oneida indian nation lawsuit against lago resort & casino, ny gaming commission

8/20/2019 Oneida Indian Nation lawsuit against Lago Resort & Casino, NY Gaming Commission

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

_________________________________________________

In the matter of the application of

ONEIDA NATION OF NEW YORK, TURNING STONERESORT CASINO, LLC, CASINO FREE TYRE, BY

ITS PRESIDENT JAMES DAWLEY, III, DESIREE

DAWLEY, JAMES DAWLEY, III, LYNN BARBUTO,

ROBERT BARBUTO, JONATHAN MORELLI, JANE

MORELLI, ASTRID NEARPASS, JAMES NEARPASS,

LAURA WORDEN, TODD WORDEN, and DAGMAR

NEARPASS,

Petitioners,

v.

NEW YORK STATE GAMING COMMISSION, NEW

YORK STATE GAMING FACILITY LOCATION

BOARD, LAGO RESORT & CASINO, LLC,

WILPAC HOLDINGS, LLC, WILMOT GAMING, LLC,

WILPAC FUNDING, LLC, THOMAS C. WILMOT,

SR., M. BRENT STEVENS, WILMORITE, INC., and

PGP INVESTORS, LLC,

Respondents.

For a Judgment Pursuant to Article 78 of the Civil

Practice Law and Rules.

_________________________________________________

Index No:

VERIFIED PETITION

TO: SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF

NEW YORK:

The Verified Petition of Oneida Nation of New York, Turning Stone Resort Casino, LLC,

Casino Free Tyre, Dagmar Nearpass, Desiree Dawley, James Dawley, III, Lynn Barbuto, Robert

Barbuto, Jonathan Morelli, Jane Morelli, Astrid Nearpass, James Nearpass, Laura Worden, and

Todd Worden (collectively, “Petitioners”), for judgment pursuant to Article 78 of the New York


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Civil Practice Law and Rules (“CPLR”), by their attorneys, respectfully alleges and states as

follows:

PRELIMINARY STATEMENT

1. On June 21, 2013, the New York State legislature passed the Upstate New York

Gaming & Economic Development Act, and on July 30, 2013, the Governor signed the Act into

law. See N.Y. Rac., Pari-Mut. Wag. & Breed. Law § 1300 et seq. (“Gaming Act”).

2. The Gaming Act has several stated purposes, including to “ boost economic

development, create thousands of well-paying jobs and provide added revenue to the state,”

Gaming Act § 1300(5), and to “attract non-New York residents and bring downstate New

Yorkers to upstate,” Gaming Act § 1300(6). The Gaming Act requires consideration of a

proposed casino’s “impact on the local and regional economy” before a license is awarded under

the statute. Gaming Act § 1313(1)(l)(3). It also requires an evaluation of applicants’ ability to

achieve the goal of “maximizing revenues received by the state and localities,” Gaming Act

§ 1320(1)(b), and an evaluation of applicants’ “estimated recapture rate of gaming-related

spending by residents travelling to an out-of-state gaming facility,” Gaming Act § 1320(1)(f).

3. The Gaming Act expressly requires consideration of “mitigating potential impacts

on host and nearby municipalities” in determining whether to approve an application for a

gaming license. Gaming Act § 1320(2)(a).

4. Notwithstanding the express purposes of the Gaming Act, on December 21, 2015,

Respondent New York State Gaming Commission (the “Gaming Commission” or

“Commission”), an agency of the State of New York, awarded a license to Respondent Lago

Resort & Casino LLC (“Lago”) to operate a commercial casino in the Town of Tyre, New York.

See Ex. 1 (Lago Gaming License Award). By Lago’s own admission, the proposed Lago casino


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will cannibalize the majority of its business from existing New York gaming facilities, Ex. 2

(Lago Application Executive Summary) at 3, contrary to the Gaming Act’s objective to boost

economic development through new (rather than transferred) revenue and to create (rather than

siphon) thousands of new jobs.

5. Lago’s license was the culmination of a two-step selection process that was

riddled with legal errors by the Gaming Commission and the Gaming Facility Location Board

(the “Location Board” or “Board”) it appointed. Both bodies failed to fulfill their statutory

duties by ignoring the fact that Lago was not an eligible applicant. Moreover, the Location

Board unlawfully used a subjective “qualitative” analysis rather than the objective weighting

analysis mandated by the Gaming Act, effectively ignored the Gaming Act’s central goal of

recapturing out-of-state spending, made grossly inconsistent findings, and arbitrarily and

capriciously treated similarly situated parties differently. For its part, the Gaming Commission

unlawfully rubber-stamped the Location Board’s recommendations, making no factual findings

whatsoever in support of its license award to Lago and refusing to consider the reasonableness

and lawfulness of the Location Board’s recommendation.

6. For the reasons set forth in this petition, the Gaming Commission’s grant of a

license to Lago should be nullified.

PETITIONERS

Oneida Nation and Turning Stone

7. Petitioner Oneida Nation of New York (“Oneida Nation” or “Nation”) is a

federally-recognized Indian tribe, see 80 Fed. Reg. 1942, 1945 (2015), with a federally-

recognized tribal government that is located in the State of New York.


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8. Petitioner Turning Stone Resort Casino, LLC (“Turning Stone”), is a

governmental instrumentality organized by and existing under the laws of the Oneida Nation of

New York, a sovereign Indian nation, with a principal office located in the State of New York.

Turning Stone owns and operates the Turning Stone Resort Casino in Verona, NY.

9. In 1993, the Nation and the State of New York entered into a gaming Compact

under the authority of the Indian Gaming Regulatory Gaming Act (“IGRA”), 25 U.S.C. § 2701 et

seq. The principal objectives of IGRA and the Compact include “promot[ing] tribal economic

development, tribal self-sufficiency, and strong tr ibal government” and “protect[ing] the health,

welfare and safety of the citizens of the Nation and the State.” 25 U.S.C. § 2701; Ex. 3 (Nation-

State Compact Between the Oneida Nation of New York and the State of New York (appendices

omitted)) at 2.

10. Pursuant to the Compact, the Nation built the Turning Stone Resort Casino at its

own considerable risk and expense.

11. Since opening in 1993, Turning Stone has been the economic engine of the Nation

and an economic boon to central New York as a whole, with the Nation infusing more than $6

billion in direct spending to support the struggling regional economy. Ex. 4 (Oneida Nation Fact

Sheet) at 2. The success of Turning Stone has been critical to an area hard hit by Air Force base

closures and plant closings.

12. Turning Stone also is a leading employer in the region, with nearly 4,000

employees — most of whom are non-Native-American. Ex. 5 (Oneida Nation Economic Impact

Fact Sheet) at 1. Turning Stone paid wages and benefits exceeding $125 million in 2014. Ex. 4

(Oneida Nation Fact Sheet) at 2. In 2014, Nation employees paid $19 million in federal payroll


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taxes and $4.3 million in state income taxes, as well as millions of dollars in local sales taxes and

property taxes. Ex. 5 (Oneida Nation Economic Impact Fact Sheet) at 1.

13. The revenue generated by Turning Stone has allowed the Nation to fund vital

governmental services for Nation members — such as a comprehensive health clinic, affordable

housing, education scholarships, tuition assistance programs, cultural education initiatives, and

numerous programs benefitting Nation children and Elders — at a time when many other Native

American tribes are mired in poverty. Ex. 4 (Oneida Nation Fact Sheet) at 2-3.

14. The Oneida Nation supported passage of the Gaming Act because it has

experienced firsthand how responsible gaming can provide vital financial support for

communities, create good-paying jobs and provide opportunities for young adults to move back

home for career advancement.

15. The proposed Lago site is just 75 miles away (nine exits on the New York State

Thruway) from the Turning Stone Resort Casino, and only 45 miles from Syracuse, Turning

Stone’s largest market. Lago will undermine the shared prosperity that both the Nation and the

State have worked so hard to cultivate in central New York, and will have a significant adverse

effect on the Nation and Turning Stone.

16. Lago itself asserts that its financial model is predicated on cannibalizing the

majority of its business from existing New York gaming facilities such as the Turning Stone

Resort Casino, rather than fulfilling the purpose of the Gaming Act to boost economic

development, create good jobs, provide added revenue to the State, attract non-New York

residents to upstate New York, and bring downstate New Yorkers to upstate. See ¶¶ 127-150,

infra.


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17. The Nation’s and Turning Stone’s injuries fall within the zone of interests of the

Gaming Act, which is intended to protect against the cannibalization of revenue from existing in-

state gaming facilities. See, e.g., Gaming Act §§ 1300(5), 1300(6), 1313 (form of application

must require an examination of “economic benefits to the region and the state” as well as

“impact on the local and regional economy”), 1320(1)(b) & (f), 1320(2) (requiring 20% weight

to be given to local impact and siting factors including “mitigating potential impacts on host and

nearby municipalities”).

Individual Petitioners

18.

Petitioners Desiree Dawley, James Dawley, III, Lynn Barbuto, Robert Barbuto,

Jonathan Morelli, Jane Morelli, Astrid Nearpass, James Nearpass, Laura Worden, Todd Worden,

and Dagmar Nearpass (collectively with Casino Free Tyre, the “Individual Petitioners”) all live

adjacent to or near the proposed Lago casino site. They have lived in Tyre for hundreds of years

collectively.

19. By virtue of their close proximity to the Lago site and their direct exposure to its

many resulting environmental, social, and local impacts, the Individual Petitioners will be

harmed in a manner different in kind and degree than the community and public at large as a

result of the construction and operation of Lago.

20. Petitioners James and Desiree Dawley live in the house they built, largely by their

own hands, on an 18.6 acre lot they own at 1938 Chase Road in Tyre. James Dawley was born

and raised in Tyre.

21. The Dawleys have owned their property in Tyre for more than 30 years. Their

home is located directly adjacent to and north of the proposed Lago casino site. Because their

property and residence is in close proximity to the Lago site, the Dawleys will experience direct


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impacts caused by the casino that are different from those of the public at large, including a

significant increase in traffic in and around their neighborhood, noise from the casino’s

construction and operation, dust from construction, nighttime lighting and sky glow, and odors.

22. The Dawleys fear that the casino will reduce the number of birds and other

wildlife they presently enjoy watching on their property, increase the amount of trash and litter in

and around their property and neighborhood, result in trespassers entering their property,

increase their and their children’s risk for personal injury or bodily harm, destroy or degrade the

scenic views their property currently enjoys, and substantially and permanently alter the

character of their rural and agricultural community.

23. Construction of the casino already has adversely impacted the Dawleys in the

form of loud noise disturbances and earth-shaking reverberations from heavy construction

machinery, increased traffic congestion near the site, and air pollution from dust kicked up by the

construction.

24. Petitioners Robert and Lynn Barbuto own and reside in a house at 1843 Chase

Road, which is approximately one-quarter mile north of the proposed casino site. They have

lived in Tyre for over 26 years. The White Brook, which begins on the Lago site, flows over the

Barbutos’ property.

25. Lynn Barbuto is a member of the clergy and maintains a chapel and sanctuary on

their property. Construction and operation of the casino will forever destroy the existing peace

and tranquility of their property, her chapel, and her sanctuary.

26. Because of the close proximity of their property and residence to the Lago site,

the Barbutos will experience direct impacts that are different from those of the public at large,

including noise from the casino’s construction and operation, dust from construction, and odors.


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27. The Barbutos fear the casino will light up their nighttime sky, disrupt their sleep,

cause increased traffic, make local roads more dangerous to traverse, destroy or degrade the

scenic views currently enjoyed from their property (although to a lesser extent than prior to the

construction), and substantially and permanently alter the character of their rural and agricultural

community.

28. Construction of the casino already has adversely impacted the Barbutos in the

form of construction dust and dirt, unpleasant odors such as tar and diesel, noise including

“booms” from construction equipment, degraded scenic views due to the clearing of trees on the

construction site, increased traffic, and dirty water containing debris and silt running from the

casino site into wetlands on their property.

29.

Petitioners Jonathan and Jane Morelli own the house they have lived in for the

past 43 years at 1077 Route 414 in Tyre. Their home is located directly adjacent to the proposed

Lago casino site to the north, and their residence is located only several hundred feet from the

proposed entrance to the casino complex.

30.

Because their property and residence is in close proximity to the Lago site, the

Morellis will experience direct harms that are different from those of the public at large,

including a significant increase in traffic in and around their neighborhood, noise from the

casino’s construction and operation, dust from construction, and odors.

31. The Morellis fear that the casino will contaminate their groundwater and drinking

water via runoff from the nearby stormwater management facility, impair their safety as they

walk on the road in front of their house, increase crime in the area, destroy or degrade the scenic

views their property currently enjoys, and substantially and permanently alter the character of

their rural and agricultural community.


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32. Petitioners James and Astrid Nearpass live in the retirement home they own at

1987 Chase Road in Tyre. Now 81 years old, James Nearpass was born and raised in Tyre.

James and Astrid farmed for several decades in Tyre and Junius (just over two miles from the

proposed casino site). Their current home is directly adjacent to the proposed Lago casino site.

33. Because of the close proximity of their property and residence to the Lago site,

the Nearpasses would experience direct harms caused by the casino that are different from those

of the public at large, including a significant increase in traffic in and around their neighborhood,

noise from the casino’s construction and operation, dust from construction, nighttime lighting

and sky glow, and odors.

34. The Nearpasses fear that the casino will increase crime in the area, destroy or

degrade the scenic views from their property, and substantially and permanently alter the


35. Petitioners Todd and Laura Worden own two houses on Chase Road in Tyre,

including their personal residence on 1891 Chase Road. Todd Worden was born and raised in

Tyre. The Wordens’ home is in close proximity to the proposed Lago casino site, approximately

one-quarter of a mile away.

36. Because their property and residence is in close proximity to the Lago site, the

Wordens will experience direct harms caused by the casino that are different from those of the

public at large, including a significant increase in traffic in and around their neighborhood, noise

from the casino’s construction and operation, dust from construction, nighttime lighting and sky

glow, and odors.


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37. The Wordens fear that the casino will increase crime in the area, destroy or

degrade the scenic views from their property, and substantially and permanently alter the


38. Construction at the Lago site has already negatively impacted the Wordens. Their

home has been covered by dust, dirt, and other pollutants resulting from construction activities at

the Lago site.

39. Further, the Wordens enjoy spending time in the outdoors, but air pollution from

the casino has significantly curtailed their ability to go outside on their property for extended

periods of time, and they have had to install room darkening shades in anticipation of the casino

lights that will shine into their expected daughter’s bedroom.

40.

Petitioner Dagmar Nearpass lives at and owns a life estate in 765 Black Brook

Road in the Town of Tyre, County of Seneca. Ms. Nearpass’s home is located in close proximity

to the proposed Lago casino site, approximately 1.2 miles away. The White Brook, which

begins on the Lago site, flows over Ms. Nearpass’s property.

41.

Because her residence is in close proximity to the Lago site, Ms. Nearpass will

experience direct harms that are different from those of the public at large, including a significant

increase in traffic in and around her neighborhood, noise from the casino’s construction and

operation, dust from construction, nighttime lighting and sky glow, and odors.

42. Ms. Nearpass fears that the casino will contribute to flooding on her property as a

result of stormwater runoff from the site into the White Brook, contaminate her groundwater and

drinking water, destroy or degrade the scenic views from her property, and substantially and

permanently alter the character of her rural and agricultural community.


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43. Petitioner Casino Free Tyre, suing by its president, James Dawley, III, is an

unincorporated association with approximately 40 of its active members residing in Tyre, New

York. Petitioners Dagmar Nearpass, Desiree Dawley, and James Dawley are members and

officers of Casino Free Tyre authorized to commence this action on Casino Free Tyre’s behalf

pursuant to General Associations Law Section 12. Formed in response to Lago’s proposal to site

its destination casino and resort in Tyre, Casino Free Tyre has an interest in safeguarding the

natural resources and community character of Tyre.

44. The Town of Tyre describes itself as “a place of homes, fields, marshes, and

geese” that “strives to maintain its rural flavor as the world passes by along the NYS Thruway.”

Ex. 6 (Tyre Town Web Site). Its entire population totals approximately 950 residents.

45.

Lago’s proposed casino site sits within a County-adopted, State-certified

Agricultural District. Ex. 7 (Seneca County Agricultural District Map). Prior to Lago’s clearing

and grading work, the site consisted of approximately 45 acres of active prime agricultural land,

10 acres of wetlands, and 30 acres of woodlands. Ex. 8 (2014 EAF Part 1) at 9.

46.

Lago seeks to build a massive destination-resort of more than 730,000 square feet,

Ex. 9 (2015 SEQRA Statement of Reasons Excerpt) at 1,1 that its Director — Tom Wilmot —

proclaims “‘will be comparable to what you will see in Las Vegas.’” Ex. 10 (Teri Weaver,

Wilmot: Digging to begin on Lago casino site on Friday, Syracuse.com (Dec. 18, 2014)) at 1.

Lago claims its sprawling complex will attract approximately 3.3 million visitors per year to

Tyre, Ex. 11 (Lago Application Exhibit VIII.C.4.c), or approximately 9,000 vehicle trips per day,

Ex. 12 (Traffic Impact Study Excerpt) at 21.

1 The full 2015 SEQRA Statement of Reasons is available athttp://www.tyreny.com/pdfs/laws/2015_resolution_- _Making_determination_of_significance_with_Completed_Full_EAF_with_written_summary.pdf.


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47. The Individual Petitioners and their injuries fall within the zone of interests of the

Gaming Act, as the Gaming Act expressly provides that local impacts must be considered in the

casino evaluation process. See, e.g., Gaming Act §§ 1300(8) (“Local impact of the casino sites

will be considered in the casino evaluation process.”), 1313(1)(l)(2) (requiring form of

application to include studies and reports regarding, inter alia, “local and regional social,

environmental, traffic and infrastructure impacts”), 1320(2) (requiring 20% weight to “local

impact and siting factors” when applicants are evaluated).

48. By virtue of their close physical proximity to the proposed casino site, the

Individual Petitioners also have standing to assert claims that the license award violates the State

Environmental Quality Review Act (“SEQRA”) and is invalid as a result of Lago’s non-

compliance with SEQRA.

RESPONDENTS

49. Respondent New York State Gaming Commission is a “body or officer” within

the meaning of CPLR § 7802(a). Upon information and belief, the Gaming Commission’s office

and principal place of business is located at One Broadway Center, Schenectady, New York,

12305.

50. Respondent New York State Gaming Facility Location Board is a “body or

officer” within the meaning of CPLR § 7802(a). Upon information and belief, the Location

Board’s office and principal place of business is located at One Broadway Center, Schenectady,

New York, 12305.

51. Upon information and belief, Respondent Lago Resort & Casino, LLC is a foreign

limited liability company, organized under the laws of the State of Delaware, that is registered to


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do business in the State of New York, with a principal office at 1265 Scottsville Road,

Rochester, New York 14624.

52. Upon information and belief, Respondent Wilpac Holdings, LLC, is a foreign


do business in the State of New York, and that owns a 100% interest in Lago.

53. Upon information and belief, Respondent Wilmot Gaming, LLC, is a foreign


do business in the State of New York, with a principal office at 1265 Scottsville Road,

Rochester, New York 14624, and that owns a 50% interest in Wilpac Holdings, LLC.

54. Upon information and belief, Respondent Wilpac Funding, LLC is a foreign

limited liability company, organized under the laws of the State of Delaware, and that owns a

50% interest in Wilpac Holdings, LLC.

55. Upon information and belief, Respondent Thomas C. Wilmot, Sr. has a

controlling interest in Wilmot Gaming, LLC.

56.

Upon information and belief, Respondent M. Brent Stevens has a controlling

interest in Wilpac Funding, LLC.

57. Upon information and belief, Respondent Wilmorite, Inc. is a domestic limited

liability company, organized under the laws of the State of New York, with a principal office at

1265 Scottsville Road, Rochester, New York 14624, and that has an ownership interest in

Wilpac Holdings, LLC.

58. Upon information and belief, Respondent PGP Investors, LLC, d/b/a Peninsula

Pacific, is a foreign limited liability company, organized under the laws of the State of Delaware,


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with a principal office at 10250 Constellation Blvd., Suite 2230, Los Angeles, CA 90067, and

that has an ownership interest in Wilpac Holdings, LLC.

JURISDICTION AND VENUE

59. This Court has jurisdiction over this matter pursuant to Article 78 of the New

York CPLR because the Gaming Commission’s license award to Lago was affected by an error

of law, was made in violation of lawful procedure, was arbitrary and capricious, lacked a rational

basis, and was an abuse of discretion.

60. Pursuant to CPLR §§ 506(b) and 7804(b), venue is proper in New York County

because the Gaming Commission made the determination complained of — the award of a

gaming facility license to Lago — in the First Judicial District, which includes New York County.

STATEMENT OF FACTS

A. The Gaming Act’s Objectives and the Roles of the Location Board and

Gaming Commission Thereunder.

61. The purposes of the Gaming Act include “ boost[ing] economic development,”

“creat[ing] thousands of well-paying jobs,” “ provid[ing] added revenue to the state,” and

“attract[ing] non-New York residents and bring[ing] downstate New Yorkers to upstate.”

Gaming Act § 1300(5), (6).

62. To accomplish those objectives, the Gaming Act authorizes up to four new

destination casinos in three specified regions in upstate New York, with no more than two

casinos in any one region. Gaming Act § 1311(1). The three regions are Region 1

(Catskill/Hudson Valley), Region 2 (Capital Region), and Region 5 (Eastern Southern

Tier/Finger Lakes). Id.; see also id. § 1310(2)(b).

63. Pursuant to the Gaming Act, the Gaming Commission formed the Location Board

and selected its members. See N.Y. Rac., Pari-Mut. Wag. & Breed. Law § 109-a.


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64. The Location Board’s role was limited to soliciting and reviewing applications

and recommending up to four applicants to apply to the Gaming Commission for a license.

Gaming Act § 1306.

65. In making its recommendations, the Gaming Act mandated that the Location

Board “shall” consider enumerated statutory selection criteria and apply a statutory weighting

scheme with respect to three general categories of selection factors: “economic activity and

business development factors” (70%); “local impact and siting factors” (20%); and “workforce

enhancement factors” (10%). Gaming Act § 1320. Within each general category of factors, the

Location Board was required to consider a number of specified statutory factors and “issue a

finding of how each applicant proposes to advance” the enumerated statutory objectives. Id.

66.

The Location Board did not have the power to grant gaming licenses; that power

belongs only to the Gaming Commission. Gaming Act § 1311(1); see id. § 1305(3) (recognizing

Gaming Commission’s power to “approve or disapprove” license applications).

67. The factual allegations that follow trace the relevant events at each stage of the

process from Lago’s a pplication to the Gaming Commission’s award.

B. Lago’s Application to the Location Board.

68. On March 31, 2014, the Location Board issued a Request for Applications

(“R FA”) to develop and operate the upstate destination resort casinos authorized by the Gaming

Act. See Ex. 13 (Board Report Excerpt) at 4.2 The Location Board established June 30, 2014 as

the application deadline. Id.

69. The Gaming Act mandates full and accurate disclosure. It provides that the

Commission “shall ” deny a license, subject to notice and an opportunity to be heard, when an

2 The full Board Report is available athttp://www.gaming.ny.gov/pdf/02.27.15.GFLBFinalAppendicesWebSmall.pdf.


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applicant fails “to provide information, documentation and assurances required by this article or

requested by the commission” or “to reveal any fact material to qualification,” or when an

applicant provides “information which is untrue or misleading as to a material fact pertaining to

the qualification criteria.” Gaming Act § 1318(1)(b) (emphasis added).

70. The Gaming Act also required the Location Board to “establish deadlines for the

receipt of all applications” and provided that “[a]pplications received af ter the deadline shall not

be reviewed by the board.” Gaming Act § 1312(4).

71. On June 30, 2014, the Location Board received seventeen applications. Ex. 13

(Board Report Excerpt) at 4. On August 7, 2014, following a unanimous vote, the Location

Board declined to review one application because it was “substantially non-responsive to the

RFA.” Id. The Location Board concluded that “[i]t is simply not feasible or fair to alter any

provision of the RFA or make concessions at the request of a bidder. To do so would create an

unfair bidding process for every other potenti al bidder and invalidate the RFA.” Ex. 14

(Disqualification of Florida Acquisition Corporation) at 1 (emphasis added).

72.

The Gaming Act and RFA set forth several requirements that Lago needed to

satisfy in connection with its application.

1. The Requirement that Lago Demonstrate Local Support as a

Condition of Filing an Application.

73. The Gaming Act required that, “[a]s a condition of filing, each potential license

applicant must demonstrate to the board’s satisfaction that local support has been demonstrated.”

Gaming Act § 1314(2).

74. Similarly, 9 N.Y.C.R.R. § 5301.1(g) provides that an applicant “shall . . .

demonstrate local support by submitting to the Gaming Facility Location Board a resolution


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passed after a date announced by such board by a majority of the membership of the local

legislative body of the host community supporting the application.” Id.

75. Section IX.A.1.a of the Location Board’s R FA required that, “as a condi tion of

acceptance of th is Appl icati on, local suppor t must be demonstrated through a post-November

5, 2013 vote of the local legislative body of each H ost M unicipali ty .” Ex. 15 (RFA) § IX.A.1, at

58 (emphasis added).

76. The Location Board’s June 10, 2014 Questions and Answers for Applicants made

clear that “a condition of fi li ng an Appli cation is that each Applicant submit to the Board a post-

November 5, 2013 resolution passed by the local legislative body of the Host Municipality that

supports the Applicant’s proposed Gaming Facility within their jurisdiction.” Ex. 66

(Resolutions of Support Q&A) at 1, Question 208 (emphasis added).

77. To satisfy the requirement that it demonstrate local support, Lago’s application

relied on a June 12, 2014 resolution of support from the Town of Tyre. Ex. 16 (Lago

Application Exhibit IX.A.1.a); Ex. 18 (Town of Tyre Lago Resolution of Support).

2.

The Requirement that Lago Include a Mitigation Commitment as

Part of its Application.

78. Under the Gaming Act, Lago also was required to “clearly state[] as part of an

application ” how it will mitigate potential impacts on its host municipality and commit to a

community mitigation plan for the host municipality. Gaming Act § 1316(5), (6), (7) (emphasis

added).

79.

Similarly, the governing regulations required Lago to “provide plans for

miti gating potential impacts on host municipality and nearby municipalities that might result

from the development or operation of the gaming facility.” 9 N.Y.C.R.R. § 5301.1(g)(3).


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80. Likewise, the RFA required Lago to “[s]ubmit . . . a description of Applicant’s

commitments to miti gate impacts of the proposed Gaming Facility (during construction and

operation) on each Host Municipality and the nearby municipalities including for traffic

mitigation, infrastructure costs, costs of increased emergency services and the other impacts

identified in the [required] studies” and “[p]rovide copies of any contracts, agreements or other

understandings evidencing such mitigation commitments.” Ex. 15 (RFA) § IX.A.3, at 59

(emphasis added).

81. To make the required mitigation showing, Lago relied exclusively on the terms of

a June 12, 2014 Host Community Agreement with the Town of Tyre; that agreement was the

only mitigation plan submitted by Lago in its application. See Ex. 17 (Lago Application Exhibit

IX.A.3).

3. Lago’s Obligation to Disclose Pending Litigation.

82. Lago also was required to disclose any pending litigation involving Lago to the

Location Board and Gaming Commission and to update that disclosure (as with all disclosures)

with new material information. 9 N.Y.C.R.R. § 5301.1(c)(5)(i); id. § 5301.1(l)(1).

83. The Location Board emphasized the importance of providing information about

lawsuits in its Questions and Answers: “[t]he Board may consider pending or threatened

litigation in its siting evaluation. Once the Board selects an applicant to present to the

Commission for licensure, the Commission may consider pending or threatened litigation in its

suitability determination.” Ex. 19 (Round 1 Q&A Excerpt) at 48, Question 167.3

84. On June 12, 2014, approximately three weeks before Lago submitted its

application, the Town of Tyre issued a negative declaration under SEQRA, declaring that Lago

3 The full Round 1 Q&A document is available athttps://gaming.ny.gov/pdf/FirstRoundQuestionsAnswersApril232014.pdf.


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would not cause any significant adverse impact to the environment. Ex. 20 (June 2014 Negative

Declaration) at 4.

85. On or about July 11, 2014, shortly after Lago filed its application with the

Location Board, Lago was served with an Article 78 petition challenging that negative

declaration under SEQRA. Ex. 21 (Verified Petition, Dawley v. Whitetail 414, LLC , Index No.

48435 (Sup. Ct., Seneca Cnty. July 11, 2014)).

86. The governing regulations concerning applications for a casino license provide

that, “[u]pon completion of an application prescribed in [this regulation] and prior to the award

of a gaming facility license, an appli cant has a continuing duty to disclose to the New York

Gaming Facility Location Board promptly, in writing (and electronically), any changes or

updates to the information submitted in the application or any related materials submitted in

connection therewith.” 9 N.Y.C.R.R. § 5301.1(l)(1) (emphasis added).

87. The Location Board’s RFA likewise provided that “[a]fter the submission of an

Application and prior to the award of the Licenses, each Applicant has a continuing duty to

disclose to the Board promptly, in writing (and electronically), any changes or updates to the

information submitted in its Application or any related materials submitted in connection

therewith.” Ex. 15 (RFA) § III.I, at 16. The supplemental RFA for Region 5 applications

reiterated the importance of updating applications: “[a]s a general rule, it is better to err on the

side of over-reporting changes than to fail to report a change.” Ex. 22 (Region 5 RFA Excerpt)

at 17.4

88. Lago does not appear to have updated its application to disclose the SEQRA

lawsuit to the Location Board.

4 The full Region 5 RFA is available at https://gaming.ny.gov/pdf/03.23.15.RFA.PDF.


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89. The SEQRA lawsuit raised issues of significance to the Gaming Commission and

Location Board’s consideration of Lago’s application for a gaming license.

90. As the Location Board Chair said when announcing its recommendations at a

December 17, 2014 press conference, SEQRA was “very important” because it “goes to the

speed to market. Because there’s one thing any developer will tell you that will slow down the

development process for any type of project, it’s getting snagged in the SEQRA process.” Aff.

of Edward C. Barnidge in Supp. of Mem. (“Barnidge Aff.”) ¶ 5.

91. Satisfying SEQRA is a precondition for an applicant to obtain a gaming license.

See Ex. 23 (Applicant Conference Q&A) at 4, Question 339.

92. The Gaming Commission stated in writing that it “expected” that each applicant

would complete an environmental impact statement, which Lago did not do because of the

negative declaration issued by the Town of Tyre. See Ex. 24 (Gaming Commission SEQR EIS

Guidance) at 1.

93. The Location Board’s treatment of other applicants that disclosed pending

litigation highlights the significance of Lago’s failure to disclose the SEQRA action to the

Location Board. With respect to three applications that the Location Board rejected, the Board

cited litigation risk as a serious concern. See Ex. 13 (Board Report Excerpt) at 18, 23-24, 27

(Caesars, Sterling Forest, and Capital View). In two instances, the litigation about which the

Location Board expressed concern involved environmental issues. See id. at 23 (expressing

concern that “the potential litigation risk over environmental issues would jeopardize the

realization of the project”); id. at 27 (“[T]he Board notes that due to legal and environmental

challenges there might have been delays in this timeline.”).


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94. In evaluating applicants, the Location Board expressly relied on “the

commitments, assurances, representations, and other statements the Applicants made” in their

applications, any updates thereto, and their public presentations. Ex. 13 (Board Report Excerpt)

“Disclaimer .”

4. Lago’s Nondisclosure of IDA Benefits to the Location Board.

95. Based on the information publicly disclosed by the Location Board, it appears that

Lago also failed to inform the Location Board that it would seek millions of dollars of tax relief

from the Seneca County Industrial Development Agency (“Seneca IDA”).

96. Lago’s application to the Location Board made no reference to Lago’s intention to

seek IDA benefits.

97. A Host Community Agreement that Lago submitted as an attachment to its

application merely recited that Lago “may, in its discretion , apply to the [IDA] for a tax

agreement with respect to the Project.” Ex. 17 (Lago Application Exhibit IX.A.3) at 12

(emphasis added).

98.

On October 2, 2014, Lago filed an application with the Seneca IDA to obtain

sizeable tax breaks in connection with the proposed casino. Ex. 25 (Lago 2014 IDA

Application).

99. Lago apparently did not inform the Location Board of either its October 2014

application to the Seneca IDA for tax relief or the Seneca IDA’s February 2015 award of such

relief to Lago.5

5 Although the February 2014 resolution awarding those benefits was later nullified, Lagosubsequently re-applied to the Seneca IDA for the same benefits, Ex. 26 (Lago 2015 IDAApplication), which were re-approved in December 2015, Ex. 27 (December 2015 Lago IDAAward).


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100. Lago admits that the sales tax and mortgage recording tax abatements that it

received from the Seneca IDA are worth approximately $20 million. See Ex. 25 (Lago 2014

IDA Application) at 2; Ex. 26 (Lago 2015 IDA Application) at 2.

101. Lago knew that the Location Board would look critically at any tax breaks it

sought.

102. The governing regulation required applicants to provide significant evidence of

the economic benefit their proposed casino would bring to the State. 9 N.Y.C.R.R. § 5301.1(d).

103. The Location Board explained in its Questions and Answers for Applicants that “a

factor for the graded RFA evaluation is economic impact and a subsidi zed appli cation wi ll li kely

il lustrate dimin ished economic impacts when competiti vely evaluated .” Ex. 19 (Round 1 Q&A

Excerpt) at 39, Question 139(b) (emphasis added).

104. The application completed by Lago expressly required applicants under penalty of

perjury to disclose any financing contingencies. Ex. 15 (RFA) § VIII.A.6.b, at 37; id. at 76.

5. Lago’s Inconsistent Representations Concerning the Status of Its

Financing.

105. Lago made contradictory representations to the Location Board and to the IDA on

a critical issue: the status of its financing.

106. Lago categorically represented to the Location Board in its June 2014 application

that “100 percent of fi nancing f or construction and operations [i s] fu ll y in place .” Ex. 2 (Lago

Application Executive Summary) at 2 (emphasis added). In a presentation to the Location Board

on September 8, 2014, Lago again represented that its financing was secured. Ex. 28 (Lago

PowerPoint Presentation to Location Board Excerpt (Sept. 8, 2014)) at 6, 17.6

6 The full presentation is available at https://gaming.ny.gov/media/LAGO9.8presentation.mp4.


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107. Those representations were important, as a significant selection factor under the

Gaming Act was “demonstrating the ability to fully finance the gaming facility.” Gaming Act

§ 1320(h). Indeed, the Board Report raised concerns about proposed financing with respect to a

number of applicants that were not recommended by the Location Board, including Mohegan

Sun, Nevele, Grand Hudson, Howe Caverns, and Tioga Downs. Ex. 13 (Board Report Excerpt)

at 15, 17, 19, 30, 34.

108. Contrary to Lago’s representations to the Location Board, Lago had been actively

planning for several months prior to its casino application to secure a PILOT agreement from the

Seneca County IDA. See Ex. 29 (Email from Shawn Griffin to Ron McGreevy, et al., dated

February 12, 2014); Ex. 30 (Email from Shawn Griffin to Ron McGreevy, et al., (Apr. 22,

2014)); Ex. 31 (Email from Town’s outside counsel, Virginia Robbins, to Shawn Griffin (Feb.

14, 2014)); Ex. 32 (Meeting Agenda for Wilmot Casino and Resort (Mar. 3, 2014)) (agenda for

Town meeting regarding IDA benefits); Ex. 33 (Email from Virginia Robbins to Shawn Griffin,

et al., (Apr. 17, 2014)) (asking whether developer funding for sewer improvements and upgrades

would supplement “the PILOT payments”).

109. Directly contrary to its representations to the Location Board, Lago claimed in its

October 2014 application to the Seneca IDA that an IDA Tax Agreement “is a cr iti cal path i tem

for f inancing .” Ex. 25 (Lago 2014 IDA Application) at 8 (emphasis added). And a Lago

representative asserted that “[n]ot getting the incenti ves would change the structur e of what we

build .” Ex. 34 (David L. Shaw, Casino Foes Blast IDA Aid Package, Finger Lakes Times (Jan.

30, 2015)) (emphasis added).

110. Lago apparently never updated its Location Board application to correct its

representation to the Location Board that its financing was fully in place.


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C. The Location Board’s Recommendation of Lago.

111.

On December 17, 2014, the Location Board recommend three proposed casinos —

Lago in Tyre, New York (Region 5), Rivers Casino & Resort at Mohawk Harbor (“Rivers”) in

Schenectady, New York (Region 2), and Montreign Resort Casino (“Montreign”) in Thompson,

New York (Region 1) — to apply to the Gaming Commission for gaming facility licenses. See

Ex. 35 (Location Board Decision) at 8.

112. On February 27, 2015 , the Location Board issued a report that explains the

reasons for the Location Board’s recommendations (“Board Report”). The Board Report was

prepared by Gaming Commission staff, see Ex. 13 (Board Report Excerpt), “Disclaimer ,” but

was adopted by the Location Board at a February 27, 2015 meeting, Ex. 36 (Location Board

Meeting Transcript (Feb. 27, 2015)) at 2-3. The Board R eport shows that the Location Board’s

analysis was contrary to law in numerous respects.

1. The Location Board Violated Its Statutory Duty to Weight Its

Analysis of Specified Factors.

113. The Location Board failed to undertake the quantitative weighting of statutory

selection criteria that the State legislature mandated in the Gaming Act. The Location Board

lacked any discretion to ignore the statutorily mandated system for analyzing applicants.

114. Section 1320 of the Gaming Act is absolute in its mandate: the Location Board’s

siting decisions “shall ” be weighted by 70% for economic activity and business development

factors, 20% for local impact and siting factors, and 10% for workforce enhancement factors.

Gaming Act § 1320 (emphasis added).

115. Consistent with its statutory mandate, the Location Board assured the public in

writing that it would score applicants based on the statutorily mandated factors. See Ex. 37

(Round 2 Q&A Excerpt) at 11, Question 370(c) (answering “Yes” to the question whether the


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Board’s “analysis and scoring of the factors included within the evaluation Criteria [will] be

made public” (emphasis added)); id. at 18, Question 384 (asserting that “[a]pplicants will be

scored based upon the total revenue generated by the gaming operation”).7

116. The Location Board’s March 2014 RFA also stated that the Location Board would

apply the required statutory weighting. See Ex. 15 (RFA) § VII.A, at 30 (“The decision by the

Board to select an Applicant shall be weighted by seventy (70) percent based on economic

activity and business development factors . . . .”); id. § VII.B, at 31 (“The decision by the Board

to select an Applicant shall be weighted by twenty (20) percent based on local impact and siting

factors . . . .”); id. § II.C, at 31 (“The decision by the Board to select an Applicant shall be

weighted by ten (10) percent based on workforce enhancement factors . . . .”).

117.

In its Board Report supporting its final recommendations, however, the Location

Board reversed its position and asserted that it had opted not to score applicants pursuant to the

statutory criteria.

118. The Location Board asserted that it “did not create numerical scores with regard

to the [statutory] criteria” but elected instead to “reach[] its conclusions based on a qualitative

judgment,” “giving a qualitative weight to categories of factors.” Ex. 13 (Board Report Excerpt)

at 8-9.

119. The Board Report does not weight the statutory categories of enumerated factors

pursuant to the Gaming Act’s 70/20/10 weighting scheme. Instead, it contains only narrative,

purely subjective explanations for the Location Board’s recommendations and appears to treat

each selection factor equally, in violation of the Gaming Act.

7 The full Round 2 Q&A document is available athttps://gaming.ny.gov/pdf/SecondRoundQuestionsandAnswersMay142014.pdf.


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120. The Location Board’s decision to rely exclusively on its own self-created

qualitative evaluation of applicants, rather than adhering to the specified quantitative weighting

approved by the Legislature in adopting the Gaming Act, violated the law.

121. Notwithstanding this fundamental flaw in the selection process, the Gaming

Commission awarded a license to Lago.

2. The Location Board Rendered the Gaming Act’s Recapture Factor a

Nullity.

122. The Gaming Act makes clear that one of its primary purposes is to “recapture . . .

gaming-related spending by residents travelling to . . . out-of-state gaming f acilit[ies].” Gaming

Act § 1320(1)(f); see also id . § 1300(6) (“four upstate casinos will attract non-New York

residents”). It provides that the Location Board “shall evaluate and issue a finding” concerning

“how each applicant proposes to advance” that central statutory objective. Id. § 1320.

123. The Location Board effectively wrote the critical “recapture” selection criterion

out of the Gaming Act by asserting in the Board Report, in almost identical language, that every

applicant anticipated a “substantial recapture rate.”8 Because the Location Board made the same

cursory “finding” almost verbatim with respect to every applicant, it effectively made no

findings on this enumerated selection factor, in plain violation of the Gaming Act.

124. The Location Board’s assertion that every applicant anticipated a substantial

recapture rate was plainly incorrect. Different applicants projected very different recapture rates,

8 See Ex. 13 (Board Report Excerpt) at 15 (Mohegan Sun at The Concord) (“substantial recapturerate”); id. at 17 (Nevele Resort, Casino & Spa) (same); id. at 18 (Caesars New York) (same); id. at 19 (The Grand Hudson Resort & Casino) (same); id. at 21 (Hudson Valley Casino & Resort)(same); id. at 22 (The Live! Hotel and Casino New York) (same); id. at 23 (Resorts WorldHudson Valley) (same); id. at 24 (Sterling Forest Resort) (same); id. at 25 (Rivers) (same); id. at27 (Capital View Casino & Resort) (same); id. at 29 (Hard Rock Rensselaer) (same); id. at 30(Howe Caverns Resort & Casino) (same); id. at 32 (Lago) (same); id. at 34 (Tioga DownsCasino, Racing & Entertainment (same); id. at 35 (Traditions Resort & Casino) (same); id. at 13(Montreign) (“recapture of a substantial amount of out-of-state gaming revenues”).


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and two applicants projected that the majority of their revenue would be recaptured from out-of-

state gaming facilities: Live! Hotel and Casino New York (projected to recapture $362.8 million

of $662 million in total revenue) and Capital View Casino & Resort (projected to recapture

$129.1 million of $227 million in total gaming revenue). See Ex. 13 (Board Report Excerpt) at

22, 27, 111, and 216.

125. In contrast, Lago projected a very low recapture rate of 14% from out-of-state

gaming facilities. Ex. 2 (Lago Application Executive Summary) at 3. The Location Board

completely failed to address the important differences among applicants with respect to

recapturing revenue from out of state and failed to make any genuine findings on this critical

statutory selection factor, in violation of the requirements of section 1320 of the Gaming Act.

126.

Notwithstanding this fundamental flaw in the selection process, the Gaming


3. The Location Board Applied a Completely Different Standard to

Lago on the Issue of Cannibalization.

127. Consistent with the Gaming Act’s objectives, the Location Board’s RFA required

each applicant to describe how it planned “to succeed . . . whi le limiti ng the impact on revenues

at other New York gaming establishments .” Ex. 15 (RFA) § VIII.B.8, at 44 (emphasis added).

128. The Location Board stressed the importance of applicants generating new

revenue, as opposed to merely redistributing existing revenue, in its Questions and Answers for

applicants: “The language that is quoted from the RFA is clear that what is required of the

Applicant is to describe how it intends to expand the relevant market by bringing in new

visitors, as opposed to merely shi ft ing visitors from existing gaming venues in the region .”

Ex. 19 (Round 1 Q&A Excerpt) at 49-50, Question 173 (emphasis added).


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129. During the RFA process, six parties filed applications to site a casino in Orange

County, within Region 1 (the Catskill/Hudson Valley). Ex. 13 (Board Report Excerpt) at 5.

Each Orange County applicant paid the State a $1 million application fee.

130. Pursuant to the stated goals of the Gaming Act, the Location Board summarily

rejected all applicants from Orange County in Region 1 based on the objective of preventing

destructive competition of existing gaming facilities in downstate New York and a proposed

casino in Sullivan County. Ex. 13 (Board Report Excerpt) at 14.

131. As justification for the categorical exclusion of all Orange County applicants, the

Location Board relied upon its concern that the Orange County applicants would cannibalize

revenue from downstate non-Native American gaming facilities located outside of Region 1. See

Ex. 13 (Board Report Excerpt) at 14 (“[B]ecause of the proximity to New York City of the

Orange County proposals, each resulted in a high level of cannibalization of existing downstate

gaming facilities.”). The Location Board also rejected all Orange County applicants because

they would destabilize a future casino recommended by the Board for the Catskill region,

explaining that “review of various internal modeling scenarios found an additional facility in

Orange County or a second facility in Sullivan County could destabilize that single project in the

traditional Catskill area.” Id.

132. The Location Board categorically rejected all Orange County applicants based on

concerns about cannibalization, even though those applicants promised to generate significantly

higher revenues and job creation, and to recapture more out-of-state spending, than the applicant

that ultimately won the only Region 1 license, Montreign.


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133. Montreign was projected to generate only $301.6 million in gaming revenue and

$103.4 million in tax revenue. Ex. 13 (Board Report Excerpt) at 12. By contrast, all of the

Orange County applicants projected to generate far superior revenue figures:

a. Caesars projected to generate $738 million in gaming revenue and $188.7million in tax revenue;

b. Grand Hudson projected to generate $568.9 million in gaming revenueand $172.6 million in tax revenue;

c. Hudson Valley projected to generate $559 million in gaming revenue and$137.1 million in tax revenue;

d. Live! projected to generate $662 million in gaming revenue and $149.9

million in tax revenue;

e. Resorts World projected to generate $758 million in gaming revenue and$201.4 million in tax revenue; and

f. Sterling Forest projected to generate $1.133 billion in gaming revenue and$264.1 million in tax revenue.

Id. at 18, 19, 21, 22, 23 & 24.

134. The expected job creation at Montreign (1,209 full time and 96 part time jobs), id.

at 12, also was dwarfed by each of the Orange County casinos:

a. Caesars projected to generate 2,129 full time and 703 part time jobs;

b. Grand Hudson projected to generate 2,310 full time and 269 part time jobs;

c. Hudson Valley projected to generate 2,412 full time and 530 part time jobs;

d. Live! projected to generate 3,264 full time and 1,444 part time jobs;

e. Resorts World projected to generate 2,662 full time and 765 part time jobs; and

f. Sterling Forest projected to generate 3,129 full time and 1,614 part time jobs.


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Id. at 18, 19, 21, 22, 23 & 24.

135. The Orange County casinos also were far better positioned to recapture spending

from out-of-state casinos than Montreign; two Orange County applicants projected recapturing

hundreds of millions of dollars in revenue from New York residents currently leaving the State

to gamble. Id. at 111 (Live!) & 198 (Sterling Forest).

136. Notwithstanding the vastly superior economic impact that the proposed Orange

County casinos would have created, the Location Board nevertheless summarily rejected those

Orange County- based applications because of “the high level of cannibalization of existing

downstate gaming facilities” and the legitimate concern that Orange County casinos “could

destabilize that single project in the traditional Catskill area.” Ex. 13 (Board Report Excerpt) at

14.

137. In stark contrast to its treatment of all Orange County applicants, the Location

Board utterly disregarded its expressed concerns regarding cannibalization when it evaluated

Lago’s application.

138.

Both the Location Board and the Gaming Commission were presented with

extensive evidence irrefutably establishing that the vast majority of Lago’s revenue would be

cannibalized from existing gaming facilities in the area, including the following:

Lago itself admitted in its application that the majority of its projected gaming revenue(approximately $134 million) will be drawn from existing New York gaming facilities,Ex. 2 (Lago Application Executive Summary) at 3.

Lago’s own market research, discussed in its application, revealed that more than $30million of its first-year revenue will be drawn fr om Turning Stone alone . Ex. 38 (LagoApplication Exhibit VIII.A.3) at 61.

Lago’s own market analysis also admitted that Native Ameri can gaming facil iti es in the

same region wi ll be mater ial ly harmed by Lago. See, e.g., id.


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An expert report by Union Gaming Analytics estimated that “virtually all ”— nearly90% — of Lago’s gaming revenue would be cannibalized from existing New Yorkgaming facilities and that Lago would only grow the gaming market by $16 million.Ex. 39 (Union Gaming Analytics Report) at 35, 36-37.

Another expert report projected a 67% cannibalization rate for Lago. Ex. 40 (PyramidReport) at 39.9

139. Lago’s projected cannibalization of existing facilities will be significantly greater

than that of Orange County applicants rejected by the Location Board on cannibalization

grounds. Compare Ex. 2 (Lago Application Executive Summary) at 3 (projecting 51%, or $134

million, in cannibalized revenues for Lago) with Ex. 44 (Live! Hotel & Casino Application

Exhibit VIII.A.3 Excerpt) at 60-62 (projecting $79.8 million in cannibalized revenues for Live!

by second year of operation) & Ex. 45 (Caesars New York Application Exhibit VIII.B.3.a_A1

Excerpt) at 32 (projecting that 84.9% of Caesars’ $694.9 million in gaming revenue would be

new gaming revenue, leaving approximately $104.6 million in cannibalized revenues).10

140. Although all of the foregoing reports were submitted to the Location Board and

the Gaming Commission, the Location Board failed to address them in its Board Report and the

Gaming Commission made no reference to them in awarding a license to Lago.

9 On September 29, 2014, the Finger Lakes Racing Association submitted both the UnionGaming Analytics Report and the Pyramid Report to the Location Board. See Ex. 41 (FingerLakes Racing Association Letter (Sept. 29, 2014)) at 4; see also Ex. 42 (Verified Petition, Finger Lakes Racing Association, Inc. v. New York State Gaming Facility Location Board, et al., Index No. 1235-15 (Sup. Ct., Albany Cnty. Mar. 6, 2015)) ¶ 48. On April 1, 2015, counsel for

Petitioners submitted both reports to the Gaming Commission. Ex. 43 (Williams & ConnollyLetter (Apr. 1, 2015)) at 7.

10 The full Live! Hotel & Casino Application Exhibit VIII.A.3 is available athttps://gaming.ny.gov/pdf/Redacted_Cordish/VIII%20A/VIII%20A%203/OC%20Market%20Study%20-%20Final.pdf. The full Caesars New York Application Exhibit VIII.B is available athttps://gaming.ny.gov/pdf/Redacted%20RFA%20Applications/Caesars%20New%20York/REDACTED/REDACTIONS/04%20-%20VIII.B.%20Economics-%20REDACTED.pdf.


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141. The Location Board justified its recommendation of Lago by claiming that Lago

would generate more revenue than the other applicants in the region, Ex. 13 (Board Report

Excerpt) at 32, yet the Location Board expressly rejected this exact same reasoning when it

summarily rejected all Orange County applicants in Region 1, all of which were projected to

generate far more gaming and state tax revenue than the selected applicant (Montreign).

142. Massive shifting of revenue from existing gaming facilities to Lago contradicts a

principal goal of the Gaming Act, to “boost economic development, create thousands of well-

paying jobs and provide added revenue to the state.” Gaming Act § 1300(5) (emphasis added).

143.

Lago would force existing facilities like Turning Stone, which have invested

hundreds of millions of dollars in the ailing central New York economy, to lay off hardworking

employees, thereby eliminating, rather than creating, jobs.

144. The Pyramid Report estimates that existing New York gaming facilities will have

to decrease direct employment by 1,040 jobs. That is nearly as many jobs as Lago purports to

create, resulting in virtually no job creation at all. Ex. 40 (Pyramid Report) at 48, Table 19.

145.

The Pyramid Report further projects that Turning Stone alone would lose

approximately $59 million in revenue to Lago in 2018 and that 445 direct employees would lose

jobs, resulting in approximately $9.7 million in lost direct wages of workers who will suffer

layoffs as a result of the Lago award. Id.

146. Furthermore, among the seventeen applicants for casino licenses in the State,

Lago’s proposed location is the worst location to fulfill the Gaming Act’s purpose of increasing

State revenues by retaining New York gamblers and attracting non-New York residents to visit.

It is more than a 90-minute drive from the nearest State border. Ex. 46 (Google Maps Lago to

Pennsylvania State Border Distance).


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147. Lago itself (optimistically) admits that only 14% of its revenue will be recaptured

from out-of-state gaming facilities. Ex. 2 (Lago Application Executive Summary) at 3.

148. Lago’s worst-possible location, which results in the majority of its revenues being

siphoned from existing New York casinos rather than attracting new casino business into the

State, is antithetical to the Gaming Act’s goal of “attract[ing] non-New York residents.” Gaming

Act § 1300(6).

149. The award of a gaming license to Lago turns the objectives of the Gaming Act on

their head — cannibalizing existing New York gaming facilities while attracting minimal business

from out-of-state gaming facilities.

150. Notwithstanding this fundamental flaw in Location Board’s recommendation of

Lago, the Gaming Commission awarded a license to Lago.

4. The Location Board Applied a Different Standard to Lago on Other

Issues As Well.

151. In addition to its inconsistent treatment of cannibalization, the Location Board

minimized or outright ignored issues concerning Lago that it cited as reasons for rejecting other

applicants.

152. As discussed above, the Location Board cited cannibalization of existing New

York gaming facilities as a compelling reason to reject applicants from Orange County, but

recommended Lago despite the certainty that it will extensively cannibalize existing New York

gaming facilities.

153.

In rejecting applicant Capital View, the Location Board noted the substantial level

of local opposition to the casino. Ex. 13 (Board Report Excerpt) at 27. Yet the Location Board

recommended Lago despite finding that “there is a well-organized and community-driven grass

roots opposition to the project.” Id. at 285.


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154. For three unsuccessful applicants, the Location Board highlighted its concern that

pending litigation threatened the realization of the project. Ex. 13 (Board Report Excerpt) at 18,

23, 24 & 27. Yet as to Lago, even though litigation brought by local opponents was disclosed in

Lago’s application, the Location Board did not even mention that suit in the Board Report.11

155. With respect to three applicants, the Location Board identified the absence of an

established player reward program and/or player database as a significant concern. Id. at 17, 19,

20, & 30. For example, the Location Board found that Grand Hudson’s absence of a player

reward program “would hinder the creation of a secure and robust gaming market in the Region

and State.” Id. at 19. Lago lacks both a player reward program and a player database, but the

Location Board expressed no concern about those facts. Id. at 32.

156.

As the Location Board was tying itself in knots to justify the recommendation of

Lago in Region 5 in light of its different treatment of similarly situated applicants in other

regions, the Location Board revealed that it was operating under the erroneous belief that it

needed to choose at least one applicant in Region 5.

157.

The Gaming Act makes clear that the Gaming Commission has no obligation to

award a gaming license in a region if there are no qualifying bids. Gaming Act § 1314(3).

158. The Location Board erroneously concluded that the Gaming Act required it to

recommend “at least one gaming facility located in each of three defined regions.” Ex. 13

(Board Report Excerpt) at 4; see also Ex. 47 (Location Board Meeting Transcript (Jan. 13,

2015)) at 2 (“We simply said and thought that Lago was the strongest application of the three

received, and thus I think that decision of Lago should stand as well.”).

11 That suit was different from the SEQRA action discussed above that Lago did not disclose inits application.


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159. The Location Board’s recommendation of Lago was based upon the Location’s

Board erroneous belief that it was required to recommend at least one applicant from Region 5.

160. The Gaming Commission awarded a gaming license to Lago even though this

significant defect in the Location Board’s process was brought to the attention of the Gaming

Commission before it awarded licenses. Ex. 43 (Williams & Connolly Letter (Apr. 1, 2015)) at

18 n.61.

5. The Location Board Improperly Relied on a New Selection Factor Not

Contained in the RFA.

161. The Location Board also added a new selection factor to its analysis that was not

contained in its RFA: namely, whether a proposal “best fulfill[s] the intent of the Act to provide

economic assistance to disadvantaged areas of the State while enhancing Upstate New York’s

tourism industry.” Ex. 13 (Board Report Excerpt) at 8.

162. The Location Board stated that it gave “considerable weight” to this new factor.

Id. at 14. It relied on it extensively in its Board Report. Id. at 14-15, 27, 28, 29-30, 31, 33, 35,

36-37.

163. The Location Board’s reliance on a new selection factor was not disclosed in its

RFA.

164. Notwithstanding this fundamental flaw in the selection process, the Gaming


C. The Location Board’s Recommendation of a Second Applicant in Lago’s

Region.

165. On December 26, 2014, fewer than ten days after the Location Board announced

its recommendations, Governor Cuomo asserted that “the intent” of the Gaming Act was to site a

new casino in the depressed Southern Tier of Region 5. See Ex. 48 (Letter from Gov. Cuomo to

Gaming Commission and Location Board (Dec. 26, 2014)). The Governor characterized the


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Location Board’s recommendation of Lago in the narrow sliver of Region 5 significantly north

of the Southern Tier as an “‘anomalous situation.’” Ex. 49 (Joseph Spector, Region needs better

casino plan for license, Cuomo says, Press & Sun-Bulletin (Jan. 19, 2015)) at 1.

166. The Governor requested that the Gaming Commission and Location Board

undertake a partial do-over in Region 5 by issuing a new RFA for bids in the “true Southern

Tier.” See Ex. 48 (Letter from Gov. Cuomo to Gaming Commission and Location Board (Dec.

26, 2014)). The Location Board did so, and on October 14, 2015, it recommended Tioga Downs

Casino, Racing & Entertainment (“Tioga”) in Nichols, New York to apply for the fourth gaming

facility license. Ex. 50 (Region 5 Decision).

D. The Dawley Decision’s Effect on Lago’s Application and the Location

Board’s Recommendation.

167. On July 10, 2015, the Appellate Division, Fourth Department, reversed the

Supreme Court and ruled against Lago in the SEQRA lawsuit that Lago had failed to disclose to

the Location Board. Dawley v. Whitetail 414, LLC , 130 A.D.3d 1570 (4th Dep’t 2015). The

Fourth Department nullified the Town of Tyre’s negative declaration with respect to Lago. Id. at

1571. Importantly, it also “vacat[ed] [Lago’s] site plan approval and all related resolutions.” Id.

168. The Town’s June 12, 2014 resolutions expressing local support for the casino and

approving a Host Community Agreement with Lago were among the resolutions that were

challenged in the Dawley action and nullified by the Fourth Department’s decision. Ex. 21

(SEQRA Verified Petition, Dawley v. Whitetail 414, LLC , Index No. 48435 (Sup. Ct., Seneca

Cnty. July 11, 2014)) at 22-23; Dawley, 130 A.D.3d at 1571.

169. Dawley thus invalidated Lago’s June 2014 application, which was required to

include a valid local resolution of support for the casino and a community mitigation plan.


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170. Rather than disqualify Lago as required by statute because its application lacked a

required element, the Gaming Commission allowed Lago to substitute a new Community

Mitigation Plan approved on October 22, 2015 —well after the Location Board’s

recommendations had been made —to fulfill Lago’s statutory requirement to “provide plans for

mitigating potential impacts.” Ex. 1 (Lago Gaming License Award) ¶ 7; Ex. 67 (Community

Mitigation Plan Resolution).

171. The Community Mitigation Plan was not part of Lago’s application to the

Location Board, and it was never considered by the Location Board in recommending applicants

to the Gaming Commission.

172. The deadline for applications to the Location Board was June 30, 2014, and the

Location Board disqualified an applicant that failed to provide all required materials by that

deadline. See Ex. 14 (Disqualification of Florida Acquisition Corporation).

173. In addition to invalidating Lago’s application, Dawley had the legal effect of

nullifying the Location Board’s recommendation of Lago.

174.

The Location Board’s recommendation of Lago was a SEQRA action.

175. SEQRA defines an “action” broadly to include:

(1) projects or physical activities, such as construction or other activities that mayaffect the environment by changing the use, appearance or condition of anynatural resource or structure, that . . . require one or more . . . approvals from anagency or agencies;

(2) agency planning and policy making activities that may affect the environmentand commit the agency to a definite course of future decisions;

(3) adoption of agency rules, regulations and procedures, including local laws,codes, ordinances, executive orders and resolutions that may affect theenvironment; and

(4) any combinations of the above.


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6 N.Y.C.R.R. § 617.2(b).

176. Because the Location Board recommendation was a SEQRA action, compliance

with SEQRA was a necessary pre-condition. See 6 N.Y.C.R.R. § 617.3 (“ No agency involved in

an action may undertake, fund or approve the action until it has complied with the provisions of

SEQR.”).

177. As a result, when the negative declaration was nullified in Dawley, the Location

Board’s recommendation of Lago was rendered invalid as well.

178. Because the Gaming Commission’s award of a license to Lago was predicated on

an invalid Location Board recommendation, and an invalid application by Lago, the grant of a

license was unlawful.

E. The Gaming Commission’s Unquestioned Acceptance of the Location

Board’s Recommendation of Lago.

179. During the nearly ten months that elapsed between the issuance of the Board

Report on February 27, 2015, and the Gaming Commission’s licensure vote on December 21,

2015, Petitioners brought to the Gaming Commission’s attention numerous errors of law in the

Location Board’s process and analysis, the Location Board’s arbitrary and capricious reasoning

in recommending Lago, and Lago’s ineligibility for licensure under the criteria enumerated in the

Gaming Act. See Exs. 43, 51-54 (Williams & Connolly Letters dated April 1, 2015, July 17,

2015, October 23, 2015, November 19, 2015, and December 18, 2015); see also Exs. 55-59

(Casino Free Tyre Submissions).

180.

The Gaming Commission was also well-apprised of these matters because its

Executive Director and other staff drafted the Board Report. Ex. 13 (Board Report Excerpt)

“Disclaimer”; Ex. 60 (Aff. of Robert Williams) ¶¶ 3-4.


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181. On December 21, 2015, the Gaming Commission convened in New York City to

vote on the gaming license applications of Lago, Rivers, and Montreign.12

182. Following the Gaming Commission’s unlawful award of a gaming license to

Lago, as described infra, Petitioners notified Respondents of Petitioners’ intent to challenge the

award in court and that, consequently, “[a]ny construction by Lago on the casino is done at its

own peril.” Ex. 68 (Williams & Connolly Letter (Dec. 21, 2015)).

1. The Gaming Commission Failed to Provide Any Reasons to Support

the Award of a Gaming License to Lago.

183. From start to finish, the licensing portion of the December 21, 2015 Gaming

Commission meeting was completely scripted. There were no questions, discussions, or debates

among the Commissioners.

184. The Commissioners unanimously voted in lockstep to award Lago a license.

185. The Gaming Commission articulated no rationale in support of the award of a

license to Lago.13 It did not provide any explanation for its conclusion that Lago satisfied all of

the requirements for a gaming license under the Gaming Act. Nor did it place any evidence in

the public record to support or explain the grounds for its conclusory determination that Lago

should receive a gaming license.

186. Instead, the Commissioners simply voted, with no discussion whatsoever, that

Lago was “suitable for gaming facility licensing per standards contained in sections 13[17] and

13[18]” of the Gaming Act; that Lago “meets the minimum licensing threshold set forth in

section 13[16]” of the Gaming Act; and that that the motion to execute the gaming facility

12 Tioga Downs’ application for a gaming license is still pending before the GamingCommission.

13 Lago’s license will take effect on the earlier of March 1, 2016 or the date of its payment ofcertain monies owed. Ex. 1 (Lago Gaming License Award) at 1.


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license to Lago should be approved. Ex. 61 (Gaming Commission Meeting Transcript (Dec. 21,

2015)) at 10-11.

2. The Gaming Commission Failed to Review the Propriety or

Lawfulness of the Location Board’s Decisions or Selection Process.

187. The Commissioners were expressly instructed by the Commission’s General

Counsel not to review either the Location Board’s selection process or the propriety of the

Location Board’s recommendations.

188. General Counsel to the Commission instructed the Commissioners only to

consider, under sections 1316-1318 of the Gaming Act, whether each applicant (a) meets the

minimum license thresholds, (b) is suitable for licensure, and (c) is not disqualified:

I would like to take a moment to describe for you, and for the public, whatyour statutory duties are in regard to licensing gaming facilities pursuant toarticle 13 of the Racing Pari-Mutuel Wagering and Breeding law. It wouldalso be useful, I think, to clarify what is not your role or responsibility inregard to these licensing decisions. Misperceptions abound amongst somecasino opponents, some public officials, and some in the media, in regard towhat your role is today in considering these decisions.

* * * *

It is important to note that your role is not to reevaluate all of theapplications, compare applicants, or to consider or reconsider the selectioncriteria the Gaming Facility Location Board considered and applied. Yourrole is no[t] to substitute your judgment for that of the Gaming FacilityLocation Board. Your role is not to decide whether you think the GamingFacility Location Board made the correct selections. Your r ole is not toexercise any review of the selection decisions the Gaming Facili ty Location

Board made.

You may or may not have different views of which applicants the Gaming

Facility Location Board should have selected. That is of no matter, becausethe law did not give to this commission the authority to select applicants forgaming facility licensure consideration. The law gave the Gaming FacilityLocation Board the sole power and authority to make those selections. Youare not [an] appellate body exercising review of the Gaming FacilityLocation Board’s processes or decision-making. Rather, your charge is toconsider only the applicants that the Gaming Facility Location Boardselected and presented to you. With respect to each of those applicants, the


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legislature has charged you with determining whether each applicant isqualified for licensure, is not disqualified for licensure, and has met statutoryminimum qualifications for licensure. If you conclude that those criteria are present for an applicant, you have the power to grant a gaming facilitylicense to such applicant. I would like to review now, with you, those

statutory criteria.

Ex. 61 (Gaming Commission Meeting Transcript (Dec. 21, 2015)) at 6 (emphasis added).

General Counsel to the Commission also enumerated the requirements of sections 1316-1318 of

the Gaming Act and summarized the need for SEQRA compliance prior to any license award.

Id. at 6-8.

189. Contrary to its counsel’s instruction, the Commission at all times possessed the

broad “power” under the Gaming Act “[to] deny an application . . . for any cause that the

commission deems reasonable .” Gaming Act § 1305(6) (emphasis added).

190. In addition, section 1314 of the Gaming Act, entitled “License applicant

eligibility,” provides that “[g]aming facility licenses shall only be issued to applicants who are

qualified under the criteria set forth in this article, as determined by the commission ,” Gaming

Act § 1314(1) (emphases added), and that “if the commission is not convinced that there is an

applicant that has met the eligibility criteria . . . , no gaming facility license shall be awarded,”

id. § 1314(3) (emphases added). Section 1320 of the Gaming Act, which concerns the Location

Board’s siting evaluation of the applicants, provides that the evaluation is for the purpose of

“determining whether an applicant shall be eligible for a gaming facility license.” Gaming Act

§ 1320 (emphasis added). The Gaming Commission thus had a clear statutory duty to deny a

license to any applicant that did not meet the eligibility criteria, including those set forth in

section 1320 of the Gaming Act.

191. In instructing the Gaming Commission that it had no power to review the basis for

the Location Board’s recommendations or its process, its General Counsel omitted any mention


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of the Gaming Commission’s broad statutory power to deny any application for any cause

deemed reasonable.

192. Counsel’s legal instruction resulted in the Gaming Commission’s blind adoption

of the Location Board’s recommendation of Lago, ignoring the significant errors of law and

unsound and inconsistent reasoning that should have precluded any reliance by the Gaming

Commission on that recommendation.

193. The Gaming Commission’s blind march forward should raise eyebrows because it

occurred in the context of casino gaming, one of the most controversial industries in the country.

Officials who were statutorily obligated to protect the public did not do so.

F. The Gaming Commission’s Arbitrary and Capricious Traffic Mitigation

Conditions on Lago’s Gaming License.

194. In the gaming license awarded to Lago, the Gaming Commission identified traffic

improvements as a required condition for mitigating local impacts from the casino. Ex. 1 (Lago

Gaming License Award) ¶ 7.

195. Because the Town of Tyre’s rural roads are ill-equipped to support the anticipated

3.3 million visitors per year, Ex. 11 (Lago Application Exhibit VIII.C.4.c), and 9,000 vehicle

trips per day, Ex. 12 (Traffic Impa

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