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March 18, 2010

Frucher Looks to Save N.Y. OTB

By John D'Antona Jr.

But he doesn't expect new technology to be readily accepted. He experienced a similar experience with floor traders, who initially rejected electronic trading. At OTB, Frucher expects resistance from the racing industry, customers, unions and state and city government.

Once all parties come to an agreement and legislation is passed, OTB plans to issue $250 million in floating rate notes and avoid asking the public for money.

At PHLX, Frucher similarly tapped Wall Street firms to become investors in the exchange.

"It's impossible or unethical to ask the state to pony up the money to do this at a time of state budget cuts. OTB's remodeling must be self-financed," Frucher said. "And you can't ask an investor to invest unless their money is in first position to be repaid."

The bond offering will be overseen by Bret Engelkemier, a friend of Frucher's and formerly Citigroup's global head of systematic trading, Now an independent consultant, Engelkemier said proceeds will finance OTB for at least three years, finance five super entertainment centers, place new ATM wagering machines around New York and increase its online presence.

"We want to present the beautiful parts of sport-the majesty of the animals," said Frucher. "At the end of the day, this is about jobs and closing OTB would be a losing trade."

 

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