In a move experts say “sure looks fishy,” the politically connected consortium that won the bid for video slots at Aqueduct dramatically changed its bid at the end of the selection process — jumping from last place to first in terms of the amount of revenue it would raise for the state, documents released yesterday show.
The Aqueduct Entertainment Group, led by former Rep. Floyd Flake of Queens, had ranked at the bottom in terms of how much revenue the project would raise — $2.9 billion, according to a Nov. 12 analysis by state budget official Jim Sherman.
The other major bidders’ projections were all higher — SL Green/Hard Rock, Penn National and Delaware North and Peebles — coming in anywhere from $3.1 billion to $3.3 billion, or $400 million more than AEG’s bid.
The estimated revenue from the slots is key for selecting a winning bidder because the state would be getting a share of that money.
But something that experts said raised a red flag happened when Gov. Paterson’s office permitted the bidders to revise their proposals last August.
All the other bidders’ revenue projections remained the same in the second round — but not AEG’s. It suddenly shot up to first place — the highest revenue-generating spot.
The group’s updated projected cash flow skyrocketed a whopping $700 million — to $3.6 from $2.9 billion, the analysis showed.
"It sure looks fishy," said Jeff Hooke, a Maryland-based financial analyst who has conducted studies of the gaming industry.
James Featherstonhaugh, a lobbyist for rival Delaware North, said, "There’s no reason why their numbers have changed. Nobody else’s number did."
Sherman also said AEG was not anywhere near the winner’s circle when factoring in the upfront license fees that bidders promised to the state.
Penn National offered $310 million. AEG offered $200 million at the governor’s request after initially submitting $151 million upfront.
Sherman said other bidders would have to generate substantially more from the 4,500 video lottery machines "to produce the same gain to the state" as Penn National over the life of the 20-to-30-year franchise. Delaware North came in second under this analysis.
AEG spokesman Jonathan Rosen defended the dramatic jump in revenues, attributing it to an updated internal analysis that boosted the number of video lottery terminals the group would open to 3,000 from 1,200.
Meanwhile, Paterson’s office refused to release any analysis conducted by the state Lottery Division, citing an ongoing federal investigation of bidding information.
But that contradicts earlier claims by the governor that the federal probe had nothing to do with the "racino" project.