Lawsuit: Company that manages Jake's 58 is misusing millions at taxpayers' expense

Suffolk's Off-Track Betting is filing a lawsuit against the company that manages its casino in Islandia, claiming the company overcharged millions, at the expense of county taxpayers.

Suffolk OTB, which oversees the casino, filed the suit Monday against Delaware North, which manages the facility and owns the hotel that houses it. The OTB's complaint says in part, "Delaware North's secret business plan for Jake's 58 is simple: Costs are charged to Suffolk OTB's "Jake's 58 Casino" so that Delaware North's 'Jake's 58 Hotel & Restaurant' can make money."

Suffolk OTB Spokesman Jon Schneider says Delaware North is draining the marketing budget to comp hotel rooms it otherwise can't fill, enriching itself by millions. Money that, by law, should go back to OTB, and then to the county.

"There are hotel rooms, millions of dollars of hotel rooms, that are being given away," says Schneider.

But the operator of the casino denies the "contrived allegations of wrongdoing" listed in the complaint.

A spokesperson for Delaware North points out that Suffolk OTB remains mired in bankruptcy despite the success of Jake's 58, while adding, "Under Delaware North's management, the property has consistently out-performed financial projections, resulting in higher-than-anticipated returns for Suffolk OTB, the citizens of Suffolk County, and the State of New York."

The lawsuit is seeking in excess of $5 million in damages. Suffolk OTB says it still expects to climb out of bankruptcy next year, in large part due to the success of Jake's 58.

The casino's home village of Islandia, apparently has not fared as well. It was recently characterized by the state comptroller as being in "significant financial stress."

A spokesperson for the village declined to comment on the lawsuit.