Quick Takes (v43): WNY OTB's Gamble

Quick Takes

Regular readers know how excited I am that New York State gambles so heavily on gambling to help fund our government.  

We've got four new-ish casinos, which have been getting a lot of attention - they've all been troubled with lower-than-expected revenues, bad credit ratings, at least two have had ownership changes, and so on. 

Most industry experts attribute the poor performance to our very over-saturated market, which includes several Indian Nation casinos, thoroughbred and harness tracks, and Off-Track Betting (OTB) outlets. You can read my coverage on this topic over the last five years here.

One thing I haven't covered all that much is the OTB stuff. There are five regional OTB corporations, with multiple betting parlors around the state (none here in Onondaga County, which is fine with me). Money earned is supposed to be distributed to the municipalities that fall under each corporation's jurisdiction. Unless, of course, that money goes for other stuff.  

Take a look at this reporting from Investigative Post, noting that there's a federal grand jury nosing around into the Western Regional OTB corporation, investigating possible corruption including free health insurance for board members, vendor contracts going to politically-connected businesses, and issues with tickets to Buffalo Bills and Buffalo Sabres games.  Not only that, the report notes,

In addition, the state comptroller has started a previously announced audit and sources said the state Gaming Commission is engaged in some sort of review, as well.

According to the paper's reporting, no one was paying much attention to WNY OTB until about a year ago, when they reported on the free health insurance offered to the part-time board members (employees have to pay for theirs), and that NY's AG seemed to suggest that was prohibited. The AG's opinion and the state comptroller, and the attorneys hired by the OTB, all said it was wrong. An estimate, based on 'normal usage' would put the prohibited program's cost at between $250K and $500K annually.

The ticket issue stems from an accusation that OTB officials give tickets to "family, friends, and political allies," although there have been changes made in how ticket distribution is handled, including "the frequency and method of ticket giveaways." 

The contracting issue has to do with politically-connected vendors getting healthy contracts, including a contract extension given, even after it was reported the contract in question was under FBI scrutiny.

New York has a history of good intentions gone bad, and sadly we seem to excel when it comes to situations where public corporations, boards, and authorities are given freedom to do their own thing - because that almost always ends up with politically connected companies and people receiving benefits they are probably not entitled to, or that are way beyond what's reasonable for the work done, and that regular folks have no way to access.

Kudos to the reporters who have been chasing these stories. Ideally we'll find that there's nothing untoward in how the OTB handles its benefits and other practices, but if there is, the practices need to change - or cease - and the municipalities who are supposed to benefit from WNY OTB need to be made whole for any lost revenue.

And if nothing else, I hope these investigations will put the hundreds of other authorities, corporations and boards that engage in similar shenanigans on notice that, as the saying goes, the house always wins.