Judge Rejects Aqueduct Casino Bid Challenge

Decision paves way for the state to officially recommend winning bidder.

A legal challenge to stop the current Aqueduct casino bidding process and award the contract to a previous bidder was tossed out by a New York state judge July 29, said state officials who were in the courtroom for the much-anticipated decision.

Supreme Court Judge Barry D. Kramer had issued a temporary restraining order banning the state from making a new selection until he considered a case brought by Aqueduct Entertainment Co., which won and then lost the contract earlier this year.

The judge’s ruling paves the way for the state to officially recommend the winning bidder--there is only one bidder left in the current round--of the long-stalled casino contract as soon as next week.

Aqueduct Entertainment Co. is a firm that includes some of the consortium that saw its winning bid tossed out by the administration of Gov. David Paterson in a previous bidding round.

The closely watched case comes as the state has been working on a timetable for the state Lottery Division to next week announce the winner of what is now the fourth round of bidding in the past nine years of the stalled project. The agency previously tossed out two bidders, leaving only Genting New York, which is owned by a Malaysian casino company that has had investments with Indian tribes in New York and Florida as well as the Monticello racetrack.

Aqueduct Entertainment Group, the predecessor company to AEC, won the third round over several competing groups for the lucrative Aqueduct contract, which calls for 4,500 slot machines and eventually a complex of hotels, restaurants and entertainment space. But the award became the subject of scrutiny, in part because of the political ties of some members of the bidding group, and soon after state and federal investigators opened probes of the process by which Aqueduct Entertainment was selected.

After those investigations began, the state Lottery Division, which oversees New York’s racino industry, scrubbed Aqueduct Entertainment’s award, saying some members of the group would not be able to get licenses by the agency to be involved with the casino.

Aqueduct Entertainment maintained the state’s decision was arbitrary, capricious and discriminatory against the consortium. It filed a lawsuit seeking to be reinstated as the winner of the casino deal.

Much is being banked on the Aqueduct casino. The New York Racing Association says the casino is vital to keeping its finances from going into the red again. Horse owners and breeders have been waiting for higher promised purse awards since the casino was approved in the fall of 2001. And the state is expecting some $400 million or so in annual revenues from the casino, not to mention at least $300 million in the upfront franchise fee bidders must pay the government for the franchise.

Aqueduct Entertainment claims the rules of the bidding process kept changing by the lottery agency, even after it had won the unanimous backing of the governor and legislative leaders.

Daryl Davis, a lawyer for Aqueduct Entertainment, said his client has strong grounds for an appeal, but a decision on an appeal has not yet been made.

“We do have a strong case. The judge clearly made an error and disregarded the record,’’ Davis said.

State Lottery Division director Gordon Medenica said the judge’s ruling "affirmed the fairness and thoroughness of the Lottery’s licensing and evaluation process.’’

Medenica said the agency is "on track’’ to make its recommendation to the governor and legislative leaders in the two houses on or before August 3, which would be in keeping with the timetable in the bidding plan.