VLT Suppliers Picked, But New York Tracks Wary

New York lottery officials have selected four firms to supply video lottery terminals at racetracks for a new gambling program, but so far, track officials aren't leaping at it because they insist it will lose money.

The companies will supply more than 13,000 VLTs officials said could be up and running sometime between April and June of 2003. But most tracks have said that is an overly optimistic timetable because the issue of VLT revenues for the tracks has not been resolved.

"That's a legislative issue at this point," lottery spokeswoman Carolyn Hapeman said. The agency is trying to implement the program, and will leave to the state legislature decisions about whether to increase the split for tracks, she said.

But Hapeman, when asked to reveal how many racetracks had said they wouldn't join the program, said: "I cannot." She also said she does not know how many tracks would definitely sign up.

"We've been told to go out and line up contracts with suppliers, so we're moving forward with our end of this process," she said.

The lottery agency, which by law will run the program, on Oct. 17 selected four firms to supply the machines, games, and software. Those companies are Bally Gaming Systems, International Game Technology, and Sierra Design Group, all from Nevada; and Spielo USA, a New Brunswick, Canada, firm. Hapeman said the agency received only four bids from suppliers.

Hapeman would give no financial details about the bids; she said the information wouldn't be made public until contracts are signed with the companies.

Earlier this year, the lottery agency tapped Multimedia Games, a Texas company, to provide the central system that will run the new electronic gambling program.

The VLT program, as well as other aspects of a 2001 law permitting up to six new Indian casinos and entry by New York into a multi-state lottery game, is being challenged in court by a group of civic, religious, and business interests, including the head of the Saratoga Chamber of Commerce. The VLTs will be permitted a most racetracks, but not at the New York Racing Association's Belmont Park and Saratoga.

Track officials said they would lose money under the VLT law because it does not give tracks enough money after proceeds go to bettors, the state's education system, and purses. Officials had hoped to get the VLTs in operation this year, but Hapeman said it could be as late as June. Industry officials have said some tracks, even if they do get on board, won't be ready until late next year.

NYRA chief Barry Schwartz recently said he does not know when VLTs will be operating at Aqueduct, but that there is no way it can happen by next April. The machines must be running by then if NYRA is to have its three-track franchise automatically extended until 2012.

The VLT controversy has left tracks reeling. Some are said to be quietly courting offers to sell to owners interested in VLTs. They include Monticello Raceway, and Saratoga Equine Sports Center, and Vernon Downs, all harness tracks.

Others said they are sitting tight to see whether the 12.5% revenue share for tracks will increase. Various ideas have been floated, from increasing the percentage to having the state pick up costs for security and marketing.

"If the deal is what it is right now, Buffalo Raceway will not have video lottery terminals," said Dennis Lang, chief executive officer of the Erie County Agricultural Society, which runs the track.

Lang said proposals have been sent to the lottery, but the agency has not budged in its position. Tracks have said they need more than a 20% revenue share to make money on the VLTs. By Tom Precious