry, to state government and to local government.