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OTB will seek meeting with State Lottery to find solution to State's concerns

By Howard B. Owens

The OTB is ready to do just about anything to avoid having the State Lottery pull all of the video lottery terminals from Batavia Downs Casino.

That was the message from Western OTB attorney Timothy McCarthy following a closed session meeting of the board at the casino and racetrack this morning.

"They're the boss and it's important they are treated as such and that we not get in a fight as to what we may have done," McCarthy said.

While characterizing the issues raised by the State Lottery in a Feb. 3 letter to the OTB board as "procedural" and "administrative," he said the board is taking the warning very seriously and will react accordingly.

He stressed that there are no allegations of criminality or missing money.

Before the board went into closed session, McCarthy said a private meeting was necessary in order to discuss possible litigation.

After the meeting, McCarthy said there is no plan to get involved in a lawsuit, but given the nature of the enforcement action, the possibility of a hearing and the need to preserve attorney-client privilege, he thought the private session was necessary.

"We chose not to be pugnacious," McCarthy said. "We chose to try and work with the Lottery. We take the Lottery very seriously. The determination by the board was, 'let's find the best way to keep peace.' The best way to keep the peace is to go hat in hand to the Lottery. There is no benefit to be achieved by being litigious, but nevertheless, that option, as it obviously must, was considered."

McCarthy noted that Batavia Downs has provided $75 million in revenue for state schools since it opened with VLTs (slot machines) in May 2005. The Downs also provides a good deal of revenue to local government agencies.

He said the board will do what's necessary to maintain that cash flow.

"If they (board members) want to characterize it as going to the woodshed, they may very well characterize it as such," McCarthy said.

The board agreed to send a four-person delegation to Schenectady to meet with Lottery officials in order to find a solution to the threat of closure.

Among the Lottery's requests is that the Downs hire a consultant to help put the procedural and administrative issues back in order. McCarthy did not say so explicitly, but the tone and tenor of his remarks indicate a willingness to follow that advice.

The members of the delegation will be Paul Lattimore, from Cayuga County, Richard Bianchi, Monroe, Richard Siebert, Genesee and Marcia Touhey, Orleans.

Previously:

 

Chris Charvella

I'll second that. All it takes to make this go away is for these guys to follow some very reasonable, very understandable rules.

If there's a single thing that will make an auditor start waving red flags it's 'discrepancies in capital expense reports.'

Feb 12, 2010, 10:01am Permalink
C. M. Barons

Acording to the Western OTB website, WOTB is a public-benefit corporation; a public corporation chartered by the state to perform some public benefit. I assume the benefit is public revenue- not promotion of gambling. Who appoints the members to this board? I see that Governor Paterson appointed three members of the City OTB (NYC). However, when Steve Newman was appointed to the New York Racing Association and New York City Off Track Betting Corp., it was Assembly-Speaker, Sheldon Silver of Manhattan who did the appointing. In the case of NYCOTB Corp., that entity has been usurped by the state due to bankruptcy- owes NYRA $15 million.

On Long Island, County Legislators appoint members to the Nassau OTB board.

Here's the law: N.Y. PML. LAW § 502 : NY Code - Section 502: Establishment of regional off-track betting corporations-
1. A regional off-track betting corporation is hereby established for each region, except the New York City region for which the New York City off-track betting corporation established pursuant to and subject to article six of this chapter shall constitute the regional corporation and such article six shall govern such New York city off-track betting corporation. Each regional corporation shall be a body corporate and politic constituting a public benefit corporation. Each corporation shall be administered by a board of directors consisting of two members from each participating county containing a city of over one hundred fifty thousand in population, according to the last federal census, and one member from each other participating county. Notwithstanding any other provision of law to the contrary, the members shall be appointed by the county governing body, and may, at the discretion of such governing body of counties which have a population of less than two hundred thousand, include sitting members of such governing body. A member of a governing body who is appointed a director after July first, nineteen hundred ninety shall not be compensated by the regional corporation; provided, however, that the mayor of a city of over one hundred fifty thousand that has elected to participate in the management of a corporation pursuant to subdivision two of this section shall, with the approval of the city's legislative body, appoint one of the members to which the county containing such city is entitled. In the case of the
corporation established for the Suffolk region and Nassau region, the board of directors of each corporation shall consist of three members appointed by the governing body of each county, not more than two of whom shall be members of the same political party. Each director shall serve at the pleasure of the governing body or mayor appointing him, as the case may be. A chairman shall be elected by the members to serve a term of one year.
2. A city with a population of over one hundred fifty thousand, according to the last federal census, may elect to participate in the management and revenues of a regional corporation if the county in which such city is located has elected to become a participating county. Such election shall be by enabling legislation. Upon such election, such city shall participate in the amount of any loans or contributions made or to be made by the participating county containing the city to the corporation, pursuant to section five hundred six of this article, in the proportion that such city will participate in net revenues payable to such county or such other equitable arrangement as shall be approved by the board.
3. Upon the passage of enabling legislation by the governing body of not less than three counties within a region representing not less than thirty percent of the population of such region, as determined by the last federal census, or in the case of the Suffolk region, upon the passage of enabling legislation by the governing body of Suffolk county, or in the case of the Nassau region, upon the passage of enabling legislation by the governing body of Nassau county, or in the case of the Mid-Hudson region upon the passage of enabling legislation by the governing body of the county of Westchester and of the governing body of one other county in such region, and following the appointment of members of the board of directors, such corporation shall file with the secretary of state and with the state racing and wagering board a certificate setting forth:
a. The date of passage of the enabling legislation;
b. The name of the agency, which shall be the name of the region followed by the words "regional off-track betting corporation"; and
c. The names of the members of the board of directors and the chairman.
4. Each of the counties of the region that have not become participating counties at the time of filing of the certificate required by subdivision three of this section may do so by enacting enabling legislation, a duly certified copy of which must be filed with the board of directors, the state board, the secretary of state and the county clerk of each participating county. In the event that a county elects to participate after June first, nineteen hundred ninety, the effective date of approval by the state board shall not be earlier than the date that branch offices are established and operating. If, at the time of such election, the state board has approved a plan of operation for the corporation, a county may not become a participating county without approval by the state board of a modified feasibility study and amended plan of operation which shall be submitted by the corporation to the state board pursuant to section five hundred twenty-one of this chapter. If the participating counties in the region have contributed or loaned funds or other consideration to the corporation, the board of directors may require that any county subsequently electing to become a participating county make such contributions in the same proportion, if any, as may have governed such contributions or loans by participating counties. Any dispute as to the value of consideration or as to a contribution required by the board of directors shall be resolved by the state board.
5. a. If the certificate required by subdivision three of this section is not filed by December thirty-first, nineteen hundred seventy-five, the corporate existence of a corporation shall terminate, but otherwise, each corporation and its corporate existence shall continue until terminated by law; provided, however, that no such law shall take effect so long as the corporation shall have bonds, notes or other obligations outstanding. Upon termination of the existence of the corporation all of its rights, property, assets and funds shall thereupon vest in and be possessed by the participating counties in the same proportion such property, assets and funds may have been contributed by each county or according to the manner in which the revenues of the corporation are distributed pursuant to section five hundred sixteen of this article, or any combination of both such methods, as the state board shall determine.
b. Notwithstanding the provisions of paragraph a of this subdivision, those counties comprising the Central Region prior to January first, nineteen hundred seventy-four, even though such counties are included in off-track betting regions other than the Central region, shall have until December thirty-first, nineteen hundred eighty-two to file the certificate required by subdivision three of this section.
6. Each director shall continue to serve until the appointment and qualification of his successor.
7. The directors shall be removable for cause by the state board, upon charges and after a hearing.
8. The powers of the corporation shall be vested in and exercised by the board of directors at a meeting duly held at a time fixed by any by-law adopted by the board, or at any duly adjourned meeting of such meeting or at any meeting held upon reasonable notice to all of the directors, or upon written waiver thereof, and a majority of the whole number of directors shall constitute a quorum; provided that neither the business nor the powers of the corporation shall be transacted or exercised except pursuant to the favorable vote of at least a majority of the directors present at a meeting at which a quorum is in attendance.
9. The board of directors may delegate to one or more of the directors, officers, agents or employees of the corporation such powers and duties as it may deem proper.
10. a. The directors may receive a sum of two hundred fifty dollars for each day or part thereof spent in attendance at meetings held in accordance with subdivision eight of this section, but not to exceed twenty-five hundred dollars during any one year.
b. The directors may receive a sum of one hundred dollars for each day or part thereof at meetings other than those defined in subdivision eight of this section or otherwise in the work of the corporation; provided that such activities are approved by the board as a whole. Such additional expenses shall not exceed fifteen hundred dollars in any calendar year.
c. The chairman of the board elected in accordance with subdivision one of this section shall receive additional compensation of one thousand dollars per year to cover those expenses and activities associated with such office.
d. In addition, the directors shall be reimbursed for their actual and necessary expenses incurred in the performance of their official duties.
e. Any expenses incurred by a director in excess of those authorized by paragraph d of this subdivision shall be the responsibility of the appointing political subdivision, payable on vouchers certified or approved by the chief fiscal officer of such political subdivision as is provided by law.
11. The directors may engage in outside employment or in a profession or business unless otherwise prohibited from doing so by virtue of holding another public office subject to the provisions of article eighteen of the general municipal law. For the purposes of such article eighteen, the corporation shall be a "municipality" and a director shall be a "municipal officer."
12. The board of directors shall hold an annual meeting.
13. The fiscal year of the corporation shall be the calendar year.
14. A general manager, who shall be the chief executive officer of the corporation, shall be in charge of the administration of its affairs. He shall perform his duties as chief executive officer, together with any other duties assigned to him by the corporation, under its direct supervision and control and shall give full time to such duties.
15. Any person prohibited by any law or rule from accepting compensation described in subdivision ten of this section shall nonetheless be permitted to serve as a director provided said person waives his compensation.
16. Notwithstanding any inconsistent provision of this chapter or any other law, any director, administrator, or other employee of a corporation may be issued and hold any license issued by the state board.

Although no mention is made of gubernatorial choice in the selection of OTB members, Gov. Paterson in 2008 appointed three members to the board of directors of the New York City Off-Track Betting Corp., one of whom was his budget director and the former director of state operations. Also appointed: New York Budget Director Laura Anglin and Paul Francis, who resigned earlier this week as acting director of state operations. Paterson also named David Cornstein chairman of the board, a post he previously held in 1994.

Paterson and New York Mayor Michael Bloomberg negotiated the plan to save the bankrupt operation, in part through consolidation with other OTBs in the state. This instance appears exceptional described by the state take-over of operations. Analysis of downstate politics indicates otherwise. Nassau was the most profitable OTB in the State and NYC was the only OTB to consistantly lose money.
Merging Nassau's profitable off-track betting corporation with the city's failing counterpart smacks of a maneuver to save Democratic patronage jobs in the county. Sen. Eric Adams (D-Brooklyn) filed legislation to create a "Metropolitan OTB," with a new five-member governing board appointed by the acting state senate president, the assembly speaker and the governor - all Democrats.

Currently, the Nassau Legislature appoints the county OTB's governing board, which means the party that controls the Legislature controls OTB patronage jobs. Democrats lost control of the Nassau Legislature in November 2009. By Jan. 1, it was rumored that Jay Jacobs, Nassau and state Democratic chairman, suggested merger of the city and county OTBs- a move that could save dozens of Democratic jobs. Among those so employed, Nassau County Democratic Party executive director, Mike Santeramo Jr., who works at Nassau OTB with a $125,000 annual salary; former Glen Cove Mayor (and Demcorat) Mary Ann Holzkamp, who earns $98,811, and former Nassau Democratic legislator Patrick Williams, convicted of mortgage fraud, who is paid $101,183. Santeramo is vice president of administration at the OTB, Holzkamp is treasurer and Williams is personnel administrator.

Jacobs denied having any involvement in the merger, but Nassau County Legislature's incoming presiding officer, Legis. Peter Schmitt (R-Massapequa) said, "I think it is a naked attempt by Jay Jacobs to protect 31 high-paying patronage jobs that we want to cut. This spits in the eye of people who voted for change."

It is yet to be determined the events empowering Speaker Sheldon Silver to appoint OTB board members. However, according to the NY Post, Sheldon Silver and Governor Paterson skirmished over the video lottery and casino contract at Aqueduct Racetrack. Silver issued a strong statement in a communication to Paterson, threatening to reject the governor's selection of (alleged Paterson pal) Floyd Flake's company, AEG, to run the lucrative "racino." Silver demanded four "not negotiable" terms: AEG must pay a $300 million up-front licensing fee, Anyone with a felony conviction within the past 15 years is barred from being a partner in the deal, The project must be environmentally sound and Legislative leaders must have veto power over any subsequent changes to the plan.

The Post clearly over-stated Floyd Flake's association with AEG. Rev. Flake is a political power-broker and former Queens congressman. “Rev. Flake’s share (in AEG) is .06 percent and the area that he’s involved in is not the actual operation of the track," Paterson told KISS-FM’s Morning Show. The governor went on to explain Flake's role, "It’s the, what they call the amenities. The community - you know when you build in a community, you also want to help the community youth centers, religious institutions and that’s his share of it. But when you read it, you would think that he owned the whole deal. When you are .06 you’re (not) even a minority owner, you’re a minute owner."

Paterson told The Post, "Silver wanted four conditions met. Those conditions were relayed to the group that won the bid and they agreed to the terms. They're the conditions we all agreed to." One of the partners in the AEG bid, Darryl Greene of the Darman Group, has a criminal record.

During the bidding process, Las Vegas gaming titan Steve Wynn backed out. Sources involved in the discussions told The Post that Paterson's senior advisers had favored other bidders; "AEG was not recommended by the governor's senior staff at any time," said a source involved in the discussions. Sources also said a preliminary assessment of the top six racino bidders by the Lottery Division listed AEG near the bottom of the pack. A rival gaming firm slammed Paterson for rejecting its plan and revealed it had offered the cash-starved state $100 million more up front than AEG. "AEG offered $200 million. We offered $301 million in up-front cash. Clearly that's $100 million more than AEG," Penn National Gaming Senior Vice President Eric Schippers told The Post. AEG then matched Penn National's $301 million up-front fee offer.

Under an unusual bidding procedure, both Silver and Senate Democratic Conference Leader John Sampson of Brooklyn were required to sign off on Paterson's choice for the racino.

The gist of this review- if the Western Region OTB is in need of a housecleaning, why aren't county legislators on the other end of the broom?

Feb 12, 2010, 8:09pm Permalink
C. M. Barons

WROTB Corp. Board Members- in some cases, I was unable to document membership after 2004- so noted (considering the age of some of these folks, a year is no trifle).

CEO- Martin C. Basinait, 60, Albion; contributor: Friends of Charlie Nesbitt, Mike Nozzolio for Senate, Republican Assembly Campaign Committee, Orleans County Republican Committee.

1. Genesee- Vice-Chairman Richard E. Siebert, 70, Batavia; retired Genesee Co. Treasurer, Genesee Co. Republican Party Chairman.
2. Monroe- Richard Bianchi, 67, Rochester; retired court reporter 7th Judicial District.
3. Erie- Anthony Orsini, 70, Springville; Independence Party Chair, Michael Mullins, backer of Democrat Paul T. Clark’s 2007 Erie County Exec run, hired Orsini's wife, Judith, a month prior to Independence Party endorsement of Clark. Democrat Jack Davis had to eat crow over hiring Orsini's wife as a consultant. Orsini is now seeking residence in Florida. Orsini was appointed to WROTB in 2006 by a Democratic-led Erie Co. Legislature.
4. Wayne- Chairman Joseph Gallo, 46, Wolcott; Chairman Town of Wolcott Republican Party, President, Port Bay Improvement Assn.
5. Chautauqua- Roger E. Ruckman, 67, Fredonia; contributor Friends of Frank Pagano (mayor, Fredonia), Friends of Sam Teresi (mayor, Jamestown).
6. Cattaraugus- Richard Haberer, 70, Franklinville; former Chairman Cattaraugus Co. Legislature, contributor, Friends of Pat McGee (late NYS assembywoman/senator from Cattaraugus Co.).
7. Cayuga- Paul Lattimore, 68, Auburn; owner Lattimore Insurance Agency, contributor, Walsh for Congress.
8. Orleans- Marcia Tuohey, 79, Medina; former Orleans Co. Legislature Chairwoman, contributor, Dave Callard for Congress.
9. Livingston- Thomas P. Wamp, 64, Dansville; owner Thomas P. Wamp Real Estate, Noyes Memorial Hospital board-member, Pataki appointee to Alfred State College Council, contributor, Committee to Elect Zach Wamp.
10. City of Buffalo- Daniel J. Carnevale, 82, Buffalo (2004).
11. Niagara- (2004) Richard P. Winter, Wheatfield; owner, Winter Jewely; contributor, Friends of Henry F. Wojtaszek (Niagara County Republican Chairman ran against Louise Slaughter for congress), Pirro for Senate, Inc.
12. Oswego- (2004) Edward J. Sohoski 69, Fulton; Fulton City Councilman, contributor, Oswego County Republican Committee.
13. City of Rochester- Thomas Andrew Brown, Esq., 51, Rochester; President Monroe County Bar Assn.
14. Schuyler- (2004) Philip C. Smith, 80, Montour Falls; Director, Schuyler Co. Veterans' Service Agency.
15. Seneca- (2004) William R. White, 49, Waterloo; Operations Mgr, Seneca Transit Service; Chairman Seneca Co. Conservative Party.
16. Steuben- (2004) Vice-Chairman Charles D. Henderson, 99, Hornell; former Republican Assemblyman, former member, Hornell Baseball Assoc. (NY-Penn League Club).
17. Wyoming- Carole L. Butler, 72, Warsaw; Warsaw Town Councilwoman and former Wyoming Co. Republican Party Chair.

Feb 14, 2010, 1:10am Permalink

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