Friday, April 24, 2009

The Tribe In The Media: NY Wants License Fee For Aqueduct VLT Slot Parlor

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This article of The Tribe In The Media is a New London Day article on the upcoming deadline and terms required for groups to submit bids to build and run a VLT slot parlor in at the Queens, NY, Aqueduct racetrack.

Mohegan Sun weighing N.Y. licensing fee
By Brian Hallenbeck
The Day
April 24, 2009

Mohegan Sun executives, who are expected to submit a bid to build and operate a casino at Aqueduct Racetrack in Queens, the New York City borough, are studying New York state's plan to fast-track the project, which includes providing $250 million worth of construction financing.

New York's request for proposals, issued late last week, calls for bidders to offer an upfront licensing fee, a provision that led to the undoing of Delaware North Companies, the Buffalo, N.Y., firm chosen to build the casino in an initial round of bids last year. In March, however, Delaware North withdrew its plan, informing New York Gov. David Paterson's office that it was unable to make the $370 million upfront payment it had offered.

According to the agreement the winning bidder would now have to sign with New York officials, the licensing fee would have to be paid within 10 days of the document's signing. No minimum bid for the fee has been established.

“We're running models of the competitive landscape and haven't decided whether to provide a bid,” Jeffrey Hartmann, chief operating officer of the Mohegan Tribal Gaming Authority, which manages Mohegan Sun, said Thursday. He added, however, “We believe we have the best understanding of the Northeast gaming market.”

The Mohegan authority partnered with Capital Play, a New York company, in submitting its earlier bid, which was one of three finalists. Hartmann said the authority has not decided whether to partner with another entity on a new bid.

Hartmann said New York's latest request for proposals was substantially the same as the earlier one. However, it does not provide an option for bidders interested only in building and managing the casino as opposed to owning it, which is likely to keep the Mashantucket Pequot Tribe's Foxwoods Development Co. from entering the fray, Gary Armentrout, Foxwoods Development's president, said Thursday.

“New York contemplates that the winner (of the bidding process) would own and operate the facility,” Armentrout said. “They're looking at a $3 million upfront payment just to be considered, as well as the upfront licensing fee and effectively a 78 percent tax rate. Based on that, it's not likely that we're going to participate this time around.”

Foxwoods Development did submit a bid for a state-owned, Foxwoods-managed casino in the initial round of bids.

Delaware North had planned to build a casino that included 4,500 video lottery terminals, which are similar to slot machines; restaurants; a hotel and a 60,000-square-foot conference center. The New York Racing Association has the franchise to operate Aqueduct's horse racing.

Hartmann said he expected the economic conditions and a “tight time frame” — proposals are due May 8 — to limit responses to a handful of bidders.

Delaware North, which is expected to come forward again, has been accused of breach of contract in a New York state Supreme Court suit filed by SL Green Realty Corp., its one-time partner in a group called Empire Racing. SL Green also is expected to participate in the Aqueduct rebidding.