PROVIDENCE — The owners of the struggling Twin River greyhound racetrack and slot parlor will not rule out an appeal to the legislature for a financial break on the hundreds of millions of dollars they are now required to turn over to the state.

But they say they may not need a break if they can negotiate deals with both the Carcieri administration and the dog owners that would let them reduce the number of races they run, continue to provide free play to frequent players and offer new attractions such as “virtual roulette” and “virtual poker” to the customers.

A spokeswoman confirmed yesterday that the state Lottery has already approved the installation next month of one virtual roulette machine with eight seats, which Twin River’s owners said will be the first of its kind in the Northeast.

BLB spokeswoman Patti Doyle said: “The [Lottery] has approved, and the product will be shipped in over the next few weeks. Just a question of how quickly the unit becomes operational.”

In an extended interview yesterday, BLB chief operating officer George Papanier and vice president and general counsel Craig Eaton said they are anxious to dig Twin River out of its current financial hole without filing for bankruptcy protection because they believe such a filing would create a “downward spiral” that would scare off customers and employees.

Having worked for the Trump casino empire in Atlantic City while it spiraled into bankruptcy in the 1990s, Papanier said he knows from experience that there are “a lot of things that go along with bankruptcy that are not necessarily true from a public-awareness perspective.”

When there is a bankruptcy filing, he said, employees worry about the security of their jobs, customers “tend to believe we will not be able to pay jackpots” which though “absolutely, not factually true … can create a significant reduction in revenue,” giving an opportunity for competitors to take “huge advantage of that.”

Gambling is the third-largest source of state revenue, now expected to generate $354.4 million this fiscal year, with Twin River producing the largest share of that money.

The two executives would not say specifically what they are negotiating behind close doors with the company selected by the state to try to straighten out their balance sheet.

BLB Management Services, they said, is committed to keeping greyhound racing.

But, that said, they are talking with “the dog-men” about ways to cut costs, such as reducing the number of races, which is 125 cards of 8 to 10 races each.

“The dog owners — the Rhode Island Greyhound Owners Associations — have expressed a willingness to work with us,” Eaton said.

Eaton said the principals in BLB Management Services are “extremely committed to Rhode Island,” and are not seeking new equity partners, a sale or legislative backing for a referendum that would allow them to operate as a full-scale casino.

Eaton said the owners simply need to work out a “more manageable debt structure.”

Asked if that hinged on keeping more of the money now going to the state from the 4,750-plus video-slot machines, Papanier said: “I just don’t have any comment.”

Twin River is run by a subsidiary of BLB Management Services Inc., 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.

The owners fell behind in their debt payments last March. They currently have $559 million in outstanding loans. Their revenues were still up when other casino operators were down, posting 13.6 percent gains through September, but still not making 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.

While BLB talks with the state about ways to raise its revenue at Twin River, it is holding at bay contractors who worked on the renovations. In March, Dimeo Construction Co., of Providence, the contractor that managed the $225-million reconstruction project, put a lien on the property to secure $5.7 million from BLB. At least 13 Dimeo subcontractors followed with their own liens, totaling about $6.3 million, that were consolidated into a pending lawsuit in Rhode Island Superior Court.

Under a court-approved settlement, BLB agreed to pay $750,000 in interim payments, the last of which — $250,000 to be divvied up between Dimeo and the subcontractors — was paid Sept. 26.

The case introduces a wild card into the financing game, according to court filings, as it opens up the possibility that a Superior Court judge could appoint a “special master” to oversee subsequent payment plans to the contractors. In some cases, a special master functions as chief executive of an entity, deciding on all expenditures, hiring and other issues. Not surprisingly, BLB wants to avoid such an appointment.

“We’re working very hard with all the contractors,” said Eaton, who expects the sides to agree to another payment schedule.

Among the Rhode Island subcontractors waiting for payment are: Arden Engineering Constructors LLC, J.L. Marshall and Sons Inc., Century Drywall Inc., Custom Drywall Inc., and Northeast Steel Corp. Inc.

As the financial situation worsened throughout the year, BLB secured a series of forbearance agreements with its two groups of lien holders.

Under an agreement that runs through Jan. 31, BLB is making interest payments of about $2 million a month to the first-lien holders, which include Merrill Lynch Capital Group, JPMorgan Chase and Deutsche Bank, but not to a second group of unidentified lenders, who gave BLB $145 million of the original $577 million.

The latest agreement with the second group ends Nov. 26. BLB hopes to extend that until Jan. 31.

Asked what happens if Nov. 26 arrives without a new arrangement in place, Eaton said: “We truly don’t know; we’re going to have to cross that bridge when we get to it.”

kgregg@projo.com