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Boston Mayor-elect Martin J. Walsh says he will not rule out legal action to stop a Mohegan Sun casino at Suffolk Downs from locating in Revere.

In a move that has generated widespread controversy, Suffolk Downs is proposing to build the project in Revere after East Boston voters rejected the racetrack's earlier effort to bring a casino to their neighborhood.

"I don't want to rule that out," Walsh said when asked about the potential for litigation Wednesday. "Legal action can happen at any point, [any] step of the way. I am not ruling [it] out. I am not saying I am going forward right now."


But while he was unwilling to take legal action off the table, Walsh also said Boston will be a surrounding community to the Revere proposal or a competing casino bid in Everett, if either project wins final approval. And under state law, surrounding communities can negotiate for compensation from a casino that operates in their region.

"I've got to make sure people of those [East Boston] neighborhoods get something out of [a] deal if it happens," said Walsh, who takes office next month.

His refusal to reject litigation as an option was welcomed by Celeste Myers, an anti-casino activist who helped defeat the initial Suffolk Downs proposal in East Boston.

"That really gives me a lot of room for optimism at this point," Myers said.

Chip Tuttle, chief operating officer of Suffolk Downs, did not directly address Walsh's comments about legal action when contacted on Wednesday night.

"We are standing by to begin discussions on a surrounding community agreement with [Mayor Thomas M. Menino] and his team or [Walsh] and his team," Tuttle said. "And we want to ensure gaming development on our property benefits not only our host community of Revere, but our neighbors in Boston as well."


On Tuesday, the state gambling commission paved the way for a referendum vote in Revere on the new proposal, probably in February. Even if voters approve the measure, the project will only go forward if the commission decides to award the sole Greater Boston casino license to the Revere group.

Suffolk Downs' quest for a casino has been uncertain since Nov. 5, when its prior plan was rejected in East Boston but embraced by Revere voters. Original plans called for a casino to be built on the East Boston side of the city line that passes through the racetrack's property.

Within hours of the vote, casino proponents suggested they would bypass the East Boston results by moving the proposal over the city line into Revere, drawing the ire of opponents.

Revere Mayor Dan Rizzo, a vocal casino supporter, did not respond to requests for comment on Wednesday night.

Dot Joyce, Menino's spokeswoman, declined to comment on Walsh's statements about legal action. She said the mayor's staff is waiting for more clarification on the casino issue and working to protect city residents.

"It is wise to take a measured approach to this ever-changing process," Joyce said.

Mark Arsenault of the Globe Staff contributed to this report.