ALBANY — Gov. Paterson, citing runaway losses at the New York City Off-Track Betting Corp., will sign an executive order today clearing the way for an unprecedented, federally supervised, bankruptcy to reorganize the long-troubled legal bookmaker, sources said.
The move will allow OTB officials to sharply reduce staffing at the money-losing bookmaker and break at least some of the leases now in place for the operation of underused OTB parlors, according to the sources.
The bankruptcy will also permit OTB to break its existing contract with District Council 37, the large public employees union, and begin using state-of-the-art remote and automated betting systems that require little, if any, supervision.
Officials said they could not recall a time when a state-controlled agency filed for bankruptcy.
Paterson’s unprecedented order will come just over a year after he had the state take over what had been a city-run agency following Mayor Bloomberg’s threat to close it down.
“Bloomberg was smart enough to see what was coming, but Paterson wanted to be the hero and save OTB, but he couldn’t,” said one source.
The city OTB employs more than 1,300 workers and maintains 68 betting locations, including 57 branch offices, eight restaurants and three tele-theaters.
While OTB takes in about $1 billion a year in wagers, the public-benefit corporation lost nearly $18 million in the 2007-08 fiscal year and racked up nearly $40 million in losses during the past four years, according to a recent audit by state Comptroller Thomas DiNapoli.
“Even if cost-savings measures are implemented, it’s unlikely that it will remain financially solvent for long,” DiNapoli said in a grim assessment of OTB’s fiscal situation last month.