Colonial Downs, the financially strapped horse racetrack near Richmond, rejected an eleventh-hour buyout bid yesterday by a Middleburg businessman who had hoped the deal would open the way for his own racetrack in Northern Virginia.

Colonial Downs officials, who lost their campaign to build a second racetrack in Prince William County this month, called James J. Wilson's $62 million offer "wholly inadequate" because it amounted to mostly a stock trade rather than a cash deal.

"There's no cash involved," Colonial Downs President Ian M. Stewart said. "And they're not a very strong company financially."

It's unclear what effect the failed deal will have on Wilson's efforts to persuade state officials today to reconsider his plans to build a $20 million racetrack on 220 acres in Nokesville in western Prince William.

Two weeks ago, the Virginia Racing Commission, which must issue any track license, turned down Wilson's application, saying a competitive Prince William track would likely kill off Colonial Downs's struggling operation in New Kent County. At the same time, the panel also killed Colonial Downs's proposal for a second track in Dumfries.

The decisions appeared to dash the fledgling industry's last hope for survival--a presence in the affluent Northern Virginia market.

But Wilson's offer last week--through his Equus Gaming Co.--to buy Colonial Downs's ailing track in New Kent County prompted the panel to schedule a special meeting today to reconsider the Nokesville track.

Wilson told the commission last week that competition would cease to be an issue should he buy the New Kent track. But even without a deal, the Loudoun County horse breeder and developer said he doubts Colonial Downs can keep its license because it won't be able to afford to put on enough live racing.

Colonial Downs officials have acknowledged that their money-losing New Kent track, which has offered few live race days since it opened two years ago, is unlikely to meet the state's requirement of 150 days of live racing by 2002.

"I think it's pretty clear that in 2002 the [New Kent] track closes," said Wilson, who runs several tracks in the Caribbean. "The question is, what will the racing commission do to protect horse racing in Virginia?"

Although Wilson's proposal for a Nokesville track promised plenty of live racing, the commission questioned whether he, too, would be able to run enough lucrative off-track betting parlors to eventually meet the 150-day standard.

The commission must act today, the last day of a five-year period approved by Prince William voters to allow the creation of a horse racetrack.

One member of the panel was skeptical that Wilson has a case. "It doesn't look like anything has really changed since we turned down his application" earlier, said Ernest Oare, a Warrenton horse owner.

Wilson's buyout deal had offered Colonial Downs stockholders a stock trade with Equus Gaming Co. worth about $35 million. Equus also would have assumed the track's $27 million debt.

But Colonial Downs officials noted that Equus stock, like much of the troubled horse racing industry, has fared no better than their own. Stock in both companies has tumbled since they went public several years ago. Equus reported losses of $1.5 million last year.

CAPTION: Colonial Downs has had some exciting races but few race days or fans since opening in 1997 as Virginia's only track for parimutuel wagering.