Genting NY to Run Aqueduct Casino Project
Genting New York, a Malaysian-based casino group, has been recommended by the New York Lottery Division to run the much-delayed Aqueduct video lottery terminal casino project.
Genting, the only bidder left standing in the most recent procurement round, offered the state an immediate upfront franchise fee payment of $380 million. The state had demanded from bidders at least $300 million in immediate payments for the exclusive rights to run the 4,500 VLTs at the Aqueduct facility.
Genting, which has been financially involved in several Indian and other gambling ventures in the state, is not assured the Aqueduct contract, however. The decision by the lottery agency is non-binding, though Gov. David Paterson has previously said he would abide by whatever group the lottery agency selects. The final selection also needs the unanimous backing of the leaders of the state Assembly and Senate.
“It is with genuine enthusiasm that the committee unanimously recommends Genting New York as the winning vendor,” Gordon Medenica, the lottery director, wrote Aug. 3 in a letter to the governor. “Our strong recommendation, based on the merits of the proposal, was vastly reinforced by Genting's financial offer of $380 million as an upfront licensing fee."
In a 28-page report recommending Genting, the lottery agency said its pick for the franchise has proposed opening an initial VLT facility at the track, with 1,600 VLTs, within six months of signing a deal with the state. The remaining machines would be ready on two floors of gambling space six months after that, along with a 2,100-space parking garage and a new pedestrian bridge to a nearby subway station.
The report said Genting scored 95 out of 100 points in the evaluation process. It noted Genting New York is a subsidiary of Genting Malaysia Berhad, a public company with $1.6 billion cash on hand and a market capitalization of $5.25 billion. It is an affiliate of its parent Genting Group of Cos., which runs casino facilities in Malaysia, Singapore, the Philippines, and Great Britain.
Stefan Friedman, a Genting spokesman, said the company's selection will create 2,000 construction jobs and lead to more than $500 million in revenue annually for the state. For the New York Racing Association, the VLT casino is expected to erase its annual cash-flow problems while owners and trainers expect a surge in purse revenue.
"We hope the Lottery’s recommendation will be endorsed by the legislature so we can immediately get to work creating jobs, preventing layoffs, and delivering more than $15 billion in economic benefits to New York over the next 30 years," Friedman said.
"The New York Racing Association is encouraged by the New York State Division of the Lottery’s timely selection of Genting New York to develop and operate the VLT facility at Aqueduct," NYRA president and chief executive officer Charles Hayward said in a statement. "The community surrounding Aqueduct has expressed support for Genting’s plans, and we trust that the leaders of the state Assembly and Senate will approve the lottery’s recommendation at their earliest opportunity."
After the lottery agency recently tossed out two of the three bidding groups left in the process, Genting’s selection was all but assured. Three of Genting New York’s major principles have already been licensed by the lottery to be partial owners of Monticello Raceway's VLT casino. Besides Monticello, Genting helped finance Indian-owned casinos in Niagara Falls, N.Y., and Connecticut.
The decision comes less than a week after Aqueduct Entertainment Co., which won, and then lost, a previous bidding round for Aqueduct, had its court case to re-install its bid rejected by a state judge. The company is appealing, so it is uncertain if that could delay the Genting situation.
The state first approved the Aqueduct VLT casino in 2001. Other racetrack casinos have since opened across the state, but the Queens project has faced an assortment of political, legal, and financial troubles.
Three previous bidding procedures were scuttled, with the most recent one earlier this year luring the interest of federal and state investigators wanting to know about the process used to select Aqueduct Entertainment. The newest process was on a fast track, with the lottery agency given until Aug. 3 to make its recommendation--less than three months after it issued its request for proposals.
The state has a short- and long-term financial interest in the Aqueduct facility. It has already put in its 2010 financial plan the $300 million the winning bidder will pay for the casino franchise, and it expects to draw at least $300 million a year in revenue-sharing proceeds from the facility.
Medenica said Genting is experienced and its plan “reflects a deep and insightful understanding of the opportunity and challenges of Aqueduct.” He said the company also understands the project’s business risks, and “they are highly sensitive to the community issues, labor requirements, and social concerns that a project of such scope encompasses.”
The lottery director said other bidders rejected earlier “made the fatal assumption that the process was still open to maneuvering and negotiation.”
Medenica said Genting also passed an “exhaustive” vetting process of its principles and investors.
“While you, governor, have already committed to supporting this recommendation, we urge our legislative leaders to quickly add their support in order for the state to receive, finally, the massive influx of monies that this project will generate,” Medenica wrote.
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