On these crisp October days, there are no fans in the 2,000-seat grandstand at Colonial Downs. The last horses left the lush turf track east of Richmond last Monday. They raced only 25 days and won't return until Labor Day.

Virginia's only racetrack, hailed as the Saratoga of the South when it opened in New Kent County, ended its third season last week financially strapped: It owes $57,750 in local taxes and water bills, with projected losses as high as $1.5 million this year.

Eleven years after Virginia voters legalized betting on horses, horse racing is in big trouble--so much so that the industry says its last hope for survival lies 90 miles away in Northern Virginia, the state's most populous and prosperous region. Colonial Downs and a competing enterprise led by a Middleburg developer and breeder are vying for approval to build a track in Prince William County.

Tomorrow, the five-member Virginia Racing Commission, created in 1988 when horse racing was approved, will hold hearings on both applications, even as officials raise concerns about the financial health of Colonial Downs and its rival.

Colonial Downs wants to build a steeplechase track atop an 85-acre landfill off Interstate 95 in Dumfries. Equus Gaming Co., which operates four tracks in Puerto Rico and the Caribbean, plans a turf track on 220 acres in Nokesville, near the Fauquier County line. Each project would cost about $20 million.

Both operators say Northern Virginia would yield new and sophisticated racing fans, which would guarantee profits, generous prize money and support for the state's $1 billion equine economy of breeders, trainers, jockeys, farriers and farmers.

The horse has a proud history in Virginia, cradle of Triple Crown winner Secretariat. But for decades, Virginia-bred champions have had to leave the state to race.

Colonial Downs was supposed to change that. Instead, the $45 million track is beset by management, political and money woes in a business already loaded with financial risk.

Disputes with contractors, state regulators and horse owners whose declining fortunes it promised to reverse--all have marked Colonial Downs's short and tortuous history. Racing officials say the track owes close to $2 million to vendors and last year alone lost $5.3 million.

Many say the track, with its remote location 30 miles from Richmond, was doomed from the start. Attendance has been as low as 400 on some days.

"They built a track where there were no horses and no people," Equus's James J. Wilson said of his rival. "The whole [horse] industry is in Northern Virginia."

Once the nation's most popular spectator sport, racing has suffered as riverboat casinos and state lotteries have siphoned away betting dollars. Racing now accounts for just 7 percent of the gambling market, and many tracks opened in recent years have failed.

With national odds like those, the racing commission faces a troubling choice: Allow a failing Colonial Downs to expand, or risk sinking it by letting a competitor open a track in Northern Virginia.

Colonial Downs "has been bad for everybody," commission Chairman Robin Williams said.

Although Colonial Downs President Ian M. Stewart agrees that the track has had problems, he attributes them to the failure so far to build a Northern Virginia track.

"There's no question the company has had problems, but you have to look back at how we got here," Stewart said. "From the standpoint of what we've built, no one could possibly expect more."

Even if the commission were to approve a new track--a decision expected sometime next month--nothing can be built without an okay from local officials. And that is not a sure thing.

Prince William, the only Northern Virginia jurisdiction to approve parimutuel betting, did so twice, in 1989 and 1994. But the local mood has changed, and pressure is mounting on county officials to stop both tracks.

The county's vocal social conservatives have attacked gambling as immoral, and homeowners near both sites are worried about crowds on race days and every day. Both tracks plan to allow betting on televised racing beamed in from other states.

The industry increasingly sees off-track betting as the key to its survival, now that attendance at live races is off everywhere. Off-track betting accounts for 70 percent of track revenue nationwide.

Virginia's experience with Colonial Downs has disillusioned even legislators who supported racing.

"We've given it our best shot," said Sen. Kenneth W. Stolle (R-Virginia Beach). "But I'm unaware of horse racing being successful."

Declining track attendance is a threat even in Maryland, where horse racing is a long-standing tradition. The state this year agreed to pump $10 million into ailing track operations.

Stolle said he would rather scrap parimutuel betting than endure "continued embarrassment to Virginians and abuse of their horse industry." He and others are crafting bills to give the state more power to control Colonial Downs.

"Virginia has led the nation in setting an example of how not to run a horse industry," he said.

Even horse owners are furious. Colonial Downs failed on its promise to produce an economic boost for them. In 1994, the track pledged 102 days a year of live racing as a condition of its license. This season it ran only 55 days of harness and thoroughbred events, and prize money has been 50 percent lower than the industry standard.

"Our whole future hangs in the balance," said Donna Rogers, a Loudoun County breeder. "It's 11 years later, and we've had 25 days of [thoroughbred] racing. You can't afford to breed horses and not have anything to do with them."

Colonial Downs was troubled at the starting gate.

By opening day in September 1997, the track was in court over multimillion-dollar claims from contractors, records show. An arbitrator in August ordered the company to pay an additional $2.3 million to its primary contractor.

To cut costs, the track tried to cancel 30 days of harness racing this year but was stopped by state officials. Later, the racing commission fined the track and threatened to yank its license over the low prize money offered thoroughbred winners.

In the end, horse owners, afraid that racing was in jeopardy, agreed to accept the smaller purses.

Among the track's debts after two unsuccessful seasons was $3 million owed the Maryland Jockey Club, which supplies the track's horses. The club has cut debt in return for more control over Colonial Downs.

The track also owes New Kent County $57,750 in real estate taxes and water bills, according to county officials. And it owes dozens of vendors more than $1 million, the racing commission says.

Stewart, the Colonial Downs president, acknowledged that the company also has been billed by the state for hundreds of thousands of dollars in back sales taxes. But Stewart said the company is disputing some of the total, which he would not divulge, and has arranged a payment plan for the rest. Such taxes are not subject to public scrutiny.

The company's stock closed at $1.25 a share Friday. Its high was $9.50 four years ago.

"There's no question the company has an image problem," Stewart said. "We've made substantial improvements financially. . . . We're working our way out of the hole."

The track's four off-track parlors near Richmond and in Tidewater are profitable, according to financial reports, and Stewart estimated that the long-planned Northern Virginia track would bring in revenue of $60 million a year.

As they weigh Colonial Downs's proposal, racing officials are concerned that a track owned by Wilson's group also might have trouble breaking even. Wilson is banking on approval for three additional off-track parlors, which would make for a total of seven in the state. That's one more than Virginia lawmakers approved, and approval for more is unlikely.

Wilson's offshore tracks have been largely profitable, but they have had some recent financial problems. The Caribbean tracks lost $1.7 million last year but have been in the black this year. Wilson attributes the losses to declining attendance after Hurricane Georges. Equus stock, too, has taken a beating on Wall Street, falling from a high of $5.63 a share in 1995 to $1.94 on Friday.

Wilson, who would offer 90 days of live racing in Nokesville (in contrast to 20 proposed by Colonial Downs), said the area's 6,000 horses are proof the industry can survive.

"Obviously the sport is alive and well," he said. "The need [for a track] is there."

Meanwhile, as the racing commission weighs the two proposals, opponents in Prince William have begun their grass-roots assault, flocking to hearings and lobbying officials.

"I don't want my community to gamble to save the horse farms of Upperville," said John Guernsey, a Woodbridge pastor among those leading the fight. "I'm sympathetic to the plight of tobacco farmers who are having tough times, but I don't want my kids to smoke to save the tobacco industry."