New York Racetrack Denied Operating License

State regulators have denied a 2004 racing application for troubled Vernon Downs, a Standardbred racetrack in central New York. The Feb. 27 ruling by the New York State Racing and Wagering Board prohibits racing at the facility and keeps shuttered a recently completed video lottery terminal casino.

Citing financial irregularities and a series of compliance problems, regulators also took the unusual course of publicly pleading for someone else to step in and take over the track from its chief investor, Shawn Scott. "Hopefully, we do get someone who's qualified to own and operate that facility," racing board chairman Michael Hoblock said.

The decision came after the board last year rejected a license by Scott, claiming questions over his financial background make him unqualified to hold a license. That ruling is on appeal.

The track had been planning a 120-meet this year to begin April 3. More importantly to its finances, it has an application before the state Lottery Division to open a new racino. But the new gambling hall can't be given a license without the track being licensed.

The track's lawyer said the racing board based its decision on an interpretation about the track's finances that "exhibits a lack of sophistication that's extraordinary." Martin Gersten said the decision will be appealed to an agency hearing officer and, if necessary, to the courts.

The board cited a huge debt level, high-interest loans, rising salary levels, and other problems as contributing to Vernon Downs' fiscal troubles. They said the track is run down, and said questionable code inspections by an official with financial ties to the track left problems like non-working fire sprinklers unresolved.

Gersten said the racing board was holding out false hope that another investor would buy the track.

"Who's going to buy this track for $26 million without a license of VLTs?" he said after the board meeting. He said the racing board "acted arbitrarily and unreasonably and unfairly to the community."

Track officials, who are planning to run television ads pressing their point, said the board's decision will cost hundreds of jobs at both the racetrack and VLT parlor. But Hoblock said there is nothing, including VLTs, to show that Vernon Downs will be able to pull out of its financial slump under the current ownership. He noted Scott, the Las Vegas investor, is unlicensed, and the track "on its face is insolvent."

"For the betterment of racing, we need to move ahead, and hopefully a qualified licensee will present himself or herself to continue racing at Vernon Downs," Hoblock said.