Schwartz: Aqueduct VLT Plan Must be Scaled Back

Plans by the New York Racing Association to build a world-class gambling facility to house video lottery terminals at Aqueduct will have to be shelved because state regulators are requiring tracks to pay too much of the program's expenses.

"I'm going to basically have to do as barebones an operation as possible," said NYRA chairman Barry Schwartz, who last year talked of a "racino" that would feature an upscale betting hall, restaurants, and space for entertainment. Now, he has asked NYRA architects to instead come up with plans for a far less ambitious facility.

"We'll try to get as many machines in as possible, and hopefully build a casino around it in the future," Schwartz said.

The state recently told eligible tracks in New York they can keep 25% of the revenue from VLTs, which were approved last October under New York's sweeping new gambling law. It will permit more than 14,000 VLTs at eight tracks, including 2,500 at Aqueduct.

But tracks have complained that the state Lottery Division, which is administering the VLT program, is shortchanging tracks by requiring them to pick up expenses such as extra security and the nearly $1,000 per machine for a player-tracking system.

Additionally, the law expires in three years, which makes it hard, track officals say, to get loans from banks to pay for the millions in capital costs the new
betting facilities will require. Of ever dollar bet, 90 cents goes back to bettors. Of the rest, 60% goes to the state, and 15% to the Lottery for administrative costs. The tracks get 25% but must dedicate a portion of that on a sliding scale for purses and breed-development funds.

The VLTs are supposed to ready by November, but track officials say the state's delays in implementing the program probably means they won't be up and running until next year.

Schwartz said it has become clear that, despite his past plans, NYRA cannot afford the splashy sort of facility he believes is needed to help compete with casinos in Connecticut and New Jersey. "From the cash flow the machines will generate, there's no way we can do it financially," he said of the ambitious plans he had for Aqueduct.

The Lottery Division settled on a 25% share for the tracks, though it could have gone as low as 12%. "Raising it to 25% didn't resolve the problem," Schwartz said. "It was a step in the right direction.''

Of his earlier plans, he said: "We can't afford any of these things. We're just about at breakeven."

Schwartz said NYRA has not yet approached lenders because it is still unclear what the facility at Aqueduct will cost. He said that because of the three-year sunset on the VLT legislation the state needs to step in and permit a government authority to lend the tracks money or have the state guarantee the track's loans to outside lenders.

Track officials are to meet late in the week of April 1 with Lottery Division officials to discuss the VLT program. NYRA is expected to send a team.

"We're going to listen," Schwartz said.