UPDATED – New York’s Governor and legislative leaders selected Aqueduct Entertainment Group for a 30 year exclusive agreement to install and operate video lottery terminals at Aqueduct Racetrack in Queens. AEG is a consortium that includes several New York City builders and developers; a former NY congressman, now a minister in Queens; and Larry Woolf’s Las Vegas based company, The Navegante Group. With New York State’s budget in dire need of tax revenue, AEG’s bid commitment to have the racino open in six months may have been a factor.
Navegante Group developed, built, and managed Casino Niagara, the first casino in Niagara Falls, Canada. Currrently they manage the casinos at the Sahara, Reno’s Grand Sierra and three gaming properties and one motel in Elko, NV, including the Red Lion.
Many involved in the bidding and New York observes felt the protracted selection process was not defined and subjective. Politics and the local connections of AEG won out over successful racino operator Penn National (who reportedly offered $100 million more than AEG), and gaming giants Harrah’s and MGM Mirage. No one would be surprised if legal challenges are filed concerning the selection process.
March 7, 2010 – Syracuse Post-Standard: New York Endures Gambling Slump
The expansion of gambling in New York is having a streak of bad luck:
• The recession has interrupted more than $900 million in construction work on a Seneca Indian casino in Buffalo and a gambling-themed resort in the Catskills.
• New York officials have yet to persuade federal officials to reverse a Bush administration ruling that has blocked the long-planned debut of Indian casinos in the Catskills.
• And a contract to introduce video lottery terminals to Aqueduct Racetrack, in Queens, appears shaky amid an investigation into how it was awarded.All of these projects would bring revenue into a state starving for money, whether from the $300 million Aqueduct franchise fee or a cut of the proceeds from new and bigger gambling operations. None of the projects are dead, but it’s also unclear how long they will be in limbo.
The Seneca’s current casino in Buffalo is a temporary, prefabricated structure. The Nation had planned to build a $330 million permanent casino and hotel near the waterfront. But work was halted in 2008 along with an expansion of the Salamanca casino because of the economic downturn. The Buffalo site now features a skeleton of steel frames near the temporary casino.
Across the state in the Catskills, work also has stopped on what was once promoted as a $1 billion mega-resort featuring video lottery terminals and a harness track at the site of the Concord, the largest of the old “Borscht Belt” hotels. Westchester County developer Louis Cappelli, promising jobs and other economic benefits for the struggling area, landed special financial incentives from the state Legislature in 2008, only to run into financing trouble with the worldwide economic meltdown.
March 3, 2010 – New York Daily News: Ex-Racino Guy Still in Picture: Darryl Greene on Board of Nonprofit Involved in Aqueduct Project
March 2, 2010 – New York Post: Former US Rep. Floyd Flake and rap star Jay Z, partners in AEG, and rap mogul Russell Simmons, partner in the Penn Gaming bid, will be subpoenaed today. The subpoenas were issued by the State Inspector General’s Office, which is working with the US attorney. Future subpoenas are expected.
February 25, 2010 – Queens Tribune: Meeks Backs Flake, Selection Of AEG
U.S. Rep. Greg Meeks (D-Jamaica) is unwaveringly defending the selection of Aqueduct Entertainment Group to develop the “racino” at Aqueduct Racetrack – and the person who has emerged as the figurehead of the deal, his predecessor in Congress, the Rev. Floyd Flake.
“There has been a lot of unfortunate misinformation,” said Meeks. “Everyone said Rev. Flake is the lead person in the deal, when that’s not true. He is only 0.6 percent of the deal.”
Meeks, who represents the Jamaica-based congressional district Flake represented from 1987 until 1997, said critics have purposely ignored Rev. Flake’s work within the community. He also commended work of Darryl Green, the Darman Group principal who also had a .06 percent stake in AEG’s bid, but dropped out of the deal after it was discovered he pleaded guilty to defrauding the city out of thousands of dollars in cash in 1999. Assembly Speaker Sheldon Silver, reluctant to the AEG deal, refused to back any deal in which any partner had a criminal record.
February 23, 2010 – HiphopDX: Jay-Z’s Partnership With AEG Under Investigation Rapper/entrepreneur Jay-Z may have been added to the racino project by AEG solely to win the favor of New York Governor David Patterson.
February 22, 2010 – What’s Wrong With Aqueduct? by Russell Simmons Queens native and advisor to Penn National Gaming
February 20, 2010 – Assembly Speaker Sheldon Silver appears poised to kill the scandal- scarred Aqueduct racino deal be cause of ongoing federal and state investigations. New York Post: Do Your Duty, Shelly
Silver seems to understand that handing the lucrative contract to the politically juiced Aqueduct Entertainment Group spells trouble.
February 18, 2010 – New York Daily News: Feds Galloping Into Probe of Controversial Aqueduct Racino Deal
The feds are trying to get losing bidders in the Aqueduct racino deal to dish about the chaotic process that led to the selection of a politically tied group, the Daily News has learned.
One losing contender said the Manhattan U.S. attorney’s office contacted his group this week – the latest twist in the mushrooming scandal.
“The guy said, ‘We’re contemplating a further inquiry into the racino bid process: If we go ahead with that, would you guys be willing to cooperate with us?’” the bidder disclosed.
“We said that it wasn’t much of a process, but, yes, if you ask us to, of course we’d cooperate.”
Prosecutors recently subpoenaed the state Lottery Division for documents related to the Aqueduct project bid process, although aides to Gov. Paterson insist the probe is unrelated to the racino deal.
February 17, 2010 – NBC News: The Murky Aqueduct Deal
February 12, 2010 – New York Daily News Editorial: Muck Out The Stable: Bet On The U.S. Attorney To Clean Up The Rank Aqueduct Deal
When, from behind closed doors, public officials deliver a gambling deal with a projected cash flow of $6 billion a year to a company that was not the high bidder, as day follows night, there will be subpoenas.
Gov. Paterson, get acquainted with Manhattan U.S. Attorney Preet Bharara.
Senate President Malcolm Smith, send your RSVP care of the FBI.
Bharara is doing the Lord’s work in calling to account a gang that governs New York with all the virtue of an oil slick. They gave him an opening with the award of the Aqueduct race track slot machine contract, and bully for Bharara for charging through.
The bidding and the selection of a preposterously undeserving winner, the Aqueduct Entertainment Group, exposed Albany at its worst – and in the process threw a spotlight on Smith’s misuse of taxpayer money.
February 8, 2010 – The news media has been critical of the Aqueduct selection, and its lack of a name brand casino operator, and the New York Post leading the charge. Larry Woolf of Navegante, the casino component of AEG is a well respected casino operator. Gov. David Paterson is reportedly on the “hot-seat” over the alleged politically motivated selection. New Post sent a reporter to Elko, NV to take a look at their Red Lion operation. Navegante operates the casino at the Sahara in Las Vegas, but they didn’t visit Las Vegas, since Navegante has more properties in Elko.
February 8, 2010, New York Post: NY Slots Pick Runs Rinky-Dink Nevada Casino
Instead of picking world-class MGM Mirage or Hard Rock Entertainment to run the city’s first video-slot parlor, Gov. Paterson is betting on the company that runs the largest casino in all of . . . tiny Elko, Nev.
And if the Red Lion Hotel & Casino in the sleepy backwater town 500 miles from Vegas is any indication, Aqueduct is well on its way to being redeveloped as a Sin City resort — circa 1972.
The Post spent the weekend in Elko to get an idea of how the Navegante Group — the gaming arm of the politically connected winning Aqueduct bidder, AEG — operates, since the desert town is where most of its holdings are.
The New York Post is also scrutinizing Darrel Green of AEG: Slots Big a Tax Deadbeat
Darryl Greene, the Queens developer whose company is part of the winning Aqueduct racetrack “racino” bid, is not just a convicted criminal, he’s a tax deadbeat, The Post has learned.
Companies connected to Greene owe nearly $1 million in state taxes. He and his wife, Cathy, also owe $10,681 in personal income tax to the state.
Greene heads The Darman Group, a company that partnered with the Empowerment Development Corp., helmed by influential Queens Pastor Rev. Floyd Flake, to join the winning Aqueduct Entertainment Group bid to bring video slot machines to the Queens racetrack.
State Senate President Malcolm Smith was once a partner in Darman, ending his formal association in 2000 when he was elected to the state Senate.
Darman Building Supply of Lynbrook, LI, owes $929,356 in state taxes, according to three liens filed last year. The liens are for outstanding sales tax that date to 2004.
Update - On Monday afternoon February 8, 2010 Darrel Green relinquished all interest in the project.
The story goes on to further examine other members of the AEG consortium.
February 7, 2010, New York Daily News: Racino at Aqueduct Raceway Could Generate $6 Billion From Gamblers, Experts Say
There’s the Triple Crown. And the Breeders’ Cup. Now it’s the $6 billion Aqueduct Cash Dash.
That’s easily the size of the purse experts say a video slots parlor at the race track could generate each year. And the state, horsemen, racino operators and, of course, gamblers have jockeyed for their share.
February 2, 2010, New York Post: Paterson Denies Sweetheart Deal in Racino Pick
The Las Vegas Sun reports: Ex-Vegas Casino Exec Among Group To Operate N.Y. Video Lottery
New York Gov. David Paterson said Friday that he and legislative leaders have chosen a consortium that includes several builders and Larry Woolf, a former Las Vegas casino executive, to install and operate video lottery terminals at Aqueduct Racetrack in Queens.
Assembly Speaker Sheldon Silver said he agreed with the selection of Aqueduct Entertainment Group subject to conditions, including raising the upfront licensing fee from $200 million to $300 million.
In November, AEG said it had advised Paterson its would make an upfront payment of at least $200 million for the license fee and would open within six months of executing a memorandum of understanding.
Ironically, in October of 2009 Governor Patterson said that AEG (Aqueduct Entertainment Group) could not be qualified to be licensed by the NY State Lottery Division because of problems with one of its partners. A week later he stated they were qualified. Story and Link below.
In a previous Aqueduct bid process, Buffalo NY based Delaware North was the successful bidder, but was unable to make the initial payment, and they were also involved in this bid. Gaming revenue expectations are extremely high for this project, and Las Vegas companies MGM Mirage, Harrah’s, and Wynn have been involved in the process.
The memorandum requires a state lottery license for “all investors at any level, partners, directors, managers, contract holders and principal and other selected employees.” The state Division of the Lottery also must sign off on any changes to the AEG proposal made during the course of the approval process.
The final five active bidders for the 30 Year Exclusive Contract:
-Aqueduct Entertainment Group, Equity investors composed of Jeffrey Levin (Queens builder), GreenStar Services (Queens based contractor), and investment firm Clairvest Group. Non-equity partners include the Navegante Group of Las Vegas (Larry Woolf, former chief executive of MGM Grand), Empower Development (former NY Congressman Rev. Floyd Flake), and the Darman Group (Darryl Green).
-S.L. Green partnering with Hard Rock Entertainment (FL), BET founder Robert Johnson, Jeff Gural, Dan Tishman, and Och-Ziff.
S.L. Green issued a statement, expressing disappointment with Paterson’s decision. “We clearly have presented the state with the superior proposal backed by a team that is best equipped to deliver on its promises to the community and to New York’s taxpayers,” the company says, adding that the partnership stands ready “to re-engage state officials” should AEG fail to meet the conditions outlined by Assembly Speaker Silver.
-Aqueduct Gaming, LLC, composed of Delaware North, Saratoga Gaming and Raceway, Cheryl McKissack, and Harrah’s Casinos.
-Peebles/MGM Mirage composed of Donahue Peebles, MGM Mirage, Harbinger Capital Partners, Perini Building and Global Hue.
-Penn National Gaming
Previously, Steve Wynn, who was not a member of any group, dropped out of the race (story link below).
Prior News of Interest
Tuesday, October 13, 2009 – Governor Generates Confusion in Aqueduct Bid
Two weeks ago, Governor Patterson said that AEG (Aqueduct Entertainment Group) could not be qualified to be licensed by the NY State Lottery Division because of problems with one of its partners.
Larry Woolf’s Navegante Group is one of the AEG’s partners along with influential Queens minister and former US Rep. Floyd Flake’s Empowerment Development Corp.
Last week the governor told people that AEG could be qualified for Aqueduct by the Lottery Division. There has been no change in the partners, so why the change? Somebody has some juice.
Perhaps someone forgot to tell Paterson that Flake has some high-powered local associates, including his congressional successor, Gregory Meeks, former state Senate Majority Leader Malcolm Smith, and others.
There is no conclusive answer, and the NY Post examines the issue: Governor’s Casino Flip Stirs Fears of Rigging
November 2009
In its bid, AEG said it will give the state $100 million on top of its initial $151 million if the state allows it to boost the number of video lottery terminals to 7,650 from 4,500.
Aqueduct Entertainment Group has reportedly bid a $251 million up-front payment. However, this bid is based on the state increasing the number of video VLTs to 7,650 from the current 4,500. This would require new legislation.
The Pulse of Las Vegas has covered this story extensively, including Steve Wynn’s plans for Aqueduct. Each of the following includes numerous updates:
New York Media Critial of Albany’s Aqueduct Process – Wynn Knew a Bad Bet When He Saw One
Steve Wynn a Scratch in Aqueduct Racino Derby
New York Governor David Paterson Raises the Stakes in the Aqueduct Race
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