PROVIDENCE — The Carcieri administration has broken off talks with the owners of Twin River over a financial rescue plan — and potential state takeover — of the greyhound track and slot parlor in Lincoln.

On Monday, Twin River spokeswoman Patti Doyle said: “We have been informed that the governor’s office has broken off all discussions with the owners of Twin River — BLB Investors, LLC. — regarding the possible state takeover or purchase of the gaming venue. In light of this new development, BLB will review its remaining options. ”

It remains unclear why the talks broke down late last week, after months of negotiations between Twin River, its lenders, and the state’s financial advisers. But Governor Carcieri’s office issued this statement: “After lengthy discussions, the State has decided that given the state’s current fiscal situation, it is not prudent to enter into a transaction that would add hundreds of millions of dollars of debt to the State’s balance sheet.”

Doyle would not say what options Twin River’s owners were exploring. But given the slot parlor’s year-long struggle to keep its lenders and contractors at bay, this latest development, at the very least, raised the possibility they would seek protection from their creditors with a filing in U.S. Bankruptcy Court.

But first, they intend to take their case to the legislature.

Doyle said Twin River’s lobbyists at the State House — who include former Senate minority leader Robert Goldberg, the husband of acting Supreme Court Chief Justice Maureen McKenna Goldberg — intended to apprise key lawmakers “of this latest development.”

High-ranking state officials, including General Treasurer Frank Caprio, have talked about a potential state buyout or takeover of the state’s largest slot parlor. House Speaker William J. Murphy has said the state has to consider every option except a reduction in the state’s share of the revenue.

Monday, Murphy issued this statement: “I remain hopeful that there can be a resolution. My main focus is to ensure that the state’s revenue stream will remain strong.”

Caprio said Twin River’s owners should continue their efforts to restructure the terms of their debt, but if “Twin River enters bankruptcy, the state would be in a strong position to protect the video slot revenue and jobs by bidding for the real estate through the bankruptcy court competitive bidding process.”

Gambling is the third-largest source of state revenue, expected by budget writers to generate $246.8 million this year from the slot play at Twin River alone, where there are 4,752 video slots, including a popular virtual roulette game.

The state keeps close to 60 cents of every dollar left behind by losing players, after the winners have been paid. The state then gives the owners of the sprawling slot parlor 27.8 percent of the money left behind in each of the machines placed at Twin River by the Providence-based GTECH and other game manufacturers under contract with the state Lottery, an estimated $107.6 million this year.

And they are not the only beneficiaries of the gambling action.

GTECH alone will receive $24.3 million from Twin River this year as both the electronic systems operator, and provider of 2,599 of the video slots, while the other suppliers — IGT and Williams — get $9.7 million and $2.4 million, respectively; the Town of Lincoln gets $5.577 million, and the Narragansett Indian Tribe, $662,901.

But Twin River has been struggling.

Its owners fell behind in their debt payments in March 2008. At last report, they had $565 million in outstanding loans. Their revenue is stagnant, and they say they have not made enough to pay their bills. Their credit rating has been downgraded to “D,” with one major rating-service agency citing the high probability of a bankruptcy.

Governor Carcieri and his advisers hired two international firms to advise them on the operations at Twin River.

The Willkie Farr & Gallagher law firm and the Blackstone Group, a leveraged-buyout firm, began working for the state in late June or early July, according to Gary Sasse, director of the state Department of Revenue, “to give advice on restructuring issues and other contingencies as they might develop.”

State officials would not discuss the nature and progress of their efforts, except to acknowledge that Twin River’s financial advisers from the New York-based Lazard Ltd. had been meeting privately with the state’s financial team in an attempt to work out a financial plan that safeguarded the state’s huge share of the video-slot revenue.

In the interim, Twin River’s lenders agreed not to exercise their rights to try to seize the property or take any other action that might force Twin River into bankruptcy court for a period of time to give the owners a chance to get their financial house in order.

That agreement lapsed Jan. 5, for reasons that remain unclear. But the talks continued until late last week when, Doyle said, “the notification of the governor’s position was verbally transmitted by the Blackstone Group to BLB consultant, Lazard.”

Twin River is owned by a holding company composed of Kerzner International, Starwood Capital Group and Waterford Group LLC. The company bought the Lincoln Park dog track in 2005, along with three greyhound racetracks and a horse track in Colorado, and then embarked on a $225-million renovation and expansion.

Monday’s news was greeted with concern — but not surprise — by GTECH spokesman Robert Vincent, who said: “It’s just my impression, but I don’t think the governor has been comfortable with bailing out a facility primarily involved in gambling.”’

In Italy for GTECH’s annual meeting, he said a Twin River bankruptcy filing would almost certainly “negatively impact their operation,” by forcing a reduction in spending on marketing, and potential layoffs, at a time when the Connecticut casinos are making a bid for the “core space” where Twin River has its niche.

kgregg@projo.com