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Bids up for Aqueduct tracks

Posted on July 2nd, 2010

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After years of being up in the market, Aqueduct racetrack is now being bid on by 3 different groups, with plans of including some 4,500 slot machines in the racetrack. The racetrack has been deemed a profitable investment, with a good location that is only a subway ride away from almost 2 million potential gamers. However, there are a number of hindering points in making a gamble on operating the Aqueduct.

One of which is the potential competition from a nearby Indian casino, the upfront payment required amounting to $300 million and all other fees, and deadlines imposed by the state of New York are all to immediate and heavy for a bidder to shoulder, these terms have also forced 2 other bidders to back out of their bids for the track at the very last minute.

Genting New York, SL Green and Hard Rock International and Penn National Gaming, are the 3 remaining bidders vying for the operation of the slot machines in the Aqueduct Racetrack. Genting New York is the US-based subsidiary of the largest gambling corporation in Southeast Asia. Hard Rock International is the worldwide known commercial landlord, the 2 are partnering up for the bid. Penn National Gaming is another large group operating a total of 15 casinos in different states. Clairvest Group, another bidder decided to join the partnership of SL Green and Hard Rock International.

The profitability of Aqueduct racetrack is said to be “ one of the few major opportunities left in the eastern U.S.” by Michael Pollack, a consultant in Spectrum Gaming Group. “The prospect of operating that facility will keep a lot of people in the game “ said Pollack. Aqueduct is estimated to generate as much as $800 million in revenues per year, said one executive.

This is 50% more earnings than what is being earned by the largest electronic slot machine facility in all of New York, the Empire City Casino. Empire is located amidst a bustling and heavily populated city, which contributes to its high revenue ratings. Analyst also say that the track can generate as much as a million in tax revenues in a day.

The 3 major bidders for the track are betting on the legalization of gambling in New York allowing more table games to be included. Nearby states have full scale casinos that allow more table games and the companies are optimistic that in the event any of them don’t win the bid, they can still try offering the slot machines. The bidders are waiting on Governor Paterson’s recommendation due on August 3.

The attorney general and the state comptroller will also be reviewing the proposals. Prospective bidders were alerted to make bids on the track when a similar case raised by the Shinnecock Indians was formally entertained by the federal government. The $300 million upfront payment was also a big discouragement to some prospective bidders as the project is about to face some real competition from casinos that offer more games like poker, roulette and blackjack and even live entertainment.

Governor Patterson assured the bidders that the Indian casino will not be a direct competition to any casino outside of their land, “The state intends to protect its financial interest in existing and planned facilities” said Patterson.

There had been a long history of attempts to place slot machines in the Aqueduct race track dating back 2001. This will be the 4th attempt to date. Oddly enough, Aqueduct, being the most profitable race track in New York, went through the hardest with the slot machine inclusion. It was last June that bidders were asked to submit their proposals and went into lengthy discussions after.