06/28/2010 11:00PM

Three groups submit bids for Aqueduct casino


Three groups submitted bids to operate a casino at Aqueduct racetrack in Queens by a late-afternoon deadline on Tuesday, according to the New York Lottery, which is overseeing the process to evaluate the bids.

The three groups - the casino and racetrack operator Penn National Gaming Inc., the Malaysia-based casino company Genting New York, and a partnership of SL Green, Hard Rock, and the Clairvest Group - will compete to win the rights to operate the casino over a span of 30 years. The casino is expected to be one of the highest-grossing gambling properties on the East Coast.

Details of the bids will not be released until the lottery has made its recommendation on the winning bidder, according to Jennifer Givener, a spokeswoman for the lottery. In addition, Givener said that the bidders were told to include the amount of money that they would be willing to pay the state as a license fee in a separate, sealed envelope from their bid, and that the lottery would not review the contents of those letters until it had finished evaluating the bidders for their suitability to run the casino.

Earlier this month, six companies complied with a condition of the licensing process to submit a $1 million entry fee to bid on the casino, which was first approved in 2001. Two of those companies, Delaware North Gaming and Empire City Casino at Yonkers Raceway, did not submit a bid on Tuesday. In addition, Clairvest, a Canadian venture-capital fund, had submitted its own $1 million entry fee, only to partner with SL Green and Hard Rock in its Tuesday bid.

Lottery officials said that they plan to announce a winning bidder on Aug. 3. The bidder will be required to pay at least $300 million to the state in an up-front licensing fee, but the state has agreed to back $250 million in bonds to fund the construction of the casino, which has been authorized for 4,500 machines.

The winning bidder will be subject to the approval of Gov. David Paterson and the leader of the state's Assembly, Sheldon Silver, and the Senate's temporary president, Malcolm Smith. All three are Democrats. Paterson has already said that he will approve the lottery's recommendation.

Two previous attempts to name an operator of the casino have been scuttled. In the first instance, in 2008, Delaware North was selected to operate the facility, but the company reneged on a promise to pay the state a $370 million licensing fee, citing the instability of the markets.

In the second instance, earlier this year, the state's legislative leaders selected a sprawling politically connected partnership called Aqueduct Entertainment Group, but the selection was immediately criticized as being politically motivated. The process was scrapped and restarted. Clairvest was a member of the Aqueduct Entertainment partnership.

In a prepared statement, William Bissett, the president of Delaware North Gaming and Entertainment, said that the company had decided not to pursue the license because of a variety of concerns, including "non-refundability" of the minimum $300 million license fee, the unpredictability of state tax rates on casinos, and the "indefinite amount of financial support that the developer will be required to provide to the New York Racing Association."

Delaware North owns Finger Lakes Gaming and Racetrack in western New York, Fairgrounds Gaming and Raceway in Hamburg, N.Y., and it operates the casino at Saratoga Gaming and Raceway.

As part of recent budget deliberations, state legislative leaders have proposed increasing the tax on casinos by 1 percentage point, with the share being taken from the operator. New York has eight racetrack casinos already in operation.

NYRA and its horsemen are expected to receive about $60 million a year in subsidies from the casino once it is up and running. The association, which operates Aqueduct, Belmont, and Saratoga, has faced financial difficulties in the past, and emerged from bankruptcy in 2008 after reaching an agreement with the state to hand over the deeds to its tracks in exchange for a 25-year franchise to operate the tracks and the forgiveness of its debt to the state.