New York state could reap at least $2.1 billion if it auctions off video lottery terminal franchises at Aqueduct and Belmont racetracks, sells the tracks now run by the New York Racing Association, and privatizes the six regional off-track betting corporations now scattered around the state.That's according to a study by the Maryland Tax Education Foundation, a conservative research group that has gotten into racing and gambling battles in Maryland, Pennsylvania, and Ohio. Its report said New York state risks giving away too much of its racing-related assets unless it engages in a true, open auction process.The value of the VLT, track, and OTB assets assigned by the group is four times what the Friends of New York Racing last year said could be the worth to the state if it merged the tracks with the OTBs and expanded VLTs to Belmont."It is a vision that provides taxpayers with less than full value," said the Maryland group's study, which was conducted by Jeff Hooke, a Virginia investment banker, and Thomas Firey, a managing editor of a publication produced by the libertarian Cato Institute in Washington, DC."Clearly the state of New York and its citizens benefit from a rich Thoroughbred tradition, VLTs, OTB and related economic activities. However, before providing a massive wealth transfer that may or may not be applied to horseracing improvements, state policymakers should examine other less costly, and perhaps more effective, means of supporting horseracing and horse breeding and last, but certainly not least, the state treasury," the report said.The scenario by the group for the VLT franchise at or near Aqueduct and Belmont assumes that the current MGM Mirage VLT deal with NYRA does not go forth. MGM could bid on the new franchise, the study envisions. It calls for a total of 9,500 slots at the two tracks with a franchise period of 20 years. It also assumes the two 200,000-square foot casinos would cost a combined $200 million – far less than the $170 million NYRA estimates for its planned VLT parlor at Aqueduct alone. The Maryland group proposes that the total revenue sharing for horsemen and breeders, which now caps out at a total of 11.5% after five years, be reduced to 2.5%. It said the 7.5% plan by the Friends of New York Racing would yield $130 million for the horsemen and breeders. "A reasonable assumption is that many of the racehorse owners are far more wealthy than the average New York resident and that the New York Legislature may find it difficult to approve such a subsidy or wealth transfer," the report said of the higher revenue sharing level.The study also envisions 25 million visitors to the two racetrack casino facilities, and that a bettor would lose an average of $70 per day on the VLTs. In all, it said the VLT franchise licenses could bring the state $1.4 billion from private investors bidding in an open auction.The study also estimated the value of the Aqueduct, Belmont, and Saratoga racetracks now operated by NYRA's franchise, which expires at the end of 2007, at $634.5 million – an amount that considers land values for the 806 total acres of the three facilities. To get what the group believes is a true value of the land, it also took into account the cost involved in changing the zoning, demolishing the tracks, and paying employee pensions if the three tracks were shuttered and re-developed into other uses. The study also assumes the state owns the land upon which the racetracks sit. The NYRA disputes that claim. "New York's racing structure is going to change. That is a certainty," said the group in urging a bidding process for the different racing assets.Bennett Liebman, director of a racing and gambling program at Albany Law School, said he agrees with some of the concepts put forth by the group. "I kind of agree with the general idea," he said, "which is that these are valuable franchises and the state shouldn't be giving them away."Liebman said it would be easier to bid out a VLT franchise than the racetrack franchise. "The VLT is a state-run operation through the Lottery," he said, noting that the state agency determines which machines can be played and other restrictions. "In horse racing, you want to put out the absolute best product," Liebman said, which raises concern about the racing franchise going to a highest-bidder only system.Hooke, who was unavailable for comment, said in a statement that Pennsylvania sold $4 billion worth of slot machine franchise and track owners for 15 cents on the dollar of their real value. "New York state risks a similar giveaway, unless a transparent auction process is conducted," he said.