A partnership that includes Las Vegas-based Navegante Group was rejected Thursday by New York licensing authorities to build and operate a lucrative slot machine casino at the Aqueduct Racetrack.
The move comes six weeks after the group won a contentious bidding process and was selected by Gov. David Paterson.
The governor's office announced that the partnership, Aqueduct Entertainment Group, had supplied insufficient financial details about some of its investors to the state's Lottery Division. The group had had until Tuesday of this week to supply the information.
A spokesman for Paterson told The New York Times the group had been rejected.
In an e-mailed statement, Aqueduct Entertainment Group attorney Barry Berke called the decision "both arbitrary and capricious."
"In the event that AEG is not given an opportunity to address the issues raised by the Lottery, and the decision to reverse the prior selection of AEG as the successful bidder is not reconsidered, AEG intends to pursue all available remedies," Berke said.
Aqueduct Entertainment had been due to pay New York a $300 million licensing fee by the end of March.
"As AEG has repeatedly stated, they remain ready, willing and able to finalize the memorandum of understanding and pay the $300 million licensing fee in accordance with the conditions placed upon AEG's selection," Berke said.
Aqueduct Entertainment was chosen over four other bidders, all of which contained a casino operator and New York-based developers and business entities. Other casino companies that bid on the Aqueduct contract were MGM Mirage, Harrah's Entertainment, Penn National Gaming and the Florida-based Hard Rock casinos. Wynn Resorts Ltd. dropped out of the bidding in November.
Aqueduct is in the New York borough of Queens and the casino will house 4,500 video lottery terminals, making it the largest gambling site in New York City.
Navegante Group, which is headed by longtime Nevada gaming figure Larry Woolf, manages casinos, including the Sahara, three casinos in Elko and Reno's Grand Sierra.
Woolf said the lottery commission didn't cast any aspersions toward Navegante.
"We want that to be fairly clear that we (Navegante) weren't denied a license," Woolf said. "We want the lottery commission to come out and make that statement. It's clear (the lottery) withdrew our bid."
On Tuesday, one of Aqueduct Entertainment's New York-based partners, former congressman-turned-minister Floyd Flake, announced he was stepping away from the project to concentrate on his community efforts.
New York expects the casino to generate $450 million a year in revenue for the state to help offset and $7.4 billion budget gap. About 15 percent of the casino revenue will go to The New York Racing Association Inc., which operates the Aqueduct racetrack, Saratoga Race Course and Belmont Park.
The governor's office said it wants to reopen the bidding through a traditional procurement process. However, Paterson is expected to remove himself on the advice of attorneys.
The process to add a casino to Aqueduct has been under way since 2001. The recently concluded bidding process began last May. A deal with a Buffalo, N.Y.-based company fell apart in 2008 and bidding was reopened.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
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