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June 4th, 2012
By Charles V. Bagli and Nicholas Confessore
A $4 billion plan announced by Gov. Andrew M. Cuomo to create the country’s largest convention center and a casino in Queens has fallen apart, the governor acknowledged on Friday.
The project, which was to have been built by a Malaysian gambling company at the Aqueduct racetrack near Kennedy Airport, was a signature initiative of Mr. Cuomo’s and a central thrust of his State of the State address in January.
Mr. Cuomo, a Democrat, said during a radio interview that negotiations between the state and the Genting company, which was expected to pay the development costs, had broken down.
“The conversations haven’t really worked out,” he said.
The revelation left a fog of uncertainty over Mr. Cuomo’s drive to bring casino gambling to New York City, which his administration views as a key source of jobs and revenue. The Genting proposal alone was expected to create 10,000 construction jobs and 10,000 permanent jobs.
Genting issued a statement saying that company officials “continue to want to invest in New York and plan to do so for years to come,” but that the uncertainty surrounding Mr. Cuomo’s efforts to push through a constitutional amendment to create a framework for casinos in the state made it difficult to reach a deal.
But it also appeared that the company’s desire for the exclusive right to operate in New York City hampered the talks.
Mr. Cuomo’s plan would have established a 3.8-million-square-foot exhibition hall and hotel alongside the casino at the Aqueduct site. Skeptics had questioned the wisdom of the location, noting that it is a long subway ride to Midtown Manhattan and that tourists visiting New York want to be near attractions like Broadway and Central Park.
The governor had also argued that the project would free up the site of the Jacob K. Javits Convention Center on the West Side of Manhattan for new development; he viewed the center as too cramped for major trade shows.
As criticism grew louder, and convention business experts doubted the plan, Mr. Cuomo continued to profess confidence in the idea, pointing to Genting’s “masterful track record” in pursuing large-scale developments elsewhere, including a $4.4 billion casino and resort complex in Singapore that opened in 2010.
On Friday, Mr. Cuomo sought to cast the breakdown of the deal as a positive, saying the state is now entering into discussions with other gambling companies. He said he planned to set up a competitive bidding process and entertain other casino proposals next year.
“They all want to come to New York, and they all have all sorts of exciting ideas — ideas that we didn’t even think of,” Mr. Cuomo said in an interview with his predecessor, former Gov. David A. Paterson, on WOR-AM. “They want to be here. They’re excited.”
But the situation underscored the pressures Mr. Cuomo faces after declaring that job creation would be his top priority. Similar pressures are at work in the debate over hydraulic fracturing, a controversial method of natural gas extraction. In both gambling and hydraulic fracturing, moving forward has the potential to bring much-needed jobs, but carries practical and political risks.
The breakdown of the Genting plan also highlights the challenges confronting gambling companies now: the industry has matured to such a degree, and casinos have so proliferated in the Northeast, that competitors are desperately seeking to take market share from one another or to block their entry altogether. Genting spent nearly $900,000 on lobbying and campaign donations in New York last year, according to an analysis by the New York Public Interest Research Group.
In New York, five Indian-run casinos are now operating, all of them upstate, and limited electronic gambling is permitted at so-called racinos at nine racetracks, including one at Aqueduct that Genting opened last year.
The Legislature this year passed a constitutional amendment to allow up to seven new casinos in the state. Lawmakers must pass the measure again next year before it can be brought before voters for their approval.
Mr. Cuomo said that as part of the approach next year, he will again aim to entice a developer to create a convention center project alongside a casino. Such a “megadevelopment,” he said, would ensure the convention business was financially viable.
The state comptroller, Thomas P. DiNapoli, who had questioned Mr. Cuomo’s swift agreement with Genting and had urged a more competitive process, said the decision to change course was “welcome news in the long run.”