Bidding for Aqueduct VLT Project Tightens

Sources said the bidding for the Aqueduct VLT project has been narrowed down.

Negotiators in New York have tentatively narrowed down the bidding list to three entities to run the long-delayed video lottery terminal casino at Aqueduct, and a final decision could come as early as the week of Sept. 28.

Gov. David Paterson told legislative leaders in a closed-door meeting Sept. 24 he believes the selection should be among bidding groups led by Manhattan real estate developer SL Green, Las Vegas casino executive Steve Wynn, and Buffalo, N.Y.-based Delaware North, according to sources with knowledge of the session.

The major battling, however, appears to be between SL Green and Wynn, with Delaware North facing an uphill challenge in large part because it won the VLT contract a year ago but never started construction because of problems caused by the nation’s lending crunch.

Two people involved in the talks cautioned that the situation is still fluid, especially with the unknown fallout since word surfaced the past week that President Barack Obama has lost confidence in Paterson and his ability to get elected in 2010 to a full term.

The governor's office declined comment Sept. 25.

A final selection needs the approval of Paterson and the leaders of the state Assembly and Senate. The issue was discussed the week of Sept. 21 in a half-hour meeting Paterson held with Assembly Speaker Sheldon Silver and Senate Democratic Conference Leader John Sampson following a public session on the condition of the state budget.

Lawmakers are eager to get the Aqueduct situation resolved soon because the state is facing a $3-billion deficit that is supposed to be closed in the coming weeks. They want to use any up-front payments from the eventual Aqueduct bidder to help reduce the budget gap.

In one of the more unusual bidding processes, groups vying for the VLT deal have been able to change their offers to the state months after they supposedly submitted their final bids.

The most recently known offers by the leading candidates to win the 30-year award are $275 million by SL Green, whose partners include Hard Rock Entertainment, Tishman Construction, and firms connected to BET founder Robert Johnson; and $300 million by Wynn. The payments to the state are made over different periods of time, but include at least $100 million up front to the cash-starved government.

Delaware North also offered $300 million, including $100 million up front. The company last year won a deal for the Aqueduct casino with a $370-million payment to the state, but it was scuttled.

A number of officials from various state agencies including the governor’s office, lottery division, budget office, and legislature met behind closed doors the week of Sept. 21 to go over the bids. While there was no resolution at the meeting, sources involved in the discussion said state lottery officials raised some doubts about two bidding entities: a group led by MGM Mirage and another called Aqueduct Entertainment Group, which includes a Las Vegas casino firm, a construction company, and a group connected to a politically influential minister in Queens.

Penn National Gaming Inc. is also believed out of the running, said sources who spoke on condition of anonymity, because the upfront payment offer was too low.

The Aqueduct casino project was first approved shortly after the 2001 terrorist attacks as a way for the state to raise revenue. Despite the downturn in the gambling industry, it is considered a major prize because of its location in New York City, where it would be the only legally operated casino in the five boroughs. The project, whenever it opens, is expected to generate millions for the New York Racing Association, as well as for purses and breeding programs.