State to take smaller cut of OTB revenue

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Byron Brown speaks to reporters at Batavia Downs. Photo by Garrett Looker.

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Just six months into his tenure at the Western Regional Off-Track Betting Corp., former Buffalo Mayor Byron Brown netted the agency a major win in Albany.

Tucked away in the state’s sprawling $254 billion budget that Gov. Kathy Hochul signed Friday is a provision that could save OTB between $4 million and $5 million per year by reducing the state’s take of revenues. 

In exchange for the savings, OTB must submit an annual report to the Legislature and governor’s office outlining how it spent the millions it saved. The legislation mandates OTB use the savings to benefit rank-and-file employees or the municipalities that own the agency.

This year, Brown said, the funds will pay for raises for union employees with whom OTB just inked a new three-year contract. Additional funds will lower employee contributions to family health insurance plans to 20 percent of premiums, vs. the present 72 percent.

The remaining money, Brown said, will be sent back to the 17 municipalities that own OTB, including Buffalo, Rochester, and 15 counties, including Erie and Niagara. Last year OTB cut the payments it made to the member municipalities, due to climbing costs that included large raises and severance packages for executives.

OTB will realize the savings through a change in state law that lowers the agency’s payments to Albany. Instead of sending 49 percent of its revenues to the state, OTB will now send 44 percent. The way off-track betting corporations are structured in state law, Albany gets paid after casino winners but before OTB pays any salaries or other expenses, meaning the savings amount to additional revenue for the agency.

“It’s a huge thing because what this means is more money for the corporation, which means more for the member municipalities,” said Crystal Rodriguez-Dabney, Buffalo’s representative on the OTB board of directors and an ally of Brown. Rodriguez-Dabney previously served briefly as Brown’s deputy mayor during his final term.

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Brown said in a statement Monday that he was “very pleased” Hochul and lawmakers approved the 5 percent reduction in OTB’s “tax rate.” That will save OTB $4 million this fiscal year. 

In an April interview, Brown said the slate of reforms he instituted — which included caps on severance pay and travel, transparency measures and the elimination of tips for bar managers — convinced lawmakers that he was serious about changing how OTB operates.

“That really opened the door to these discussions [which] have gone very well,” he said. 

Brown said he sought the reduction in payments in part because other Central and Western New York racetracks only pay 44 percent of earnings to the state. He said it was a “matter of equity” to have Batavia Downs on par with the tracks in Hamburg and the Finger Lakes.

The savings, however, came at a cost to OTB. The agency employed no fewer than four lobbying firms in a “full court press” on lawmakers, Brown said. Those included:

• Former Assemblyman Sam Hoyt’s Upstate Strategies, paid $5,000 monthly.
• Mercury Public Affairs, paid $5,000 monthly.
• Former Mayor Tony Masiello’s firm, Masiello, Martucci and Hughes, 
• Bolton-St. Johns, which employs Kat Achibar-Boyd, a former staffer of Crystal Peoples-Stokes, was paid more than $5,000 per month.

OTB has spent more than $200,000 on the lobbying push since it began in December. The lobbyists, however, did other work for OTB beyond the effort to reduce the state’s take of revenue according to state records.

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