OTB lands $3.2M intended for small business

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The Western Regional Off Track Betting Corp. is not to be mistaken for a small business.

It’s a state-created public benefit corporation, owned by 15 counties and two cities, and charged with running legalized betting operations in western and central New York. It shares its profits with those local governments and the State of New York.

Its employees, starting with its well compensated CEO, Henry Wojtaszek, are treated as public-sector employees, drawing, for example, a pension from the state. 

And OTB reported some $3.1 million in cash reserves in its last audited financial statements.

Nevertheless, OTB has managed to obtain federal funding intended to help keep small businesses afloat during the COVID-19 pandemic. 

It appears permissible under the Payroll Protection Program, which is coming under increasing criticism for providing funds to questionable recipients while denying money to many legitimate small businesses.

OTB officials disclosed this week the organization will receive $3.2 million through the program, the majority of which is intended to cover eight weeks of payroll costs, plus other expenses such as utilities and employee benefits.

Wojtaszek, who has doubled his salary since joining OTB nine years ago as general counsel, will be among the beneficiaries. So will his three senior managers, who took a 50 percent pay cut April 16, and some 450 full and part-time employees, most of whom were furloughed without pay at the same time. 

Meanwhile, Wojtaszek and his chief fiscal officer have continued to receive full pay.

The federal money will also presumably pay the stipends and premiums of OTB board members, who receive free health, dental and vision insurance. The state comptroller and attorney general, as well as private attorneys, have all told OTB officials that they’re not entitled to the insurance, but Wojtaszek and the board have ignored that advice.

Program geared for small business

The Payroll Protection Program was created by the federal government earlier this year to stem cash flow shortfalls caused by the COVID-19 pandemic in small businesses and nonprofits employing fewer than 500 workers. 

The program offers a loan worth 2.5 times the business’s average monthly payroll, up to $10 million. Seventy-five percent is to be spent on salaries, while a quarter can be spent on non-payroll-related expenses. The loan is forgiven if employers keep their workers on the payroll for eight weeks. If not, it remains a loan on favorable terms to the borrower. 

Congress authorized $660 billion for the program, which has come under increasing criticism as many small businesses have been shut out while loopholes have enabled large, profitable firms to secure up to $1 billion in funds.

Gov. Andrew Cuomo’s March 16 order to close restaurants, bars and casinos temporarily shuttered OTB’s video slots at Batavia Downs, its primary revenue-generating arm. It also triggered furloughs for OTB’s workforce. Wojtaszek and Leach continued to be paid in full to prepare the Payroll Protection Program application  and “other matters,” according to Ryan Hasenhauer, an OTB spokesman.

Gambini discusses the story on WBFO & WBEN

It’s unclear which employees will be called back to work while OTB’s casino and other operations remain closed, or what their duties will be. OTB operates 19 betting parlors, 30 betting kiosks in restaurants and bars, and the harness racing track at Batavia Downs, as well.

“All employees will be considered on call,” Hasenhauer said.

As well, additional health and safety training is scheduled in advance of re-opening. 

“As we get closer to reopening, employees will have to prepare each area of the facility and some employees will also be reaching out to our guests,” Hasenhauer said in an email to Investigative Post. 

It’s not mandatory for employees to work, however. Matthew Pelkey, a business attorney, said the program is akin to unemployment insurance run through an employer.

“It’s the same result, it’s just you made it look like it was more of, you know, capitalism,” Pelkey said. 

The program application doesn’t ask for documentation of a business’s cash reserves, according to Susan McCartney, the director of Buffalo State College’s Small Business Development Center. She and Pelkey said the paperwork required to demonstrate the funds were expended appropriately hasn’t been issued yet.

But eventually, with evidence, the program’s funding becomes a grant. Or a recipient could accept the money, not comply with the rules, and the money remains a loan due back in two years at a 1 percent fixed interest rate.

“That’s about as close to free money as you can get,” Pelkey said. “I can tell you, I don’t think I’ve ever seen a loan that favorable.” 

Wojtaszek has doubled pay

The challenges of 2020 follow a difficult 2019 for OTB. Last year, federal investigators continued to dig into its operations, the state comptroller launched a sweeping audit, and a growing number of critics questioned its spending on everything from health insurance for board members to the purchase of luxury suites for concerts and sports events.

Despite the troubles, OTB’s board of directors voted to give Wojtaszek a raise in December. That upped his total compensation to about $191,938, making him one of the highest-paid public officials in Western New York. 

In 2019, OTB’s monthly payroll averaged about $1.5 million. At least six employees make over $100,000, starting with Wojtaszek.

According to a recently released report from the Empire Center, an Albany research and advocacy group, Wojtaszek ranks just outside the 10 highest-paid public employees in Western New York. He’s outpaced by his spouse, Niagara County District Attorney Caroline Wojtazek, who makes $197,565 a year. That’s the sixth highest in the region, according to Empire Center.

Wojtazek’s ever-increasing salary 

Source: Western Regional Off Track Betting Corp.

Until last year, Wojtaszek drove an OTB-owned vehicle, which he turned in after Investigative Post requested documents that showed he failed to keep accurate records of his mileage and failed to reimburse the OTB regularly for personal use between 2016 and 2019. He also had an OTB-issued cell phone between 2018 and 2019, but turned that in as well after Investigative Post began probing its use.

Wojtaszek’s compensation package includes 47 days a year of paid time off for vacation, holidays and sick time. He received health, dental and vision insurance with an estimated value of $20,000 per year until 2018, when he opted out for an annual payment of at least $6,000. He remains covered under his wife’s plan.

Erie County Legislator Kevin Hardwick said Wojtaszek’s salary is excessive considering  Erie County Executive Mark Poloncarz is paid $118,376 for managing a budget that is nearly 45 times bigger and overseeing a workforce that is 7.5 times larger.

“That’s a problem,” Hardwick said.

Wojtaszek’s most recent pay raise, approved in December, was two-fold. The first is a 3 percent increase in his 2019 earnings, an uptick awarded to all members of management but one, whose lawyer said the employee has been retaliated against for cooperating with federal investigators. 

The second is $7,000 to compensate Wojtaszek for use of his personal car. Records described the sum as an “increased salary,” while Wojtaszek called it a “stipend.” OTB officials have not said whether he receives reimbursement for gas and other related expenses.

OTB’s roller coaster finances

Wojtaszek’s 2020 salary exceeds OTB’s payouts to 12 of the 17 counties and municipalities that own OTB and receive profits. 

While OTB’s profits increased last year to $3.6 million, they have fluctuated over the years and down from a high of $8.7 million in 1987.

Those profits are distributed to the state and municipalities that control OTB. The payouts were one of three primary aims of the state Legislature when it created public benefit corporations like OTB in 1973. The others were to provide jobs and curb the black market on gambling. 

OTB payouts to local governments in 2019

Source: Western Regional Off Track Betting Corp.

Distribution of OTB profits is based on a formula that sends 65 percent to the state for education and administrative expenses and 35 percent to local governments based on population.

OTB’s waning profitability is fueled by losses at two of its three major divisions — its betting parlors and Batavia Downs harness racing track — which have lost millions of dollars in recent years, according to a detailed review by Investigative Post analyst Ken Kruly. 

Only two of OTB’s business arms make money. Online betting turns a profit, helped by the small overhead costs its digital operations require. The other is its video slot casino at Batavia Downs, which generated $4.5 million to $5.5 million per month last year – nearly three-quarters of OTB’s gross income. 

Wojtaszek ignored numerous requests for comment for this story from Investigative Post. He did, however, speak briefly during an impromptu interview following OTB’s board meeting in December. He told Investigative Post he deserved the raise.

“We had a great year. Look at the numbers. That’s what tells the tale,” he said. 

Wojtaszek told his board at the meeting that OTB last year distributed more profits to counties and cities than any year in its 40-year history. However, a review of OTB finances shows that OTB distributed larger profits in 24 of its 45 years in business.

“It’s nowhere near being the highest-earning year in the history of the organization,” Kruly said.

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Phil Gambini