OTB protecting its perks

Questionable spending of nearly a half-million dollars for pricey health insurance benefits and sports tickets
Reporting, analysis and commentary
by Jim Heaney, editor of Investigative Post

The regional Off Track Betting Corporation has a story – two stories, actually – and they’re sticking to them.

Officials there continue to insist that the OTB is authorized to provide health, dental and vision insurance free of charge to its board of directors. Gold-plated insurance, described to me by one health insurance expert as “literally the richest plan available.”

I reported in December that the state Attorney General issued an opinion in 2008 that appears to conclude that OTBs are not permitted to provide health insurance coverage to board members.

President Henry Wojtaszek responded by pledging to ask the AG for another opinion specific to his Western Regional OTB, but instead hired a lawyer who has advised him that the AG should have nothing to say about the matter.

Meanwhile, the OTB is treating as a state secret the names of those who enjoy free use of the luxury suites it leases for Bills and Sabres games. Wojtaszek said they’re high rollers at the casino the OTB operates at Batavia Downs. George Maziarz, a former state senator, has suggested OTB managers and directors treat themselves and family members to a fair share of the tickets, possibly in violation of state law.


Heaney discusses his story on Capitol Pressroom


Let’s backtrack for a moment.

The Western Regional OTB is owned by 15 counties in Western and Central New York, plus the cities of Buffalo and Rochester. It operates 15 betting parlors, 30 betting kiosks in restaurants and bars, and a hotel, harness racing track and casino at Batavia Downs.

The OTB is required to dispense its profits to its 17 government owners, divided up based on population. The total in 2017 was $2.9 million. Erie County received the biggest cut, $709,280; Buffalo’s share was about $281,749; Niagara County’s, $227,016.

The OTB board meets for two days a month, for which members receive a stipend of up to $4,000 a year. They’re also entitled to health, dental and vision insurance. Board members who serve for at least 10 years are eligible for lifetime coverage.

In 2017, the last year for which I have information, 13 of 17 active board members  received coverage that had a total value of $229,800. That’s money that would otherwise get disbursed to OTB’s government owners, providing taxpayers a bit of relief.

While there are a handful of business people on the board, most are either elected officials or active in party politics – mostly of the Republican variety.

In 2008, the OTB in Suffolk County asked the attorney general if it could provide health insurance coverage to its board members. The AG’s response: “The OTB is not authorized to provide health insurance benefits to members of its board of directors.”

Wojtaszek said in December he was unaware of the opinion, but nevertheless insisted it did not apply to the western OTB.

“We’re going to ask for our own opinion from the attorney general,” he told me.

I circled back to Wojtaszek several weeks ago to see what the AG had determined. It turns out, Wojtaszek never asked.

“We hired outside counsel [and] they came back with an opinion that the attorney general is not the proper avenue to ask for the opinion,” he said.

Instead, Wojtaszek’s lawyer concluded that the state constitution authorizes the comptroller to handle financial matters involving OTB. The lawyer turned up a 41-year-old legal opinion from the comptroller that supports the OTB’s granting of health insurance to board members.

“We have a ruling that’s directly on point to Batavia Downs that allows us to have health insurance for board directors,” Wojtaszek said.

I shared all this with the comptroller’s office. They see things differently.

Jennifer Freeman, the comptroller’s director of communication, pointed to a comptroller’s audit from 2007 that concluded public bodies that provide cash compensation for board members can’t also provide health insurance. That, in effect, overrules the 1978 opinion.

“Our 2007 audit is consistent with the attorney general’s 2008 opinion,” she said. Any further questions about health insurance are “an issue for the AG’s office.”

Maziarz, who represented Niagara and Orleans counties, called the health insurance “ridiculous” and a “misuse of public dollars.”

Sean Ryan, who represents Buffalo in the state Assembly, said the notion of compensating those who serve on public boards is passe.

“This is outdated,” he said. “These are the types of sort of quasi-unethical perks that we’ve been trying to get rid of.”

Indeed, not one of the 473 authorities and public benefit corporations that filed annual disclosures in 2017 with the state Authorities Budget Office reported providing health, dental or vision benefits to board members. Wojtaszek justified the health insurance benefits to his board by saying the OTB is profitable and board members have contributed to that success.

‘The benefits they receive are hard-earned and well-deserved,” he said.

After I interviewed Ryan, he wrote the AG requesting a ruling on the OTB’s health benefits for board members.

(Update, posted Feb. 28 at 4 p.m. – The attorney general’s office has responded  to Ryan’s request by writing: “We do not render opinions to individual legislators. But we have reviewed our 2008 opinion and the relevant statutes and see no reason why the opinion from 2008 would not apply to the Western Regional OTB.”)

The OTB’s legal challenges don’t stop with health insurance. Its use of tickets for Bills and Sabres games has also become an issue. Maziarz first raised it as an issue in a complaint he filed last June with the inspector general of the state Gaming Commission, whose jurisdiction includes the regulation of OTBs.

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The Western OTB spends $243,500 a year to lease suites at New Era Field and KeyBank Center, ostensibly to entertain high rollers at its casino at Batavia Downs. We’re talking free tickets to concerts and Bills and Sabres games, which sometimes involve visits by former Bills great Thurman Thomas, who the OTB pays $150,000 a year to serve as an ambassador.

Wojtaszek told me the tickets are distributed to “our good customers” and that employees use them “once in a while.”

However, Maziarz, in his complaint to the Gaming Commission, said an “overwhelming majority of those tickets” are used by board members, Wojtaszek and Scott Kiedrowski, OTB’s vice president of operations.

I pressed Wojtaszek during an interview earlier this month as to whether employees attend games and concerts using the OTB’s suites and sometimes bring friends and family members. I couldn’t get a straight answer out of him; he just kept saying the tickets were used for promotional purposes while not directly addressing possible use by employees and family members.

Last fall, Wojtaszek offered to let me look at attendance lists, but refused to give me a copy, which I wanted so I could properly research the names of attendees. I filed a request for the lists under the state Freedom of Information Law. After some foot-dragging, the OTB refused my request, saying release of the names would represent a violation of privacy.

Robert Freeman, the executive director of the state Committee on Open Government, said the OTB has no legal grounds to withhold the names of attendees.

Maziarz said two investigators from the Gaming Commission have interviewed him twice, as recently as January of this year, and left him with the impression the commission is conducting an investigation into several matters involving the western OTB, including health insurance and the use of tickets.

The commission won’t say what, if anything, it’s up to. A spokesman told me the commission neither confirms nor denies ongoing investigations.

The OTB is playing games regarding the questionable spending of hundreds of thousands of public dollars. It’s past time that those with oversight powers do their job and determine the legality of the OTB’s actions.