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New York tribe offers to circle the wagons around Aqueduct

Oct 16, 2007 4:38 AM

The bizarre battle for the New York Racing Association franchise grew moreso over the weekend when the New York Daily News reported a new development: it now could turn out to be a struggle between Cowboys and Indians.

The Shinnecocks of Long Island, currently awaiting a court decision after a bitter legal battle to build a casino on their ancestral home in ritzy Southhampton in the Hamptons, much to the discomfiture of the rich and famous who live there, offered to forget that in return for a shot at the less toney but more lucrative hunting grounds at Aqueduct Racetrack.

They come with wampum, lots of it, and an offer that is sure to catch the attention of the vigilantes in Albany. The Shinnecocks, backed by Detroit casino mogul Marian Ilitch, are offering to transform Aqueduct into a racino beyond even Foxwoods or Mohegan Sun proportions.

Instead of the 4,500 slots now proposed for Aqueduct when the pols got done their posturing at the state capital, the Shinnecocks propose 10,500, along with 350 gaming tables and 12,000 employees. They plan on building a 1,200-room hotel and work with the community of Ozone Park in Queens, where Aqueduct is located, on a huge entertainment complex.

A Shinnecock trustee, Fred Bess, said New York is tired of seeing its residents make the trek down the coast to Atlantic City or north to Connecticut and its huge casinos, and says the million square-foot racino planned at Aqueduct would end that costly migration.

There are, as usual, a few complications. Big ones. A federal judge issued a ruling two years ago recognizing the Shinnecocks as a tribe, but the Department of the Interior, with the usual Washington penchant for deep thought and slow action, has yet to give its seal of approval. Without that, there is no way to turn the land around Aqueduct into a Shinnecock reservation.

While this bombshell was dropped on Long Island, the Senate Republicans in Albany were disparaging the decision of Democratic governor Eliot Spitzer to extend NYRA’s franchise 30 years. Senator William Larkin, chairman of that body’s racing committee, led a public hearing, the third in a series, that sounded more like an inquisition. He belittled NYRA and told reporters, "Don’t tell me it’s a new NYRA. What’s new about it?"

I’m not sure if anyone answered, but I will. What’s new about it is the man who will run it, Hal Handel, former chief operator of The Meadowlands, Philadelphia Park, and Freehold Raceway, an attorney and former racing commission official. Little has been written about him since this charade began, but Larkin of all people should know how important a strong leader can be. His commander, New York Senate leader Joe Bruno, runs the New York Senate like the original Richard Daley ran Chicago: with an iron hand. Handel could turn NYRA into a totally new organization.

There are signs on the horizon that other changes are coming in the gaming world.

 The New York Times, in a long Sunday story on the subject, told of states considering privatizing their lotteries by leasing them to private operators.

It told of Kathleen Brown, daughter of former California governor Pat Brown and sister of former California governor Jerry Brown, and herself a former California state treasurer, visiting Fred Klass, COO of the state’s Department of Finance.

Ms.Brown carries heavy current credentials of her own, working for Goldman Sachs, the financial factory that turns out multimillionaires on a grand scale. She caught Klass’s attention when she mentioned that privatization could make California somewhere between $14 and $18 billion a year — that’s spelled with a "B" — by leasing its state lottery.

Lehman Brothers, a Goldman Sachs competitor, heard about it quickly, and upped the ante to $37 billion.

It did not take long for that word to reach The Terminator, and he quickly responded. Governor Arnold Schwarzenegger added his own worthy twist, proposing last week that the state lease its 23-year-old lottery to a private operator and use the proceeds to finance health care reform.

He is not alone.

The governors of Florida, Illinois and Texas are considering the idea, and that captivating idea has had strong reverberations on Wall Street, which could reap, the Times said, "a minimum of $250 million in fees alone" if the idea took hold.

The carrot is on the stick. You won’t have long to wait for the first privatization.