The now US president was in the running for the contract in 1987 with joint venture partner the Kern Corporation, but Australian police were so concerned they recommended it be excluded.
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At the time, Trump operated two casinos in Atlantic City -- Trump Plaza and Trump's Castle, and was close to owning a third.
"Atlantic City would be a dubious model for Sydney and in our judgement, the Trump Mafia connections should exclude the Kern/Trump consortium," the New South Wales Police Board said in report dated April 3, 1987.
A summary of the board's position was contained in cabinet minutes from the then-NSW Labor government on May 4 that year, released Thursday after being declassified and confirming revelations in The Australian newspaper last month.
No further details on the alleged mafia links were provided.
The documents said the consortium's plans were "rich and attractive" and it had the capacity to operate a casino, but warned that its revenue estimates were "not soundly based".
Of the four tenderers for the project, the police board cautioned against three of them, including the Hong Kong Macau Sydney consortium due to its "Chinese Triad association".
The project was later abandoned.
In its report before the documents were declassified, The Australian recounted how Trump boasted about his plans to the newspaper.
"If our design is chosen, it will not only be the largest, but one of the most magnificent, one of the most beautiful hotels anywhere in the world," he said in February 1987.
The newspaper cited a retired businessman involved in the Trump bid as saying he was unaware of the police board recommendation.
"All of us had to undergo police investigation; we were told that everyone had to be cleared from a police perspective," he said, declining to be named.
"The plan was for the Kern Corporation to build the casino, and for Trump to run it because he had the licence and experience in Atlantic City.
"I was not aware of the police report; it is the first I've heard of any mafia connections."
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