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First Capital Realty’s letter states that no one would want to live near a casinoKevin Van Paassen/The Globe and Mail

A Toronto real estate company fighting plans for a casino at Exhibition Place is questioning whether city council has the legal ability to put strings on its approval of a downtown gambling complex.

First Capital Realty, a mall owner with major holdings at Liberty Village, is arguing that under provincial regulations, city council has no ability to give conditional approval to casino plans.

"A vote yes on a conditional resolution for a casino does not comply with provincial legislation and First Capital Realty is prepared to take all necessary steps to challenge that outcome," states a letter sent Monday to Mayor Rob Ford and the members of his executive committee.

The executive committee last week voted to support a downtown casino and the expansion of existing gambling facilities at Woodbine Racetrack, recommending that council say yes provided more than 40 conditions are met.

In its letter, the real estate firm notes that such conditional approval is not addressed in the provincial lottery and gaming act or in the regulations that govern the establishment of a "gaming site."

Toronto lawyer George Rust-D'Eye, a municipal law expert, said the company's letter raises a valid question that has not been tested in the courts.

"It is certainly a grey area," he said. "There is nothing in the regulation that says this decision can be made conditionally."

Mr. Ford said Monday he had not read the letter, but said the final decision will be made at Queen's Park.

"That's up to the province," he said. "We have a proposal. All I'm asking council to do is move that proposal in front of the province and let them say yes or no."

A spokeswoman for the city noted that under provincial regulations Ontario Lottery and Gaming Corp. cannot establish a gambling site in a municipality before receiving a supporting resolution from the municipal council.

"The OLG has agreed to implement commercially viable conditions in its procurement process," Jackie DeSouza said in a written response. "The OLG would enter into a hosting agreement with the City, obliging the OLG to meet City conditions. If conditions are not met, Council can decide not to proceed."

OLG did not respond to a request for comment, but senior executives with the provincial agency have said that the city will be able to reconsider the casino question in a year's time once an operator has been selected.

That understanding was echoed by the city manager last week who told councillors that OLG had indicated to staff they could "work" with the 43 conditions outlined in the casino report.

The committee went on to recommend several more.

OLG wants to establish a new casino in the GTA as part of plans to expand gambling sites in the province and the Toronto waterfront is its first choice. If Toronto rejects plans for a downtown site, the provincial agency has said it will look to locate a casino in a neighbouring municipality.