Delaware North pulls out of VLT deal
Wednesday, March 11, 2009 5:16 AM EDT
By PAUL POST, The Saratogian
Racing put in jeopardy
SARATOGA SPRINGS — The firm slated to build a racino at Aqueduct Racetrack has withdrawn its offer, possibly jeopardizing the future of thoroughbred racing in New York state.
Gov. David Paterson tabbed Buffalo-based Delaware North Companies on Oct. 10, 2008, to operate 4,500 video lottery terminals at Aqueduct, generating an estimated $450 million per year. But the state and Delaware North never reached a final agreement on the deal.
Now the firm says it can’t secure the financing needed for such an undertaking, a result of the nation’s deepening economic crisis. The move also means that the cash-strapped state won’t get the $370 million Delaware North pledged for the gaming contract.
More importantly, however, without gaming revenues, New York Racing Association won’t have the funds it needs to run Aqueduct, Belmont Park and Saratoga Race Course.
"NYRA can’t exist without VLTs," said Edward Bogdan, a lobbyist for Saratoga Springs-based New York Thoroughbred Breeders Inc. "They’re going to have to come back to the state (for more money)."
But with a projected $14 billion deficit, the state doesn’t have anything left to give.
NYRA President and CEO Charles Hayward was tied up with meetings in New York City on Tuesday and could not immediately be reached for comment.
Last September, when awarding NYRA a new 25-year contract, the state gave NYRA
$30 million to keep operating until VLTs come on line. Hayward has said that should tide his firm over until the second half of 2010. Recently, he warned about the possibility of falling short of funds if VLT money doesn’t become available.
Now that scenario appears to be playing itself out.
Delaware North President William Bissett says the state plans to rebid the whole project. But that would take months and some bidders, soured by the state’s poor handling of the last selection process, might not want to get involved at all.
There’s a growing belief that major gaming corporations, wearied by the state’s political quandary, are focusing their efforts elsewhere and want nothing more to do with New York.
In addition to the financial crisis, Delaware North was unhappy by Paterson’s recent call for VLTs at Belmont Park, too, a short distance from Aqueduct. The firm said it wouldn’t pay the $370 million pledged to the state unless it was given a greater share of Aqueduct VLT revenues, because of competition from Belmont.
Now, it would be almost impossible to expect racino construction at either track to begin this year — if ever.
Paterson’s office offered no immediate comment, but the development is sure to cause him major political damage with the state already in disastrous fiscal shape. In addition to gaming revenues, Aqueduct was expected to create hundreds of jobs for communities surrounding the track, and without Delaware North’s $370 payment the already-troubled budget faces another gaping hole.
Bogdan’s firm has been lobbying on behalf of breeders for 15 years and for VLTs specifically since 1999. The state approved legislation allowing for VLTs at New York racetracks in 2001. Saratoga Gaming & Raceway was the first track to get gaming in 2004. Six other harness tracks and one thoroughbred track — Finger Lakes near Rochester — have VLTs now, too.
But not Aqueduct.
Delaware North’s partners in the venture included Saratoga Harness Racing Inc., which owns Saratoga Gaming & Raceway. Delaware North operates the raceway’s VLTs and manages Gideon Putnam Hotel in Saratoga Springs.