During today's Arrow panel at Comic Con International: San Diego, producer Andrew Kreisberg revealed that Ted Kord, the post-Crisis on Infinite Earths Blue Beetle, will not be appearing on Arrow this season becuase the show's request to use him was turned down by DC Entertainment.
They explained it in the context of how Ray Palmer came into the show, saying that when Ted Kord was pitched, DC told them they couldn't use the character because DC have "other plans" for Kord.
Kord has recently begun to appear in the New 52, and will be a key character in one of the chapters of Grant Morrison's The Multiversity. He's also been referenced indirectly a number of times on Arrow, when his company's products have appeared in the show.
Here's the casting call that ultimately resulted in Arrow casting Brandon Routh as Palmer:
‘DANIEL’ | Though Daniel could be a fake name to throw off spoilerholics, this 20something gent — a major recurring character for Season 3 — is a handsome, enigmatic and highly intelligent entrepreneur developing groundbreaking technology. (Picture a business magnate in Ryan Gosling’s body.) Though exuding charm and confidence in public, he privately harbors a tragic past that will drive him to become a tech-powered superhero. Watch for this formidable fella to be a love interest for Felicity and a rival of Oliver’s – both personally and professionally.
Daniel, of course, was presumed to be a reference to Dan Garrett, the Golden Age Blue Beetle and Ted's mentor. Much of the rest fit Ted, including the fact that back when Barbara Gordon was Oracle -- a character often associated with Felicity Smoak -- the pair had a brief relationship.