Monday, October 13, 2008

The Tribe In The Media: The Latest On Mohegan's Bid For Slots At NY's Aqueduct Racetrack

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This installment of The Tribe In The Media series is an article in The Thoroughbred Times providing more details on the N.Y. Governor's recommendation for Delaware North to be given the contract to operate VLT slot machines at the Aqueduct Racetrack in Queens, N.Y. The Mohegan Tribe was a partner in one of three groups bidding to build and operate VLT slot machines at the racetrack, located in Queens, N.Y.

Paterson names Delaware North to run Aqueduct racino

Thoroughbred Times
By Paul Post
October 11, 2008

Governor David Paterson has named an operator to run Aqueduct’s proposed racino, which could revolutionize the state’s Thoroughbred industry by generating tens of millions of dollars annually for the New York Racing Association, horsemen, and breeders.

Paterson, on Friday, selected Delaware North Companies—owner of Finger Lakes in Farmington, New York—and its partner Saratoga Harness Racing Inc. to run a 4,500-machine video lottery terminal facility at Aqueduct.

The choice has the support of Assembly Speaker Sheldon Silver (D-Manhattan), but the Senate’s Republican leader, whose approval is also required, voiced immediate opposition to the plan.

“Governor Paterson is supporting a bid that only includes plans for a racino and does not include any proposal to generate needed economic development,” said Senate Majority Leader Dean Skelos (R-Rockville Center).

Proposals from two competing bidders call for large-scale retail and entertainment complexes and one includes a major hotel, which could create hundreds of additional jobs.

“Before agreeing to any final proposal, we must be assured that the bid meets the basic criteria we established when we authorized this effort,” Skelos said.

So while Paterson’s long-awaited choice is finally known, the deal is not finalized and may not be until after the elections in November. Senate Republicans are trying to maintain a slim majority, while Democrats are trying to unseat them, which would give Democrats control of all three branches of state government. Gaming could be a key issue in several hotly contested downstate Senate races.

Racino construction is expected to take 15 to 18 months, meaning it probably will not be operational until 2010, even if an agreement is reached soon.

“I’ve seen Delaware North in action at Finger Lakes and Saratoga [Race Course], so we‘re very comfortable with them,” NYRA President Charles Hayward said. “We’re going to be highly motivated to work with these guys, to make them a bigger success, because we get 7% of the net win—4% for capital expenses, 3% percent for operating expenses.”

This should translate into more than $40-million annually. NYRA already has retained a consultant to map out future capital projects.

Horsemen and breeders are slated to get 7.5% and 1.5%, respectively, of racino profits at year three and beyond. The lure of higher purses could stimulate major investment in New York’s breeding industry and the expansion or addition of many upstate Thoroughbred farms.

Paterson defended his choice, saying that Delaware North provided the highest up-front payment of $370-million, compared with $250-million by SL Green Realty Trust/Hard Rock Entertainment and $100-million by Capital Play Inc./Mohegan Sun.

Paterson criticized Skelos for holding up final approval.

“Equally troubling is that he has refused to state what proposal he supports and why,” said Risa Heller, a spokesperson for Paterson. “In this time of financial crisis, every day we delay hurts New York.”

The state loses an estimated $1-million per day while awaiting the start of racino operations.

This summer, at a New York gaming summit in Saratoga Springs, New York, Delaware North President William Bissett said he would be content to put viedo lottery terminals alone at Aqueduct and let another firm handle other types of development such as retail and entertainment. That’s in stark contrast to the other proposals.

“We had planned to turn Aqueduct into a premier destination,” Mohegan Sun President and Chief Executive Officer Mitchell Etess said. Mohegan Sun’s plan would produce $6-billion more than its rivals during the life of the 30-year contract, Etess said.