Despite Hochul’s Vow, Her Policies Have Indirectly Aided Husband’s Firm

The day before she was sworn into office, Gov. Kathy Hochul of New York signed an unusual recusal policy forbidding her from using her position to help Delaware North, a global giant in entertainment and hospitality services.

The privately held company — which owns or manages 11 gambling venues and numerous hotels, and handles concessions at scores of stadiums, airports and parks — employs Ms. Hochul’s husband, William Hochul, as its senior vice president and top lawyer.

Yet Ms. Hochul’s recusal, and an even more sweeping addendum she signed two months later, hasn’t stopped the governor from taking actions that could benefit Delaware North or hurt its competitors, especially near Buffalo, the governor’s hometown.

There is no evidence that Ms. Hochul has used her influence with the intent to help Delaware North. But in three recent cases involving matters relating to gambling or concessions, the state took actions that aligned with the interests of her husband’s company.

Seven months after Ms. Hochul became governor, she said it was time for the state to play “hardball” with the Seneca Nation of Indians, Delaware North’s biggest competitor in the Buffalo gambling market. The state froze the Senecas’ bank accounts to force the tribe to turn over $564 million in gambling revenue — money that had been in dispute for four years.

She then directed $418 million of that money toward the financing of a new home for the Buffalo Bills. The move drew questions over whether the governor should be subsidizing a football stadium for the team’s billionaire owners, especially since the Bills have a more than three-decade relationship with Delaware North, as their concessionaire. (The team has since announced that it has chosen Legends Hospitality to run its concessions starting in 2026.)

Then last month, Ms. Hochul agreed to an 11th-hour provision to the state’s budget deal calling for restructuring the quasi-government board overseeing the lucrative Batavia Downs Gaming & Hotel in western New York, another direct Delaware North competitor. The restructuring could make it easier for Delaware North to attempt to acquire Batavia Downs, which sits between two Delaware North gambling facilities.

Now, as the 2023 legislative session comes to a close next month, Ms. Hochul’s handling of matters that may benefit Delaware North will again be under scrutiny.

At issue is a renewal of the Seneca Nation gaming compact, with billions of dollars at stake. The Senecas and state officials must hash out the state’s cut of gambling revenue at the Nation’s three casinos, and define the area in western New York where the Senecas have exclusive casino rights — a decision that will affect Delaware North’s gambling market share in the region.

The governor says she is recusing herself from the matter, as is her husband, whose $650,000 in compensation last year helped push the Hochuls’ combined income to just under $1 million. Mr. Hochul has signed his own recusal policy with Delaware North on matters concerning the company’s New York operations.

“Governor Hochul has taken unprecedented steps to restore trust in government, including releasing her recusal policies, and seeks to avoid even the appearance of conflict while executing the duties that New Yorkers elected her to do,” said Hazel Crampton-Hays, a Hochul spokeswoman.

The wrangling over the Seneca-run casinos highlights how difficult it is for Ms. Hochul to create an unimpeachable firewall between her duties as governor and the thicket of Delaware North interests tied to state regulation or management.

Delaware North was founded more than a century ago in Buffalo, beginning as a peanut stand run by L.M. Jacobs and his brothers, and eventually expanding to stadiums and horse and dog tracks all over the country.

The family company’s growth was accompanied by some controversy. In 1972, a Los Angeles federal court convicted the company, then known as Emprise, on felony charges for conspiring with known Mafia figures to conceal their ownership stakes in a Las Vegas hotel and casino. The founder’s sons, reeling from the stigma of Emprise’s reported ties to organized crime, eventually reorganized their holdings under the name Delaware North, derived from its location at the time on Delaware Avenue and North Street in downtown Buffalo.

The company, which reported revenues of $4 billion last year, describes its operations in New York as a relatively small piece of a large corporate empire. Even so, it operates over 2,000 state-regulated slot machines (technically known as video lottery terminals) in western New York; runs concessions at the Buffalo and Syracuse airports; and operates a hotel and spa for Saratoga State Park and various visitor services at Niagara Falls State Park.

It also has roughly 20 alcoholic beverage permits at various venues and through its Patina Restaurant Group, which operates numerous establishments in New York, including two at the Lincoln Center in Manhattan.

The company regularly spends $275,000 a year for lobbyists to try to influence state officials to ensure its New York interests are protected.

Under the governor’s recusal memorandum, Delaware North cannot donate to Ms. Hochul and must have executive clearance from the company to lobby the executive chamber, which has happened at least once since Ms. Hochul took office. They have also sent lobbyists to other top administration officials, including Robert Williams, executive director of the State Gaming Commission and a member of the state team negotiating the Seneca compact, according to state records and interviews.

A little over a year ago, Delaware North’s lobbying went into overdrive. As representatives pressed Mr. Williams on the Seneca compact, the company was also lobbying on behalf of so-called racinos — racetracks outfitted with video lottery terminals — in Western New York and “additional casino licenses,” state lobbying disclosures show. The company has also repeatedly lobbied executives at Ms. Hochul’s powerful Division of Budget, on the Seneca compact and other issues, records show.

The Senecas have taken notice of Delaware North’s apparent influence with the state, and are pushing lawmakers to pass a new bill that would allow them to sue the state in the event that negotiations over their compact break down, or if they believe the state isn’t negotiating in good faith. The state is currently protected from such lawsuits under the principle of sovereign immunity.

“They’re our direct competitors,” Rickey L. Armstrong Sr., the Seneca president, said in an interview, referring to Delaware North. “They’re looking for control over what we do and don’t do.”

He added that the ability to sue over bad faith negotiations, a right California tribes have enjoyed and is contemplated in federal law, “would give us a tool to address that issue.” The Nation also employs its own team of lobbyists; last year, the tribe spent a little over $300,000 on lobbying efforts in New York, state records show.

Beyond the Senecas, the recent move by the state to dismantle the quasi-governmental board overseeing Batavia Downs — a harness track that now houses a racino and a hotel — has also prompted scrutiny of Delaware North’s ties to the Hochul family.

The hastily approved measure, which, like the stadium deal, never received a public hearing, reorganizes the leadership of Western Regional OTB, the public benefit corporation that controls Batavia and is overseen by 15 Western New York counties and the cities of Buffalo and Rochester.

According to State Senator Tim Kennedy, the Buffalo Democrat who pushed the reforms, Ms. Hochul personally signed off on the move to include the shake-up in the state budget.

She told the senator “she recognized that changes needed to be made and would be supportive of the legislation in the budget, and she was — to her word,” Mr. Kennedy said.

Both Mr. Kennedy and Ms. Hochul’s office say there’s good reason to support the changes — namely active investigations into potential financial abuse and corruption under the existing board. According to news reports and government auditors, part-time board members availed themselves of pricey health insurance without clear authorization, and some of their family members got free tickets to sporting events, including Buffalo Bills games.

Under the old structure, counties run by Republicans dominated the board. The changes ensure that Democrats in the Rochester and Buffalo areas will control about two-thirds of the votes.

Mr. Kennedy and the governor’s office said the move had nothing to do with Delaware North, but Henry Wojtaszek, the current president of Western Regional OTB, believed otherwise.

“I believe it’s a Democratic power play to take over the board of directors with an eye toward replacing the management structure at Western OTB — and replace it with Delaware North,” Mr. Wojtaszek said. “They stand to benefit the most from a change of management.”

Mr. Wojtaszek, a Republican, said Ms. Hochul should have recused herself from the Western Regional OTB matter since the company competes with her husband’s employer.

In fact, a decade ago, Delaware North attempted to buy or manage Western Regional OTB, records show.

In September 2012, Rajat Shah, then a Delaware North vice president, sent an email to Mr. Wojtaszek exploring various “acquisition scenarios,” including a “100 percent equity purchase.” Mr. Shah did not respond to email and voice messages.

Mr. Kennedy said critics of the changes to Western OTB, including Mr. Wojtaszek, who had to refund $3,500 to the corporation after an internal audit found he failed to provide a reimbursement for personal use of his company car, were “grasping at straws.”

Delaware North said it was no longer interested in acquiring Western OTB.

“Historic interest in doing so does not reflect our current interests,” said a company spokesman, Glen White.

Experts contacted by The Times could find no precedent for such a sweeping recusal by a New York governor. Years ago, critics accused former Republican Gov. George E. Pataki, whose wife consulted for clients tied to friends and donors of her husband, of doing nothing to address the perceived conflicts from his spouse’s job.

Blair Horner, director of the New York Public Interest Research Group, said questions will continue to be raised about Ms. Hochul’s recusal policy because there is no disinterested third-party in charge of enforcing it. Although the original agreement was supposed to be approved by the state ethics board, aides to Ms Hochul could not find a record of the office asking for or receiving it.

Washington University law professor and ethics expert Kathleen Clark, who reviewed the recusal agreement for The Times, praised both the detailed procedures in place to identify conflicts and Delaware North’s separate agreement to keep Mr. Hochul out of the company’s New York operations.

But one area of concern cited by Professor Clark and other ethics experts was how the recusal policy empowered the governor’s chief counsel, Liz Fine, to help determine when Ms. Hochul must recuse herself. In those situations, Ms. Fine would then step in and act on the governor’s behalf — a setup that the professor characterized as a “significant weak link” because the governor could easily influence Ms. Fine if she so chose.

“There’s far too much at stake to be left up to what is effectively an informal agreement with a subordinate,” Mr. Horner said.