NEW YORK -- New York City has selected a partnership headed by Frank Stronach's Magna Entertainment and Greenwood Racing as the winning bidder for New York City Off-Track Betting Corporation, Mayor Rudolph Guiliani announced Thursday at a Manhattan press conference.

The sale still needs the approval of the New York state legislature, which must change state law in order to allow an entity other than the city to take bets. That process is considered a longshot by many legislators, who are currently embroiled in a battle over the state budget.

Magna and its partners beat out a bid placed by the New York Racing Association and several partners. NYRA owns and operates Belmont Park, Aqueduct Racetrack and Saratoga Race Course.

The price for New York City OTB will depend on the content of the legislation that is passed, if any. The top price Magna will pay would be a $260 million down-payment along with ongoing payments based on the amount of annual handle through OTB. Based on those continuing payments, Guiliani's office estimated the value of the bid at $389 million.

Wilbur Ross, which conducted a financial assessment of the bids for the city, called the deal the "largest privatization deal in the history of the city."

New York City OTB owns and operates 75 off-track betting outlets. The outlets took in more than $1 billion in handle last year.

Along with the legislative concerns, a number of other hurdles stand in the way of completing a deal this year. Local 137, which represents most of New York City OTB's mutuel clerks, has filed a lawsuit to block the sale, and the New York City Council has raised objections to the sale, claiming it was not properly consulted during the bidding and evaluation stages of the process.