The projected cost of building the long-planned video lottery terminal casino at Aqueduct has soared nearly 20% since it was first proposed several years ago, New York Racing Association officials said.
With a major court case recently decided and a new racetrack revenue-sharing plan now on the state books, NYRA is tentatively planning to begin construction on its sprawling VLT parlor July 1, NYRA president Charles Hayward said.
"We're pushing hard to get this thing going," Hayward said.
But Hayward said the costs, due to inflation and other expenses--especially sharply higher steel prices--have boosted the price tag for the casino from the original $140 million to about $170 million. That, he said, may require the need for compromise with horse owners and breeders for a projected increase in VLT splits in the years ahead.
NYRA has a deal with Las Vegas-based MGM Mirage, which will finance the project and serve as the VLT manager. But the higher construction costs, Hayward said, mean it would take longer to pay back MGM the money being lent to NYRA to construct the facility. Plans call for 4,500 VLTs in addition to bars and restaurants.
The level of VLT revenue sharing for purses and breed development was, under the original state law, to rise after the fifth year of the gambling program. A new law, enacted in March, no longer specifies how much VLT revenue will be dedicated to purses and breed development, but Hayward said NYRA hopes to cut deals with horsemen and breeders to match the splits under the earlier VLT law.
Hayward warned that MGM must be assured it will get its investment back in a set time period. "We can't have an increase in our commitment to purses and breeders, which we would like to do, if we have not paid back MGM," Hayward said.
The state's highest court recently ruled racetrack VLTs are legal, rejecting a case by gambling opponents who said the new form of gambling in New York is prohibited by the state constitution. A mid-level appeals court had earlier struck down as illegal the VLT revenue-sharing arrangement for purses and breed development, insisting those payments amount to a unconstitutional diversion of money that should be going solely to public school funding.
The legislature and Gov. George Pataki subsequently cut a deal in late March to raise the level of VLT revenue for tracks and eliminate the statutory requirement for specific VLT proceeds for purses and breed development. That plan envisions tracks making separate deals with horsemen and breeders for a share of VLT revenue.
Hayward said NYRA wouldn't reshape the plans to accommodate the rising cost of the project. "We feel strongly, as does MGM, that if we're going to make this a first-class facility and hit the per-machine rates, we really need to make sure it's an attractive facility with some amenities," Hayward said. "Were we to cut back on the building just to make the $140 million number, that would be shortsighted."
NYRA expects the per-machine net win to total about $400 a day, a substantial number for racetrack VLTs.
Hayward said construction plans began to heat up after the VLT law was revised in a state budget package that passed March 31. He said NYRA assumed all along the court challenge would fail.
"Once that recent legislation went through, we started proceeding," the NYRA chief said.
Hayward said NYRA and MGM would hire a new construction management firm for a facility that will include a small theater and a large sports bar. NYRA expects the project to be completed in about 12 months, which would make Labor Day 2006 a target date.