Things didn't get much better for Auckland as they slumped to 104-5 at lunch and, after a brief break for bad light in the middle session, the wickets continued to tumble.
Colin Munro provided the only real resistance with a run-a-ball half-century, but Butler had him caught for 59 to complete his third first class five-wicket haul.
When Nathan McCullum wrapped up the tail, Otago's bowlers had earned the full four bonus points and given their batsmen every chance of snatching a sizeable first-innings advantage.
Aaron Redmond and Hamish Rutherford, particularly, seized that chance and saw their side through to 86-0 loss at stumps, with Rutherford's unbeaten 60 coming from just 63 balls.
The day's other game, between Northern Districts and Canterbury, was limited to 50 overs due to rain in Hamilton.
In that time the hosts, who were sent in by Canterbury captain Peter Fulton, managed to reach 125-2 with Joseph Yovich (40no) and Daryl Mitchell (8no) the unbeaten batsmen.
Providing the skies clear at Seddon Park, defending champions ND will resume chasing the win they need to rise off the bottom of the table.