New York leaders were apparently close to a deal to keep New York City Off-track Betting Corp. in operation beyond Sunday's deadline, only to return to more closed-door talks.
The OTB negotiations join a few others over policy issues that lawmakers and Paterson hope to settle by June 23. That's the scheduled end of the 2008 legislative session.
Senate Majority Leader Joseph Bruno said he had thought there was a deal, or almost a deal, to keep the troubled, billion-dollar bookmaking operation on the job along with 1,500 employees.
Bruno said it will likely be a temporary or long-term takeover of the city OTB by the state, state funding to cover the city's losses if it continues operating the agency, or a combination of those options.
State officials say the New York Racing Association or another major racing entity now competing to run video slot machines at Aqueduct race track could also be enlisted.
"I thought we had an agreement," Bruno said.
Bruno said a takeover by the state could cost $90 million, a tough bill as revenue growth declines and a deficit of $5 billion is projected for the 2009-10 fiscal year.
"The closing will put 1,500 people out of work," Paterson said. "I would everything to stop that."
Paterson, Bruno and Assembly Speaker Sheldon Silver were continuing negotiations with a goal of avoiding the shut-down on Sunday. That's when New York City Mayor Michael Bloomberg said he will no longer subsidize a gambling operation that posted losses of millions of dollars a year.
State and city officials are trying negotiate a new revenue sharing agreement that will better fund the many beneficiaries of OTB's take from its 60 branches and eight restaurants, including governments and the racing industry.
There are several regional OTBs around the state run independent of government by politically appointed boards. But the New York City OTB board said a new fiscal structure was need to keep it in business.
OTBs were created 30 years ago to take horse racing bets away from tracks and to provide revenues from the bets to governments and the racing industry. New York City OTB handles about $1 billion a year in bets. Last year it reported a $13 million shortfall.