The lawmakers failed to overcome partisan differences before the latest deadline to save the troubled gambling operation.
The Senate's Democratic majority didn't have the votes to pass their party's plan to reorganize the OTB and keep it from closing by midnight Tuesday.
The Assembly had already passed that bill drafted by Democratic Gov. David Paterson.
But Republicans in the Senate minority who were excluded from negotiations wanted similar help for the five other regional OTBs on Long Island and upstate.