The biggest contest among casino operators these days isn't over prime property in Macau or the latest edifice complex in Las Vegas.

The action is taking place in Queens, where six bidders want to redevelop the Aqueduct thoroughbred horse racetrack to include a popular type of slot machine called a video lottery terminal, described on Wikipedia as a computerized version of scratch-off lottery tickets.

Either as lone bidders or with partners, the players include Wynn Resorts (NASDAQ:WYNN), MGM Mirage (NYSE:MGM), Penn National Gaming (NASDAQ:PENN), and Harrah's Entertainment. New York's governor and top legislators are expected to choose within a few weeks.

A trifecta of politics, budgets, and capitalism
The race for Aqueduct has been a long-running horse opera -- a previous winner dropped out because it couldn't raise enough money -- in a state where a huge budget deficit has prompted searches for extra revenue sources. Adding slot machines and video lottery terminals to racetracks is a scenario being played out in several states.

For investors, Aqueduct illustrates companies' multiple expansion strategies even though their balance sheets aren't completely under control. Neither Wynn, which is making a sole bid, nor MGM Mirage, which has several partners, is involved in racetracks or racinos, which are racetracks that also offer slot machines or video lottery terminals.

Although Las Vegas Sands (NYSE:LVS) competes ferociously with Wynn Resorts and MGM Mirage in the high-roller havens of Las Vegas and Macau, it is watching the Aqueduct affair from the grandstand.

Among other Aqueduct bidders, Penn National started as a racetrack company in 1972. It owns and/or manages 19 racetracks, casinos, and racinos in 14 states and Ontario.

Harrah's Entertainment owns three facilities, including a harness-track racino in Chester, Pa., which has played a role with other Pennsylvania track-and-slot outlets in siphoning gamblers from Atlantic City. Harrah's is looking for more. It recently agreed to buy an Ohio track from the bankrupt Magna Entertainment.

Tracking revenue
New York is one of 12 states permitting racetrack casinos, and Aqueduct would be the ninth racino in the state, says the American Gaming Association. The closest racino to Aqueduct is the privately owned Yonkers Raceway, a harness-racing track just north of New York City.

Aqueduct bidders look at Yonkers Raceway with envy. Last year, it produced more revenue -- $486.5 million -- than any U.S. racino, according to the American Gaming Association. It also was the 19th-largest commercial gambling market in the U.S.

Aqueduct may be the biggest prize now. However, with racing revenues declining nationwide, with states trying to dig out from deficits, and with casino operators' DNA propelling them to expand, investors can bet we haven't reached the finish line for racinos.

Fool contributor Robert Steyer doesn't own shares of any companies cited in this story. The Fool has a disclosure policy.