08/06/2010 2:40PM

Legislators to question Aqueduct casino bidder on women, minorities

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SARATOGA SPRINGS, N.Y. – New York legislators will not approve a company selected by the state lottery to operate a casino at Aqueduct racetrack until they have had an opportunity to question the company on its proposal, including its plans for minority- and women-owned contractors, a representative of Sen. Malcolm Smith, the Senate president pro tem, said on Friday.

Travis Proulx, a spokesman for Smith – one of two legislators who must approve the proposal – said that Smith’s legal counsel has asked the company, Genting New York, to schedule several presentations over the next several weeks so that Senate members can question the company about its bid. On Tuesday, the state lottery issued a glowing recommendation of Genting’s bid to operate the casino, which will likely be one of the highest-grossing gambling properties on the East Coast.

“One of our biggest concerns is that Genting has a robust [Minority and Women’s Business Enterprise] program,” Proulx said. “It’s our strong belief that as the casino grows, that all the small businesses associated with it will be able to grow as well.”

Genting’s plan for the casino, which has been approved for 4,500 slot machines, cannot go forward without the approval of Smith; Rep. Sheldon Silver, the Speaker of the Assembly; and Gov. David Paterson, who has already said that he will accept the lottery’s recommendation.

Sisa Moyo, a spokesperson for Silver, reiterated on Friday that Silver’s staff continues to “evaluate” Genting’s proposal.

Genting, a Malaysian company with vast gambling and entertainment holdings, received the lottery’s recommendation on Tuesday, five weeks after submitting a proposal to operate the casino. Two other bidders – a partnership of SL Green and Hard Rock Cafe, and Penn National Gaming Inc. – also submitted proposals, but the lottery disqualified those bids because the entities did not comply with the bidding requirements.

One of the requirements in the lottery’s request for proposals included a commitment to minority-owned businesses. In a report about the evaluation of Genting’s bid, the lottery said that Genting “has a solid MWBE plan [and] has made a commitment to meet and exceed the goals established” by the request for proposals. The evaluation also said, however, that Genting would be awarded four out of a possible five points for its commitment to minority- and women-owned businesses because the company “does not have experience” with New York State’s program in the matter.

Stefan Friedman, a spokesperson for Genting, said that the company’s project would create 2,000 jobs “that will be filled in large part by local minority and women residents.”

“We look forward to meeting with the State Senate to lay out Genting’s vision for Aqueduct,” Friedman said.

Two previous attempts to approve an operator for the Aqueduct casino have imploded over the past three years because of a variety of political and financial considerations. In the first instance, the state selected Delaware North to operate the casino, but the company reneged on a promise to pay the state a $370 million upfront licensing fee. Then, earlier this year, the selection of a sprawling partnership, Aqueduct Entertainment Group, was scuttled under accusations that the choice was politically motivated.

In both instances, the two companies had not signed a binding contract with the state to operate the casino before the proposals being thrown out. But in Genting’s case, the contract has already been signed as part of revised procedures for the evaluation of the bid, meaning that no terms of the operating contract are negotiable, according to Jennifer Givner, a spokesperson for the lottery.

If the legislative leaders approve Genting, the contract will be sent to the state’s attorney general and comptroller for review, Givner said. If both parties approve the contract, then Genting will have 10 days to forward a cash payment of $380 million to the state, the amount promised in the company’s bid to operate the casino for the next 25 years. Genting says it currently has $1.6 billion in cash.

Friedman said that the company hoped to get approval of the contract within the next several weeks so that it could begin construction on the facility. Friedman said that Genting would be able to install 1,600 slot machines within six months, and that the facility’s 4,500 machines would be fully operational within 12 months.

“We’re extremely confident we can get that done,” Friedman said.

The casino is expected to generate at least $650 million in annual gross gaming revenues. The New York Racing Association, the operator of Aqueduct, Belmont and Saratoga, will receive 7 percent of those revenues for capital expenditures and operating funds, or approximately $45 million. Horsemen and breeders will receive 6.5 percent, or approximately $42 million.