Antitrust Law Daily ‘Racino’ developers’ monopolization claims properly tossed
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Friday, March 18, 2016

‘Racino’ developers’ monopolization claims properly tossed

By Greg Hammond, J.D.

A group of developers who intend to develop racing and casino gambling facilities, known as “racinos,” on two adjoining properties in the Catskills region of New York have failed to identify a plausible relevant geographic or product market for antitrust purposes, the U.S. Court of Appeals in New York has determined. An order dismissing the developers’ antitrust claims was therefore affirmed (Concord Associates, L.P. v. Entertainment Properties Trust, March 18, 2016, Hall, P.).

Seven casino-resort development companies, including Concord Associates, L.P., are attempting to build a casino-resort complex in the Catskills region of New York, containing a luxury hotel, name entertainment, championship golf, harness racing, and casino gaming. They filed suit against Entertainment Properties Trust and other companies, however, alleging a conspiracy to monopolize regarding the racing and casino gaming industry in that area. The district court dismissed the antitrust claims, finding that the developers failed to allege a plausible relevant geographic market for their casino-related products and services. The developers appealed.

Geographic market. Agreeing with the lower court’s order, the appellate court concluded that the proposed geographic market definition—“the Racing/Gaming Market in the Catskills region”—was insufficient. According to the court, the proposed market definition excludes gambling markets in Connecticut, Pennsylvania, and New Jersey that are well-known and accessible to residents of the New York Metro area. In addition, the court rejected the developers’ claim that the bulk of the resort’s potential customers would not view Atlantic City and Connecticut as “reasonably interchangeable substitutes for a Catskills racino in terms of distance as well as regional character,” because the developers provided no plausible basis for explaining why the location of Atlantic City and Connecticut—an additional 25 miles from the New York Metro area—would make a difference.

In addition, the appellate court rejected the developers’ regional characterization of the Catskills, in which the plaintiffs claimed that the Catskills region comprised a “unique” geographic market for a racino and hotel complex based on its status as a tourist destination with “popular natural resources for water sports, mountain sports, hunting and golf.” The court reasoned that merely asserting that a commodity was in some way unique was insufficient to plead a relevant market. In the instant action, the developers failed to allege why their proposed resort differed from the variety of other options for tourists to combine a gambling trip, access to natural resources, and other related activities available roughly the same distance from the New York Metro area.

The lower court also did not err in denying the developers leave to amend. The appellate court reasoned that the proposed second amended complaint alleged two relevant markets that referred to the same geographic area as the market alleged in the dismissed complaint. This “re-characterization” failed to remedy the flaws in the plaintiffs’ proposed geographic market definition, the appellate court concluded.

The case is No. 13-3933-cv.

Attorneys: James Ian Serot (Greenberg Traurig, LLP) for Concord Associates, LP, Concord Raceway Corp. and Concord Kiamesha Casino LLC. Y. David Scharf (Morrison Cohen LLP) for Entertainment Properties Trust, EPT Concord, LLC and EPT Concord II, LLC.

Companies: Concord Associates, LP; Concord Raceway Corp.; Concord Kiamesha Casino LLC; Entertainment Properties Trust; EPT Concord, LLC; EPT Concord II, LLC

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