New York state has no choice but to give the New York Racing Association an extension of its franchise if it wants to get video lottery terminals operating at Aqueduct, NYRA chairman Barry Schwartz said.
Schwartz, in a Feb. 16 interview, said NYRA needs an extension if it is to secure $140 million in financing to construct a racino at the track. The NYRA franchise expires Dec. 31, 2007; it would have automatically been extended until 2013 had NYRA been able to get VLTs operational by March 1.
Schwartz said he would be comfortable if state officials were to grant NYRA a two- or three-year extension, instead of the six years that Republicans and Democrats were willing to give NYRA before its legal problems last year that cost it an indictment, "deferred prosecution," and $3-million fine.
The extra time would provide NYRA with "an opportunity to demonstrate we will be the kind of organization that will make everyone happy in the state," Schwartz said.
"At the end of the day, I want to get the casino built and demonstrate to everyone that's involved that NYRA can get it done," Schwartz said. "Everyone will see what it means, then I'll take my chances getting a longer-term extension."
The Aqueduct VLT program is undergoing an environmental review by the state Department of Environmental Conservation. Schwartz said if all goes well and construction takes seven months, the 4,500 VLTs could be activated at Aqueduct during the fourth quarter of the year.
Because of its location, the Aqueduct racino is expected to generate the most revenue of any in the state.
State officials earlier this year were quietly wondering how they could grant NYRA an extension--especially with the entire 212-member legislature up for re-election this fall--so soon after NYRA and several former executives were charged in a multimillion-dollar fraud scheme. There had been talk a bill could be crafted to ensure that MGM Mirage, NYRA's partner in the VLT project, would be the VLT operator beyond 2007 no matter what happens with NYRA.
But in recent weeks, legislators, led by Senate Majority Leader Joseph Bruno, a longtime NYRA backer, have been warming up to the idea of a NYRA franchise being granted this spring.
"We're going to have to have some sort of extension because we have to have a franchise that at least covers the payback period," Schwartz said. "We can't expect a lender to give us $140 million when we can't assure our existence for a period of time that would cover the payback.
He declined to say what the term of the VLT loan might be. State officials could not be reached for comment Feb. 16, a state holiday.