The owner of a South Dakota telephone race betting business is reassuring his customers that they’ll be made whole despite the firm filing for bankruptcy.
On Monday, the Paulick Report broke the news that South Dakota-based advance deposit wagering (ADW) and off-track betting operator Bettor Racing Inc. had filed for Chapter 7 bankruptcy protection, citing over $11.8m in liabilities and less than $1.5m in assets.
The filing came after Bettor Racing lost its legal fight with its principal creditors, the National Indian Gaming Commission (NIGC) and the South Dakota-based Flandreau Santee Sioux Tribe. The tribe is owed over $6.1m while the NIGC is owed over $4.5m.
In 2004, Bettor Racing opened its ADW operations at the tribe’s Royal River Casino (pictured) due to the tribe’s favorable pari-mutuel tax rate. When the state of South Dakota reduced its pari-mutuel tax rate, Bettor Racing owner Randy Gallo announced he would move the ADW business out of the casino, prompting the tribe to modify Bettor Racing’s original contract to convince Gallo to stay.
However, the NIGC never approved the amended contract, and a 2011 compliance review found the tribe was never authorized to modify the original deal, meaning both Bettor Racing and the tribe were in violation of the Indian Gaming Regulatory Act (IGRA). The NIGC slapped Bettor Racing with a $5m fine and ordered it to pay the tribe an additional $4.5m.
Bettor Racing, which Gallo claims handles annual turnover of around $80m, caters to high-end bettors seeking rebates, and Gallo insists that the company’s roughly 160 clients won’t be left stranded by Bettor Racing’s bankruptcy.
Among Bettor Racing’s assets is a $902k bond that Gallo believes should be used to pay off the company’s customers, some of whom are owed up to $69k. But the ultimate decision on how Bettor Racing’s assets are disbursed will be made by trustee Lee Ann Pierce.
Gallo insists that all Bettor Racing’s customers will be “paid 100%.” The bond covers the first $10k in each customer’s account, and Gallo claims “anything over that I am going to make good.”
In August, Gallo won permission from South Dakota regulators to launch a new entity called South Dakota OTB Inc, although it can’t commence operations until all of Bettor Racing’s customers have been paid.