05/10/2010 11:00PM

New York restarts slot-operator selection


The New York Lottery will make a recommendation to Gov. David Paterson regarding an operator for a casino at Aqueduct racetrack in Queens within the next 12 weeks, the lottery said in a release issued late Tuesday.

As part of the process, the lottery issued a request for proposals to operate the casino on Tuesday. The casino has been authorized for 4,500 slot machines, and most gambling-industry analysts expect the property to be the highest-grossing casino on the East Coast, with revenue in excess of $600 million, with the operator s cut reaching $250 million annually.

Earlier this year, Gov. Paterson and Democratic leaders of the state s Senate and Assembly selected Aqueduct Entertainment Group, a sprawling politically connected partnership, to operate the casino. The selection, however, was scuttled after it draw intense criticism as politically motivated.

In a release, the lottery said that the evaluation of the bidders will be based on predetermined and public criteria. The evaluation will be performed by a committee at the lottery headed by its director, Gordon Medenica, and staffed by lottery personnel and a representative of Paterson s budget division, the lottery said.

Under current state law, any recommendation by the lottery would still have to be approved by the governor and the legislative leaders of each house. Critics of the previous selection had said that the system invites cronyism and suspicion because the negotiations are conducted behind closed doors.

According to the request for proposals released on Tuesday, bidders will need to guarantee the state $300 million in upfront fees to qualify to operate the casino. The previous proposal request had an identical requirement.

The lottery said that all bids will be made public once a winner is selected.

In addition to Aqueduct Entertainment Group, five other companies placed bids on the 30-year contract to operate the casino. They included Delaware North Cos.; a partnership of SL Green and Hard Rock Casinos; a partnership of Peebles Development and MGM Grand; and Penn National Inc.

Delaware North was selected to operate the casino under similar procedures in 2008, but the company reneged on a promise to pay the state $370 million, and the deal was scrapped.

Slot machines were first legalized at eight New York racetracks in 2001. Aqueduct is the only location at which a casino has yet to open.