12/11/2001 1:00AM

N.Y. grapples with slot rules


NEW YORK - New York Racing Association President Terry Meyocks accompanied officials of the New York State Lottery on a tour of the video-lottery terminal operation at Woodbine Racecourse in Canada on Tuesday.

The trip is part of the lottery department's effort to draft rules that would govern the operation of video-lottery terminals at New York racetracks next year. VLTs were legalized at five New York tracks, including NYRA's Aqueduct and Finger Lakes in upstate New York, in a controversial bill passed just six weeks after the Sept. 11 attacks.

Although VLTs are legal on paper, they will not be on line until the lottery department determines how to regulate them and pay for their operation.

Also, the department's interpretation of what defines a VLT machine is expected to be a target of lawsuits from groups opposed to expanded gambling.

Woodbine's operation has been offered as a model for the department by New York's Thoroughbred racetracks. Under Canadian law, the provincial government owns and operates Woodbine's slot machines and is responsible for security, marketing, and maintenance. The racetrack is responsible for little other than building the facilities to house the machines, while retaining 20 percent of the net revenues.

The New York lottery department has asked New York's racetracks to take a much larger role in VLT operations, however. In a meeting with racing officials in November, the department argued that racetracks should build separate facilities for the machines, lease the machines from the state, and pay marketing and maintenance costs.

The department's proposal was sharply criticized by New York racing officials, who said their profit margins would be squeezed too thin by the plan to justify huge expenditures on new facilities and marketing.

"We can't pick up a lot of those items," said Ron Sultemeier, president of the company that owns Finger Lakes, last week. "But we're hopeful something else can be worked out."

A lottery department spokeswoman, Carolyn Hapeman, did not return a phone call Tuesday.

On Tuesday, NYRA chairman Barry Schwartz also criticized the state lottery department's proposal, saying that Aqueduct would be unable to afford a VLT operation under the current proposal.

Another obstacle might be that the VLT law passed this year is scheduled to expire at the end of 2004, and Schwartz said that NYRA would find it extremely difficult to raise money for capital improvements under that three-year time frame.

"I don't think it was fully thought out when they decided to make the law expire in three years," Schwartz said. "I need to make a major investment, and no one is going to loan us the money for that when they could pull it back three years from now."