A government-owned corporation that manages horse betting in Suffolk County, New York, sold $342.7 million in bonds to refinance its debt as it expands its operations.
The bonds, issued by the Suffolk Regional Off-track Betting Corporation (OTB), mature between 2034 and 2053, yielding between 5.08% and 6.1%. The bonds did not receive a rating.
The corporation will use the bond proceeds to refinance a credit agreement it signed in 2021 to fund the acquisition of a casino hotel in the village of Islandia, which is in central Long Island. The corporation is now planning to expand the former Marriott hotel and current casino, which goes by Jake’s 58 Casino Hotel.
The issuance comes as the corporation recovers from a decade-long period of financial uncertainty. The Suffolk OTB declared bankruptcy in 2011 and emerged from it in 2020. One year later, the corporation reacquired the license to Jake’s, which it had licensed to a private company during its bankruptcy.
Off-track betting on horses is permitted in five regions of New York and managed by state-government-owned corporations. In 2013, Suffolk OTB won the right to introduce video gambling machines, including electronic versions of games like blackjack and roulette, in addition to horse betting.
Revenue from so-called video lottery terminals now makes up more than 90% of the corporation’s total operating revenue, according to the official statement accompanying the sale of the bonds. “The success of our business strategy speaks for itself,” the bond documents read.
The bonds are revenue obligations of Suffolk OTB, secured by a lien on its revenue.
KeyBanc Capital Markets Inc served as underwriter on the issuance, purchasing the bonds for $335 million. Munistat Services, Inc acted as financial advisor.