06/07/2007 11:00PM

New York franchise may be split

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Officials in the administration of New York Gov. Eliot Spitzer are considering a plan to separate the racing and slot-machine gambling aspects of the franchise held by the New York Racing Association, with NYRA emerging as a strong contender for the racing side of the business, according to an official who met with Spitzer's representatives on Friday.

Karl O'Farrell, the president of Capital Play Pty - one of four groups hoping to obtain the NYRA franchise - said that Spitzer officials made the comments during a meeting with officials of Capital Play. Under the plan, the state would award a franchise to operate Aqueduct, Belmont, and Saratoga, and another to operate a casino at Aqueduct that has not yet been built but is expected to house 4,500 slot machines.

Although the state representatives did not say that NYRA had already been selected as the racing operator, O'Farrell said, NYRA could have the inside track on that aspect of the franchise because of a dispute over whether it or the state owns the franchise's three tracks. O'Farrell said the state officials, which included Spitzer's lead counsel, Richard Rifkin, were "very concerned" by NYRA's land claim.

Capital Play was one of three groups seeking the franchise that met with Rifkin and the other state representatives on Friday. Officials of Excelsior Racing Associates and Empire Racing Associates also met separately with the governor's representatives, but officials for both groups declined to comment on Friday. All four groups gave presentations in April during public hearings on their plans for the franchise, on both the racing and casino sides.

Paul Larabee, a spokesman for Spitzer, said the Friday meetings were for discussions only, and he stressed that Spitzer had not decided on any "absolutes" for awarding the franchise, which expires at the end of the year. Any plan to award the franchise must be approved by the legislature.

"Anything you hear that is time-specific or date-specific would be clearly premature," Larabee said. "These were discussions only." Larabee said Spitzer was not prepared to comment further.

O'Farrell said that Spitzer's representatives plan to talk to legislators about the franchise over the next month and then develop a detailed process in which bidders for the franchise can respond to a new proposal, likely by the end of June, after the legislature adjourns for the year. Responses to the proposal would likely be due in July and August, with the process to award the separate parts of the franchise complete by September, O'Farrell said.

Under that scenario, the legislature would likely be called back into special session to address the franchise, which expires at the end of the year.

According to O'Farrell, the officials said the issue of awarding the franchise has been complicated by NYRA's bankruptcy filing last year, NYRA's land claim, and the recent withdrawal of MGM Grand, the casino company, from an agreement to manage a slot-machine casino at Aqueduct. MGM dropped out of the agreement with NYRA in May, after the April hearings, citing approval delays and anticipated cost overruns for the project.

NYRA officials were not invited to the Friday meetings, but Larabee said "we're in discussions with them regularly" because of NYRA's bankruptcy filing.

O'Farrell said that officials at the Friday meetings indicated that Aqueduct would remain open under the plan "at least for the foreseeable future." Recently, legislators have said that Spitzer has mentioned that the administration is considering closing Aqueduct and conducting winter racing at Belmont, which currently holds a fall and spring meet.

The Spitzer officials also indicated during the meeting that the administration would like to see slot machines legalized at Belmont Park. Slot machines are explicitly illegal at Belmont under existing law, and any proposal to legalize the devices is expected to be controversial within the local communities.