The business group proposing to build a $500 million casino on the New Bedford waterfront has reached an agreement for Foxwoods Resorts to operate the gambling facility, if one is approved and built there.

The agreement means that KG Urban Enterprises, a New York-based development company, has cleared a major hurdle it faced before a March 16 deadline by identifying its expected casino operator.

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But even as KG Urban gained Foxwoods’ commitment as an operator, its relationship with New Bedford Mayor Jon Mitchell appeared to deteriorate.Late Thursday afternoon, Andrew Paven, a KG Urban spokesman, said KG Urban may abandon its plans after Mitchell demanded that it redesign its proposed casino site and make other concessions. RELATED: 2/5/14: Casino pitches made for Brockton, New Bedford, Somerset

“At this point, we are not sure we can come to agreement with this mayor,” Paven said.

Mitchell released a statement saying: “We are in discussions with the developer about whether a casino makes sense at the proposed site. The city would be willing to support a casino proposal so long as, on balance, it advances the city’s long-term economic interests.”

Foxwoods, owned by Mashantucket Pequot Indian tribe, opened New England’s first Las Vegas-style casino in the early 1990s in eastern Connecticut, where for decades Massachusetts residents have been one of the largest blocs of patrons.

“We couldn’t have found a better choice for an operator — no one knows the Massachusetts and New England regional market better than the Mashantucket,” Andrew M. Stern, managing director of KG Urban Enterprises, said in a statement Thursday.

KG Urban Enterprises and Foxwoods Resorts signed a letter of intent last week. Terms were not disclosed.

Later this year, the state Gaming Commission plans to award the last of the three full casino licenses authorized by the 2011 state casino law. MGM Resorts won the Western Massachusetts license for an $800 million casino in downtown Springfield, and Wynn Resorts won the Greater Boston license for a $1.75 billion casino on the waterfront in Everett.

If KG Urban meets the commission’s latest deadline the company would compete for the license against a group proposing a casino on the Brockton Fairgrounds in Brockton, and possibly a third proposal for a casino in Somerset.

Mass Gaming & Entertainment, the group behind the Brockton proposal, is led by George Carney, the longtime owner of Raynham Park, a former dog-racing track that now simulcasts horse racing with video feeds from other tracks. Carney’s partner is Rush Street Gaming, which operates four casinos in the Midwest and Canada.

Sean P. Murphy can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Follow him on Twitter @spmurphyboston.