LV-financed track denied license

Monday, March 1, 2004 | 11:53 a.m.

SUN STAFF AND WIRE REPORTS

ALBANY, N.Y. -- The state Racing and Wagering Board on Friday refused to renew the operating license for the Vernon Downs harness track in central New York.

Not only does the board's decision kill a 120-day racing season the track had scheduled to begin April 3, it also means the track cannot open, at least for now, a $3.6 million casino featuring slot machine-like video lottery terminals.

Track officials say the casino's electronic gaming machines could bring in $80 million a year, but under state law, the casino cannot operate unless the track has a license to race horses.

The board cited continuing financial losses by the owner of the track, Mid-State Raceway Inc., in making its unanimous decision.

Staffers at the Racing and Wagering Board said Friday they had also lost confidence in assertions made by Mid-State that the track would be financially viable and that management would make needed improvements.

The board urged the 500-plus shareholders of the publicly held Mid-State to seek new managers for the company. Mid-State is controlled by Shawn Scott of Las Vegas, who has been accused in a shareholder lawsuit and by former track personnel of misusing some loan money.

"The New York State Racing and Wagering Board's decision is ludicrous," David Wilson, vice-president of racing and acting chief executive of Vernon Downs, said in a statement. "We are not only disappointed, but also frustrated with the way this has been handled by the board."

The company recently borrowed $23 million in a deal arranged by Vestin Mortgage of Las Vegas. Only $14 million of which went to capital improvements at the track. Of the rest, $7 million covered operating losses from 2003, board officials said.

Of the $23 million loan, Vestin funded $12 million, Owens Mortgage Investment Fund provided $8 million and All Capital -- a limited liability company of which Scott is the owner -- funded $3 million.

A Vestin spokesman said Vestin remains confident that the loan will be paid. The company declined further comment on the licensing issue.