Curt Schilling’s 38 Studios, which borrowed $75 million from the Rhode Island Economic Development Corporation, is hurting financially and may be unable to pay back its debt.

That’s bad news for people who dug the studio’s debut game, Kingdoms of Amalur: Reckoning, because it means that we probably won’t be seeing a sequel or the long-in-development massively multiplayer online game any time soon.

Joystiq reports that a default on the bond would mean the Kingdoms of Amalur franchise would belong to the Rhode Island taxpayers. At that point the state would probably auction off the franchise for far less than its debt and eat the loss.

Maybe a publisher that respects Amalur’s potential could come along, snatch it up and do the series justice. And maybe Schilling will report back to the Boston Red Sox and score a ridiculous signing bonus that lets him pay off the debt and keep his game company’s intellectual property. Neither scenario is likely.

Let this be a lesson to states business-promoting organizations: Beware of lending money to baseball legends who are dabbling in the videogame business.