New York’s New Guv Is Staring at a Massive Conflict of Interest

Andrew Burton/Getty

Andrew Burton/Getty

Between the brutality of the early COVID-19 pandemic and the unceremonious downfall of its accused sex pest governor, New York State has endured a run of bad luck lately. But thanks to Gov. Andrew Cuomo’s impending departure, and the rise of Lt. Gov. Kathy Hochul, for one Buffalo-based casino company, everything could soon be coming up aces.

Hochul, Cuomo’s soon-to-be successor in the governor’s mansion, is married to former federal prosecutor William Hochul—now general counsel and senior vice president at gambling and hospitality giant Delaware North.

Once behind the executive desk, Kathy Hochul could have a major impact on the company’s future earnings. She will control the New York State Gaming Commission, which must sign off on any sales and acquisitions of betting facilities. She will also hold in her palm the New York State Thruway Authority and the state Office of Parks and Recreation, with which Delaware North has almost $50 million in long-term contracts to operate food and beverage concessions, all of which it will need to renew in the next two years while Hochul is in office. She will also oversee all the major airports and transit hubs in New York City, and the implementation and expansion of the state’s new plan to license online sports gambling—growth opportunities Delaware North has long salivated over and lobbied for.

Hochul’s team asserted that there is “already a recusal process in place” to keep away any conflicts of interest. But it is unclear how that process works, since the lieutenant governor’s only formal role at the moment is to handle parliamentary matters in the State Senate.

“It is being evaluated with her new role as governor, and it will be completed before she takes office,” said a spokesman, who declined to answer further questions or provide additional details.

Delaware North did not respond to repeated requests for comment. But like many gambling outfits, the company has something of a shady past. It is effectively the reincarnation of Chairman Jeremy Jacobs’ previous company, Emprise, which was convicted in the 1970s of helping the Mafia operate a hotel-casino in Las Vegas.

The looming potential for a conflict of interest between the governor-to-be and the company that has paid her husband well over a million dollars over the past three years already has riled ethics advocates in the notoriously corruption-plagued state.

“It’s unacceptable to have him as general counsel and her as governor,” said John Kaehny, executive director of the good government group Reinvent Albany. “”The next governor should not be involved in enriching their spouse, it’s that simple.”

Cuomo Goes Down Like He Ruled—With Lies, Excuses, and Insults

As Kaehny noted, Delaware North has spent $700,000 lobbying the state just since 2019, trying to increase its share of the state’s tightly-regulated, zero-sum gambling market. Three years before Cuomo entered office, Delaware North fleetingly secured a state contract to operate hyper-profitable video slots at the legendary Aqueduct Racetrack in Queens—only to see the deal collapse amid the global financial meltdown. Sources told The Daily Beast it has unsuccessfully sought a major breakthrough in the New York City market ever since.

Kaehny described the Hochuls as part of “the Buffalo oligarchy,” which controls nearly all of the long-struggling Rust Belt town’s political and financial affairs. (Kathy Hochul previously served as a member of Congress and a county clerk in the region.) The Jacobs family, despite owning the Boston Bruins hockey team and operating the Kennedy Space Center—among many other assets and franchises nationwide—belongs to this same insular aristocracy, he said.

“Buffalo is singular in how concentrated the power is, and how you really have a handful of people and companies that utterly dominate,” he said, noting the Jacobs name adorns a local hospital and buildings at state university, where the family patriarch has held multiple positions of influence. “It’s based on mainly money, but also on political position.”

Part of how Delaware North has maintained and enlarged its power in the region is by putting the close associates of local politicians on its payroll, Kaehny said.

At least one person who worked under the lieutenant governor’s husband at the company agreed, noting that the state’s second husband had a stellar record as a U.S. Attorney for the Western District of New York but no background in business when Delaware North hired him in 2017.

“How does a guy who never worked in corporate law suddenly become general counsel of a multi-billion-dollar company?” wondered Nate McMurray, the company’s former assistant general counsel and vice president of business development.

Himself the Democratic former town supervisor of a Buffalo suburb, McMurray ran unsuccessfully for Kathy Hochul’s old seat in Congress in 2018 with little financial support from the company but no opposition. When incumbent Republican Chris Collins resigned after pleading guilty to insider trading charges, McMurray announced a second bid—only to find himself running against now-Rep. Chris Jacobs, the Delaware North chairman’s nephew.

Then-President Donald Trump himself intervened in the Republican primary, tweeting his endorsement of the younger Jacobs and effectively clearing the GOP field.

Trump, for whom Jeremy Jacobs sponsored a fundraiser two years before, also held a tele-rally for the congressional contender on the eve of the vote, while Donald Trump, Jr. recorded robocalls backing the Republican.

But a few months before voters selected Jacobs, Delaware North placed McMurray on unpaid leave. Republicans noted that McMurray had tweeted several statements alluding to the Jacobs’ family’s billion-dollar wealth. But the Democrat is now suing his old employer, alleging political retaliation.

McMurray declined to comment on William Hochul’s role, citing ongoing litigation.

It’s just one of many recent controversies that have engulfed Delaware North and its political allies.

In 2017, Cuomo proposed constructing a massive new lodge on Goat Island, near Niagara Falls, land sacred to the Seneca Nation of Indians. Local outlets reported at the time Delaware North, which already operates state concessions on and around the island, was the preferred partner.

“The idea of them building on Goat Island is something both native and nonnative people would be opposed to,” said John Kane, a Seneca activist and host of the ‘Let’s Talk Native’ radio show. “Delaware North has had a real easy time with New York State. They seem to have been catered to by the state.”

Public outcry finally forced Cuomo to back off the idea earlier this year. But the outgoing governor pressed ahead with another squabble with the Seneca, who happen to be Delaware North’s top competitor in the Western New York gambling market. The state has waged a thus-far successful effort to force the Native American tribe to cough up hundreds of millions of dollars out of its casino revenues. Kane noted the Seneca Nation has also quarreled with Cuomo, and William Hochul during his tenure as U.S. Attorney, over tobacco sales on the reservation.

These fights are set to continue under the next governor. The Seneca Nation declined to comment for this story.

“The conflict of interest is incredible,” remarked Kane. “Delaware North has been treated incredibly kindly by this outgoing governor, and it’s no surprise to me that William Hochul would have gone into being such a prominent figure at the company.”

However, Kane noted it was hard to imagine Hochul’s state government being any friendlier to Delaware North than Cuomo’s.

“We don’t really expect anything much different from her,” he said.

Read more at The Daily Beast.

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