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STATE SEEKS EXPERIENCED GAMING OPERATOR FOR VLT FACILITY AT AQUEDUCT

The Division of Budget today released a letter seeking expressions of interest from experienced gaming operators to operate a Video Lottery Terminal (“VLT”) facility at Aqueduct Racetrack. As part of its recommendation that a newly reconstituted New York Racing Association be granted a franchise to operate thoroughbred racing at Aqueduct, Belmont Park and Saratoga Race Course, the state is seeking an experienced gaming operator to operate the facility. Responses are requested by October 15, 2007.

A VLT facility at Aqueduct is expected to generate Net Machine Income (“NMI”) in excess of $500 million by 2010. Funds from the VLT facility will provide sustained funding for elementary and secondary education, while also supporting the operation and improvement of the three thoroughbred racing facilities. The state will receive in excess of 70% of Net Machine Income (“NMI”) from the facility in the form of statutory payments for education and operation of the Lottery and approximately 14.5% of NMI will be dedicated to supporting thoroughbred horse racing in New York State. The remaining funds will be used to pay operating expenses including salaries, debt service, taxes, and a management fee if applicable.

The State is considering two alternative models for the development and operation of the Aqueduct VLT facility. Under one approach, the state would own the gaming facility and finance its construction. The state would also contract with a gaming operator to manage the facility for an agreed upon fee plus a performance bonus or profit sharing arrangement. Under an alternative approach, the gaming operator would be responsible for the operating, capital and other expenses associated with the development and operation of the gaming facility, and would retain excess VLT revenues after making the statutory payments for education and racing and covering these operating and capital expenses.

Paul Francis, the Director of the Budget and Senior Advisor to the Governor, said: “We believe that the Governor’s recommendation to award the racing franchise to a newly reconstituted NYRA—as the best operator of racing in New York State—while seeking an experienced gaming operator to operate the VLT facility offers the best opportunity available to enhance the racing industry in New York while generating the maximum revenue possible for education. We look forward to working with the legislature to translate the Governor’s proposal into law and are prepared to answer any questions they may have about the specific terms and conditions of the Governor’s recommendation.”

Under the MOU/proposal, the New York Racing Association (NYRA) is committed to the future of all three tracks, as well as to investing substantially in track and facility improvements at Belmont and to work with the surrounding community there to ensure that Belmont remains one of the premier racing facilities in the United States. The recommendation to the legislature does not contemplate development of a VLT facility at Belmont Park.

Upon completion of the franchise grant to the newly reconstituted NYRA, the State will agree to PILOT payments with the municipalities in which the three tracks are located to ensure that they receive property tax payments that are now paid by NYRA.

Any firm interested in bidding should contact David English, Chief Budget Examiner, (518) 473-7512.

A copy of the letter seeking expressions of interest in the VLT facility is attached. HTML, PDF