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Plans to build a casino in New York City have collapsed, another victim of the financial crisis that has strangled credit markets.

Racetrack and racino operator Delaware North Companies, slated to build and operate a 4,500-machine casino at the famed Aqueduct Racetrack in Queens, has not been able to raise a promised up-front payment to the state of $370 million for the development rights.

Instead, citing “continued instability in the financial markets,” the company asked Gov. David Patterson to forego the lump sum in favor of graduated payments over a specified period of time. The governor declined and said he will push to have the project re-bid, with Delaware North welcome to join the process.

William Bissett, president of Delaware North Gaming & Entertainment, said he was “disappointed”.

“Given the conditions of the financial markets, our progress in finalizing the Memorandum of Understanding, our phased development plan approach, and our commitment to stand by our $370 million payment, we strongly believe that it is still in the state’s best interest to accept our proposal.”

Buffalo, N.Y.-based Delaware North, which operates three racinos in the state — Hamburg Fairgrounds, Finger Lakes Gaming & Racetrack and Saratoga Gaming and Raceway — was to build a 184,000-square-foot gambling floor at Aqueduct with 4,500 video lottery terminals, restaurants, a hotel and a 60,000-square-foot conference center. Construction was to start this year.

At the time the initial deal was reached, Patterson lauded it as a “critical revenue stream” for a cash-strapped state that is now at the end of its fiscal year and confronting a deadline to pass a budget and close a deficit estimated at more than $15 billion.

Allowing Delaware North to change its bid would have meant the facility could be opened by Jan. 1, 2010, Bissett said. But news reports say some of the losing bidders were pressuring the state, complaining that Delaware North was dragging its feet because it couldn’t secure the funding.

Bissett, however, contended that the company’s revised offer “still provides the state with the best possible outcome.”

“A prolonged re-bid of the project would ultimately cost the state even more in terms of added delays in construction and a missed opportunity to capitalize on a phased opening,” he said.