May 3
2023
Big shakeup at the besieged OTB
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The embattled Western Regional Off-Track Betting Corp. is finally getting reformed. In a big way.
The state public benefit corporation — mired in allegations of malfeasance and subject to multiple critical audits and investigations — saw its entire 17-member board of commissioners terminated Tuesday night, thanks to a budget provision sponsored by Sen. Tim Kennedy of Buffalo and Assembly Member Monica Wallace of Lancaster, both Democrats.
New board members will be appointed and weighted voting instituted to reflect the population of the 15 counties and two cities that in-effect own OTB. That will shift control from mostly rural counties controlled by Republicans to Erie and Monroe counties and their two largest cities, Buffalo and Rochester, all of which are led by Democrats.
The power shift is expected to lead to the departure of Henry Wojtaszek, who has served as OTB’s president and CEO since 2016. Wojtaszek is an influential GOP insider and the former chairman of the Niagara County Republican Party. Critics maintain he has used the OTB payroll for patronage purposes.
“This is all about cleaning up a board that has a pervasive culture of corruption,” Kennedy said in an interview with Investigative Post. “The bottom line here is that the current board structure has ignored the public good.”
Kennedy declined to comment on whether Wojtaszek should be fired by the new board, but said he expects Poloncarz, Brown and other municipal leaders to “appoint people who will have reform-minded interests in cleaning up the corruption at OTB.”
In a statement, OTB Chairman Richard Bianchi said he and the now-former board members were “disappointed by the language included in the state budget.”
“It was negotiated in secret with no open discussion, debate, or input from our member counties,” Bianchi said. “In the short term, we will remain focused on fulfilling the responsibilities to our partners in local government as we look to evaluate potential next steps.”
Western Regional OTB was created by state lawmakers in 1973 to curb the black market in bookmaking and provide revenues to local governments. It is owned by 15 counties in Western and Central New York, plus the cities of Buffalo and Rochester. It operates betting parlors, betting kiosks in restaurants and bars, and a casino and harness racing track at Batavia Downs, which also includes a hotel and restaurant.
Each year OTB dispenses a portion of its profits to its government owners, divided based on population. Erie County, as the most populous government owner, receives the biggest cut.
For 2022, OTB distributed $9.6 million in profits to the 17 governments that own the operation. That’s up from $5.8 million in 2021. In 2020, COVID shutdowns limited OTB’s profits to $722,000.
Investigative Post has published more than two dozen stories about OTB since 2018, detailing the improper award of high-end health insurance to its board members; extravagant spending on luxury boxes at concerts and Bills and Sabres games; and a federal whistleblower lawsuit filed by former OTB executive Michael Nolan, who claimed he faced retaliation by Wojtaszek and ultimately was fired for cooperating with investigators looking into OTB’s practices. Nolan’s lawsuit was dismissed as untimely last year; he is appealing that dismissal.
Most recently, Investigative Post reported in March on the current board’s decision to award top management $40,000 in bonuses, despite ongoing investigations by federal and state authorities into OTB operations.
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OTB is believed to be the subject of ongoing criminal investigations being conducted by the FBI and state comptroller. Among other inquiries, OTB has been under an FBI investigation since 2019 regarding the agency’s awarding of lucrative contracts to politically wired companies.
Kennedy said he expects the new board to address the use of Bills and Sabres tickets by OTB executives and board members, end the policy of allowing take-home vehicles for executives, and “do away with lavish benefits” like the lifetime, gold-plated healthcare board members currently enjoy.
“Those are simple things the hoard can do out of the gate to show they’re serious,” Kennedy said. “What we are doing is cleaning up the pervasive disregard for the public good.”
Erie County and Buffalo — whose commissioners will be appointed by the county executive and the mayor, respectively — will have a combined weighted vote of 34 percent.
Rochester and Monroe County and Rochester will have a combined weighted vote of 28 percent.
In sum, those four municipalities — all controlled by Democrats — will exercise effective control over a 17-member board that previously had long been dominated by Republican appointees.
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Wallace, in a statement Wednesday, said: “Under these budget provisions, the leadership of WROTB will be representative of the community that it serves.”
“The board member who represents the nearly 1 million residents of Erie County will now have 24 votes and the board member who represents the roughly 40,000 residents of Wyoming County will have one vote. This change will provide fair representation for those who live in the more populated counties as well as provide much-needed oversight and transparency to the board.”
Erie County Executive Mark Poloncarz and Buffalo Mayor Byron Brown — who now hold considerable influence over the new board — declined to comment on who they would appoint and if they’d appoint people in favor of firing Wojtaszek.
Michael DeGeorge, a spokesperson for Brown, said the city “will do what is required by the state” but declined to comment further. Peter Anderson, a spokesperson for Poloncarz, said Wednesday morning that “no decisions have been made at this point.”
Last summer, Erie County Comptroller Kevin Hardwick fired off a series of letters to Wojtaszek, asking the OTB chief to provide answers — and documents — explaining, among other matters, why OTB continued to provide health insurance to board members, despite numerous legal opinions that doing so was improper. Hardwick also asked for information about the construction and purchase of the hotel serving Batavia Downs.
At first Wojtaszek advised Hardwick to file a Freedom of Information request for the information. (OTB has dragged its heels on satisfying such requests in the past.) Then, in an October face-to-face meeting, he assured Hardwick that he would provide the comptroller with the requested documents.
He did not. So, in February, Hardwick sent Wojtaszek yet another letter, titled “Unanswered Questions Regarding WROTB Operations.”
Among those unanswered questions was the cost of free — and in some cases lifetime — health insurance for board members. In response to scrutiny of the issue, OTB stopped offering health insurance to board members appointed after July 1, 2021. However, board members appointed before that continued to qualify for health insurance paid by OTB, and some long-serving members qualified for continued coverage after they retired from the board.
In a statement Tuesday, Hardwick, noting his own inquiries into OTB operations, said the agency has “been under a cloud of scrutiny for quite some time.”
“While the organization has supplied information to some of my questions, many more have gone unanswered,” Hardwick said. “I am pleased, therefore, that the State Legislature has acted. Like me, I’m sure they have also concluded that when it comes to OTB … enough is enough.”
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The changes adopted by the Legislature Tuesday night also established four-year terms for board members. It does not limit the number of terms a board member can serve. The changes took effect immediately but will expire after four years. Kennedy said the sunset clause allows lawmakers to evaluate the effect of the changes and revise the board’s structure again, if necessary.
Kennedy and Wallace first introduced bills aiming to reform OTB in 2022, but their efforts to attach those bills to last year’s budget failed. The changes to OTB’s board was one of three measures championed by Kennedy this year.
The other two measures, which aim to reduce or eliminate perks for board members and staff, were not incorporated into the so-called “Big Ugly” — the state’s final omnibus budget bill, which is traditionally studded with unrelated legislation. He told The Buffalo News that separate legislation addressing those matters could be brought up for votes in the coming weeks.
