Lawyers tell OTB to ditch the perks
A prominent law firm has told the board of the Western Regional Off Track Betting Corp. that its members should not be helping themselves to free health, dental and vision insurance.
“We recommend that Western region directors no longer accept health insurance benefits,” lawyers for the firm of Barclay Damon wrote in a March 26 opinion obtained by Investigative Post and the Niagara Gazette.
The opinion cited caps on board compensation established in state law and previous rulings made by the state Comptroller and Attorney General. Attorneys for Barclay Damon also cautioned that board members may face financial penalties if the courts determine they weren’t eligible for the insurance coverage.
The OTB board sought outside counsel after another lawyer, Ginger Schröder, who was selected by President Henry Wojtaszek, advised that members were entitled to the coverage thanks to an opinion rendered by the comptroller in 1978.
The offices of the comptroller and attorney general responded by disputing Schröder’s opinion. Neither the comptroller nor AG has challenged the OTB about continuing the coverage, which leaves the matter in the hands of the OTB board, which sources say is becoming increasingly divided over the issue.
Wojtaszek, who has consistently defended the board’s insurance coverage, declined an interview request for this story. But in an email to the Gazette, he said: “Recently, questions have arisen about the propriety of the plan and whether it is appropriate in the current economic climate. Conflicting opinions have been rendered. The issue will be placed before the board for a full discussion.”
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 dispenses 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 money spent on insurance coverage for board members comes out of OTB’s profits and reduces annual payouts to the counties and cities.
Board members have been receiving health insurance since Batavia Downs was privately held. The OTB took ownership in 2000 and the insurance continued without controversy until Investigative Post raised the issue with a story last December.
Investigative Post reported that the AG issued an opinion in 2008 that appeared to conclude that OTBs are not permitted to provide health insurance coverage to board members.
“The OTB is not authorized to provide health insurance benefits to members of its board of directors,” according to the advisory opinion.
In December, Wojtaszek defended the insurance coverage as “hard-earned” and “well-deserved.”
He said he was unaware of the opinion and pledged to seek another opinion specific to the Western Regional OTB. Instead he hired Schröder, who advised that the AG should have nothing to say about the matter.
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 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.
A spokesperson for the comptroller disagreed, noting an audit from 2007 that concluded public bodies that provide cash compensation for board members can’t also provide health insurance. That, in effect, overruled the 1978 opinion.
“Our 2007 audit is consistent with the attorney general’s 2008 opinion,” the spokesperson said. Any further questions about health insurance are “an issue for the AG’s office.”
The AG’s office subsequently issued a statement that said “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.”
Lawyers for Barclay Damon noted the comptroller’s and AG’s stance in their opinion to the OTB board. They also cited state law that governs the state’s five off track betting corporations that limits the compensation for board members to $4,000 a year. The OTB board meets two days a month; meetings last month lasted a total of some two hours.
The value of the insurance coverage is estimated at about $20,000 per participating member annually. Eleven of 17 board members, plus three retired board members, receive coverage.
The coverage was described by one health insurance expert as “literally the richest plan available.” Board members have access to plans that feature a $5 copay for generic prescription drugs, a $15 copay for routine doctor visits and no copay for routine dental work.
Regardless of its legality, the insurance coverage is an unusual perk. 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.
A spokesman for state Gaming Commission, which regulates OTBs, declined to comment on the legal memo or the OTB’s health insurance package.
In a related development, the Schuyler County Legislature voted earlier this week to ask the state Comptroller to conduct an audit of the OTB. Schuyler County’s representative on the OTB board is Philip Barnes, who also serves as vice chairman of the OTB. Barnes, a legislator, supported the resolution, which said, in part, “(the) legislature is mindful of its duty to the public purse and government accountability and to a full and fair investigation.”
A similar measure was voted down last week by the Niagara County Legislature, which also has a representative on the OTB board.
Philip Gambini is a reporter with the Niagara Gazette.