06/26/2003 11:00PM

Penn. license thrown out

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A Pennsylvania court ruled on Thursday that state regulators failed to follow proper procedures in granting a racing license to a group hoping to build a new harness track and casino in Erie, Pa.

In the ruling, Pennsylvania Commonwealth Court said that the Pennsylvania Horse Racing Commission could not award the license without letting other applicants cross-examine witnesses. The court ordered the license vacated.

The racing commission awarded the license earlier this year to MTR Gaming Group Inc., which also owns Mountaineer Park, a racetrack-casino in West Virginia. The award was subsequently challenged by Magna Entertainment Corp., which owns The Meadows in Pennsylvania.

A number of racing companies have been competing to get the remaining racing licenses in Pennsylvania because of the anticipation that the legislature will legalize slot machines at tracks. The grant to MTR represented one of the two remaining harness licenses. Another Thoroughbred license is also still to be granted.

Greg Santoro, the chief counsel for the Pennsylvania Department of Agriculture, which provides legal services to the racing commission, said that the commission has two options because of the court ruling: hold a new hearing to award the license or appeal the ruling to the state supreme court. He said that he has not yet consulted with the commission about which course of action to take.

If the commission holds another hearing, it is likely that Magna will drop its objections. The company reached a settlement with MTR last week, officials said.