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Faraldo On Proposed NYC OTB Bailout

Published: October 20, 2010 9:36 pm ET

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Governor David A. Paterson and New York City Off Track Betting Corporation (NYC OTB) today announced that NYC OTB has entered into a historic agreement with the Official Committee of Unsecured Creditors of NYC OTB (Creditor's Committee) that will prevent the closure of NYC OTB. A release from the New York State Office of the Governor states that the action will save hundreds of NYC OTB jobs and provide stability to the State's horse racing industry, protecting an estimated 35,000 related jobs throughout New York.

"This agreement is a tremendous achievement and will help to reassure communities in New York that rely on the horse racing industry," Governor Paterson said. "When my administration took over the operation of NYC OTB, we did it because we knew the Corporation could be saved, and the benefits would help the entire State. More than 17,000 jobs in New York are directly supported by the racing industry, and many thousands more are supported by the economic activity generated by horse racing. I commend NYC OTB Chairman Larry Schwartz and CEO Greg Rayburn for their efforts."

Senator Eric Adams said, "The OTB industry is of importance to the economic growth of New York State. I am pleased that this agreement was reached to prevent the closure of OTB. It will support and stimulate future financial health for the racing industry."

NYC OTB CEO Greg Rayburn said, "This is an agreement that involves shared pain across all of the participants in the process in order to arrive at a viable solution. I would like to thank the employees, our Board of Directors, the unions and the creditors for their diligence and willingness to be a part of the solution. We believe that the concessions made by all parties involved are in the best interests of the State and the racing industry, and we look forward to working with the Creditor's Committee in the future to continue strengthening horse racing in the Empire State."

This unprecedented agreement follows months of intense negotiations and is the cornerstone of NYC OTB's Plan of Adjustment to be filed with the Bankruptcy Court. In addition to having the support of the Creditor's Committee, the labour unions representing OTB employees reached agreements earlier this fall, which were ratified by their members.

Under the terms of the agreement, approximately $95 million in pre and post-petition debt owed by NYC OTB to the Committee members will be resolved. Approximately $65 million will be forgiven by the New York-based track members of the Committee in exchange for the transfer by NYC OTB of its advance deposit wagering operations and certain essential changes to the New York Racing Laws. The legislative changes will include provisions to help video lottery terminal operators, located at several harness tracks and Aqueduct Race Track, generate additional revenue; measures that will increase aid to education.

The Creditor's Committee includes: Yonkers Racing Corporation; the New York Racing Association; Empire Resorts/Monticello Raceway; District Council 37, Local 2021; Finger Lakes Racing Association; Churchill Downs, Incorporated; and Paramount Leasehold, L.P.

In response to today’s announcement by Governor Paterson and NYC OTB CEO Gregory Rayburn of the state bailout proposal for New York City Off Track Betting, Joe Faraldo, President of the Standardbred Owners Association of New York, issued the following statement:

“While the Governor and New York City OTB may have reached agreement with the Creditors Committee, they are going to find it much tougher to convince the people of New York State and their legislators that this proposal as it now stands makes any kind of long term sense. Not only does the latest plan being floated by NYC OTB represent yet another government sponsored and funded bailout of a broken system, but worse yet it now also directly threatens the livelihoods of 40,000 New Yorkers employed in the racing and agriculture industries by seeking to buy the support of a handful of wealthy racino owners with pricey givebacks.

"On behalf of New York’s horsemen and those 40,000 people employed as a result of racing, let me make it perfectly clear: A few wealthy racino operators seeking to insert their own non-racing perks into this new bailout plan absolutely do not speak for our entire racing industry. In fact, many of the items on the table – ranging from forgiving legislatively mandated payments owed to horsemen, reducing future commissions paid for racing, and even a proposed reduction in race days at New York harness tracks – will have immediate and negative impacts on employment in our rapidly recovering harness industry. Furthermore, since many of these issues are related solely to increasing profits from the video lottery terminals and have absolutely no connection to racing, one must question why they are even being considered as part of a supposed racing-related OTB bailout.

"We cannot and should not forget that NYC OTB was originally formed to benefit both the New York racing industry and the state, yet it continues to actually hurt both racing and the state in general. Simply bailing them out once again (and in the middle of a fiscal crisis) without enacting structural reforms to finally assist racing makes no sense, and buying the support of the cash-rich racinos – to the long term detriment of the racing and agriculture industries – tips this new bailout plan from plain old bad to potentially scandalous.”

(With files from the New York State Office of the Governor and Standardbred Owners Association of New York)

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