Thursday, July 15, 2010

Review of Lone Aqueduct Bid Continues

By Eric Yun

Genting New York is continuing to move forward with plans to build and operate video lottery terminals (VLTs) at Aqueduct race track in Ozone Park, but still has many hurdles to clear.

Genting New York, a subsidiary of one of Asia's largest casino and resorts operators, is the only remaining bidder for the project. SL Green and Penn National Gaming also submitted bids in June, which were rejected by New York Lottery because the two companies attempted to renegotiate the terms to be more favorable.

As the lone bidder, Genting has begun to release their plans for the "racino" project. Besides the 4,500 VLTs, Genting has planned many amenities for the facility. These include a two-story food court, a spacious area that could be used for community and corporate events and shuttle busses to John F. Kennedy (JFK) Airport.

New York Lottery is reviewing Genting's bid, and will have a final recommendation for the state by August 3.

This is the fourth time companies have vied for the right to operate VLTs at Aqueduct. In two of the previous attempts, Delaware North was selected, but they were forced to withdraw after failing to raise the $370 million up front fee they promised to the state.

Most recently, in June 2009, Aqueduct Entertainment Group (AEG) was selected for the project. The deal fell apart, however, after an investigation by the state inspector general, which is still ongoing, and charges of political favoritism.

As state Inspecter General Joseph Fisch continues to probe for more information regarding AEG's controversial selection, the company is not sitting idly. Last week, AEG filed a motion in New York Supreme Court requesting the right to sue New York Lottery and Govenor David Paterson, Assembly Speaker Sheldon Silver, Senate Conference Leader John Sampson and Senate President Malcolm Smith.

In their motion filed in court, AEG claimed their rejection was "a result of the arbitrary, capricious, unauthorized and discriminatory actions taken against [us]."

Among their complaints is a claim that Assembly Speaker Silver demanded detailed financial information from passive investors who were not directly involved with the project, "nearly a year after the bidding process." They also claim the state did not "provide AEG adequate notice of important deadlines ... or afforded AEG an opportunity to be heard on Lottery's denial of its license application or the Governor's single-handed rescission of the Aqueduct contract."

"We seek a temporary restraining order until we have a hearing or trial," said Daryl Davis, one of the lawyers representing AEG, according to a report published in Crain's New York Business.

If a judge sides with AEG, the Aqueduct project may be put on hold again as the state deals with the litigation.

Another major concern for any bidders on the Aqueduct "racino" is the possibility of a casino from the Shinnecock Indians. They were granted federal recognition as a tribe after a 32-year battle, which paves the way for them to open a casino with video slots but no table games—on their land in the Hamptons.

However, The New York Times reported the state is hesitant to open a casino in the Hamptons because of already existing tourism traffic and are exploring sites in New York City. The Shinnecock Indians are hoping to gain land and permission to build a full casino with table games. Such a casino might be a deathblow to VLTs at Aqueduct.

As the process to create VLTs at Aqueduct race track drags on, there are some who question if VLTs are the best option for Aqueduct.

Undoubtedly, gambling at Aqueduct with VLTs would help revitalize Aqueduct and bring millions of dollars in revenue for the winning bidder and the state.

Hugh O'Neil, writing for Center for an Urban Future, argues that the 192 acres of land could be better utilized.

O'Neil believes New York would be better served by using the land to build an "airport city" that thrives because of its proximity to JFK Airport. He cites many cities such as Dallas-Fort Worth and Denver that have partnered with their airports to build commercial developments.

Other cities have much more available land, O'Neil acknowledges, but he believes the city and state could do better with what they have. New York City has begun developing areas around the Jamaica AirTran station. The Aqueduct property, with even more land, holds an opportunity for "low- to medium- density development (such as office buildings, distribution facilities, hotels or a conference center) and still have plenty of room left for community uses," according to O'Neil's report.

For now, New York Lottery and Genting are hoping that they will be able to operate VLTs at Aqueduct race track. Representa- tives from Genting will hold a public meeting with Community Board 10 on Thursday, July 16, at 6 P.M. to discuss their plans with the public.

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