The New Mexico Racing Commission (NMRC) will keep bidders for the state’s sixth and final racino license on tenterhooks, after an eleventh-hour legal challenge prompted it to postpone its decision.

New Mexico racino

Full House Resorts’ “moving grandstand” is one of five proposals bidding for the sixth New Mexico racino license. The choosing of the winner was delayed by litigation from competing bid Hidalgo Downs this week. (Image: Full House Resorts)

Commissioners were expected to announce the winning bid on Thursday, but instead they announced they would be seeking legal advice after one of the bidders — Hidalgo Downs — filed a preliminary injunction to halt the process.

Hidalgo Downs is one of five companies vying for the license. The lawsuit claims that a feasibility study on all five bidders conducted by analysts for the NMRC was flawed when it concluded the Hidalgo Downs proposal would generate less slots revenue than competing bidders and therefore less revenue for the state.

To add insult to injury, the study also found that the proposal would cannibalize revenue from existing racinos within the state.

Hidalgo Downs — which aims to build a racetrack in Lordsburg, Hidalgo County, southwestern New Mexico — wants a judge to order that a new study be commissioned.

‘Biased’ Report

The company claims the study is a “marketing plan” in support of Full House Resorts of Las Vegas, adding that it “does not appear to meet the minimum requirements for a comprehensive, standard and objective feasibility study.”

Full House wants to build a racetrack in Clovis, Curry County, which will feature a futuristic “moving grandstand” which will follow the horses around the track like a sideways-facing train.

NMRC said it was advised to put the decision on ice by the State Attorney General’s Office until the litigation is resolved. The move shows just how carefully the regulator is treading and how susceptible it may be to litigation if gets the final decision wrong.

As the Santa Fe New Mexican points out, a new racino will generate hundreds of millions of dollars in slot machine winnings for its owner, which could lead losing bidders to sue if they feel they have been hard done by.

No more than six tracks are permitted to exist in the state under the terms of the gaming compacts New Mexico has agreed with its numerous tribal operators.

Opposition from Existing Racinos

In 2008, the NMRC issued a sixth license to a group that planned to build a racetrack in Raton, Colfax County, but like so many casino projects at the beginning of the recession, it bit the dust.

As well as losing bidders, the NMRC may have to brave the wrath of the state’s five existing operators, who claim a sixth racino would damage an already struggling industry.

In a November 13 letter to the commission, they warned the industry was “far from healthy and not in need of additional forces creating additional downward pressures.”

Meanwhile, on Thursday, bidders were also treading carefully, anxious to avoid showing their frustration for fear of offending the commissioners.

Full House Resorts swallowed its disappointment and told the Santa Fe New Mexican that it applauded the commission for taking a “prudent path.”