New York Racino Stalled by Licensing Difficulties

Licensing problems have delayed, for possibly well into 2004, the opening of Vernon Downs, which was to become the first racetrack in New York with video lottery terminals. That honor will now go to Saratoga Raceway, which is scheduled to open its VLT operation in mid-January.

The problems at Vernon, located near Syracuse, intensified after its key investor and its president key were determined by state racing regulators to be unfit to operate the facility. Shawn Scott, a Las Vegas businessman, and Hoolae Paoa, president of the track, have appealed the decision.

Stacy Clifford, a New York State Racing and Wagering Board spokeswoman, said it could take months before a hearing is scheduled. On Dec. 23, the board was expected to defer action on the track's operating and simulcasting license for 2004.

Clifford said a number of questions remain about the application, and she didn't know what impact the license denial would have on the Standardbred track's operations. "That's going to be a question the board is going to have to answer," she said.

Without a license, the state Lottery Division, which will operate New York's VLT program, will not grant Vernon a gaming license.

The "experience, character, and general fitness" of Scott and Paoa do not make them eligible to run the facility, the racing board determined. The track is now $23 million in debt to a Nevada company connected to Scott. Since the racing board's license denial forbids Scott and Paoa from being involved in Vernon's operations, Paoa has stepped aside as president of the track pending action on his appeal.

David Wilson, vice president of racing, has taken over Paoa's duties, Vernon spokesman Jim Moran said.

At Vernon, construction of the multimillion-dollar, 35,000-square-foot racino is complete, Moran said. About 1,100 VLTs are waiting to be delivered. Originally, the track said VLTs would be operational by the end of November.

"Now, my understanding is that the machines earmarked for Vernon might be the ones going to Saratoga," Moran said.

The problems for the Vernon Downs operators come as Scott is attempting to develop a racino in Bangor, Maine. The Maine Harness Racing Commission, after a one-day hearing, put off until January another session to consider whether to grant Scott a racing license.

Scott, according to the Bangor Daily News, has become the sole owner of Bangor Raceway, where he is trying to take advantage of a Maine law that legalized slot machines at the track.

New York regulators raised financial questions about companies Scott operated over the years, and Maine officials have said his companies have been involved in 36 lawsuits over an eight-year period. Paoa, meanwhile, has pleaded guilty in the past to stealing money from a Hawaii management company and to an assault charge involving his wife.

In New York, a group of Vernon shareholders recently sued the track's parent company, claiming Scott and associates fraudulently took over the facility, took money from it and drove up the debt. The suit alleges companies tied to Scott charged interest rates up to 25% for money loaned to the track.

Jeff Gural, Gary Greenberg, and former Vernon Downs chief executive officer John Signorelli filed the suit.