04/12/2007 11:00PM

Casinos, malls and, oh yes, racing

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ALBANY, N.Y. - So what would you do with $1 billion a year?

For companies bidding on the franchise held by the New York Racing Association, the answer to that question typically entails promises of massive development at Aqueduct and Belmont, including hotels and shopping malls. Add to that tens of millions of dollars to spruce up the backstretches, including the construction of modern dormitories and child-care facilities; $20 million or so for a couple of synthetic tracks; and another couple of million here, there, and everywhere to cure all of the sport's problems.

The plans for racing in New York - sketched out by four bidding groups over two days of hearings in Albany last week - have never been so grand, and that's because the state's three largest Thoroughbred racetracks have never enjoyed the largesse of slot machines in one, if not two, of its grandstands. But that day is coming, and if everything goes according to the bidders' plans, coming soon.

NYRA's franchise to operate Aqueduct, Belmont, Saratoga, and a yet-to-be-built casino at Aqueduct expires on Dec. 31, and the panel that conducted the hearings is expected to release a report in 30 days detailing its recommendations for the next franchise holder. What that report will recommend is anyone's guess.

According to Paul Larabee, a spokesman for Gov. Eliot Spitzer, who must approve any franchise deal along with the legislature, the report will not necessarily name one of the bidders as the next operator, but rather lay out the government's recommendations for what form the operator should take.

"This was only to put the options in front of the governor, and to have a forum where everyone could benefit from the questions that any panel member might have," Larabee said of the hearings.

The bidders promised huge development projects to support casinos at Aqueduct and Belmont and promised that the revenues from the casinos would go into marketing programs designed to "resurrect" racing. The reason that racing needs resurrection, three of the bidding groups contended, is because of the downward trend of ontrack business - a measurement that many people in the racing industry feel is obsolete since the growth of full-card simulcasting, offtrack betting, and Internet wagering.

Surely, the downward spiral of ontrack business would be reversed with slot machines, some of the bidders contended. Their focus, they said, was on racing, with most of them advocating aggressive marketing strategies to get the "younger crowd" back to racetracks and to make a trip to the track as an "event." Even though NYRA faulted itself for failing to market the sport properly in the last 10 years, those strategies are not new to the racing industry, and they haven't exactly succeeded in mature markets. Still, some of the bidders said that with slots revenues they would build bigger, better facilities - and if you build it, they will come.

In a way, they are right. Plenty of people will walk into Aqueduct when the slots are up and running. But if the last 10 years of experience with slots at racetracks have proven anything, the crowds won't cross over to the racing side. Yet the fiction remains, and no one questions it.

Why? A billion dollars.

For sheer chutzpah, none of the bidders exceeded Steve Wynn, the casino operator who was brought in by Excelsior Racing Associates one day before the hearings started. After telling the panel about his friendship with the Dalai Lama, Wynn equated his standing as a "humanist" with the ability of his casinos to post the "highest yield per table" in Las Vegas while contending that the legislators on the panel needed to have "an honest discussion" about racing's failures and its only salvation: slot machines. Wynn's honest discussion included several hints that the state was overcharging casino operators for their monopolies and that everyone would benefit by a lower tax rate for slot-machine revenues. Then he mentioned something about bulldozing the state's OTBs, and if they didn't like that strategy, he would force OTB's customers to cash their winning tickets at the casinos he would be running.

It all had an element of fantasy. The bidders' grandiose plans are based on changes to the racing law that are hardly guaranteed. In fact, New York's laws explicitly make slot machines at Belmont illegal.

So what can the Spitzer panel do? At best, it can recommend that the legislature adopt a certain set of laws that would enable a franchise operator to enact its business plan.

Wynn may have summed up the absurdity of the hearings best when responding to Assemblyman Gary Pretlow's insistence that Excelsior guarantee its payments to the state. "You can put anything down on a piece of paper," Wynn said dismissively. Then he asked the state to simply trust that his group knew best how to run a casino and to let them do it.

Seconds later, Jerry Bailey, the Hall of Fame jockey who is a paid representative of Excelsior, began the summary to his part of the group's presentation by saying, "Since this is all about racing . . ."

The question is whether racing is, in fact, a top priority at all.