By The Business Review (Albany)

The former winning bidder on a casino complex at the Aqueduct race track downstate has sued the state of New York.

A consortium called Aqueduct Entertainment Group sued the state on July 9 in Schenectady Civil Supreme Court. The group vowed to sue after the state revoked a controversial deal for it to build the casino complex.

Aqueduct Entertainment wants a judge to halt the ongoing bidding process on the contract and give it back to the consortium, said Daryl Davis, an attorney for the group.

⿿The state was arbitrary and capricious and didn⿿t follow their own regulations. The rules changed midway through. They acted beyond their authority,⿝ Davis said. ⿿These claims are very valid.⿝

The lawsuit is yet another chapter in the history of the long-delayed Aqueduct.

In January, state officials selected Aqueduct Entertainment to build the casino complex, which featured 4,500 video lottery machines and a hotel with restaurants.

Yet in March, Gov. David Paterson spiked the deal after Republicans and Democrats demanded investigations by the state Inspector General and other probes into the bid process and why the group was picked.

It was the second time in two years the state had nixed a deal with a winning bidder on the Aqueduct project. The deals are a big factor jeopardizing the finances of The New York Racing Association Inc., the not-for-profit that operates horse racing at Aqueduct and Saratoga Race Course, in Saratoga Springs.

The state is once again rebidding the project, now aiming to announce a potential winner in early August. Just one bidder remains, an affiliate of a Malaysian casino and resort company.

State officials declined comment on the lawsuit, saying they had not yet been served a copy of the allegations.

A hearing date for the lawsuit has not been set yet.

Related story:

Audit: NYRA facing insolvency in 2011

Copyright 2010 American City Business Journals

Copyright 2010