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Thursday, June 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

Casino Conspiracy Ignored Elephant in the Room

MANHATTAN (CN) - With Atlantic City luring the same customers, the would-be developers of a Catskills "racino" cannot sustain a conspiracy action against the investors behind New York City's Aqueduct Race Track, the Second Circuit ruled.

Concord Associates has been envisioning the construction of a racing and casino facility, known as a "racino," in Thompson, N.Y., ever since the once world-famous Concord Resort Hotel went bankrupt in 1998.

Though it bought the resort's property and 1,500 surrounding acres from the resort's bankruptcy estate in 1999, Concord Associates claims that its development has run into opposition in recent years from Empire Resort, which owns the nearby Monticello Raceway, and real estate developer Entertainment Properties Trust.

Concord had to relinquish the 1,500-acre parcel to Entertainment subsidiary EPT Concord as part of a settlement in 2010, but Concord said it retained the right to develop the proposed resort by leasing the land.

Other hiccups remained, however, as Empire opened a rival casino at the Aqueduct Race Track, about 100 miles away from the Concord hotel, after leading gaming conglomerate Kien Huat Realty obtained a majority interest in Empire in 2009.

The original agreement further soured when Empire and EPT then planned to build their own racino next to Concord's planned site, as well as scuttled the existing lease and restrictive covenants they had entered into with Concord.

A breach-of-contract action Concord brought against EPT Concord failed in 2014, and a federal judge also ruled against the 2012 antitrust action Concord brought with six fellow investors.

Though the latter suit accused Empire and EPT of trying to create a gambling monopoly, Concord missed the mark by defining the applicable market under the Sherman Act as a 100-mile radius around Thompson.

The Second Circuit affirmed dismissal of the antitrust action Friday, rejecting Concord's call to consider the Catskills as a "destination market" for antitrust purposes.

Particularly hard to swallow for the federal appeals court was Concord's argument that gamblers in New York City would be more likely to visit the Catskills, roughly 100 miles away, rather than Atlantic City or casinos in Connecticut, which are 125 miles away.

"The plaintiffs failed to present a plausible basis for explaining why an additional twenty-five miles makes the difference," Judge Peter Hall wrote for a three-person panel. "These locations are reasonably accessible by car to NY Metro Area residents, and as the plaintiffs concede, these other facilities provide amenities comparable to the plaintiff's proposed resort."

Denying Concord the chance to file an amended complaint, Hall said such a complaint would be futile because the second complaint still had ill-defined markets.

Empire's plans to open the Montreign Resort Casino appear on track.

The project, which will feature an 18-story hotel and indoor waterpark, received state approval for casino licenses in 2014.

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