In New York, opponents of an offtrack betting venue recently were dealt a blow when Central Islip District Judge Joan M. Azrack upheld a 2018 federal Bankruptcy Court ruling recommending dismissal of the Islandia residents’ lawsuit seeking to close Jake’s 58 casino.
The residents had argued that the Islandia village board used illegal “spot zoning” in its initial 2016 approval of the casino and a subsequent 2017 zoning change allowing casino-hotels in business and industrial zones.
In her ruling, Azrack wrote a 2016 “taxpayer relief agreement,” in which Jake’s 58 former owner Delaware North agreed to pay the village $47 million over 20 years, did not constitute evidence of collusion between the village and the company. She wrote that opponents had failed to provide evidence of collusion and said their allegation “appears to be nothing more than conjecture and speculation.”
Suffolk County Regional Off-Track Betting Corp. spokesman Jon Schneider said OTB officials “were always confident that the village handled our approval correctly and we’re very happy to see this matter resolved and behind us.” Islandia Mayor Allan M. Dorman added, “From the outset of this litigation, the village was confident that it would prevail in this matter. We are pleased with the court’s decision.”
Attorney Paul Sabatino, representing the four Islandia casino opponents, said his clients were disappointed and that he would meet with them soon to decide whether or not to appeal Azrack’s decision. “They’re crushed. They had faith that we had a really strong argument,” he said.
Sabatino said the judge seemed to ignore rulings in previous New York land-use cases that invalidated spot zoning, which approves uses for certain properties that are not permitted on other properties. He said, “The court has overlooked 60 years of New York land use law, which says you can’t adopt land use law for the exclusive use of a single entity at the expense of the overall community.”
He added he believed the village “turned over the entire land use process” to Delaware North. As evidence, Sabatino provided an email from village officials to Delaware North outlining proposed zoning law changes that would allow the casino. “I thought that, by itself, would prove the case, but it was completely ignored,” he said.
Opened in February 2017, Jake’s 58 is one of the state’s most successful video lottery casinos. According to state records, last month alone, its 1,000 video lottery machines generated $360.5 million and paid bettors $338 million. It paid $9.8 million each to the state public education fund and to Suffolk OTB, which pays a portion of its share to Suffolk County. Jake’s 58 was owned and operated by Delaware North until May, when the company sold it to Suffolk OTB for $120 million.
The four opponents originally sued the Islandia village board in 2016 after it approved the betting facility as an “accessory” use of the existing hotel. In 2017, the village board amended its zoning code after New York Supreme Court Justice William G. Ford ruled Islandia should not have granted a permit because it failed to show a casino is “customarily incidental” to the operation of a hotel. The case later moved from state courts to federal bankruptcy court because Suffolk OTB was going through bankruptcy proceedings; it paid off its debts last year and avoided bankruptcy.
