09/19/2006 12:00AM

Official questions N.Y. slots delay


The New York state comptroller has asked the state lottery division to explain why it has yet to approve the New York Racing Association's plans to operate a slot-machine casino at Aqueduct racetrack.

The request came in a letter dated Sept. 15 from State Comptroller Alan Hevesi to the lottery division's director, Nancy Palumbo, asking Palumbo to "make a decision about the proposal or offer guidance for any needed revisions." NYRA sent its proposal -- a management contract between NYRA and the casino company MGM Grand -- to the lottery for review four months ago.

The letter was provided by the comptroller's office on Tuesday.

NYRA's efforts to open the casino have been delayed several times since legislation was passed in 2005 addressing MGM Grand's concerns regarding its involvement with the casino. Over the past several months, NYRA officials have openly criticized the lottery division's failure to approve the management contract and have asked Gov. George Pataki and a state oversight committee to intervene.

In his letter, Hevesi said that the state budget for 2007 includes $300 million in revenue from the casino and that the delay "creates a substantial risk to the state's financial plan, potentially exacerbating the out-year gaps to be faced by a new [governor]."

Hevesi, a Democrat, is expected to win a second term for comptroller this year. Hevesi is closely aligned with New York Attorney General Eliot Spitzer, a Democrat who is expected to win the gubernatorial election this year.

Lottery officials did not return phone calls on Tuesday.

NYRA's state-approved franchise to operate the casino and its three racetracks expires on Dec. 31, 2007, and a committee is reviewing bids for a new 20-year franchise. NYRA was one of four companies to submit bids. A final decision on the new franchise must be made by the governor and legislature.

Late in 2005, NYRA received a $30 million loan package from the state legislature to address the association's mounting cash-flow problems. The loan included $25 million from the lottery, but two weeks ago, NYRA's chief executive, Charles Hayward, said that the lottery has released only $6 million and that NYRA would have to declare bankruptcy by the end of the year if the remainder of the funds were not released.

Hevesi said in his letter that the failure of the lottery to approve the management contract and additional allotments from the loan package was influencing the effort to identify a successor to the NYRA franchise and jeopardizing NYRA's ability to operate.

"Is there really an interest in forcing NYRA into bankruptcy?" Hevesi wrote. "Is it in the interest of New York State to have this critically important asset (and industry) devalued? Is it actually someone's intention to change the dynamic of what is purported to be an open and fair competitive process to select the next franchisee?"

Scott Reif, a spokesman for the oversight committee, which ultimately must approve NYRA's casino plans and its proposal to repay the loans, said the committee would take no action until the lottery made its decision. Carole Stone is the chair of the committee.

"Until the lottery division completes its review and approves the MGM contract, and a repayment plan is in place, we don't anticipate the oversight board taking action," Reif said.