Both the Downs at Albuquerque, which has leased more than one-third of Expo New Mexico’s 236-acre fairgrounds since 1985 for its racetrack and casino, and Laguna Development Corp., which operates the Route 66 and Dancing Eagle casinos west of Albuquerque, have submitted proposals for use of the 93-acre tract for the next 25 years.

Both plan to build brand new casinos at the aging racetrack, along with some other amenities such as a bar and restaurant.

With the Downs’ lease set to expire Jan. 11, 2013, Expo officials in July issued a request for proposals for a 25-year lease of the racino property and gave interested parties 32 days to present highly detailed offers, which had to include a lease payment of at least $2 million a year.

The Downs’ plan

The Downs at Albuquerque proposes building a new $20 million, 52,000-square-foot casino at the southern end of the 1-mile racetrack. Majority owner Paul Blanchard proposed a similar plan in 2004, but with the casino closer to the intersection of Louisiana and Central NE.

Blanchard, a close personal friend and political ally of former Gov. Bill Richardson, tried to resurrect that plan in the waning days of Richardson’s administration but, like the earlier attempt, met with stiff neighborhood and political opposition.

This time, however, Blanchard has been replaced as president of the Downs, stripped of his management duties and, according to new president and part-owner Bill Windham of Louisiana, will no longer be the racino’s majority owner.

Windham and fellow Louisianan John Turner each own 25 percent of the Downs, and Blanchard owns 50 percent. Windham and Turner also own just under 25 percent each of SunRay Park and Casino near Farmington.

Windham said last week that negotiations are under way to reduce Blanchard’s ownership stake in the racino.

“The truth is, the Downs was very poorly managed,” Windham said. “I have to take some fault for that as an owner, but I also have to pass the buck because we didn’t have any oversight of management, by contract.”

The Downs has apparently been losing money for years.

According to a statement of income filed with the New Mexico General Services Department in 2010, the Downs’ revenues from 2003 through 2009 averaged $28.8 million per year, but its losses averaged $541,441 per year. It showed a profit only once during that period – just over $1 million in 2003.

“The fact is, we have a third-story casino in a dump,” Windham said.

He said his new plans for the Downs would change that drastically.

According to the Downs’ new proposal, the entryway to the new casino would sit about 550 feet north of Central, and about 650 feet west of Louisiana. It would include two gaming floors, a simulcast parlor, an upscale steakhouse, a paddock lounge and sports bar, a 150-seat food court and business offices.

The facility is designed to accommodate 600 slot machines, nearly double what the current casino holds.

Despite the increase in slots and other amenities, the Downs’ proposes paying Expo $2 million a year – the same rate it paid prior to obtaining its two most recent lease extensions.

When the Legislature approved the extensions in 2010, lawmakers increased the lease payment by 10 percent each year. But because of an agreement signed by former Expo general manager and Richardson appointee Craig Swagerty, the Downs was allowed to pay the increases with in-kind services – such as cooperative advertising – instead of cash.

“I’m cautiously optimistic,” about the Downs’ chances of getting the new casino and another 25-year lease, Windham said. “I know our proposal is really good, really strong. We developed it like we were going to have a hundred bidders.”

Regardless, only two bidders emerged.

The Laguna plan

Laguna Development Corp., formed in 1998 and owned entirely by Laguna Pueblo, hopes to build a $30 million, 36,000-square-foot casino at the south end of the Downs’ existing grandstand after demolishing the mostly unused, open-air portion of the grandstand.

It also plans to remodel the glassed-in portion of the grandstand and add a new simulcast parlor, bar, restaurant and exhibit area.

Skip Sayre, the corporation’s chief of sales and marketing, said the quality of the new casino would be on par with the corporation’s Route 66 Casino, about 15 miles west of Albuquerque on I-40.

The entire cost of the Expo project, said Sayre, would be internally funded.

Although Laguna Development is owned by the pueblo, Sayre said the racino would be subject to the same regulations imposed on every other racino in the state, which include a ban on table games and any other forms of gambling outside of video slot machines.

None of the state’s five existing racinos is tribally owned.

“Table games are not permitted in racinos in New Mexico, and we would never contemplate attempting to change that,” Sayre said.

Like the Downs, Laguna Development’s proposal calls for 600 slot machines, Sayre said. Under state gaming regulations, racinos can own 600 slot machines, and can lease as many as 150 additional slots from other racinos not using their entire allotment.

The Laguna racino would pay Expo $2 million its first year of operation, $2.5 million its second year and $3 million annually after that in lease payments.

Boosting Expo’s revenues by $1 million a year, Sayre said, would help pay for needed renovations at the aging fairgrounds.

Travis Nabahe, Laguna Development’s director of business development, said the acquisition of a racino “naturally fits in our company’s strategic direction” and builds on the company’s gaming expertise.

Though the racino currently averages more than $28 million in revenues annually, both Laguna Development and the Downs said they believe a new casino could produce about $40 million a year within three years of opening – a sum they say could triple the amount of taxes currently paid to the state.

Racinos pay 26 percent of their net win – the amount wagered on slot machines, minus payouts and approved regulatory fees – to the state. According to the New Mexico Taxation and Revenue Department, the state’s five racinos had a total net win of $245.7 million in 2010, and pumped $63.8 million into state coffers.

Tribal casinos with a total annual net win of less than $50 million pay the state 3 percent on their first $5 million in slot machine net win, and 9.25 percent on the remainder. Tribal casinos with an annual slots net win of $50 million or more pay the state 9.75 percent of their net win.

Read more: ABQJournal Online » Multimillion-Dollar Plans Envisioned for Expo Racino