Former Partner Sues NY Aqueduct Video Slots Bidder
The Associated Press
04/21/09 - 05:47 PM EDT
MICHAEL GORMLEY
ALBANY, N.Y. (AP) — The former partner of a company bidding to bring lucrative video slot machines to the Aqueduct racetrack has filed a multimillion-dollar lawsuit that could further delay the project and revenues for New York state.
SL Green Realty Corp. claims that its former ally, Delaware North Companies Gaming and Entertainment, wrongly used confidential information from SL Green in an independent attempt to land the state's thoroughbred racing franchise and the video slots contract for Aqueduct.
At stake are hundreds of millions of dollars a year in revenue for the state, the racing industry, and the company that wins the latest round of bidding to install and operate video slot machines at Aqueduct. The state has sought the deal for years.
Delaware North President William Bissett said Tuesday the lawsuit is "a desperate attempt by SL Green to try to enhance their standing in the rebid process."
In March, Buffalo-based Delaware North said the credit collapse on Wall Street forced it to seek a restructuring of its video slots proposal because it could no longer provide the $370 million in upfront payments to the state, a provision that was key to its winning bid.
The state was counting on about $250 million in annual revenue from 4,500 video slot machines and jobs for 1,200 people at the Queens track.
But the state wasn't permitted to renegotiate an accepted bid, so the whole project is being bid again.
Delaware North's offer included the largest upfront cash payment to the state at a time when it's trying to close growing budget deficits. At the time, some competitors warned Delaware North wouldn't be able to make good on its pledge.
Delaware North and SL Green, once part of Empire Racing Associates, are both among the bidders now seeking the franchise.
"Delaware North's actions, as outlined in the complaint, damaged SL Green and other Empire Racing Associates shareholders significantly," SL said Green in a statement. "They also harmed the people of New York, given that VLTs at Aqueduct otherwise could have been up and running by now and would be delivering revenue to the state at a time when the state sorely needs it."
Bissett said the lawsuit, which was filed Friday, could delay the new bidding. He insisted the company didn't withdraw its original bid to run the gaming machines, called video lottery terminals, but only needed to adjust it to compensate for the credit crunch.
A video slots center will take 15 months to build.
"Our proposal would have had the VLTs up and running faster than any of the other bidders," Bissett said Tuesday.
The lawsuit contends Delaware North sabotaged SL Green's chances of landing state franchises worth millions of dollars by violating contracts and other agreements to obtain SL Green's internal data.
