2010-03-19 / Top Stories

All Bets Are Off For Aqueduct Racino Deal

Bidding Process Begins Anew, Sans Politics
By Howard Schwach

The battle over who would run a new gambling Racino at the aging Aqueduct racetrack will begin anew now that Governor David Paterson has withdrawn his support for AEG. The battle over who would run a new gambling Racino at the aging Aqueduct racetrack will begin anew now that Governor David Paterson has withdrawn his support for AEG. The state scratched the Aqueduct Entertainment Group from the big Racino race late last week, promising a new process that would keep politics out of the decision-making.

On Thursday, Governor Paterson’s office withdrew its support for AEG’s plan to run 4,500 video slot machines at the Aqueduct Racetrack in Ozone Park following accusations of cronyism and a rigged bidding process.

“The Division of the Lottery has concluded that it cannot issue a gaming license to [AEG],” Paterson’s office said in a terse statement.

The statement added that the new bidding process would be “transparent and apolitical, and publically accountable.”

Officials of AEG threatened to sue Paterson and the state for taking away their right to run the Racino.

Those officials said that the decision was “without legal basis, arbitrary and capricious,” and “an abuse of discretion.”

There are four other companies that were bidding for the right to run the Racino at Aqueduct: SL Green/Hard Rock Café; Delaware North; Penn National; and Peebles/ MGM. In addition, Las Vegas casino mogul Steve Wynn dropped out of the process. At the time, Wynn said that he was “frustrated” with the political process and many believe that he will resubmit his bid now that politics is no longer involved.

Some insiders believed that the Governor would pick from one of the other finalists rather than start the bidding process all over again, but Paterson decided that the process was “so politically tainted that it needed a fresh start,” an aide to the governor told reporters.

Last week, two AEG minor part- ners pulled out of the process rather than supply financial statements for background checks to the state’s lottery division.

Although the financial stake of the two was “minor,” according to AEG officials, the impact of the loss of the two, the Reverend Floyd Flake, the pastor of one of the largest AME churches in the city and a Democratic powerhouse, and Rapper Jay-Z, was far larger than their financial stake.

In fact, there was a wide-spread belief that this was a done deal from the beginning because of Flake’s relationship with Paterson, Senate President Pro-tempore Malcolm Smith and Congressman Gregory Meeks.

There are ongoing federal and state probes into the Aqueduct process. Federal officials said that the probe would continue.

That probe is focusing on claims that political connections rather than merit spurred Paterson and the legislative leaders to give the Racino to AEG.

Flags went up after Flake flirted with backing Andrew Cuomo over Paterson for governor. A few days later, Paterson backed AEG and then met with Flake to seek his endorsement. Flake then reportedly said that he had not made up his mind about who he would back for the top state seat.

Paterson recused himself from the present decision-making process on Monday, but on Tuesday he told reporters that he would “still have a role in the decision-making process.” Paterson added that he expected to have the process up and running by mid-April.

“We are hopeful to find a procedure that would work within a month,” Paterson told reporters.

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