Lottery scratches two, leaves sole Aqueduct bidder

The New York Lottery has thrown out proposals from two of the three remaining bidders for the Racino at Aqueduct, leaving only one.

Lottery director Gordon Medenica announced on Tuesday, July 6 that the

proposals received from Penn National Gaming and a consortium consisting of SL Green, Hard Rock International and Clairvest Group, “did not conform with the requirements of the competition and, instead, attempted to negotiate for terms more favorable to the bidders.”

Medenica continued, “The proposal submitted by Genting New York appears to conform with all requirements of the bid submission process and will continue to be evaluated.” However, according to a Lottery source, “they still have to go through the full evaluation process.”

If Genting does not pass muster, the bidding process will have to be repeated – again – except that under the state’s rules, Penn National and SL Green can no longer participate, according to Medenica.

The announcement enumerated all the ways the proposals from the lead partners of the bidders SL Green and Penn National diverted from the Memorandum of Understanding (MOU) that the state issued as an iron-clad list of terms and conditions for the deal.

“I can’t understand it,” said one source close to the selection process. “[The Lottery] spelled it out at the public meeting with the qualified bidders in June. We said that bids that didn’t conform to the MOU were at risk of immediate disqualification.”

The source continued, “We had two rounds of questions and answers, and we made it clear that no deviation would be tolerated. I just don’t get it.”

Both SL Green and Penn National wanted to limit or avoid payments to the New York Racing Authority, operator of the track, until the gaming operations were up and running. Likewise, each had penciled in various guarantees and escape clauses, including limits on property taxes – the major revenue source for the City of New York in the current agreement.

SL Green, for example, wanted to be able to sublet some of the facility, make ownership changes and award operation or management contracts – all without the state’s consent – and a condition that the state could not even discuss the Aqueduct Racino with “any other party” as long as they were the operator.

Penn National’s off-the-page wish list included demanding the state waive any right to seek “consequential or punitive” damages on account of its conduct and “to indemnify Penn

National against claims related to operation of the Aqueduct casino.”

“The Lottery is refunding the $1 million entry fees paid by SL Green and Penn National, in addition to the earlier refunds to Delaware North and Empire City,” according to the statement. A spokesperson suggested that if the Genting bid fails, Delaware North and Empire City would be welcome back as bidders.

Community Board (CB) 10 is still planning a public meeting at the track on Thursday, July 15 for the remaining bidder to disclose its proposal, but “if Genting is disqualified, we’ll cancel,” according to board chair Betty Braton.

For more information about the meeting, call CB10 at 718-843-4488.