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Legal Objections Filed Over Proposed Bailout

Published: November 24, 2010 2:34 pm ET

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The Standardbred Owners Association of New York today sent a letter and memorandum to members of the New York State Assembly and Senate in advance of the scheduled Special Legislative Session on Monday, November 29, 2010.

The pieces appear below in their entirety.


NYS HARNESS HORSEMEN FILE LEGAL OBJECTIONS AGAINST NYCOTB BANKRUPTCY PLAN AND CALL ON LEGISLATORS TO REJECT LAST MINUTE OTB BAILOUT

November 24, 2010

Dear Legislators:

While we apologize for contacting you on the eve of the Thanksgiving holiday, the timing of this Monday’s legislative special session and the unfortunate (bordering on scandalous) process surrounding the proposed bailout of New York City OTB (NYCOTB) has left us no choice but to make this urgent appeal.

As you are no doubt aware, the Governor has called on the Legislature to act on the proposed bailout of NYCOTB at this coming Monday’s session. You and your colleagues are going to be asked to approve a multi-million dollar bailout bill that will be finalized in the proverbial 'dark of night' over the Thanksgiving holiday – with no input from the very harness racing stakeholders it will hurt – and that will have long-term impacts on an industry that employs 40,000 New Yorkers. Within the context of other recent gaming issues in New York State, it is extremely disturbing that the Legislature is even being asked to consider yet another hugely important racing issue in this manner.

Furthermore, you should know that the Standardbred Owners Association (SOA) yesterday filed formal legal objections with the United States Bankruptcy Court (as did Catskill OTB) to prevent what is clearly an illegal plan to deprive the harness horsemen of their undisputed legal claim to millions of dollars in payments owed them by NYCOTB. The first hearing on this matter is scheduled for Tuesday, November 30 – the day after your special session – which makes the rush to consider a bailout bill on Monday even more questionable.

Therefore, on behalf of New York State’s resurgent, multi-billion dollar racing industry, we are calling on the New York State Assembly and New York State Senate to reject the NYCOTB bailout legislation you will be presented with on Monday. Instead, we urge you to work with ALL industry stakeholders to develop an equitable, thoughtful, long-term legislative solution, rather than a last minute bill that hurts racing and agriculture and provides significant benefits to a handful of wealthy racino owners. Even the most cursory review of this plan makes it crystal clear who is driving the bankruptcy process, who benefits the most and who essentially wrote this bill: Track owners who believe they are on the verge of successfully 'gaming' the bankruptcy court and the Legislature and who have been working toward a day in which their racinos can jettison horse racing altogether and be nothing more than stand-alone casinos.

We have attached a one-page summary of our concerns – and more importantly, several rational and achievable proposed solutions that won’t cost the state a penny! – for your review. As always, please do not hesitate to contact me at 718-544-6800 or the SOA’s lobbyist, Joni Yoswein, at 212-233-5700 with any questions or concerns.

Sincerely,

Joe Faraldo


NYS HARNESS HORSEMEN OPPOSE NYCOTB BAILOUT PLAN

New York State’s harness horsemen and stakeholders throughout the multi-billion dollar horse racing industry – which is responsible for the livelihoods of more than 40,000 New Yorkers – strongly oppose the new bailout of NYC Off Track Betting (NYCOTB). While specific bill language will likely not be released until immediately preceding the legislative Special Session scheduled for November 29, the bill is expected to mirror the recently-filed NYCOTB debt adjustment plan.

Despite the fact that the harness horsemen have clear legal claims in the NYCOTB bankruptcy in the millions of dollars, we were not included in the creditors committee and none of our issues are reflected in this plan. The debt adjustment plan solely addresses the interests of the unions, the track owners and the landlords, but not the actual racing industry, the horsemen or the breeders that NYCOTB was originally created to support. Furthermore, this plan contains countless pricey givebacks for a small handful of wealthy racino owners that have absolutely nothing to do with NYCOTB or racing, which is nothing short of scandalous.

Though the head of NYCOTB is fond of saying that everyone is sharing in the pain a little and is “taking a haircut,” that is simply not true. This plan disproportionately damages New York State harness racing and provides nothing to help our rapidly rebounding industry. Therefore, we urge the New York State legislature to reject this plan and develop legislation that reflects our fundamentally fair and valid concerns.

HOW CAN THIS PLAN BE AMENDED TO REDUCE THE DAMAGE TO OUR INDUSTRY?

Since we recognize that the NYS Legislature may not be prepared to simply let NYCOTB die just yet (as many media outlets and observers have suggested), we believe a fair, workable legislative solution can be achieved with the following proposals:

1. COMPENSATE THE HORSEMEN FOR OUR LEGAL CLAIMS: Based on the horsemen’s and breeders’ proven legal claims (more than $11 million at Yonkers alone) – and the fact that the tracks are essentially using our money to 'buy' the phone and internet wagering system from NYCOTB – it is appropriate that the horsemen be given an ownership stake in the new Advance Deposit Wagering (ADW) entity. As it stands now, this 'Newco ADW' will be 'taken' by our track partners solely for themselves, with a 'sue us if you can to get your share' attitude. (Furthermore, these track operators have not shared with the Court or the Legislature the fact that they have a conflict of interest on the Creditors Committee and that they have systematically excluded the horsemen and the breeders from these proceedings). The horsemen at Yonkers and Monticello should receive a proportionate share of the debt settlement (which has no cost to the State of NY) and a defined, legal role in the ongoing management of this entity so that we can protect the racing industry and its economic importance to NYS.

2. NO REDUCTION IN RACE DAYS AT NYS HARNESS TRACKS: There can be absolutely no reduction in race days in this proposal. It directly contradicts the Legislature’s prior intent in protecting the racing industry and has nothing to do with NYCOTB. Again, it’s scandalous that the track owners sitting on the Creditor’s Committee (who excluded the horsemen) even put this on the table within the context of a bankruptcy proceeding. Equally outrageous is the proposal to reduce the percentage paid to the Agriculture and NYS Horse Breeding Development Fund by 20% - which again, has nothing to do with NYCOTB’s reorganization.

3. SUPPORT NY RACING WITH A REAL, ENFORCEABLE 'NY FIRST' PROGRAM: Finally, if statutory payments to the racing industry are to be lost as part of this bailout, then a real 'NY First' program needs to be put in place to promote and support NY racing. It must be detailed, legally enforceable (with penalties for non-compliance) and must apply to the new ADW and not just OTB parlours. The language now contained in this plan is weak, unenforceable and is no more than a public relations ploy that will provide no real benefit to our industry.

While we fully accept the fact that all of the stakeholders will need to feel some pain in the end, the facts clearly indicate that we horsemen and our industry are disproportionately hurt by this plan as it stands right now. Should you have any questions or concerns, please contact Joe Faraldo at 718-544-6800 or the SOA’s lobbyist, Joni Yoswein, at 212-233-5700.



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