SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

_________________________________________________
In the matter of the application of

Index No.:

ONEIDA NATION OF NEW YORK, TURNING STONE Hon.

RESORT 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.
_________________________________________________
MEMORANDUM OF LAW IN SUPPORT OF ARTICLE 78 VERIFIED PETITION
RICHARDS KIBBE & ORBE LLP
Daniel C. Zinman
Matthew M. Riccardi
Alex M. Solomon
200 Liberty Street
New York, NY 10281-1003
Telephone: 212-530-1800
Facsimile: 212-530-1801

WILLIAMS & CONNOLLY LLP

Daniel F. Katz
Marcie R. Ziegler
Edward C. Barnidge
725 Twelfth Street NW
Washington, DC 20005
Telephone: 202-434-5000
Facsimile: 202-434-5029

Attorneys for Petitioners

TABLE OF CONTENTS
Page
INTRODUCTION ...........................................................................................................................1
STATEMENT OF FACTS ..............................................................................................................3
A.

The Gaming Act. ......................................................................................................3

B.

Lagos Application to the Location Board. ..............................................................4

C.

Governor Cuomos Request for a New Bidding Process in Region 5. ....................8

D.

The Unlawful Award of a Gaming License to Lago................................................8

E.

The Gaming Commissions Failure to Impose Necessary Traffic

Mitigation Conditions on Lago. .............................................................................11

ARGUMENT .................................................................................................................................13
I.

II.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE THE

GAMING COMMISSION FAILED TO PROVIDE ANY BASIS, LET ALONE
A RATIONAL BASIS, IN SUPPORT OF ITS DECISION, AND ACTED
CONTRARY TO LAW. ....................................................................................................14
A.

The Gaming Commission Failed To Provide Any Explanation for its

Award of a Gaming License to Lago. ....................................................................14

B.

The License Award to Lago Was Based on the Legally Erroneous Premise
that the Gaming Commission Lacked the Power to Review the Location
Boards Selection Process or Recommendations. ..................................................18

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE IT

WAS PREDICATED ON AN UNLAWFUL SELECTION PROCESS. ..........................21
A.

The Gaming Commission Relied on a Selection Process that Failed to

Perform the Weighting of Enumerated Statutory Factors that the Gaming
Act Requires...........................................................................................................21

B.

The Gaming Commission Relied on a Selection Process that Effectively

Wrote a Critical Selection Factor Out of the Gaming Act. ....................................26

III.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE IT

VIOLATED THE EQUAL PROTECTION CLAUSE......................................................28

IV.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE LAGO

WAS NOT ELIGIBLE FOR LICENSURE UNDER THE GAMING ACT. ....................35
A.

Lago Should Have Been Disqualified Under the Gaming Act for Failing to
Disclose Material Information. ..............................................................................35
1.

Lago Failed to Disclose a Significant SEQRA Suit...................................37

2.

Lago Failed to Disclose Its Application for IDA Benefits. .......................39

3.
B.

V.

Lago Made Contradictory Representations to Two Different Public

Agencies That Undermine Its Integrity and Veracity. ...............................40

Lago Failed to Satisfy Statutory Requirements for Eligibility for Licensure

Under the Gaming Act. ..........................................................................................41
1.

Lagos Application Lacked a Valid Host Community Agreement. ...........42

2.

Lagos Application Lacked a Valid Resolution of Support from the

Town of Tyre. ............................................................................................45

3.

The Location Boards Recommendation of Lago Was a Nullity. .............46

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE IT

WAS ARBITRARY AND CAPRICIOUS. .......................................................................48
A.

The License Award Reflects Arbitrary and Capricious Conditions

Regarding Necessary Road Improvements. ...........................................................48

B.

The Location Board Analysis Relied on by the Gaming Commission Was

Arbitrary and Capricious........................................................................................50

C.

The Location Board Arbitrarily and Capriciously Relied on a New

Selection Factor Not Contained in the RFA. .........................................................53

CONCLUSION ..............................................................................................................................53

ii

TABLE OF AUTHORITIES
FEDERAL CASES
360Training.com, Inc. v. United States, 106 Fed. Cl. 177 (2012) .....................................25, 26, 53
Afghan Am. Army Servs. Corp. v. United States, 90 Fed. Cl. 341 (2009) .....................................42
Alfa Laval Separation Inc. v. United States, 175 F.3d 1365 (Fed. Cir. 1996) ...............................42
Ashbritt, Inc. v. United States, 87 Fed. Cl. 344 (2009) ..................................................................53
Burlington Truck Lines v. United States, 371 U.S. 156 (1962) .....................................................15
City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (1985) ....................................................29
E.W. Bliss Co. v. United States, 77 F.3d 445 (Fed. Cir. 1996) ......................................................42
FirstLine Transp. Sec., Inc. v. United States, 100 Fed. Cl. 359 (2011) .........................................25
Lab. Corp. of Am. Holdings v. United States, 116 Fed. Cl. 643 (2014) ..................................26, 53
Motor Vehicle Mfgs. Assn v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29
(1983) ...........................................................................................................................15, 16, 27
Red River Serv. Corp. v. United States, 60 Fed. Cl. 532 (2004)....................................................24
Richardson v. Selsky, 5 F.3d 616 (2d Cir. 1993) ...........................................................................15
Richardson v. U.S. Customs Serv., 47 F.3d 415 (Fed. Cir. 1995)..................................................15
RLB Contracting, Inc. v. United States, 118 Fed. Cl. 750 (2014) .................................................24
Village of Willowbrook v. Olech, 528 U.S. 562 (2000) ...........................................................29, 35
STATE CASES
29 Flatbush Assocs., LLC v. N.Y. State Dept of Envtl. Conservation, 27 Misc. 3d
1917(A), 2010 WL 1756847 (Sup. Ct., Kings Cnty. May 3, 2010) ..................................15, 24
Abdur-Raheem v. Mann, 85 N.Y.2d 113 (1995) ............................................................................15
Billerbeck v. Brady, 224 A.D.2d 937 (4th Dept 1996) .................................................................48
Brusco v. Braun, 84 N.Y.2d 674 (1994) ........................................................................................23
Cave-of-the-Winds Scenic Tours, Inc. v. Niagara Frontier State Park &
Recreation Commission, 64 A.D.2d 818 (4th Dept 1978)................................................37, 42

iii

Centennial Restorations Co. v. Wyatt, 248 A.D.2d 193 (1st Dept 1998) .....................................23
Central N.Y. Coach Lines, Inc. v. Larocca, 120 A.D.2d 149 (3d Dept 1986)..................16, 17, 18
Chinese Staff & Workers Assn v. City of N.Y., 68 N.Y.2d 359 (1986) .........................................47
City Council of City of Watervliet v. Town Bd. of Town of Colonie, 3 N.Y.3d 508
(2004) .................................................................................................................................46, 47
Clark v. Metro. Transp. Auth., 46 Misc. 3d 344 (Sup. Ct., N.Y. Cnty. 2013) ...............................34
Coca-Cola Bottling Co. of N.Y. v. Bd. of Estimate of City of N.Y., 72 N.Y.2d 674
(1988) .......................................................................................................................................20
Cohn Chemung Props., Inc. v. Town of Southport, 108 A.D.3d 928 (3d Dept
2013) ........................................................................................................................................13
Concern, Inc. v. Pataki, 7 Misc. 3d 1030(A), 2005 WL 1310478 (Sup. Ct., Erie
Cnty. May 25, 2005) ................................................................................................................47
Cross County Savings & Loan Assn v. Siebert, 98 Misc. 2d 283 (Sup. Ct., Queens
Cnty. 1979) ..............................................................................................................................34
Dawley v. Whitetail 414, LLC, Index No. 48435 (Sup. Ct., Seneca Cnty. July 11,
2014) ................................................................................................................................6, 7, 38
Dawley v. Whitetail 414, LLC, 130 A.D.3d 1570 (4th Dept 2015) ..........................................7, 38
De Marco v. Village of Elbridge, 251 A.D.2d 991 (4th Dept 1998) ......................................13, 50
Destiny USA Dev., LLC v. N.Y. State Dept of Envtl. Conservation, 63 A.D.3d
1568 (4th Dept 2009) ..............................................................................................................19
Duarte v. City of N.Y., 91 A.D.3d 778 (2d Dept 2012) ..........................................................13, 17
E.F.S. Ventures Corp. v. Foster, 71 N.Y.2d 359 (1988)................................................................48
Epstein v. Valenti, 97 A.D.2d 881 (3d Dept 1983) .......................................................................24
Exxon Corp. v. Bd. of Standards & Appeals of City of N.Y., 128 A.D.2d 289 (1st
Dept 1987) ........................................................................................................................13, 50
Figel v. Dwyer, 75 A.D.3d 802 (3d Dept 2010) .....................................................................13, 16
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) ........................................................................................................................................32

iv

Flatiron Cmty. Assn v. N.Y. State Liquor Auth., 36 Misc. 3d 267 (Sup. Ct., N.Y.
Cnty. 2004) ..............................................................................................................................27
Graves v. Doar, 87 A.D.3d 740 (2d Dept 2011) ..........................................................................34
Italian Sons & Daughters of Am., Inc. v. Common Council of Buffalo, 89 A.D.2d
822 (4th Dept 1982) ................................................................................................................50
Kaplan v. State Liquor Authority, 47 Misc. 2d 257 (Sup. Ct., Monroe Cnty. 1965) ...............20, 21
Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451 (1980) ........................................................19
Lee v. Smith, 43 N.Y.2d 453 (1977) ..............................................................................................34
Lefrak Forest Hills Corp. v. Galvin, 40 A.D.2d 211 (2d Dept 1972) ..........................................50
Leizer v. Ambach, 91 A.D.2d 1117 (3d Dept 1983) .....................................................................21
Lindemann v. Am. Horse Shows Assn, 222 A.D.2d 248 (1st Dept 1995) ...................................15
Nat. Res. Def. Council, Inc. v. N.Y.C. Dept of Sanitation, 83 N.Y.2d 215 (1994) .......................23
New York Water Service Corp. v. Water Power & Control Commission, 283 N.Y.
23 (1940) ..................................................................................................................................17
Oneida Indian Nation v. N.Y. State Gaming Commn, Index No. 2015-2213, RJI
No. 46-1-2015-1395 (Sup. Ct., Schenectady Cnty.) ................................................................30
Pokoik v. Dept of Health Servs., 220 A.D.2d 13 (2d Dept 1996) ...............................................48
Riverkeeper, Inc. v. Planning Bd. of Town of Southeast, 9 N.Y.3d 219 (2007) ............................20
Scherbyn v. Wayne-Finger Lakes Bd. of Co-op. Educ. Servs., 77 N.Y.2d 753
(1991) .......................................................................................................................................16
Swalbach v. State Liquor Auth., 7 N.Y.2d 518 (1960) ..................................................................20
Tauber v. Village of Spring Valley, 56 A.D.3d 660 (2d Dept 2008) ............................................48
Thurman v. Holahan, 123 A.D.2d 687 (2d Dept 1986)................................................................13
Travel House of Buffalo, Inc. v. Grzechowiak, 31 A.D.2d 74 (4th Dept 1968) ...........................42
Trump-Equitable Fifth Ave. Co. v. Gliedman, 57 N.Y.2d 588 (1982)...........................................16
Waldman v. N.Y. State Liquor Auth., 281 A.D.2d 286 (1st Dept 2001) .......................................17
Wallach v. Town of Dryden, 23 N.Y.3d 728 (2014) ......................................................................24

Washington ex rel. Selfhelp Cmty. Servs., Inc. v. Visnauskas, 45 Misc. 3d 418

(Sup. Ct., Kings Cnty. 2014)....................................................................................................16
Weaver v. Town of Rush, 1 A.D.3d 920 (4th Dept 2003) .............................................................29
Wechsler v. State, 284 A.D.2d 707 (3d Dept 2001) .....................................................................13
Wrobel v. Town Bd. of Town of Holland, 210 A.D.2d 986 (4th Dept 1994) ................................42
OTHER AUTHORITIES
6 N.Y.C.R.R. 617.2 .....................................................................................................................46
6 N.Y.C.R.R. 617.3 ...............................................................................................................46, 47
9 N.Y.C.R.R. 5301.1 ........................................................................................................... passim
Gaming Act 1300 ..............................................................................................................3, 26, 49
Gaming Act 1305 ........................................................................................................4, 10, 18, 19
Gaming Act 1306 ..........................................................................................................................4
Gaming Act 1311 ..........................................................................................................................3
Gaming Act 1310 ......................................................................................................................3, 4
Gaming Act 1312 ..........................................................................................................................4
Gaming Act 1313 ........................................................................................................................49
Gaming Act 1314 ..................................................................................................4, 19, 20, 45, 52
Gaming Act 1316 ................................................................................................................ passim
Gaming Act 1317 ................................................................................................................ passim
Gaming Act 1318 ................................................................................................................ passim
Gaming Act 1320 ................................................................................................................ passim
N.Y. Const., Article 1, 11 ...........................................................................................................29
N.Y. Stat. Law 177(a) .................................................................................................................23
U.S. Const. Amendment 14 ...........................................................................................................29

vi

INTRODUCTION
On December 21, 2015, pursuant to its authority under the Upstate New York Gaming &
Economic Development Act (Gaming Act),1 the New York State Gaming Commission granted
a gaming facility license to Lago Resort & Casino (Lago) in Tyre, New York. Lagos 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 it appointed. As a result, the
license award to Lago must be nullified.
The Gaming Commissions selection process was ad hoc, subjective, and result-oriented.
By statute, the Location Board was authorized to recommend up to four applicants in three
different upstate regions: Catskill/Hudson Valley; Capital; and Eastern Southern Tier/Finger
Lakes. During its deliberations, the Location Board abandoned the objective weighting analysis
that was mandatory under the Gaming Act. The Location Board substituted its own invention, a
qualitative evaluation that is without basis in the statutory language. To promote objectivity,
fairness, and transparency, the Gaming Act could not have been clearer: the Location Board
shall evaluate applicants based on a 70/20/10 percent weighting of statutorily enumerated
factors. Indeed, when the Location Board issued its Request for Applications (RFA) and
subsequent guidance to applicants, it underscored its obligation to score applicants according to
the express statutory weighting scheme.
After receiving applications, however, the Location Board decided that following the
statutory weighting criteria would not produce the desired result, especially in the
Catskill/Hudson Valley region nearest to New York City. In an obvious effort to boost
applicants in that region from distressed Sullivan County, the Location Board substituted its own
1

Citations to the Gaming Act refer to Chapter 47-A, Article 13 of the Racing, Pari-Mutuel
Wagering and Breeding Law.
1

qualitative, outcome-driven review to select a Sullivan County candidate whose projected

revenues, job creation, and recapture of out-of-state gambling expenditures paled in comparison
to applicants seeking to establish a casino in Orange County. In addition to substituting a
qualitative review in lieu of the required quantitative analysis, the Location Board improperly
altered the statutory factors to be considered. The Location Board effectively eliminated from
the required analysis an evaluation of each applicants ability to satisfy the central statutory
objective of recapturing gambling revenues from other states; it also inserted a new factor
favoring distressed areas that it never disclosed in the RFA. It utterly failed to perform the
analysis that it was charged to undertake.
The Location Boards home-cooked qualitative review spawned a series of unlawful
consequences reflected in the Boards report and findings (which were drafted by Gaming
Commission staff). Contrary to the Gaming Acts objectives of recapturing out-of-State
business, creating jobs, and increasing in-State revenue, Lago admitted that it will cannibalize
massive amounts of revenue from existing gaming establishments in upstate New York. Lago
conservatively projected that more than 50% of its revenue would be taken from such
establishments. In the Catskill/Hudson Valley region, the Location Board concluded that much
lower levels of cannibalization than Lago projected were a categorical bar to the selection of any
applicant from Orange County. But the Location Board imposed no such bar when it came to
Lago. Such unlawful inconsistencies in the Location Boards treatment of Lago and other
applicants abounded. Unhinged from the required objective analysis, the Location Boards ad
hoc, qualitative analysis violated Turning Stone Resort Casinos right to Equal Protection
under the United States and New York constitutions and was otherwise contrary to law.

Before the Gaming Commission made any licensing decisions, Petitioners unmistakably
outlined for the Commission both the unlawfulness of the Location Boards analysis and the
numerous reasons why Lago was not even eligible for a license. Unable to defend the Location
Boards recommendation of Lago, the Gaming Commission followed the Location Boards
example and simply disregarded the law. Contrary to the Commissions express statutory power
to deny an application for any cause the Commission deems reasonable, the Commissioners were
erroneously instructed by the Commissions General Counsel that they could not even consider
the lawfulness or reasonableness of the Location Boards recommendation. And they dutifully
followed that instruction. The Gaming Commission made no findings of fact. At the December
2015 public meeting, the Commission did nothing more than follow a script. The
Commissioners did not debate or discuss any of the issues raised by Petitioners.
Neither the process nor the result was legal. The selection of Lago must be nullified. If
Lagos unlawful license is permitted to stand, the Petitionerswhich include a number of local
Tyre residents and Turning Stone Resort Casino LLC, an existing Native American casino in
upstate New Yorkwill be directly and substantially harmed.
STATEMENT OF FACTS
A.

The Gaming Act.

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, attract[ing] non-New
York residents[,] and bring[ing] downstate New Yorkers to upstate. Gaming Act 1300(5), (6).
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.
The three regions are Region 1 (Catskill/Hudson Valley), Region 2 (Capital Region), and Region
5 (Eastern Southern Tier/Finger Lakes). See id. 1310, 1311.
3

Pursuant to the Gaming Act, the Gaming Commission formed the Location Board and
selected its members. The Location Boards 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. In making its recommendations, the Location Board was required
to consider enumerated statutory selection criteria and to 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%). Id. 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. The Location
Board did not have the power to grant gaming licenses; that power belongs only to the Gaming
Commission. Id. 1311(1); see id. 1305(3) (recognizing Gaming Commissions power to
approve or disapprove license applications).
B.

Lagos Application to the Location Board.

The Gaming Act requires that, [a]s a condition of filing, each potential license applicant
must demonstrate to the boards satisfaction that local support has been demonstrated. Gaming
Act 1314(2). It further requires that an applicant 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. Id. 1316(5), (6), (7). The Gaming Act also requires the
Location Board to establish deadlines for the receipt of all applications and provided that
[a]pplications received after the deadline shall not be reviewed by the board. Id. 1312(4).
On March 31, 2014, the Location Board issued an RFA to develop and operate the
upstate destination resort casinos authorized by the Gaming Act. See Ex. 13 (Board Report

Excerpt) at 4.2 The RFA required compliance with the above-referenced provisions of the
Gaming Act. Ex. 15 (RFA) I, at 7; id. IV.B, at 19; id. IX.A.3, at 59. The Location Board
established June 30, 2014 as the application deadline. Id. IV.B, at 19.
On June 30, 2014, the Location Board received seventeen applications. Ex. 13 (Board
Report) 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. The Location
Board declared that it would be unfair to alter any provision of the RFA or make concessions at
the request of a bidder. Ex. 14 (Disqualification of Florida Acquisition Corporation) at 1
(emphasis added).
Lagos application relied on a June 12, 2014 resolution of support from the Town of Tyre
to satisfy the requirement that it demonstrate local support for the proposed casino. Ex. 16 (Lago
Application Exhibit IX.A.1.a); Ex. 18 (Town of Tyre Lago Resolution of Support). Lago relied
exclusively on a June 12, 2014 Host Community Agreement to satisfy the requirements of the
Gaming Act and the RFA that its application include a community mitigation plan. Ex. 15
(RFA) IX.A.3, at 59; Ex. 17 (Lago Application Exhibit IX.A.3). To demonstrat[e] the ability
to fully finance the gaming facility, Gaming Act 1320(1)(h), a statutory selection factor, Lago
represented to the Location Board in its application that 100 percent of financing for
construction and operations [is] fully in place. Ex. 2 (Lago Application Executive Summary)
at 2 (emphasis added).
On or about July 11, 2014, shortly after filing its application, Lago was served with an
Article 78 petition challenging, under the State Environmental Quality Review Act (SEQRA),
2

The full Board Report is available at

http://www.gaming.ny.gov/pdf/02.27.15.GFLBFinalAppendicesWebSmall.pdf. All exhibits
cited herein are exhibits to the Verified Petition.
5

the negative declaration issued by the Town of Tyre concluding that the proposed casino would
have no significant adverse impact on the environment. Ex. 21 (Verified Petition, Dawley v.
Whitetail 414, LLC, Index No. 48435 (Sup. Ct., Seneca Cnty. July 11, 2014)). Lago does not
appear to have updated its application to disclose that lawsuit to the Location Board, as it was
required to do. See N.Y.C.R.R. 5301.1(c)(5)(i); id. 5301.1(l)(1). The Location Board
expressly relied on the commitments, assurances, representations, and other statements of the
Applicants made in their applications, any updates thereto, and their public presentations. Ex.
13 (Board Report Excerpt), Disclaimer.
On October 2, 2014, Lago filed an application with the Seneca County Industrial
Development Agency (Seneca IDA) to obtain sizeable tax breaks. Lago apparently did not
update its application to disclose that it was seeking tax breaks that would diminish Lagos
expected benefit to the local community. Notably, in its application to the Seneca IDA, Lago
contradicted its representation to the Location Board that its financing was 100% in place; to
support its request for IDA benefits, Lago represented to the Seneca IDA that IDA assistance is
a critical path item for financing. Ex. 25 (Lago 2014 IDA Application) at 8 (emphasis added).
On December 17, 2014, the Location Board recommended 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). Lago was chosen despite admitting that more than half of its
revenue will be cannibalized from existing gaming facilities in upstate New York and that a mere
14% of its revenue (an optimistic number) will be recaptured from out-of-state, contrary to the
objectives of the Gaming Act. Ex. 2 (Lago Application Executive Summary) at 3.

On February 27, 2015, the Location Board issued a report explaining its
recommendations (Board Report).3 The Board Report states that Location Board 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. The Board Report does not weight the statutory
categories of enumerated factors pursuant to the Gaming Acts 70/20/10 weighting scheme.
Instead, it contains only narrative, purely subjective explanations for the Location Boards
recommendations. As detailed below, the reasoning contained in the Board Report to support the
selection of Lago in Region 5 fundamentally contradicts the reasoning set forth in the Board
Report for selecting and rejecting applicants in other regions.
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 Dept 2015). The Fourth
Department nullified the Town of Tyres negative declaration with respect to Lago and vacated
all related Town resolutions. Id. at 1571. The related resolutions nullified by the Fourth
Department included the June 12, 2014 Town resolutions adopting the Host Community
Agreement and demonstrating local support for the casino. Ex. 21 (Verified Petition, Dawley v.
Whitetail 414, LLC, Index No. 48435 (Sup. Ct., Seneca Cnty. July 11, 2014)) at 22-23. Dawley
thus invalidated Lagos June 2014 application, which was required to include a valid local
resolution of support for the casino and a community mitigation plan.4
3

The Board Report was prepared by Gaming Commission staff, Ex. 13 (Board Report Excerpt),
Disclaimer, but was adopted by the Location Board at a February 27, 2015 meeting, Ex. 36
(Location Board Feb. 27, 2015 Meeting Transcript) at 2-3.
4

Rather than disqualify Lago as required by the Gaming Act because its application lacked a
required element, the Gaming Commission allowed Lago to substitute a new Community
7

C.

Governor Cuomos Request for a New Bidding Process in Region 5.

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
Location Boards 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. 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 Unlawful Award of a Gaming License to Lago.

During the nearly ten months that elapsed between the issuance of the Board Report on
February 27, 2015 and the Gaming Commissions licensure vote on December 21, 2015,
Petitioners brought to the Gaming Commissions attention numerous errors of law in the
Location Boards process and analysis, the Location Boards arbitrary and capricious reasoning
in recommending Lago, and Lagos 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,
Mitigation Plan approved on October 22, 2015well after the Location Boards
recommendations had been madeto fulfill Lagos statutory requirement to provide plans for
mitigating potential impacts. Ex. 1 (Lago Gaming License Award) at 3. The Community
Mitigation Plan was not part of Lagos application to the Location Board, and it was never
considered by the Location Board in recommending applicants to the Gaming Commission.
8

2015, October 23, 2015, November 19, 2015, and December 18, 2015); see also Exs. 55-59
(Casino Free Tyre Submissions). The Gaming Commission also was 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.
On December 21, 2015, the Gaming Commission convened in New York City to vote on
the gaming license applications of Lago, Rivers, and Montreign.5 From start to finish, the
licensing portion of the meeting was completely scripted. See Aff. of Edward C. Barnidge in
Supp. of Mem. (Barnidge Aff.) 9. There were no questions, discussion, or debate among the
Commissioners. Id. The Commissioners unanimously voted in lockstep to award Lago a
license. Id. 10. The Commission articulated no rationale in support of the award of a license to
Lago.6 Id.
The Commissioners were expressly instructed by the Commissions General Counsel not
to review either the Location Boards selection process or the propriety of the Location Boards
recommendations. The General Counsel 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, what
your statutory duties are in regard to licensing gaming facilities pursuant to
article 13 of the Racing Pari-Mutuel Wagering and Breeding law. It would
also be useful, I think, to clarify what is not your role or responsibility in
regard to these licensing decisions. Misperceptions abound amongst some
casino opponents, some public officials, and some in the media, in regard to
what your role is today in considering these decisions.
****
5

Tioga Downs application is still pending before the Gaming Commission.

Lagos license will take effect on the earlier of March 1, 2016 or the date of its payment of
certain monies owed. Ex. 1 (Lago License Award) at 1.
9

It is important to note that your role is not to reevaluate all of the

applications, compare applicants, or to consider or reconsider the selection
criteria the Gaming Facility Location Board considered and applied. Your
role is no[t] to substitute your judgment for that of the Gaming Facility
Location Board. Your role is not to decide whether you think the Gaming
Facility Location Board made the correct selections. Your role is not to
exercise any review of the selection decisions the Gaming Facility 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, because
the law did not give to this commission the authority to select applicants for
gaming facility licensure consideration. The law gave the Gaming Facility
Location Board the sole power and authority to make those selections. You
are not [an] appellate body exercising review of the Gaming Facility
Location Boards processes or decision-making. Rather, your charge is to
consider only the applicants that the Gaming Facility Location Board
selected and presented to you. With respect to each of those applicants, the
legislature has charged you with determining whether each applicant is
qualified for licensure, is not disqualified for licensure, and has met statutory
minimum qualifications for licensure. If you conclude that those criteria are
present for an applicant, you have the power to grant a gaming facility
license 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
Contrary to its counsels instructions, 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). In instructing the Commission
that it had no power to review either the basis for the Location Boards recommendations or the
Location Boards selection process, its General Counsel omitted any mention of the Gaming
Commissions broad statutory power to deny any application for any cause deemed reasonable.

10

Counsels legal instruction resulted in the Gaming Commissions blind adoption of the Location
Boards recommendation of Lago. The Gaming Commission completely ignored the significant
errors of law and unsound and inconsistent reasoning brought to its attention by Petitioners,
which should have precluded any reliance on the Location Boards recommendation.
E.

The Gaming Commissions Failure to Impose Necessary Traffic Mitigation

Conditions on Lago.

The Board Report emphasized that the Gaming Commission should work with Lago to
address potential traffic impacts of its facility on the local community. Ex. 13 (Board Report
Excerpt) at 11. The gaming license awarded to Lago includes Conditions to Mitigate Impacts
on Host and Nearby Municipalities that Lago shall implement. Ex. 1 (Lago Gaming License
Award) 7. The conditions required by the Gaming Commission concerning Lago include only
a single mitigation measure related to traffic; they omit numerous traffic mitigation measures
that the Town of Tyre concluded were necessary to avoid a significant adverse impact on traffic
in the Town.
The Town of Tyres entire population is only approximately 950 residents. Because
Tyres rural roads are ill-equipped to support the approximately 3.3 million visitors per year,
Ex. 11 (Lago Application Exhibit VIII.C.4.c), and approximately 9,000 vehicle trips per day,
Ex. 12 (Traffic Impact Study Excerpt) at 21, that Lago projects to attract, the Town of Tyre,
Lagos traffic expert, the New York Department of Transportation, and the New York Thruway
Authority all concluded that extensive road improvements were needed throughout the Town and
at the Thruway exit to mitigate the expected traffic onslaught. See Ex. 9 (2015 SEQRA
Statement of Reasons Excerpt) at 49-52;7 Ex. 12 (Traffic Impact Study Excerpt) at 46-47; Ex. 62

The full 2015 SEQRA Statement of Reasons is available at

http://www.tyreny.com/pdfs/laws/2015_resolution_11

(NYSDOT Letter (Apr. 23, 2014)) at 3; Ex. 63 (NYSTA Letter (Aug. 14, 2015)) at 1. When
Lago obtained a second negative declaration from the Town of Tyre in October 2015, the
negative declaration and other Town resolutions expressly required Lago to make numerous offsite road improvements in order to mitigate the casinos impact on traffic to an acceptable level.
Ex. 9 (2015 SEQRA Statement of Reasons Excerpt) at 49-52; Ex. 64 (2015 Development Plan
Resolution) at 3-4; Ex. 65 (2015 Site Plan Resolution) at 5-6, 8. The traffic mitigation measures
required by the Town include: (1) adding a dedicated right turn lane at the intersection of NYS
Routes 318 and 414, Ex. 9 (2015 SEQRA Statement of Reasons Excerpt) at 50; (2) adding a
series of lanes and a new toll plaza lane at NYS Thruway exit 41, id. at 51-52; (3) creating turn
lanes at the intersection of NYS Route 5 & 20 and NYS Route 89, id. at 51-52; (4) expanding
NYS Route 414 to four lanes from the Thruway exit to the casino entrance, id. at 52; (5) adding
turning lanes to the intersection of the NYS Thruway and NYS Route 414, id.; and (6) expanding
the NYS Thruway bridge on NYS Route 414, id.
In contradiction of the Town of Tyres findings, as well as the findings of expert involved
agencies, however, the license awarded by the Gaming Commission states that Lago shall
implement only a single traffic mitigation measure: [w]iden the shoulders of NYS Route 414
and install signage. Ex. 1 (Lago Gaming License Award) 7. The Gaming Commission thus
plucked out only one piece of a comprehensive traffic mitigation plan, effectively overruling the
Town of Tyre, involved agencies, and an expert traffic study without providing any justification
for doing so.

_Making_determination_of_significance_with_Completed_Full_EAF_with_written_summary.p
df.
12

ARGUMENT
An Article 78 proceeding is appropriate to determine whether [an agency] exceeded its
authority, violated a controlling law or otherwise acted in an arbitrary and capricious manner.
Cohn Chemung Props., Inc. v. Town of Southport, 108 A.D.3d 928, 929 (3d Dept 2013).8 As a
threshold matter, if an action is contrary to lawincluding statutory or constitutional
requirementsit must be nullified. See Thurman v. Holahan, 123 A.D.2d 687, 687 (2d Dept
1986) (annulling planning boards administrative determination that was not based on the proper
statutory criteria). Moreover, because any action must be supported by a rational basis, an
agencys failure to make any findings at all requires nullification. See Figel v. Dwyer, 75 A.D.3d
802, 804 (3d Dept 2010) (The absence in respondents cursory letter decision of any mention
of the statutory factors or the grounds for the denial precludes meaningful review of the
rationality of the decision and requires nullification); Duarte v. City of N.Y., 91 A.D.3d 778, 779
(2d Dept 2012) (affirming nullification of administrative action because administrative agency
failed to make any assessment of the relevant consideration under the statute at issue). Even
where findings are made, an action must be nullified as arbitrary and capricious if the findings
are inconsistent, De Marco v. Village of Elbridge, 251 A.D.2d 991, 991 (4th Dept 1998), or
result in the inconsistent treatment of similarly situated parties, Exxon Corp. v. Bd. of
Standards & Appeals of City of N.Y., 128 A.D.2d 289, 296 (1st Dept 1987).
The license award to Lago fails for each and all of these reasonsit is contrary to both
the Gaming Act and the RFA (in multiple respects), as well as fundamental constitutional
protections; the Gaming Commission did not make any findings or provide any explanation in

See also Wechsler v. State, 284 A.D.2d 707, 709 (3d Dept 2001) (claim that agency lacked
the authority to take administrative action is subject to review in an Article 78 proceeding).
13

support of the award; and the Location Boards inconsistent treatment of Lago and other
applicants was arbitrary and capricious. The license award should be nullified.
I.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE THE

GAMING COMMISSION FAILED TO PROVIDE ANY BASIS, LET ALONE A
RATIONAL BASIS, IN SUPPORT OF ITS DECISION, AND ACTED
CONTRARY TO LAW.
A.

The Gaming Commission Failed To Provide Any Explanation for its Award
of a Gaming License to Lago.

The gaming license awarded to Lago was unsupported by any basis, let alone a rational
basis. The Gaming Commission provided no explanation for its conclusion that Lago satisfied
the statutory requirements for a gaming license. Nor did it place any evidence in the public
record to support or explain the grounds for its entirely conclusory determination that Lago
should receive a gaming license. The Gaming Commission provided no explanation for its
decision to award Lago a license despite the fact that Petitioners presented extensive evidence to
the Commission that the selection process that resulted in the recommendation of Lago was
fatally defective and that Lago did not satisfy the requirements for licensure under the Gaming
Act.
During the December 21, 2015 meeting at which the Gaming Commission awarded a
license to Lago, the Commission simply voted, with no discussion or explanation, 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[s] set forth in section
13[16] of the Gaming Act; and that that the motion to execute the gaming facility license to
Lago should be approved. Ex. 61 (Gaming Commission Meeting Transcript (Dec. 21, 2015)) at
10-11. The Gaming Commission did not address how Lago satisfied the various requirements of
sections 1316-1318 of the Gaming Act. It failed to explain how Lago satisfied the requirements
of the ten subsections of section 1316 of the Gaming Act, which contain criteria that an applicant
14

must satisfy in order to be eligible for a gaming license. Nor did it explain how Lago satisfied
the various suitability criteria enumerated in section 1317 of the Gaming Act or why Lago was
not disqualified under the various provisions of sections 1317 and 1318 of the Act. And it failed
to address any of the issues raised by Petitioners as to why Lago should not receive a gaming
license. Consistent with the Gaming Commissions failure to offer any reasons to support the
award of a gaming facility license to Lago, the license awarded to Lago asserts, in wholly
conclusory terms, that the Gaming Commission determined, based upon an investigation by the
New York State Police, that Lago and its associated entities and individuals are suitable and not
disqualified in accordance with section[s] 1317 and 1318 of the Gaming Act and that Lago
meets each of the minimum license thresholds in accordance with section 1316 of the Gaming
Act. Ex. 1 (Lago Gaming License Award) at 1.
It is well settled that an agencys decision cannot stand where the agency fails to offer
any explanation of the grounds for its decision. In order to avoid nullification, the agency must
examine the relevant data and articulate a satisfactory explanation for its action including a
rational connection between the facts found and the choice made. Motor Vehicle Mfgs. Assn
v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines v.
United States, 371 U.S. 156, 168 (1962));9 see also 29 Flatbush Assocs., LLC v. N.Y. State Dept
of Envtl. Conservation, 27 Misc. 3d 1917(A), 2010 WL 1756847, at *6 (Sup. Ct., Kings Cnty.
May 3, 2010) (A rational basis exists where the determination was supported by proof sufficient
9

New York courts proceedings frequently rely on federal court precedent as persuasive authority
in Article 78 proceedings. See, e.g., Abdur-Raheem v. Mann, 85 N.Y.2d 113, 119-20 (1995)
(looking to position of most of the Federal courts that have considered the issue as persuasive
authority) (citing Richardson v. Selsky, 5 F.3d 616 (2d Cir. 1993)); Lindemann v. Am. Horse
Shows Assn, 222 A.D.2d 248, 250 (1st Dept 1995) (finding persuasive federal courts decision
[u]nder similar circumstances) (citing Richardson v. U.S. Customs Serv., 47 F.3d 415 (Fed.
Cir. 1995)).
15

to satisfy a reasonable person, of all of the facts necessary to be proved in order to authorize the
determination.) (quotation & brackets omitted) (collecting cases); adhered to, 30 Misc. 3d
1239(A), 2011 WL 1019787 (Sup. Ct., Kings Cnty. Mar. 22, 2011).
In Figel v. Dwyer, 75 A.D.3d 802 (3d Dept 2010), for example, the court nullified a
decision concerning an application for a certificate of release from disabilities where the Town
Justice provided no explanation for the decision. There, like here, the Town Justice was required
to consider and apply certain statutorily enumerated factors. Id. at 804. The court held that the
decision must be annulled because we cannot conclude that a rational basis exists for
respondents decision. Id. at 805. The court rejected the Towns post-hoc rationale for its
decision, because judicial review of an administrative determination [is limited] solely to the
grounds invoked by the respondent at the time of its decision. Id. (quoting Trump-Equitable
Fifth Ave. Co. v. Gliedman, 57 N.Y.2d 588, 593 (1982)). Indeed, the reasonableness of an
agencys determination must be judged solely on the grounds stated by the agency at the time of
its determination. Washington ex rel. Selfhelp Cmty. Servs., Inc. v. Visnauskas, 45 Misc. 3d
418, 422 (Sup. Ct., Kings Cnty. 2014) (citing Scherbyn v. Wayne-Finger Lakes Bd. of Co-op.
Educ. Servs., 77 N.Y.2d 753 (1991)); see also State Farm, 463 U.S. at 43 (We may not supply a
reasoned basis for the agencys action that the agency itself has not given.) (quotation omitted);
Central N.Y. Coach Lines, Inc. v. Larocca, 120 A.D.2d 149, 152 (3d Dept 1986) ([J]udicial
review of an agency decision is limited to the reasons given by the agency in its decision. An
agency cannot use its answer in a CPLR Article 78 proceeding as a substitute for providing a
rational reason in its determination. (citation omitted)).
Similarly, in Central N.Y. Coach Lines, the court held that the Department of
Transportation (DOT) failed to offer a rational basis for the termination of a financial

16

assistance program where the DOT simply asserted that it was no longer justified. As the court
explained, [i]n reviewing a determination of an agency made without a hearing, the test is not
whether the court would have made a different determination if it were sitting as respondent, but
rather, whether respondents view rests on an adequate and rational basis. 120 A.D.2d at 151
(quotation omitted). The court held that the DOTs bald assertion hardly suffices as a rational
basis for DOTs decision. Id. at 152.
In New York Water Service Corp. v. Water Power & Control Commission, 283 N.Y. 23
(1940), the Court of Appeals found deficient an agency decision that did not contain adequate
factual findings. The Court emphasized that [f]indings of fact in support of decisions by courts
and administrative boards alike serve to give assurance to parties concerned that the decisions are
based upon evidence of record and were not reached arbitrarily or influenced by extra-legal
considerations. Id. at 30. The Court held that where agency decisions are subject to judicial
review, findings of fact in some form are essential. Id.; see also Waldman v. N.Y. State Liquor
Auth., 281 A.D.2d 286 (1st Dept 2001) (annulling award of liquor license where Liquor
Authority found only that the applicant will operate these premises as a bona fide restaurant
featuring Cuban cuisine; This perfunctory recitation fails to comply with the requirement that
the Authority state its reasons for concluding that it would be in the public interest to grant the
license); Duarte, 91 A.D.3d at 779 (affirming nullification of agency decision that lacked a
rational basis because it failed to make any assessment of whether the subject childs welfare
would best be served by remaining with his mother, the relevant consideration under the
governing law).
Here, as discussed above, the Gaming Commission made no factual findings in support
of its licensing determination and gave no explanation whatsoever for its conclusion that Lago

17

meets all of the statutory requirements for a gaming license. Because the Gaming Commissions
licensing decision is based only on bald assertion[s], Larocca, 120 A.D.2d at 152, the license
award to Lago must be annulled.
B.

The License Award to Lago Was Based on the Legally Erroneous Premise
that the Gaming Commission Lacked the Power to Review the Location
Boards Selection Process or Recommendations.

The license award to Lago also was contrary to law because the Gaming Commission
completely renounced its statutory authority to examine the lawfulness and reasonableness of the
Location Boards selection process. Rather than acknowledging or exercising its clear power
under the Gaming Act to deny an application . . . for any cause that the commission deems
reasonable, Gaming Act 1305(6) (emphasis added), the Gaming Commission instead was
instructed by its General Counsel to blindly accept the Location Boards recommendations as a
fait accompli. The Gaming Commission failed to consider substantial evidence submitted by
Petitioners demonstrating that the Location Boards selection process violated the Gaming Act
and that the Location Boards recommendation of Lago was arbitrary and capricious. It was
unlawful for the Gaming Commission to stick its head in the sand and refuse to consider issues
raised by Petitioners based on erroneous advice from its counsel.
During the December 21, 2015 licensure meeting, the Commissions General Counsel
erroneously instructed the Commission that it lacked any power to review either the propriety of
the Location Boards selection process or the Location Boards recommendations. Counsel
instructed the Commissioners that their role was not to consider or reconsider the selection
criteria the Gaming Facility Location Board considered or applied; that their role [wa]s not to
exercise any review of the selection decisions the Gaming Facility Location Board made; and
that they were not an appellate body exercising review of the Gaming Facility Location Boards
processes or decision-making. Ex. 61 (Gaming Commission Meeting Transcript (Dec. 21,
18

2015)) at 6 (emphasis added). The Commissioners were further instructed by their General
Counsel that their role was limited to determining whether the applicants recommended by the
Location Board were suitable for licensure and not disqualified, as set forth in sections 1317
and 1318 of the Gaming Act, and whether the applicants me[t] the minimum license thresholds
set forth in section 1316 of the Gaming Act. Id. at 6-7.
Adhering to counsels instructions, the Commissioners made no inquiry whatsoever into
whether the Location Boards recommendations were based on a lawful process that complied
with the Gaming Act; nor did they conduct any inquiry concerning the basis for the Location
Boards recommendations. Instead, after reading a script, the Commissioners voted in unison,
with no discussion, that Lago, Montreign, and Rivers were suitable for a license under sections
1317 and 1318 of the Gaming Act; met the minimum license thresholds in section 1316; and
would receive a gaming license. Id. at 8-12.
The instructions by the Commissions General Counsel that produced this rubberstamping process were clearly erroneous as a matter of law.10 The Gaming Act confers on the
Gaming Commission the broad power [to] deny an application . . . for any cause that the
commission deems reasonable. Gaming Act 1305(6) (emphasis added). 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, id. 1314(1) (emphasis added), and that if the
commission is not convinced that there is an applicant that has met the eligibility criteria . . . , no
10

See Destiny USA Dev., LLC v. N.Y. State Dept of Envtl. Conservation, 63 A.D.3d 1568, 1569
(4th Dept 2009) ([A]gency determinations that conflict with the clear wording of a statute are
entitled to little or no weight.); Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451, 459 (1980)
(where an agencys interpretation of a statute runs counter to the clear wording of a statutory
provision it should not be accorded any weight).
19

gaming facility license shall be awarded, id. 1314(3) (emphasis added). Section 1320 of the
Act, which concerns the Location Boards evaluation of applicants, provides that the evaluation
is for the purpose of determining whether an applicant shall be eligible for a gaming facility
license. Id. 1320 (emphasis added). Accordingly, the Gaming Commission had a clearly
defined statutory duty to deny a license to any applicant that did not meet the Gaming Acts
eligibility criteria, including the criteria set forth in section 1320 of the Act. The Commission
also was required to deny [an] application if it finds any . . . reason . . . as to why it would be
injurious to the interests of the state in awarding the applicant a gaming facility license. Id.
1317(2)(c) (emphasis added). The Commission disregarded this duty in failing even to
consider whether the Location Boards recommendation of Lago fulfilled the purposes of the
Gaming Act or satisfied its criteria.
In the SEQRA context, for example, courts have held that an agency improperly defers
its duties when it abdicates its . . . responsibilities . . . or insulates itself from . . .
decisionmaking. Riverkeeper, Inc. v. Planning Bd. of Town of Southeast, 9 N.Y.3d 219, 234
(2007); see also Coca-Cola Bottling Co. of N.Y. v. Bd. of Estimate of City of N.Y., 72 N.Y.2d
674, 682-83 (1988) (nullifying agencys SEQRA determination when it unlawfully deferred its
responsibilities and duties to another agency). Similarly, in Kaplan v. State Liquor Authority, 47
Misc. 2d 257 (Sup. Ct., Monroe Cnty. 1965), the court concluded that the issuance of licenses
depends upon the weighing . . . in each case of the public convenience and advantage, and that
the petitioners were entitled to submit evidence on this subject, id. at 259-60 (quoting Swalbach
v. State Liquor Auth., 7 N.Y.2d 518, 523-24 (1960)). There, the petitioners alleged that the State
Liquor Authority had unlawfully refused to receive, . . . and to consider relevant and material
information necessary to determine whether public convenience and advantage was served by

20

approving . . . applications for package stores, and that instead the Authority approved the
applications . . . under a general policy for the approval of applications without consideration of
the criteria enumerated by statute. Id. at 258-59; see also Leizer v. Ambach, 91 A.D.2d 1117,
1118 (3d Dept 1983) (annulling Commissioner of Educations denial of application for teaching
permit when the commissioner failed to exercise the discretion required under the regulation).
Here, the Gaming Commissions abdication of its duty to determine eligibility
including consideration of the statutory selection criteriaand its repudiation of its statutory
authority to deny an application . . . for any cause that the commission deems reasonable were
errors of law that require the nullification of Lagos license award. Those errors were highly
prejudicial, because they resulted in the Gaming Commissions refusal to consider significant
information submitted by Petitioners that the Location Boards selection process was unlawful
and that its recommendation of Lago was fundamentally inconsistent with the selection criteria
in the Gaming Act.
II.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE IT WAS

PREDICATED ON AN UNLAWFUL SELECTION PROCESS.
A.

The Gaming Commission Relied on a Selection Process that Failed to

Perform the Weighting of Enumerated Statutory Factors that the Gaming
Act Requires.

The Location Board process that the Gaming Commission blindly accepted in awarding a
license to Lago violated the Gaming Acts express weighting requirement. The Gaming Act is
absolute: the Location Board shall accord a 70 percent weight to economic activity and
business development factors; a 20 percent weight to local impact and siting factors; and a 10
percent weight to workforce enhancement factors in making its recommendations. Gaming
Act 1320.

21

Consistent with the Gaming Acts statutory mandate, the Location Boards March 2014
RFA expressly 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 . . . .). In May 2014, in its Questions and Answers for
Applicants, the Location Board assured the public that it would disclose its scoring of applicants
based on the statutorily-mandated factors. In response to the question [w]ill the Boards
analysis and scoring of the factors included within the evaluation Criteria be made public?, the
Board responded, Yes. Ex. 37 (Round 2 Q&A Excerpt) at 11, Question 370(c) (emphasis
added); see also id. at 18, Question 384 (Applicants will be scored based upon the total revenue
generated by the gaming operation.) (emphasis added).11
Contrary to the plain language of the Gaming Act and its own representations, however,
the Location Board ultimately refused to undertake the quantitative weighting of the statutorily
enumerated selection criteria required by the Gaming Act. Instead, to create greater discretion
when comparing applicantsespecially in the Catskill/Hudson Valley Region where Orange
County applicants projected massive revenue and job numbersthe Board Report decreed that
the Location Board 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 (emphases
11

The full Round 2 Q&A document is available at

https://gaming.ny.gov/pdf/SecondRoundQuestionsandAnswersMay142014.pdf.
22

added). At no point in the Board Report does the Location Board apply the required 70/20/10
weighting of the statutory factors to the applicants or perform any scoring or quantitative
comparison of applicants based on the statutory weighting scheme. Instead, the Board Report
discusses the various statutory factors with respect to each applicant in a manner that treats each
factor as having equal significance, in violation of the Gaming Act. See generally Ex. 13 (Board
Report Excerpt) at 12-37. The Selection section of the Board Report, for example, contains
only a general narrative explaining the Location Boards recommendations without reference to
the required statutory weighting of factors. See, e.g., Ex. 13 (Board Report Excerpt) at 15-16
(discussing Mohegan Sun application). Similarly, the Summary of Each Applicant section of
the Board Report makes no attempt to address or apply the weighting requirements of section
1320. See, e.g., id. at 58-73 (discussing Caesars New York application).
Section 1320 of the Gaming Act does not permit the Location Board to abandon
quantitative weighting: the statute mandates that the evaluation of applicants shall be
weighted according to the statutes 70/20/10 scoring scheme. Gaming Act 1320 (emphasis
added). New York follows the traditional rule of interpretation that [t]he use of the verb
shall in a statute illustrates the mandatory nature of the duties contained therein. Nat. Res.
Def. Council, Inc. v. N.Y.C. Dept of Sanitation, 83 N.Y.2d 215, 220 (1994); see also, e.g.,
Brusco v. Braun, 84 N.Y.2d 674, 680 (1994) (statute providing that judge shall render
judgment commands an action (citation omitted)); Centennial Restorations Co. v. Wyatt, 248
A.D.2d 193, 195 (1st Dept 1998) (Statutory language providing that a court shall take some
action should be read to mean that the court has no discretion to refrain once the party seeking
relief has fulfilled the statutory requirements.); N.Y. Stat. Law 177(a) (In the absence of
anything to indicate a contrary intention, words of command in a statute are construed as

23

peremptory . . . .). As the Location Board Chair admitted, were not the policymakers.
Barnidge Aff. 6.
The Location Board was under a mandatory duty to apply the statutory weighting scheme
in making its findings and recommendations with respect to applicants.12 Its results-driven
refusal to do so, and its reliance instead on a purely qualitative analysis with no apparent
weighting of the statutory factors, violated the Gaming Act, rendering the Gaming Commissions
reliance on the Location Boards recommendation of Lago unlawful. See, e.g., Red River Serv.
Corp. v. United States, 60 Fed. Cl. 532, 548-49 (2004) (invalidating agency action that failed to
give primary consideration to . . . the relative value and importance of the components of the
procurement, as required by the governing regulation (internal quotation marks omitted)); RLB
Contracting, Inc. v. United States, 118 Fed. Cl. 750, 759 (2014) (setting aside contract award
where regulations require an analysis of the relative weight of the components of the contract
and contracting officer failed to comply with that requirement), affd, 621 F. Appx 1026 (Fed
Cir. 2015); see also Epstein v. Valenti, 97 A.D.2d 881, 881-82 (3d Dept 1983) (nullifying civil
service examinations where agency disqualified applicants for unsatisfactory performance on
oral examination but failed to disclose the relative weight assigned to the oral examination, in
violation of regulation); 29 Flatbush Associates, 2010 WL 1756847, at *10-11 (nullifying
agency action where Department of Environmental Conservation denied application based on
vague qualitative factors, in violation of its responsibility to use quantitative parameters . . . to
guide decision-making).

12

The Court of Appeals itself has noted in dicta that Section 1320 places mandatory duties on
the Location Board. Wallach v. Town of Dryden, 23 N.Y.3d 728, 748 (2014) (section 1320
mandat[es] the consideration of local impacts and community support in the siting of gaming
facilities).
24

Moreover, where an agency specifies in a solicitation an evaluation and selection

process, it must follow the disclosed process. 360Training.com, Inc. v. United States, 106 Fed.
Cl. 177, 186 (2012). In 360Training.com, for example, the court invalidated a contract award
where an agencys RFA stated that it would score applicants based on specified criteria with
assigned weights, but the agency failed to evaluate applicants in accordance with the weighting
scheme enumerated in the RFA. Id. at 187, 190. Instead, the agencylike the Location
Boardgave only descriptive ratings to applicants; [l]eft out of evaluations was the point
score assigned to each criterion and the criterions weight. Id. at 190. The court concluded that
[t]he RFA disclosed a weighting scheme for the criteria and OSHAs decision to abandon that
weighting in its official evaluation report was improper. Id. That is precisely the situation here.
Moreover, in 360Training.com, as here, the evaluations do not list the weighting for each
criterion so it appears that each criterion is weighted equally. Id. Further, [t]he use of
descriptive ratings is inconsistent with the RFA, which provided that applications would be
assigned point scores on the basis of 100 points. Id. Because the Location Boards selection
process was fundamentally inconsistent with its RFA (as well as the Gaming Act), the Gaming
Commission could not lawfully award licenses based on the Location Boards recommendations.
See id.; see also FirstLine Transp. Sec., Inc. v. United States, 100 Fed. Cl. 359, 382 (2011)
(contract award was arbitrary, capricious and not in compliance with law where agency did not
award contract in accordance with the relative weight of the selection factors enumerated in the
RFP; Having announced the relative weight of the non-price factors in the RFP, the government
was not free to evaluate the proposals and award the . . . contract in accordance with another
scheme, regardless of the reasonableness of that scheme.).

25

The Location Boards refusal to score applicants according to the weighting requirements
of section 1320 of the Gaming Act and the RFA was no mere technical defect. If an agencys
evaluation of proposals differs significantly from the process disclosed in the solicitation, the
agencys decision lacks a rational basis. Lab. Corp. of Am. Holdings v. United States, 116 Fed.
Cl. 643, 650 (2014) (citing 360Training.com, 106 Fed. Cl. at 184). Section 1320s required
70/20/10 weighting scheme provided a framework for the Location Board to objectivity evaluate
applicants and ensure transparency. Instead, the Location Board substituted its qualitative
judgment for the required quantitative weighting, resulting in recommendations that reflect no
weighting of the statutory factors and entirely subjective explanations for why certain applicants
were selected over others.
Petitioners notified the Gaming Commission that the Location Board had refused to apply
the required statutory weighting long before the Gaming Commission awarded licenses. Ex. 43
(Williams & Connolly Letter (Apr. 1, 2015)) at 16. The Gaming Commissions award of a
license to Lago based on a selection process that violated the plain language of both the Gaming
Act and the Location Boards RFA was unlawful.
B.

The Gaming Commission Relied on a Selection Process that Effectively

Wrote a Critical Selection Factor Out of the Gaming Act.

The gaming license awarded to Lago also should be nullified because the selection
process effectively wrote out of the Gaming Act a critical factor that the Location Board was
required to evaluate.
A primary purpose of the Gaming Act is to recapture . . . gaming-related spending by
residents travelling to . . . out-of-state gaming facilit[ies]. Gaming Act 1320(1)(f); see also id.
1300(6) (four upstate casinos will attract non-New York residents). Accordingly, the
Gaming Act provides that the Location Board shall evaluate and issue a finding concerning
26

how each applicant proposes to advance that central statutory objective. Id. 1320. But, in
another example of its results-driven approach, 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.13 Because the
Location Board made the same cursory finding with respect to every applicant, it effectively
made no findings on this enumerated selection factor, in plain violation of the Gaming Act.
Agency action will be nullified where an agency has entirely failed to consider an
important aspect of the problem. State Farm Mutual Auto. Ins. Co., 463 U.S. at 43. Where a
statute sets forth a factor that an agency must consider, the agencys failure to engage in any
meaningful consideration of that factor requires nullification of its decision. See Flatiron Cmty.
Assn v. N.Y. State Liquor Auth., 36 Misc. 3d 267, 273 (Sup. Ct., N.Y. Cnty. 2004).
In Flatiron, the statute required consideration of the public interest when acting on a
liquor license application, but the agencys approval of the application failed to state its reasons
for concluding that it would be in the public interest to grant this license. 36 Misc. 3d at 274
(quotation omitted). The court concluded that the agencys determination was irrational, and
should be annulled. Id. The same result should follow here. The Location Board never made
any genuine findings concerning the recapture factor. Its disregard of that critical statutory
selection factor benefited Lago: located more than 90 minutes from the nearest State border, Ex.
13

See Ex. 13 (Board Report Excerpt) at 15 (Mohegan Sun at The Concord) (substantial
recapture rate); 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
World Hudson Valley) (same); id. at 24 (Sterling Forest Resort) (same); id. at 25 (Rivers)
(same); id. at 27 (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 Downs Casino, 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).
27

46 (Google Maps Lago to State Border Distance), no applicant was more poorly positioned than
Lago to recapture out-of-state spending.
The evidence before the Location Board overwhelmingly contradicted the cookie-cutter
finding in the Board Report that every applicant projected a substantial recapture rate.
Different applicants projected very different recapture rates. For example, 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. By 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 Boards
failure to address the important differences among applicants with respect to recapturing revenue
violated the requirements of section 1320 of the Gaming Act. For this reason as well, the
Location Boards selection process violated the Gaming Act, and the award of a license to Lago
based on that fundamentally defective process should be nullified.
III.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE IT

VIOLATED THE EQUAL PROTECTION CLAUSE.
Having manufactured a subjective, qualitative standard to apply, the Location Board

proceeded to wield that new power inconsistently when evaluating applicants to deliver its
desired results. In particular, it treated similarly situated existing gaming facilities in the State
differently with respect to the critical issue of cannibalization. Because the award of a gaming
license to Lago was predicated on that arbitrary analysis, it violated the Equal Protection Clause
of the federal and New York constitutions.

28

The Fourteenth Amendment to the United States Constitution provides that no State shall
deny to any person within its jurisdiction the equal protection of the laws. U.S. Const. amend.
14. The New York Constitution likewise states that [n]o person shall be denied the equal
protection of the laws of this state or any subdivision thereof. N.Y. Const., art. 1, 11. The
equal protection principle embodied in the State and federal Constitutions is essentially a
direction that all persons similarly situated should be treated alike. City of Cleburne v.
Cleburne Living Ctr., 473 U.S. 432, 439 (1985). The basic guarantee of the Equal Protection
Clause is that government will act evenhandedly in allocating the benefits and burdens
prescribed by law and will not, without at least a rational basis, treat similarly situated persons
differently or disparately. Weaver v. Town of Rush, 1 A.D.3d 920, 921 (4th Dept 2003).
Where a person has been intentionally treated differently from others similarly situated and . . .
there is no rational basis for the difference in treatment, his equal protection rights have been
violated, and the governments action cannot stand. Village of Willowbrook v. Olech, 528 U.S.
562, 564 (2000) (per curiam). The Oneida Nation and Turning Stone Resort Casino were
subjected to such disparate treatment with respect to the issue of cannibalization of revenue.
The Location Board correctly recognized the Gaming Acts anti-cannibalization
objective. Its RFA required each applicant to describe how it planned to succeed . . . while
limiting the impact on revenues at other New York gaming establishments. Ex. 15 (RFA)
VIII.B.8, at 44 (emphasis added). 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

29

in new visitors, as opposed to merely shifting visitors from existing gaming venues in the
region. Ex. 19 (Round 1 Q&A Excerpt) at 49-50, Question 173 (emphasis added).14
Consistent with the stated goals of the Gaming Act, in Region 1 the Location Board
rejected all applicants from Orange County to prevent destructive competition. To justify this
categorical approach, the Location Board reasoned that the Orange County applicants could
destabilize a future casino selected by the Board for the Catskill region. Ex. 13 (Board Report
Excerpt) at 14; see also id. at 21 (proposed location of Live! in Orange County made the
Boards concern about adversely affecting the economic need of the Catskill region particularly
acute in that this location would have had a pronounced cannibalization effect on a potential
Sullivan County casino).15 And the Location Board reasoned that the Orange County applicants
would cannibalize revenue from two existing downstate, non-Native American gaming facilities
located outside of Region 1. See id. 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 flatly rejected all Orange County applicants because of 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
selected in Region 1, Montreign. Montreign was projected to generate only $301.6 million in

14

The full Round 1 Q&A document is available at

https://gaming.ny.gov/pdf/FirstRoundQuestionsAnswersApril232014.pdf.
15

In response to a FOIL request, the Gaming Commission and Location Board refused to
produce the expert analyses on which the Location Board purported to rely. The Oneida Nation
brought an Article 78 proceeding seeking those documents; the matter is fully briefed, but no
decision has been rendered to date. See Oneida Indian Nation v. N.Y. State Gaming Commn,
Index No. 2015-2213, RJI No. 46-1-2015-1395 (Sup. Ct., Schenectady Cnty.).
30

annual 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 far superior annual revenue figures:
Applicant
Sterling Forest
Resorts World
Caesars
Live!
Grand Hudson
Hudson Valley
Montreign

Projected Gaming Revenue

$1.133B
$758M
$738M
$662M
$568.9M
$559M
$301.6M

Projected Tax Revenue

$264.1M
$201.4M
$188.7M
$149.9M
$172.6M
$137.1M
$103.4M

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

Likewise, all of the Orange County applicants projected job creation numbers that
dwarfed Montreigns:
Applicant

Projected Full Time Jobs

Live!
Sterling Forest
Resorts World
Hudson Valley
Grand Hudson
Caesars
Montreign

3,264
3,129
2,662
2,412
2,310
2,129
1,209

Projected Part Time

Jobs
1,444
1,614
765
530
269
703
96

Id. at 12, 18, 19, 21, 22, 23 & 24.

The Orange County casinos also were far better positioned to recapture spending from
out-of-state casinos than Montreign. Whereas Montreign projected $39 to $69 million in
recaptured revenue, id. at 146, 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!) ($362.8 million revenue recapture) & 198 (Sterling Forest) ($205.4 million
revenue recapture in average-case scenario). Notwithstanding their vastly superior potential
economic impact on the State, the Location Board summarily rejected all Orange County
applicants because of the high level of cannibalization of existing downstate gaming facilities
31

and the concern that Orange County casinos could destabilize that single project in the
traditional Catskill area. Id. at 14 (emphasis added).
In stark contrast to its treatment of all Orange County applicants in Region 1, the
Location Board utterly disregarded its expressed cannibalization concerns when it evaluated
Lagos application in Region 5. Both the Location Board and Gaming Commission received
extensive evidence irrefutably establishing that the vast majority of Lagos revenue would be
cannibalized from existing gaming facilities, 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.

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

Lagos market analysis also admitted that Native American gaming facilities in the same
region will be materially harmed by Lago. See, e.g., id.

An expert report by Union Gaming Analytics estimated that virtually allnearly

90%of Lagos gaming revenue would be cannibalized from existing New York
gaming 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 (Pyramid
Report) at 39.16
Lagos projected cannibalization of existing facilities will be significantly greater than

that of proposed Orange County casinos categorically rejected by the Location Board on
cannibalization grounds. Compare Ex. 2 (Lago Application Executive Summary) at 3

16

On September 29, 2014, the Finger Lakes Racing Association submitted both the Union
Gaming Analytics Report and the Pyramid Report to the Location Board. See Ex. 41 (Finger
Lakes 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.
32

(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 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).17
Faced with uncontroverted evidence of massive cannibalization by Lago, the Board
Report purported to justify the Location Boards recommendation of Lago by claiming that Lago
would generate more revenue than the two other applicants in the region. Ex. 13 (Board Report
Excerpt) at 32. But the Location Board rejected the exact same reasoning when it categorically
rejected all Orange County applicants in Region 1all of which were projected to generate far
more gaming and state tax revenue than Montreign. See id. at 14, 18, 19, 21, 22, 23 & 24
(rejecting all Orange County applicants despite the fact that an Orange County casino could
generate substantial revenues as a result of proximity to New York City, and despite the
revenue projections of the Orange County casinos, all of which were far higher than Montreigns
projected revenue).
The Location Boards arbitrary and inconsistent approach to the issue of cannibalization
resulted in treating existing gaming facilities in downstate New York substantially better than
those in upstate New York. When government action is based on distinctions between similarly
situated parties that lack any basis rationally related to a legitimate governmental interest, the
17

The full Live! Hotel & Casino Application Exhibit VIII.A.3 is available at
https://gaming.ny.gov/pdf/Redacted_Cordish/VIII%20A/VIII%20A%203/OC%20Market%20St
udy%20-%20Final.pdf. The full Caesars New York Application Exhibit VIII.B is available at
https://gaming.ny.gov/pdf/Redacted%20RFA%20Applications/Caesars%20New%20York/RED
ACTED/REDACTIONS/04%20-%20VIII.B.%20Economics-%20REDACTED.pdf.
33

action must be invalidated on equal protection grounds. Clark v. Metro. Transp. Auth., 46 Misc.
3d 344, 355 (Sup. Ct., N.Y. Cnty. 2013). In Graves v. Doar, 87 A.D.3d 740 (2d Dept 2011), for
example, the Second Department affirmed an equal protection challenge to a government
program that granted Public Assistance (PA) recipients more under the food stamp program than
recipients of Supplemental Security Income (SSI). Id. at 742-43. Applying the rational basis
test, the court concluded that the state failed to justify the different treatment accorded to
recipients of PA payments and SSI payments. Id.; see also Lee v. Smith, 43 N.Y.2d 453, 46163 (1977) (classification of public assistance recipients that disadvantaged SSI recipients lacked
rational basis). Similarly, in Cross County Savings & Loan Assn v. Siebert, 98 Misc. 2d 283
(Sup. Ct., Queens Cnty. 1979), the court held that the plaintiffs equal protection rights were
violated by a rule favoring savings banks over savings and loan associations that failed to show
any rational basis. Id. at 286.
In the same way, when addressing its policy to limit[] the impact on revenues at other
New York gaming establishments in order to further the objectives of the Gaming Act, Ex. 15
(RFA) VIII.B.8, at 44, the Location Board was required to make determinations in a manner
rationally related to the desired objective of that policy. Cross County Savings & Loan, 98
Misc. 2d at 286. That policy protects all New York gaming establishments on an equal basis,
upstate or downstate. With respect to a similar statutory command to avoid[] unsound and
destructive competition, the court in Cross Country Savings & Loan held that the state Banking
Department violated equal protection principles by failing to enforce the mandate evenhandedly.
The Banking Department placed onerous requirements on savings and loan branches that it
refused to place on savings bank branches. Id. So too here, the Location Board has condemned
existing upstate gaming facilities to suffer cannibalization greater than that deemed unacceptable

34

for downstate gaming establishments to endure; that differential treatment is in no way

rationally related to the desired objective of the Gaming Act to protect existing facilities. Id.
Based on this irrational and wholly arbitrary distinction, the license award to Lago clearly
violated the Oneida Nations and Turning Stone Resort Casinos equal protection rights. Olech,
528 U.S. at 565 (internal quotation marks omitted).
IV.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE LAGO

WAS NOT ELIGIBLE FOR LICENSURE UNDER THE GAMING ACT.
The Gaming Commission also acted contrary to law by failing to enforce the Gaming

Acts eligibility requirements with respect to Lago. Lago should have been disqualified under
the Gaming Act for many reasons, but the Gaming Commission disregarded them all in awarding
a license to Lago.
A.

Lago Should Have Been Disqualified Under the Gaming Act for Failing to
Disclose Material Information.

The Gaming Commission should have disqualified Lago from eligibility for a gaming
license because Lago failed to make disclosures required by the Gaming Act in connection with
its application. As shown below, it appears from publicly disclosed information that Lago failed
to provide the Location Board with highly significant information bearing directly on the
statutory selection factors and eligibility criteria. Petitioners brought these facts to the attention
of the Gaming Commission before it awarded Lago a license, but the Gaming Commission failed
entirely to address them at the December 21, 2015 meeting at which it found Lago suitable for a
gaming license. See Ex. 43 (Williams & Connolly Letter (Apr. 1, 2015)) at 9-12.
The Gaming Act provides that the Commission shall deny a license, subject to notice
and an opportunity to be heard, where an 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 provides information which is untrue or misleading as to a material
35

fact pertaining to the qualification criteria. Gaming Act 1318(1)(b) (emphasis added). The
governing regulations provide that, [u]pon completion of an application prescribed in [this
regulation] and prior to the award of a gaming facility license, an applicant 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) (emphases
added). The 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 17.18
With respect to other applicants, the Location Board strictly applied the foregoing
requirements. Indeed, the Location Board rejected one application altogether because it was
substantially non-responsive to the RFA. Ex. 13 (Board Report Excerpt) at 4. As explained
by the Location Board, [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 potential bidder and invalidate the RFA. Ex. 14 (Disqualification of Florida
Acquisition Corporation) at 1 (emphasis added). Yet the Gaming Commission allowed Lago to
flout the requirements of the RFA and the Gaming Act, producing precisely the unfair . . .
process that the Location Board declared unacceptable.
18

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

36

It is well established that an agencys grant of a license is subject to annulment when the
applicant fails to demonstrate compliance with specified requirements or fails to provide
information requested in an application. In Cave-of-the-Winds Scenic Tours, Inc. v. Niagara
Frontier State Park & Recreation Commission, 64 A.D.2d 818 (4th Dept 1978), for example,
the court annulled a license award where the applicant did not provide required information. Id.
at 819. There, a competing bidder filed an Article 78 proceeding challenging the award, arguing
that the licensee failed to demonstrate that it had pertinent business experience, as required by
the bid specifications, and that the chosen licensee failed completely to answer questions posed
in the application, which required applicants to answer all questions completely. Id. The court
agreed and annulled the license, holding that respondent Commission acted arbitrarily and
capriciously in accepting [the] bid when the applicant failed to satisfy the specific qualification
requirement and did not provide all required information. Id. Similarly here, the Gaming
Commission committed an error of law by failing to disqualify Lago for its failure to disclose
material information to the Location Board.
1.

Lago Failed to Disclose a Significant SEQRA Suit.

Lago was required to provide information to the Location Board about any pending
legal actions . . . to which the applicant is a party and a brief description of any such actions. 9
N.Y.C.R.R. 5301.1(c)(5)(i); Ex. 15 (RFA) VII.A.10, at 39-40. 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.

37

Based on the information publicly disclosed by the Location Board, it appears that Lago
failed to update its application to disclose a July 2014 lawsuit filed against Lago and other parties
that sought to nullify, based on noncompliance with SEQRA, the Town of Tyres June 2014
negative declaration and other Lago-related resolutions issued by the Town. See Ex. 21
(Verified Petition, Dawley v. Whitetail 414, LLC, Index No. 48435 (Sup. Ct., Seneca Cnty. July
11, 2014)). The Board Report does not reference the Lago SEQRA suit. The lawsuit raised
issues of great significance to the Gaming Commission and Location Board. As the Location
Board Chair stated when announcing its recommendations, SEQRA was very important
because it goes to the speed to market. Because theres one thing any developer will tell you
that will slow down the development process for any type of project, its getting snagged in the
SEQRA process. Barnidge Aff. 5. Moreover, satisfying SEQRA was a precondition for an
applicant to obtain a gaming license. See Ex. 23 (Applicant Conference Q&A) at 4, Question
339. The Gaming Commission stated in writing that it expected each applicant to complete an
environmental impact statement, which Lago did not do because of the negative declaration. See
Ex. 24 (Gaming Commission SEQR EIS Guidance) at 1. Although the trial court dismissed the
SEQRA action, the Fourth Department reversed and nullified the negative declaration and all
related Town of Tyre resolutions concerning Lago. See generally Dawley v. Whitetail 414, LLC,
130 A.D.3d 1570 (4th Dept 2015).
The Location Boards treatment of applicants that disclosed pending litigation highlights
the significance of Lagos failure to disclose a meritorious SEQRA action to the Location Board.
In rejecting three applications, the Location 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 disclosed litigation involved environmental issues. See id. at 23 (expressing

38

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.). Lagos failure to inform the
Location Board of the SEQRA lawsuit and appeal violated the Gaming Act and should have
resulted in Lagos disqualification.
2.

Lago Failed to Disclose Its Application for IDA Benefits.

Lago also apparently failed to inform the Location Board that it would seek millions of
dollars of tax relief from the Seneca County IDA. Lagos application to the Location Board
made no reference to Lagos intention to seek IDA benefits. Instead, a (now-nullified) Host
Community Agreement, which 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).
It appears from the public record that Lago did not inform the Location Board of its
October 2014 application to the Seneca IDA for tax relief or the IDAs February 2015 award of
such relief to Lago.19 Lago admits that the sales tax and mortgage recording tax abatements
alone 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.
Lago knew that the Location Board would look critically at any tax breaks it sought. The
governing regulation required applicants to provide substantial evidence of the economic benefit
their proposed casino would bring to the State. 9 N.Y.C.R.R. 5301.1(d). The Location Board
explained in its Questions and Answers for Applicants that a factor for the graded RFA
19

Although the resolution awarding those benefits was nullified based on the Dawley decision,
Lago subsequently re-applied to the IDA for the same benefits, Ex. 26 (Lago 2015 IDA
Application), which were re-approved in December 2015, Ex. 27 (December 2015 Lago IDA
Award).
39

evaluation is economic impact and a subsidized application will likely illustrate diminished
economic impacts when competitively evaluated. Ex. 19 (Round 1 Q&A Excerpt) at 39,
Question 139(b) (emphasis added). 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. Insofar as Lago failed to disclose to the Location Board (or the
Gaming Commission) its application for tax relief and subsequent award of tax relief, Lago
withheld material information and should have been disqualified from eligibility for a license
under the Gaming Act.
3.

Lago Made Contradictory Representations to Two Different Public

Agencies That Undermine Its Integrity and Veracity.

Lago also made contradictory representations to the Location Board and the Seneca IDA
on a critical issue: the status of its financing. It categorically represented to the Location Board
in its June 2014 application that 100 percent of financing for construction and operations [is]
fully in place. Ex. 3 (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, 17.20 Those representations were important, because 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. It raised no such concerns as to Lago, based on Lagos assurances
that its financing was 100% in place.
20

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

40

Directly contrary to Lagos representations to the Location Board, Lago represented in its
October 2014 application to the Seneca IDA that an IDA Tax Agreement is a critical path item
for financing. Ex. 25 at 8 (emphasis added). And a Lago representative asserted that [n]ot
getting the incentives would change the structure of what we build. Ex. 34 (David L. Shaw,
Casino Foes Blast IDA Aid Package, Finger Lakes Times (Jan. 30, 2015)) at 3 (emphasis added).
Thus, while Lago was assuring one State agency that its financing was 100% in place to improve
its chances of being selected for a gaming license, Lago was telling another agency that it needed
IDA assistance as a critical path item for financinga fundamentally inconsistent representation.
It does not appear that Lago ever updated its Location Board application to correct its
representation to the Location Board that its financing was fully in place. Lagos fundamentally
inconsistent representations to two State entities on the critical matter of its casino financing
which was brought to the Gaming Commissions attention before it awarded licenses, Ex. 52
(Williams & Connolly Letter (Oct. 23, 2015)) at 1-3should have disqualified Lago under
sections 1317 and 1318 the Gaming Act. The Gaming Commissions refusal to disqualify Lago
under the Gaming Act for withholding material information and making contradictory statements
was unlawful, arbitrary, and capricious.
B.

Lago Failed to Satisfy Statutory Requirements for Eligibility for Licensure

Under the Gaming Act.

Lagos June 30, 2014 application to the Location Board included two June 12, 2014
resolutions from the Town of Tyrea resolution of support for the casino and a resolution
approving a host community agreementto satisfy mandatory requirements for a valid
application under the Gaming Act and RFA. Both of those resolutions were nullified on July 10,
2015 by the Fourth Departments Dawley decision. Because those resolutions were legal
nullities, Lagos application for a gaming license lacked required elements and Lago was
41

ineligible for consideration for a license under the Gaming Act. For this reason as well, the
Gaming Commissions award of a license to Lago was contrary to law and arbitrary and
capricious. See Cave-of-the-Winds Scenic Tours, 64 A.D.2d at 819 (license award was arbitrary
and capricious when applicant failed to satisfy specified license qualifications); Wrobel v. Town
Bd. of Town of Holland, 210 A.D.2d 986, 986 (4th Dept 1994) (license award arbitrary and
capricious when the application and approval . . . violated the Town Code in several respects);
Afghan Am. Army Servs. Corp. v. United States, 90 Fed. Cl. 341, 363 (2009) (failure to disqualify
proposal unlawful when proposal failed to satisfy mandatory requirement of solicitation)
(collecting cases).21
1.

Lagos Application Lacked a Valid Host Community Agreement.

The Gaming Act required Lago 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). Pursuant to the
Gaming Act, the RFA required Lago to [s]ubmit . . . a description of Applicants commitments
to mitigate 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). Similarly, the
21

See also E.W. Bliss Co. v. United States, 77 F.3d 445, 448 (Fed. Cir. 1996) ([A] proposal that
fails to conform to the material terms and conditions of the solicitation should be considered
unacceptable. (quotation omitted)); Alfa Laval Separation Inc. v. United States, 175 F.3d 1365,
1367-68 (Fed. Cir. 1996) (waiving a mandatory solicitation requirement for one offeror violated
procurement law); Travel House of Buffalo, Inc. v. Grzechowiak, 31 A.D.2d 74, 81 (4th Dept
1968) (renewal of taxicab licenses was arbitrary, capricious and improper when the licenses
were unlawfully transferred without notice to and approval of the Director and without payment
of the transfer fee as required by law), affd, 24 N.Y.2d 1034 (1969).
42

governing regulations required Lago to provide plans for mitigating 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).
Lago relied exclusively on the terms of the now-nullified June 2014 Host Community
Agreement to make these required showings. See Ex. 17 (Lago Application Exhibit IX.A.3).
Because the Dawley decision nullified the Host Community Agreement, Lagos application
failed to satisfy a statutory requirement to be eligible to receive a gaming license. Gaming Act
1316. The Gaming Commission violated the Gaming Act by awarding Lago a license despite
this fatal deficiency in its application.
The nullification of the Host Community Agreement submitted with Lagos application
also invalidated the Board Reports reliance on that agreement to justify the Location Boards
recommendation of Lago. Section 1320 of the Gaming Act provides that, [i]n determining
whether an applicant shall be eligible for a gaming facility license, the board shall evaluate and
issue a finding of how each applicant proposes to advance the following objectives, including
mitigating potential impacts on host and nearby municipalities which might result from the
development or operation of the gaming facility. Gaming Act 1320(2)(a). The Board Report
relied on the June 2014 Host Community Agreement in making those findings with respect to
Lago. See Ex. 13 (Board Report Excerpt) at 32 (The Board finds that Lago presents a complete
analysis of the anticipated local impacts of its facility and provides reasonable strategies for
mitigating those impacts . . .); id. at 284 (Lago has agreed to absorb the incremental costs for
municipal services incurred by the local municipalities resulting from the proposed casinos
development and operation. To that end, Lago has entered into a host community agreement
with the Town of Tyre to mitigate these impacts.); id. (detailing terms of Host Community

43

Agreement). Because the Host Community Agreement was a legal nullity, the Board Reports
conclusion that Lago mitigated potential impacts on host and nearby municipalities based on the
Host Community Agreement was invalid, as was the Location Boards recommendation of Lago
based on that Agreement.
The Gaming Act required the Gaming Commission to disqualify Lago because its
application lacked a required element. Instead, the Gaming Commission allowed Lago to
substitute a new Community Mitigation Plan approved on October 22, 2015well after the
Location Boards recommendations had been madeto fulfill Lagos statutory requirement to
provide plans for mitigating potential impacts. Ex. 1 (Lago Gaming License Award) 7. But
the Community Mitigation Plan was not part of Lagos application to the Location Board. The
Plan was never considered by the Location Board in recommending applicants to the Gaming
Commission. Even though the Location Board disqualified another applicant that failed to
provide all required materials by the June 30, 2014 application deadline, see generally Ex. 14
(Disqualification of Florida Acquisition Corporation), the Gaming Commission unlawfully,
arbitrarily, and capriciously permitted Lago to substitute its October 2015 Community Mitigation
Plan as part of its application well after the application deadline had passed. This was
particularly egregious because the Location Board had made its recommendations based on the
applications submitted in June 2014. The Location Board never issued the mandatory finding
of how [Lago] proposes to . . . mitigat[e] potential impacts on host and nearby municipalities
which might result from the development or operation of the gaming facility, with respect to the
Community Mitigation Plan, as required by section 1320(2)(a) of the Gaming Act. The Gaming
Commissions reliance on Lagos untimely Community Mitigation Plan in issuing a license to

44

Lago was unlawful, as was its award of a license based on an application that lacked a valid
mitigation plan.
2.

Lagos Application Lacked a Valid Resolution of Support from the

Town of Tyre.

Lago also did not satisfy a condition of filing its application because the resolution of
support from the Town of Tyre that it submitted with its application was a legal nullity. Section
1314(2) of the Gaming Act requires that, [a]s a condition of filing, each potential license
applicant must demonstrate to the boards satisfaction that local support has been demonstrated.
Id. (emphasis added). 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
passed . . . by a majority of the membership of the local legislative body of the host community
supporting the application. Id. The Location Board announced in Section IX.A.1.a of its RFA
that as a condition of acceptance of this Application, local support must be demonstrated
through a post-November 5, 2013 vote of the local legislative body of each Host Municipality.
Ex. 15 (RFA) IX.A.1, at 58 (emphasis added). The Location Boards June 10, 2014 Questions
and Answers for Applicants made clear that a condition of filing an Application 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 Applicants proposed Gaming Facility within
their jurisdiction. Ex. 66 (Resolutions of Support Q&A) at 1, Question 208 (emphasis added).
The June 12, 2014 resolution of support for Lago passed by the Town of Tyre was
nullified as a result of the Fourth Departments Dawley decision. As a result, Lagos application
to the Location Board lacked a required condition of acceptance, Ex. 15 (RFA) IX.A.1, at 58,
and Lagos application should have been disqualified under the Gaming Act. The award of a
license to an applicant that failed to satisfy a critical statutory requirement was unlawful.
45

3.

The Location Boards Recommendation of Lago Was a Nullity.

The Gaming Commissions license award to Lago also was unlawful because it relied on
the Location Boards recommendation of Lagoa SEQRA action that also was invalidated by
Dawleys nullification of the Town of Tyres June 12, 2014 negative declaration.
SEQRA defines an action broadly to include:
(1) projects or physical activities, such as construction or other activities that may
affect the environment by changing the use, appearance or condition of any
natural resource or structure, that . . . require one or more . . . approvals from an
agency or agencies;
(2) agency planning and policy making activities that may affect the environment
and 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 the
environment; and
(4) any combinations of the above.
6 N.Y.C.R.R. 617.2(b). Significantly, [a]ctions commonly consist of a set of activities or
steps. The entire set of activities or steps must be considered the action . . . . 6 N.Y.C.R.R.
617.3(g) (emphasis added). As [a] principal goal of SEQRA is to incorporate environmental
considerations into the decisionmaking process at the earliest opportunity, SEQRAs broad
definition of actions . . . should be liberally construed to facilitate SEQRAs salutary purposes.
City Council of City of Watervliet v. Town Bd. of Town of Colonie, 3 N.Y.3d 508, 518 (2004)
(quotation omitted).
City Council of City of Watervliet illustrates that SEQRA actions include
determinations such as those made by the Location Board. There, private developers argued that
SEQRA did not apply to a towns annexation of land because there was no specific
development plan for the land. Id. at 516. The Court of Appeals rejected this argument and
held that SEQRA applied to the annexation because [a]nnexations are often the first step toward
46

the development of real property. Id. at 518. Similarly, in Concern, Inc. v. Pataki, 7 Misc. 3d
1030(A), 2005 WL 1310478 (Sup. Ct., Erie Cnty. May 25, 2005), which involved the siting and
construction of a Seneca Nation casino, the court held that the States approval of the Seneca
Nations choice of site for the proposed casino was an additional step taken by the State which
. . . invokes SEQRA. Id. at *21. The court explained that, pursuant to 6 N.Y.C.R.R. 617.3(g),
the set of steps [constituting the action subject to SEQRA] includes the execution of the
Compact, by the Governor, involving State funding for the Project; the decision of the Seneca
Nation to choose the [property] for the . . . casino site; and the States . . . approval of that site for
the construction of the Project. Id.
Here, the Location Boards recommendation of Lago was a necessary step in the
development of the Lago casino. If the Location Board had not recommended Lago, Lago would
have been disqualified from further consideration and would not have been able to apply to the
Gaming Commission for a gaming license. Consistent with SEQRAs goal to inject
environmental considerations into the decision-making process as early as possible, the Location
Boards recommendation of Lago was one of the activities or steps [that] must be considered
the action for purposes of SEQRA. 6 N.Y.C.R.R. 617.3(g).
Because the Location Boards recommendation of Lago was an action subject to SEQRA,
the Location Board could not lawfully recommend Lago until Lago had complied with the
provisions of SEQRA. 6 N.Y.C.R.R. 617.3(a). Because Lagos purported SEQRA
compliance at the time of the Location Boards recommendation was based on the invalid June
2014 negative declaration nullified by Dawley, the appropriate remedy under SEQRA is to
declar[e] [the Location Boards recommendation of Lago] null and void. Chinese Staff &
Workers Assn v. City of N.Y., 68 N.Y.2d 359, 369 (1986). [T]he governmental action is void

47

and, in a real sense, unauthorized. E.F.S. Ventures Corp. v. Foster, 71 N.Y.2d 359, 371 (1988);
see also Tauber v. Village of Spring Valley, 56 A.D.3d 660, 661 (2d Dept 2008) (villages sale
of land was null and void where it failed to comply with SEQRA); Billerbeck v. Brady, 224
A.D.2d 937, 938 (4th Dept 1996) (environmental review requirements of SEQRA must be met
before action is taken; agreement was null and void because it failed to comply with the
requirements of SEQRA). Because the Location Boards recommendation of Lago was
rendered a nullity by Dawley, the Gaming Commissions award of a license to Lago based on
that recommendation was unlawful and must be nullified.22
V.

THE LICENSE AWARD TO LAGO MUST BE NULLIFIED BECAUSE IT WAS

ARBITRARY AND CAPRICIOUS.
Finally, the Gaming Commissions award of a gaming license to Lago should be nullified

because both the Gaming Commissions licensure conditions and the Location Boards analysis
were arbitrary and capricious.
A.

The License Award Reflects Arbitrary and Capricious Conditions Regarding

Necessary Road Improvements.

The Gaming Commission arbitrarily and capriciously failed to require Lago to implement
numerous traffic mitigation measures required to avoid a traffic catastrophe in the tiny Town of
Tyre. The Town of Tyre concluded that such mitigation measures are essential to counteract the
significant adverse traffic impact of Lago and its projected 3.3 million annual visitors on the
Town, yet the Gaming Commission completely disregarded the Towns findings (as well as the
findings of Lagos traffic expert and involved agencies New York Department of Transportation
22

It makes no difference that the Fourth Department granted leave to appeal the Dawley decision
to the Court of Appeals or that such appeal is pending. The Fourth Departments decision, under
which the Location Boards recommendation of Lago is now a nullity, remains in full effect
during the pendency of the appeal. It is well-settled that an appeal by . . . a political subdivision
. . . does not suspend the operation of the order or judgment and restore the case to the status
which existed before it was issued. Pokoik v. Dept of Health Servs., 220 A.D.2d 13, 15 (2d
Dept 1996).
48

and New York Thruway Authority) by failing to require Lago to make offsite road improvements
that are vitally necessary to mitigate the adverse impact of the casino on the Town.
A critical goal of the Gaming Act is to minimize the impact of a new gaming facility on
its host municipality and nearby municipalities. See, e.g., Gaming Act 1300(8) (Local impact
of the casino sites will be considered in the casino evaluation process.); id. 1313(1)(l)(2)
(requiring studies and reports regarding, inter alia, local and regional social, environmental,
traffic and infrastructure impacts); id. 1320(2) (requiring Location Board to assign a 20%
weight to local impact and siting factors). Reflecting that critical statutory objective, the
Location Board emphasized in the Board Report that the Gaming Commission should work
with Lago to address potential traffic impacts of its facility on the local community. Ex. 13
(Board Report Excerpt) at 11.
The gaming license awarded to Lago contains enumerated conditions to Mitigate
Impacts on Host and Nearby Municipalities. Ex. 1 (Lago Gaming License Award) 7. With
respect to traffic mitigation, the gaming license states that Lago shall implement only a single
mitigation measure: [w]iden the shoulders of NYS Route 414 and install signage. Id. But that
mitigation measure was only one small component of a much larger set of offsite road
improvements that the Town and involved agencies New York Department of Transportation and
the New York Thruway Authority concluded were essential to avoid a significant adverse impact
on traffic caused by Lago. Ex. 9 (2015 SEQRA Statement of Reasons Excerpt) at 49-52; Ex. 62
(NYSDOT Letter (Apr. 23, 2014)) at 3; Ex. 63 (NYSTA Letter (Aug. 14, 2015)) at 1, 3. Those
essential improvements included: (1) adding a dedicated right turn lane at the intersection of
NYS Routes 318 and 414, Ex. 9 (2015 SEQRA Statement of Reasons Excerpt) at 50; (2) adding
a series of lanes and a new toll plaza lane at NYS Thruway exit 41, id. at 51-52; (3) creating turn

49

lanes at the intersection of NYS Route 5 & 20 and NYS Route 89, id. at 51-52; (4) expanding
NYS Route 414 to four lanes from the Thruway exit to the casino entrance, id. at 52; (5) adding
turning lanes to the intersection of the NYS Thruway and NYS Route 414, id.; and (6) expanding
the NYS Thruway bridge on NYS Route 414, id. Because the license awarded to Lago does not
require Lago to perform critical traffic mitigation measures that the Town of Tyre and involved
State agencies found essential to avoiding a significant adverse traffic impact on the Town, the
license awarded to Lago was arbitrary and capricious and must be nullified.
B.

The Location Board Analysis Relied on by the Gaming Commission Was

Arbitrary and Capricious.

Because the Gaming Commission blindly accepted the Location Boards

recommendations without any scrutiny, the Commission awarded a license to Lago based on a
selection process that employed egregiously arbitrary and capricious reasoning to justify the
selection of Lago, and that again and again treated Lago and other applicants differently with
respect to the same selection factors.
It is well settled that an administrative action based on inconsistent findings must be
nullified. De Marco v. Village of Elbridge, 251 A.D.2d 991, 991 (4th Dept 1998). Imposing a
measure of legal consistency on administrative agencies is part of the tariff that must be paid
for whatever advantage can be claimed for review by a law court of the work of an
administrator. Lefrak Forest Hills Corp. v. Galvin, 40 A.D.2d 211, 217 (2d Dept 1972)
(quotation omitted), affd, 32 N.Y.2d 796 (1973). Accordingly, an administrative agency may
not rule or act in such a way as to result in inconsistent treatment of similarly situated parties.
Exxon Corp. v. Bd. of Standards & Appeals of City of N.Y., 128 A.D.2d 289, 296 (1st Dept
1987); Italian Sons & Daughters of Am., Inc. v. Common Council of Buffalo, 89 A.D.2d 822, 823
(4th Dept 1982) (reversing denial of Article 78 petition because the inference arises that [the
50

public body] may have acted arbitrarily when denying a permit that was substantially similar to
one they granted to another applicant). Yet that is exactly what occurred here on the
cannibalization issue as well as other issues.
As detailed above, for the same reasons that the Location Boards inconsistent treatment
of the issue of cannibalization violated the Equal Protection Clause, it also was arbitrary and
capricious under Article 78.
The Location Board also employed arbitrary and capricious reasoning on numerous other
issues in recommending Lago to apply for a gaming license. Time after time, when it came to
Lago, the Board Report minimized or outright ignored concerns that it cited as reasons for
rejecting other applicants. For example, in explaining the Location Boards rejection of
applicant Capital View, the Board Report noted that there was a substantial level of local
opposition to the casino. Ex. 13 (Board Report Excerpt) at 27. In contrast, 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. Similarly, for three unsuccessful applicants, the
Board Report highlighted the Location Boards 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 a lawsuit brought by local opponents was disclosed in Lagos application, the
Location Board did not even mention it in the Board Report.23
With respect to three applicants that the Location Board did not recommend, 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 Board Report concluded that Grand
Hudsons lack of a player reward program would hinder the creation of a secure and robust
23

That suit was different from the SEQRA action discussed above that Lago did not disclose in
its application.
51

gaming market in the Region and State. Id. at 19. Lago lacks both a player reward program
and a player database, but the Board Report expressed no concern about those deficiencies. Id.
at 32. All of these inconsistencies in the Location Boards selection of Lago were brought to the
attention of the Gaming Commission before it awarded licenses. Ex. 43 (Williams & Connolly
Letter (Apr. 1, 2015)) at 14-15. In the face of that evidence, the Gaming Commissions award of
a license to Lago was arbitrary and capricious and cannot stand.
As the Location Board was tying itself in knots to justify the recommendation of Lago in
Region 5 in light of its differential treatment of other applicants, the Location Board revealed in
its Board Report that it was operating under the erroneous belief that it needed to choose at least
one applicant in each region. The Gaming Act makes clear that no gaming facility license shall
be awarded in a given region if the commission is not convinced that there is an applicant that
has met the eligibility criteria or the board finds that no applicant has provided substantial
evidence that its proposal will provide value to the region in which the gaming facility is
proposed to be located. Gaming Act 1314(3). Yet the Board Report revealed that the
Location Board understood the Gaming Act to require 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.). Because the Location Board was operating under a
misunderstanding of the Gaming Act when it recommended Lago in Region 5, and resorted to
arbitrary and capricious reasoning to justify its selection of Lago, the selection process with
respect to Lago was unlawful and arbitrary and capricious.

52

C.

The Location Board Arbitrarily and Capriciously Relied on a New Selection

Factor Not Contained in the RFA.

The Location Board also acted arbitrarily and capriciously by adding a new selection
factor to its analysis that was not contained in the 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 Yorks tourism industry. Ex. 13 (Board Report Excerpt) at 8.
The Location Board gave considerable weight to this new factor. Id. at 14. The Board Report
relied on it extensively. Id. at 14-15, 27, 28, 29-30, 31, 33, 35, 36-37.
The Location Boards reliance on a new selection factor was arbitrary and capricious
because that factor was not disclosed its RFA. It is black letter law that agencies must evaluate
offerors proposals based on the evaluation criteria stated in the solicitation. Lab. Corp. of Am.
Holdings v. United States, 116 Fed. Cl. 643, 650 (2014). In Lab. Corp., for example, the Court
of Claims invalidated a contract award as arbitrary, capricious, and lacking a rational basis where
an agency relied on a selection factor that was not contained in its Request for Quotations. Id.
(citing Ashbritt, Inc. v. United States, 87 Fed. Cl. 344, 374 (2009)). Similarly, in
360Training.com, Inc. v. United States, 106 Fed. Cl. 177 (2012), the court invalidated a contract
award where the involved agency imposed an undisclosed eligibility requirement. Id. at 180.
Because the new selection factor invented by the Location Board was not contained in its RFA,
the Location Boards recommendations were arbitrary and capricious, and the Gaming
Commissions reliance on those recommendations in licensing Lago requires nullification.
CONCLUSION
For all of the foregoing reasons, and the reasons set forth in the Verified Petition, the
Court should enter an Order and Judgment declaring that the license award to Lago was contrary

53

to law, arbitrary and capricious, an abuse of discretion, and unsupported by any rational basis,
and is therefore ineffective, null and void, and unenforceable.

Respectfully submitted,
Dated: New York, New York
January 19, 2016

RICHARDS KIBBE & ORBE LLP

By: _________________________
Daniel C. Zinman
Matthew M. Riccardi
Alex M. Solomon
200 Liberty Street
New York, NY 10281-1003
Telephone: 212-530-1800
Facsimile: 212-530-1801
WILLIAMS & CONNOLLY LLP24
Daniel F. Katz
Marcie R. Ziegler
Edward C. Barnidge
725 Twelfth Street N.W.
Washington, DC 20005
Telephone: 202-434-5000
Facsimile: 202-434-5029
Attorneys for Petitioners

24

Pro hac vice applications for counsel from Williams & Connolly LLP will be submitted
forthwith.
54