New York Gov. David Paterson

New York Gov. David Paterson

AP Photo

Is Aqueduct VLT Deal in Jeopardy Again?

The Aqueduct video lottery terminal project again appears to be in jeopardy.

In a new and major sign the Aqueduct video lottery terminal project could be in jeopardy, Gov. David Paterson is no longer counting on the winning bidder to supply the cash-starved state with $300 million by end of the current fiscal year March 31.

Just a few weeks after joining with legislative leaders to select Aqueduct Entertainment Group for the long-delayed VLT casino, the governor March 1 said the state’s current deficit is being made worse by “the fact that we won’t get” the up-front franchise fee from the “successful bidder to Aqueduct right away.”

“That would have been $300 million,” Paterson said in a speech in Manhattan.

The governor, who has been the most vocal in defending the AEG award, did not elaborate.

Sources, however, said negotiations with the state over a memorandum of understanding for the casino agreement are proceeding. One source said talks were scheduled for March 1 with state officials to try to reach a final deal on various aspects of the AEG contract for the VLT operation.

Under the terms of the deal, the sides are supposed to sign a final deal, and AEG is supposed to pay the state $300 million by March 31. But the selection process, which critics said changed often over the past year, is the subject of a review by federal prosecutors in New York. Also, the state inspector general’s office is conducting a probe of how AEG was selected.

The governor, whose administration had been warm to a bid by SL Green and Hard Rock Entertainment, in February selected AEG as his choice. Senate Democrats, whose titular leader, Malcolm Smith, has ties to some AEG partners, had been pushing AEG’s bid in private talks since last summer.

Assembly Speaker Sheldon Silver has said he will not give his final signature to the deal until the AEG bid is cleared by the inspector general’s review.

There has been growing chatter—especially since Paterson announced he will not be running for governor this year amid the latest scandal to rock his administration—that some state negotiators might be interested in putting off the Aqueduct project until after January, when a new governor takes office.

The VLT casino was first approved in 2001. The state has been losing an estimated $1 million in slot machine revenue-sharing for every day the casino has not been open.

The New York Racing Association, which operates Aqueduct, has said it could run out of money in June. It has been counting on VLT revenue to help its bottom line.