Salary increases and other personnel costs are among the reasons for a $2.6 million drop in revenue shared with 15 counties plus Buffalo and Rochester.

Salary increases and executive buyouts are among the costs charged to Western Regional Off-Track Betting Corp. which reduced its payments to local governments by $2.6 million this year.

In 2023, OTB leaders said Thursday, the agency will send $10.25 million to the 15 counties and two cities that own it. This year, that amount decreased to $7.6 million.

The OTB did not specify how much the reduction in payments to individual local authorities would cost. Erie County will lose about $200,000.

Officials did not fully explain the reduction Thursday, but cited personnel, legal and development costs.

The drop follows a number of personnel costs incurred by management this year as the agency transitioned from outgoing CEO Henry Wojtaszek to former Buffalo Mayor Byron Brown.

These costs include:

• Raises of $40,000 for Wojtaszek and other executives were approved in January.
• A $299,000 buyout for Wojtaszek, this sum should be paid at the end of the year.
• The hiring of Brown (salary $295,000), chief of staff Steven Casey (salary $190,000) and director of communications Michael DeGeorge (salary $130,000) in October.
• The retention, with salary increases, of Scott Kiedrowski, vice president of operations (salary of $190,000) and Ryan Hasenauer, marketing director (salary of $130,000).
  

Wojtaszek said additional costs include $300,000 for preparations to expand the Batavia Downs hotel, $100,000 in legal fees and other payroll expenses that contributed to the reduced payments. OTB then suspended the hotel project on Thursday.

Wojtaszek said the legal fees were related to OTB’s pursuit of a Employee Loyalty Credit with the IRS, a pandemic tax credit for certain tax-exempt organizations.

Figures displayed during the OTB board of directors on Thursday. Photo by J. Dale Shoemaker.

OTB has approved raises of 8.5 percent for managers and other employees over the past two years.

Some board members criticized the reduction in payments to municipalities on Thursday.

“We’re not happy about it,” board chairman Dennis Bassett said. “This will be our number one goal in 2025: to reverse the trend. »

“Byron’s commitment is to ensure that the amount for municipalities increases and that will be our priority,” he added.

Bassett said, however, that he has “no regrets” about voting in favor of the raises or other spending this year.

“We are struggling in a very competitive market and we have to take care of our employees,” he said.

Callan, the Erie County board member, suggested that reduced payments to municipalities were evidence of bigger financial problems, not just this year’s increases.

“I’m not convinced about the drop in revenue…. is driven by what we call one-off or one-time spending,” he told Investigative Post.

“The company’s management has been bragging all year about how great things are going there, record revenues, and that’s why they’ve given raises to everyone in management,” he added. “But here we are in the second year where member government revenues are declining and to me that is not the sign of a company doing its best.”

By law, the state gaming agency sends a portion of its profits each year to the 15 counties and two cities that own it, including Buffalo and Rochester, as well as Erie, Niagara and Monroe counties.

In 2023, Erie County received $2.4 million from OTB. This year, he is expected to receive $2.2 million.

Brown told Investigative Post that his main goal next year is to increase payments to municipalities. He told board members at Thursday’s meeting that he would adopt a “conservative” budget to accomplish that. And he and Wojtaszek announced that the agency was suspend planned hotel expansion to prevent these costs from accumulating.

“I can’t affect 2024,” Brown said. “My objective in 2025 is to return to the municipalities more revenue than they received in 2024.”

published 2 hours ago – November 22, 2024