Few fans showed up on a race day in February 2007 at the Aqueduct racetrack in Queens, and the grandstand, which once held up to 30,000 people, is still mostly empty. Officials hope to increase attendance by adding slot machines; the refurbished operation is expected to generate more than a $1 million a day.
Amid a battered economy and falling tax revenue, Gov. George E. Pataki agreed in October 2001 to a budget deal that authorized electronic slot machines at the Aqueduct racetrack in Queens.
But eight years and one recession later, state officials still cannot agree on an operator for the aging track, despite the obvious financial incentive: a refurbished operation with video gambling machines would generate more than $1 million a day, many experts say.
The latest round of talks has been stalled for months, and despite a series of meetings among Gov. David A. Paterson and legislative leaders to try to resolve the matter, they remain deadlocked. The pressure is on state lawmakers, who have already included a $200 million upfront payment from the winning bidder in their plan to reduce a multibillion-dollar budget deficit.
The problem is that the governor and the leaders of the Assembly and the Senate must agree on the winning bid.
The governor’s office appears to favor a group led by SL Green Realty, Manhattan’s largest commercial landlord, and Hard Rock International, or maybe Delaware North.
The Senate, which would have to approve the selection, has expressed enthusiasm for Aqueduct Entertainment Group, even though some advisers say it is one of the weaker of the six bidders. The Assembly, in turn, has not shown a preference, although Speaker Sheldon Silver is thought to favor Delaware North or SL Green.
Given the history of tortuous and interminable negotiations over selecting an operator — symbolizing the worst of Albany’s dysfunction and backroom political horse trading — no one is expecting a quick compromise.
“It is a mystery why this is taking so long, since it is costing over a million dollars a day not to have it open,” said Jeff Gural, a minority partner in the SL Green group who owns two small tracks upstate that have electronic machines. “The original decision was promised for Aug. 1.”
Some legislators and many of the bidders say the chaotic situation has been compounded by the failure of the governor’s chief counsel, Peter J. Kiernan, to establish criteria for bids and a formal selection process. As a result, some bidders have been allowed to change their offers midstream to be more competitive, while the state has twice asked for their final and best offers.
“There are no parameters,” said Assemblyman J. Gary Pretlow, a Westchester Democrat who is chairman of the Assembly’s Committee on Racing and Wagering. “The problem is that the process was flawed from its inception. Everyone should have been operating with common guidelines.”
Most recently, the Paterson administration surprised the six competing bidders when he asked them to submit their new final offers by Nov. 6 and demanded that all must guarantee an upfront licensing fee of $200 million or more, payable within 30 days of signing an operating agreement. Weeks earlier, Governor Paterson inserted the $200 million into his deficit reduction plan.
One of the bidders, Stephen A. Wynn, the Las Vegas gambling and hotel impresario, promptly pulled out.
Joseph M. Kelly, a professor of business law at the College of Buffalo and an associate of the Catania Consulting Group, which specializes in gaming issues, said the peculiar process could easily lead to a lawsuit once someone was selected. “I have a lot of problems with the process,” Mr. Kelly said. “Whoever is selected, I think you can argue that the decision was arbitrary and capricious.”
The Legislature first authorized the use of electronic slot machines, also known as video lottery terminals, at Aqueduct and eight other racetracks in the state and six American Indian casinos during another period of fiscal distress — immediately after the Sept. 11, 2001, attack on the World Trade Center. The other racetracks quickly installed the machines.
On a recent Friday afternoon, the parking lots at Aqueduct were largely vacant. A good portion of the grandstand, which once accommodated as many as 30,000 people, was closed. Still, the handful of bettors in the stands had hundreds of empty seats to choose from. Most sat inside, staring at the television screens that broadcast races from Aqueduct and elsewhere. The cavernous hall resembles a large bus station without all the passengers.
“This isn’t a pretty place,” said Donald Rosen, whose horse, Boxitup, finished second in the eighth race that day. “Hopefully, when they get the slots, they’ll fix it up and get people to come here.”
“I saw it work with slots at Saratoga,” he added, referring to a harness track upstate. “That place is now like a palace. It’s clean; everyone’s jumping around.”
Yet selecting an operator for Aqueduct, potentially the most lucrative location for New York, has turned into a long-running drama.
After two attempts to pick an operator fizzled, Gov. Eliot Spitzer decided to start over in 2008. His successor, Governor Paterson, and the Legislature ultimately picked Delaware North, a Buffalo company, over two rivals. But that deal collapsed in March after Delaware North failed to raise a $370 million payment for the exclusive rights to build the gambling hall.
In June, six groups submitted new offers to build a hall for 4,500 machines and to refurbish the track; they included Delaware North, SL Green, Mr. Wynn and R. Donahue Peebles in partnership with MGM Mirage, the casino operator.
SL Green vowed to open at least 1,500 electronic slot machines within eight months of signing a preliminary operating deal with the state or pay up to $25 million in penalties. Another bidder, Aqueduct Entertainment Group, said it would open 1,200 machines within six months, although there was no mention of any self-imposed penalties.
Penn National Gaming, which operates 15 casinos in Florida, New Jersey, Maine and other states, signed a deal with the hip-hop entrepreneur Russell Simmons to handle the project’s community outreach. It also offered the highest — at least until recently — licensing fee, $250 million.
And in a nod to the hotel union’s political power in Albany, all of the contenders worked out some form of agreement with the New York Hotel and Motels Trades Council.
Mr. Silver said last week that he had no favorite candidate to run Aqueduct. “I have no horse in the race,” he said, adding that he favored “the one that makes the most sense.”
He said the Legislature was now focused on dealing with the budget and a $4 billion deficit. “We have five months to collect that $200 million,” he said, adding that he hoped to resolve the issue once negotiations on the budget were concluded.
The Senate — particularly its president, Malcolm A. Smith — has been pushing Aqueduct Entertainment Group, even though that group’s ties to the Rev. Floyd H. Flake, a spiritual and political mentor of Mr. Smith’s, have been questioned in the Assembly and by the governor’s office.
Senator Eric Adams, a Brooklyn Democrat who chairs the Senate’s Racing, Gaming and Wagering Committee, said on Monday that Senator John L. Sampson, the Democrats’ leader, “is comfortable with A.E.G.,” but could “live with any of the others.”
“We don’t want to go in there and say, ‘Listen. This is the only person we’re going with and that’s it.’ We want to get this resolved, and we need the money in the budget."
