Official vetters has formally approved Genting NY's bid for the Aqueduct Racino project which offered state $380 million upfront to redevelop the Queens racetrack—$55 million more than any other bidder had offered.
The much-maligned process to select a winning bidder to build and run a slots parlor at Aqueduct Racetrack moved towards the finish line Tuesday when the state Lottery Division's evaluation committee recommended that elected officials approve the Malaysian entertainment giant for the lucrative contract.
The move by Lottery to recommend Genting New York could finally put to an end a nine-year process that has been replete with false starts, political jockeying and investigation. But the group that had been awarded the contract in the previous round, only to have it taken away by Gov. David Paterson amidst a swirl of controversy earlier this year, is likely to appeal a judge's decision late last month that allowed Lottery to choose a new winner, according to Daryl Davis, an attorney for spurned bidder Aqueduct Entertainment Co.
And Mr. Paterson, Assembly Speaker Sheldon Silver and Senate Majority Conference Leader John Sampson all have to give their stamps of approval to the recommendation. The governor has said publicly that he will go along with Lottery's decision.
Genting NY's bid was an impressive bid “on many levels,” according to Lottery officials. Genting offered a $380 million upfront licensing fee, well above the required $300 million and $55 million more than any other bidder had offered. The extra $80 million will help a state budget that has been drowning in red ink.
“Genting's proposal was far superior, in concept, scope, detail and execution, to any we have seen in previous rounds of evaluation,” Lottery Director Gordon Medenica wrote in a letter to Mr. Paterson.
Genting received 95 out of a possible 100 points, scoring high marks for its balance sheet (its publicly traded parent company, Genting Malaysia Berhad, has $1.6 billion in cash on hand and a market capitalization of $5.25 billion), its plan to involve minority- and women-owned businesses, and its marketing plan for the site. The company hopes to target travelers stuck for a few hours at nearby John F. Kennedy Airport to help build its gambling business.
Lottery officials said Genting's hope to open the first phase of the project, encompassing 1,600 of an eventual 4,525 video lottery terminals, within six months might be “overly ambitious,” but company executives insisted they had the experience and resources to meet the proposed timetable.
In a statement, a Genting spokesman said: “We hope the Lottery's recommendation will be endorsed by the legislature so we can immediately get to work creating jobs, preventing layoffs and delivering more than $15 billion in economic benefits to New York over the next 30 years.”
A spokesman for Mr. Sampson said the Majority Conference leader was reviewing the recommendation and that “it's imperative that jobs are created for the local economy as soon as possible.”
A spokeswoman for Mr. Silver said she would review Genting's proposal.
The racino is expected to create about 1,200 construction jobs and 800 permanent ones and bring the state some $500 million a year in revenue.
The Aqueduct project may be smaller than Genting is used to, but it is being looked at as “stepping off point for the United States,” according to a company spokesman. “It will lay the groundwork for a bigger rollout throughout the United States.”
In announcing the Genting recommendation, Lottery denied protests lodged by SL Green and Penn National over their disqualifications. Officials agreed to give debriefings to both companies and promised to respond to SL Green's request for a copy of Genting's complete proposal.
So do you think Genting Malaysia's shares will go up soon and will this be only possible uptick in an ocean of confusion as minority shareholders grapple with the uncertainties of the proposed takeover of Genting UK from GentingS?
I think the jury has yet to sit on this one.
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