SCHENECTADY - A New York judge yesterday paved the way for a Malaysia-based company to get a contract to build and operate video slot machines at Aqueduct racetrack in New York City, a project that is expected to provide hundreds of millions of dollars in revenue a year to the racing industry and the cash-strapped state.

For the state government, it means a $300 million upfront payment once the contract is awarded by the Lottery Division. The deal is also crucial for the New York Racing Association and the cash flow it needs to operate thoroughbred tracks at Saratoga, Belmont and Aqueduct.

The sole remaining bidder for the right to operate 4,500 machines at the Queens track is Genting New York, an offshoot of a Malaysian company. Three other potential bidders made no offers and two others were disqualified for deviating from bid requirements.

Aqueduct Entertainment had won a previous round of bidding but was rejected later in the process by the Lottery Division. It sued and won a temporary restraining order that prevented lottery officials from approving a new deal.

State Supreme Court Justice Barry Kramer dismissed the lawsuit yesterday, lifting the restraining order.

Kramer concluded the Lottery Division had "a rational basis" for rejecting Aqueduct Entertainment's bid. He said information about key personnel in the consortium was not provided by the deadline and noted that Aqueduct Entertainment failed to bid in the latest round.

Kramer found no basis for the group's claims that its constitutional rights to due process and equal protection were violated.

Lottery Director Gordon Medenica said the lawsuit and restraining order set them back only one day, which they made up, and the agency expects to make its recommendation to Gov. David A. Paterson and legislative leaders as scheduled by Aug. 3. Genting New York, whose proposal has been under review, remained a qualified bidder yesterday, he said.

Aqueduct Entertainment lawyer Daryl Davis said he will recommend an appeal.

The judge's information was inaccurate and all key personnel information had been provided on time, Davis said. Also, Aqueduct Entertainment was prohibited by regulation from bidding again for 90 days after the previous round ended, a period during which the latest solicitation was issued, he said.

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