Pennsylvania's last available horse-racing license - and the slot-machine license possibly to follow - shouldn't go to a track owned by a family with past mob ties, state attorneys told the state Supreme Court yesterday.

The state Harness Racing Commission is trying to reverse a lower-court victory by the grandchildren of Carmen Ambrosia, who succeeded in overturning a 2005 decision by the commission to refuse a track license based on their grandfather's business dealings with mobsters.

State officials said they were worried about public perception of the racing industry. "It's the mere appearance of impropriety that makes people believe there's something wrong with racing," said Harness Racing Commission attorney Jorge Augusto.

In November 2005, the commission rejected the license application for a track at Bedford Downs in Lawrence County, north of Pittsburgh.

Ambrosia's grandchildren appealed, and Commonwealth Court last year agreed that the commission had improperly held Carmen Shick, his brother, Ken, and sister, Kendra Tabak, responsible for their grandfather's dealings. The commission appealed to the Supreme Court.

Ambrosia allegedly made loans to organized crime figures in the 1980s through his company, Ambrosia Coal, though those allegations were never proved in court.

"What is preventing my client licensure here is the actions of a deceased grandfather, who died more than 20 years ago," Bedford Downs' attorney, Victor Stabile, told justices yesterday.

The adult grandchildren who own Bedford Downs are not suspected of any crime ties. State officials said Ambrosia's loans became an issue because Ambrosia Coal was involved in the financing for the track and the uncollected loans were still on the company's books.

"Any taint in the least is enough for the Commonwealth to have concerns," Leo Pandeladis, counsel for the state Department of Agriculture, said after the hearing. The department oversees horse racing.

The 2004 Gaming Act authorizes up to 5,000 slot machines at four harness tracks and three thoroughbred tracks in Pennsylvania. Three thoroughbred tracks, including Philadelphia Park in Bensalem, have already been licensed for slots, but only only three harness tracks, including Harrah's Chester in Chester City, are licensed.

The state Gaming Control Board, which would have to consider Bedford Downs for a slots licence were it to win the harness license, has been watching the case closely to see how far it can go in denying licenses to those with ties of any kind to organized crime.

The board has already awarded a stand-alone slots license to Scranton-area businessman Louis DeNaples despite allegations that he had a relationship with a local mob figure. The board said that none of the allegations about DeNaples could be substantiated.

DeNaples, who plans to open the rebuilt Mount Airy Lodge in the Pocono Mountains this fall, has denied any such ties.

Contact staff writer Jeff Shields at 610-313-8173 or jshields@phillynews.com.