Horse Racing: Genting cleared to run video lottery terminals at Aqueduct
It’s been a long time coming but finally it would appear everything has been cleared up and the Aqueduct ‘racino’ project is a go.
So far, New York has struck down two successful bidders for the Aqueduct project and the last group to be ruled out was not at all happy about it. The Aqueduct Entertainment Group was ruled out by the Lottery Division over concerns about the bidding process. The group subsequently took to the courts arguing that they had been wrongfully ruled out and because they had already successfully won the bid for the project, no other bidders should be considered.
The Aqueduct Entertainment Group was actually just trying to stop Genting New York LLC from landing the Aqueduct racino project. These efforts appear to have been in vain since Genting has been cleared. After years of uncertainty, the Aqueduct project appears to be a done deal. The final nod has been given to the Malaysian giant Genting and the state can now pull out the paperwork. The final required approval came from Assembly speaker Sheldon Silver. Governor David Paterson and the Democrat controlled senate had already signed off on it.
There was pressure on the legislative to get the racino project moving forward because the New York Racing Association has been struggling financially and without racinos, they could be insolvent by next year. The fact that New York authorities didn’t have bidders left to pick from was another factor that helped Genting get the approval they needed. The state legislature approved the proposal for VLTs in 2001 but had made no significant progress until now.
Genting offered $80 million more than the $300 million non-refundable franchise fee that Governor Paterson and the lottery division had set. Genting wanted to move forward as early as possible and said that 1,600 of the 4,500 approved video lottery terminals could be set up and running within six months of signing a memorandum of understanding. It could be signed as early as this week. At its peak, the armless slot machines could be generating a million dollars a day.
Although Genting, if it can get the required approvals, would like to move on to other games and even move into casino gambling if the state legalizes it, but revenues from just the slot machines would be more than enough to make the investment viable. Genting spokesman made it a point to make sure New York legislature understands that the jump to casino gambling was not a requirement for Genting but strictly an avenue of growth. Slot machines represent between 60 to 70 percent of casino revenues.
Governor Paterson has been calling for a quick decisions regarding the Aqueduct project. He said that lawmakers knew Genting was the sole remaining bidder and they have had weeks to examine the deal. “I don’t see any reason for any further delay,” Paterson said.
The group, that is worth $5.25 billion dollars, won over the lottery division. An assessment of Genting for the lottery division commented on the financial strength of the group. Genting was described as “an extremely strong company, with excellent cash flow, good operating results, a healthy balance sheet and significant growth opportunities.”
Genting plans on promoting Aqueduct as a tourist resort and using its proximity to the JFK airport to that end. “It’s not just slot machines, it needs to be a destination for all kinds of customers,” the president of Genting, Michael Speller said.
The casino at Aqueduct would provide employment to around 1,300 people from around New York. “Getting New Yorkers working again is our top priority,” Chairman of the Senate racing committee, Eric Adams said. He said that the fact that they were the only remaining option was a disappointment initially but since then he has been convinced that Genting was “the best product.”
Sen. Joseph Addabbo said that Genting wasn’t just the best financial option but its commitment to engage the local suppliers and community showed that it would be a good partner to local community and the state.
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