Thursday, July 8, 2010

Aqueduct Bidders Get Axed; One Remaining

By Eric Yun

The tumultuous quest to build and operate video lottery terminals at Aqueduct Racetrack took another turn this week when state Lottery Commission rejected SL Green and Penn National’s bids. This leaves Genting New York as the only remaining bidder for the “racino” project.

Neither SL Green nor Penn National is a stranger to Aqueduct’s bidding process. Both groups submitted bids last June when the Aqueduct Entertainment Group was selected to operate the casino. Aqueduct Entertainment Group’s bid was eventually dismissed after a political battle and charges of favoritism.

In a press release explaining its to reject the two bidders, the Lottery says SL Green and Penn National Gaming failed to comply with mandatory requirements in their proposals, which were submitted on May 11.

Both groups were uneasy about the possibility of the Shinnecock Indian Nation building a new casino within 50 miles of Aqueduct. SL Green asked for compensation if a new casino is given more favorable taxes. Penn National wanted a guarantee that no casino would open with 50 miles or com- pensation if one were to open.

The $300 million minimum payment for the project was another point of contention. Both groups requested the money be held in escrow until all conditions have been met. Penn National also requested a refund if there were unfavorable changes state laws.

Other changes requested by SL Green include the ability to award operation or management contracts to third parties. Penn National’s other changes include the ability to abandon the Aqueduct project if they operate at a loss for four consecutive quarters

“Most of SL Green’s and Penn National’s proposed changes were raised during the course of the Lottery’s three rounds of questions and answers,” Lottery Commission said in its statement. “It was made clear to all bidders that non-conforming bids would be disqualified.”

SL Green and Penn National will be refunded the $1 million payment made after submitting their bids back in May.

Originally, six bidders were interested in operating the casino at Aqueduct racetrack: SL Green, Penn National Gaming, Genting New York, Clairvest Group, Delaware North and Empire City Yonkers Raceway. Delaware North and Empire City dropped out before submitting a bid, and Clairvest joined SL Green in an attempt to strengthen their bid.

The state is still reviewing Genting New York’s proposal. Genting operates Asia’s largest casino, in Malaysia. If their bid is not approved, New York Lottery will be unsuccessful for the fourth time to find a group to operate the casino at Aqueduct racetrack. New York Lottery hopes to make a final recommendation by August 3.

Community Board 10 will hold a public hearing on July 15th at 6 p.m at Aqueduct Racetrack. Representatives from Genting will make a presentation of their proposal to operate the VLTs at that time.

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