By Matt Hegarty
New York Gov. Andrew Cuomo has proposed a
multibillion-dollar convention center at Aqueduct racetrack in Queens, but he
and his staff have yet to discuss the impact that such a project would have on
the track’s racing operations and the New York racing circuit, according to
officials who have discussed the proposal with its supporters.
The proposal was outlined during Cuomo’s “State of the
State” speech Jan. 4 following closed-door discussions between Cuomo’s staff
and officials of Genting. Racing officials said it was never discussed with any
representatives of New York racing, including officials at the New York Racing
Association, Aqueduct’s operator, or with the state’s horsemen’s group.
The plan for the convention center poses some troubling
questions for New York racing, especially considering that it comes only two
months after a casino at Aqueduct began generating tens of millions of dollars
a month for the state and the casino’s operator, the Malaysia-based company
The plan hinges on legislative approval of an expansion of
the number of gambling machines at the Aqueduct casino and could lead to the
possibility that Aqueduct would be closed for racing operations. If that were
the case, Belmont Park on Long Island would become the state’s sole downstate
facility for racing, requiring a renovation of the historic track so that it
could accommodate winter racing.
It is not entirely surprising that the plan’s impact on
racing has not been a pressing topic for the governor. Racing generates paltry
sums for the state in comparison to casinos and real-estate development, and
the plan under discussion could reward the state with a $4 billion convention
center and generate hundreds of millions of dollars annually in new gambling
revenue. In addition, the construction of a new convention center in Queens –
adjacent to JFK airport, but miles and miles from the center of Manhattan –
could free up the state to redevelop the existing Jacob Javits convention
center on Manhattan’s west side, a property that sits on some of the most
valuable real estate in the world.
Officials said that the plan still faces several hurdles and
that the process to negotiate the details could take years. Most significantly,
Genting has agreed to fund construction of the convention center as long as the
state allows the company to add thousands of machines to its existing casino at
Aqueduct and tax the revenues from the new machines at a lower rate than the
existing machines. Politically, that presents the possibility that other casinos
in the state will clamor for the same consideration, a prospect that could
complicate the political process.
Genting and Cuomo have also said they want to add table
games to the Aqueduct casino, a measure that would require approval of a
constitutional amendment. In New York, constitutional amendments must pass in
two consecutive legislatures and then be ratified by voters. The earliest such
a referendum could appear on a ballot, then, is November 2013.
Genting has said it needs the additional machines and table
games in order to fund construction of the convention center, a project its
supporters contend will cost an estimated $4 billion. Coupled with the billions
of dollars that would be associated with the redevelopment of the Javits
Center, the two projects would create a web of opportunity for New York
politicians to strengthen their ties to constituents, the business community,
and union leaders, all sources of votes and campaign contributions.
The plan is in part a validation of the enormous success of
the Aqueduct casino, which in just over two months of operation generated $89.2
million in total revenue to the state, its lottery, Genting, and the state’s
racing industry, according to figures published by the New York Lottery. The
casino opened Oct. 28 with approximately 2,500 slot machines and video table
games; it has since expanded to 5,000 gambling machines and is generating
approximately $350 in revenue per machine each day.
Cuomo said in a letter to the state’s legislative leaders
this week that Genting would need a new “revenue-sharing” agreement with the
state for the additional machines, and that the new agreement “would be binding
only upon the new [gambling machine] revenue.” In other words, the state would
leave intact the legislation setting forth revenue distributions from the
existing machines while seeking to negotiate a deal that applies only to the
That new agreement, according to an official with knowledge
of the talks, would probably not include distributions to the racing industry,
so that the state can sweeten the deal for Genting without cutting too far into
the share distributed to the state. The New York Racing Association and its
horsemen currently share approximately 15 percent of the gross revenue from the
casino, money that has promised to put NYRA in the black for the first time in
a decade and boost purses at the three tracks operated by NYRA to levels far
higher than any other racing circuit.
“The talk right now is that there would probably be a floor
in the new agreement,” the official said. The floor would protect the horse
racing industry’s share of the total gambling revenue if revenue from the
existing machines falls because of the expansion, the official said. Typically,
when a casino adds machines, the operation’s overall revenue rises, even though
the amount of revenue generated by each machine falls.
Officials for NYRA did not return phone calls.
Rick Violette, the president of the New York Thoroughbred
Horsemen’s Association, said if the expansion goes forward, the days of racing
at Aqueduct may be numbered. In addition to the convention center, Genting has
said it plans to build a 1,000-room hotel at the property to accommodate
visitors, along with other amenities, making racing even more of a sideshow
than it is right now.
Still, Violette said if racing remains at Aqueduct, that
might not be such a bad thing.
“If racing continues to exist at Aqueduct, it will be racing
at the new Times Square of New York, where we could showcase racing at its best
to a whole new captive audience,” Violette said.
If Aqueduct’s racing operation is squeezed out, that would
require nearly year-round racing at Belmont Park, the cavernous racetrack in
Elmont, N.Y., that has no heating or subway link to the five boroughs.
Officials have said they are unsure what would be required to convert the track
into a winter-racing facility, but that the cost would certainly run well
beyond what the racing industry could bear.
So who would pay for such a project? Violette said it would
be incumbent on Genting and the state to fund the renovation. “We’re partners
in this whole thing,” he said.
Should the renovation of Belmont become necessary, the state
could look to an easy source of revenue – another casino, located at Belmont,
convenient to the population of mid-Long Island and eastward. The state is
currently in negotiations with the Shinnecock Indian tribe to settle a land
claim, and Belmont has been mentioned as a site for the casino the tribe wants
A number of other possibilities are plausible, but it’s hard
to forecast the future for a racing industry that is so far relegated to the
“There’s a lot of potential impacts on racing, but none have
been discussed yet,” said the official with knowledge of the talks. “This deal
has a lot of moving parts, and I don’t see this as being a quick process.”