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Judge dismisses Islandia residents' lawsuit against Jake's 58 casino

Jake's 58 Hotel and Casino in Islandia seen

Jake's 58 Hotel and Casino in Islandia seen here in 2018. Credit: James Carbone

A federal judge has dismissed a lawsuit filed by Islandia residents seeking to close Jake's 58 casino.

Central Islip District Judge Joan M. Azrack on Tuesday upheld a 2018 federal Bankruptcy Court decision that recommended throwing out the casino opponents' lawsuit challenging the Village of Islandia's decision to approve the Suffolk OTB betting parlor.

Azrack rejected residents' arguments that the Islandia Village Board employed illegal "spot zoning" in its initial 2016 approval of the casino and a subsequent 2017 zoning change allowing hotel-casinos in business and industrial zones.

In a statement, 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 said in a statement: "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."

Huntington Station lawyer Paul Sabatino, who represents casino opponents, said his clients were disappointed. He said he would meet with them this week before deciding whether to appeal Azrack's decision.

"They’re crushed," Sabatino said of his clients, four residents who live near Jake's 58. "They had faith that we had a really strong argument."

Jake's 58 casino-hotel had been owned and operated by Buffalo-based entertainment conglomerate Delaware North until May, when the company sold the property for $120 million to Suffolk OTB.

Delaware North spokesman Glen A. White declined to comment.

Jake's 58 has been among the state's most successful video lottery casinos since it opened in February 2017. Last month alone, its 1,000 machines generated $360.5 million in bets and paid bettors $338 million, according to state Gaming Commission records.

The casino last month paid $9.8 million each to the state public education fund and to Suffolk OTB. A portion of OTB's share is paid to Suffolk County.

Casino opponents Jennifer Tomasino, Kevin Montano, Richard Meyer and his wife, Apryl Meyer, had initially sued the village in 2016 after the village board approved the betting facility as an "accessory" use of the existing hotel.

The village board in 2017 amended its zoning code after State Supreme Court Justice William G. Ford ruled that 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 was later moved from state courts to federal bankruptcy court because Suffolk OTB was going through bankruptcy proceedings.

OTB last year paid off its debts and escaped bankruptcy.

Azrack last week dismissed opponents' argument that a 2016 "taxpayer relief agreement," in which Delaware North agreed to pay the village $47 million over 20 years, constituted evidence of collusion between the village and the company.

She wrote that opponents had failed to provide evidence of collusion, adding their allegation "appears to be nothing more than conjecture and speculation."

Sabatino said the judge appeared to ignore rulings in previous New York land-use cases that had invalidated spot zoning — the practice of approving uses for certain properties that are deemed impermissible on other properties.

"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," Sabatino said, adding he believed the village "turned over the entire land use process to Delaware North" to approve Jake's 58.

He said he had offered as evidence an email from village officials to Delaware North outlining proposed zoning law changes to legalize the casino.

"I thought that, by itself, would prove the case, but it was completely ignored," Sabatino said.

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