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Casinos Boost Bottom Line

But Pa.’s slots threaten what was once a sure thing

August 8, 2008

WHEELING - Roulette, blackjack and Caribbean Stud helped Wheeling Island Hotel-Casino-Racetrack and Mountaineer Casino Racetrack and Resort earn a combined revenue of nearly $275 million between Dec. 20, 2007, and July 19.

That's $14.3 million more than the $260.6 million the two tracks earned between Dec. 20, 2006, and July 19, 2007, prior to the implementation of table gambling. The tracks also are battling a weak economy in the Upper Ohio Valley and higher consumer prices this year.

Since the December opening of table gambling at the two Northern Panhandle facilities, the Wheeling track has earned $117.2 million from slots and table gambling, about $1.26 million more than the previous year's take. Mountaineer has earned $157.7 million, about $13 million more than the previous year, according to the West Virginia Lottery Commission.

Article Photos

AP Photo
A woman plays the slots at the Philadelphia Park Casino and Racetrack in Pennsylvania. Casino gambling has helped West Virginia’s tracks, but Pennsylvania’s slot machines are biting into profits.

In comparison, The Meadows Racetrack and Casino in Meadowlands, Pa., about 35 miles northeast of Wheeling, has raked in $138.5 million over the same seven-month period - and The Meadows does not have table gambling, according to the Pennsylvania Gaming Control Board.

Combined, the three tracks earned revenue of more than $413 million since December.

A look at Wheeling Island and Mountaineer's numbers show that while table gambling has been successful in bolstering the track's bottom lines, slot machine play has dropped considerably over the past year.

Counting only slot machine revenue, Wheeling Island earned $97.3 million for the period from Dec. 20 to July 19, while Mountaineer took in $129.8 million. These numbers are down about 10 percent from the $115.9 million for Wheeling Island and $144.6 million for Mountaineer during the same period a year earlier.

As for table gambling, the two tracks have combined to earn $47.7 million in revenue since Dec. 20, with Wheeling Island taking $19.8 million and Mountaineer claiming nearly $27.9 million.

Nancy Bulla, West Virginia Lottery Commission spokeswoman, said the state's transition to table gambling has been smooth.

"Lottery Director (John) Musgrave made sure to dot every 'i' and cross every 't' as we got ready for table gambling, which ensured a smooth process," she said.

Bulla said the main purpose of table gambling was to help offset projected losses in slot machine revenue upon Pennsylvania plugging in its video lottery machines.

"The table gambling has done everything we expected it to do," she added.

Mountaineer spokeswoman Tamara Pettit said the Chester track is pleased with how table gambling has allowed it to expand its entertainment options.

"I think (table gambling) has exceeded any expectations we could have had. It has added another element for us that has allowed us to attract many new customers," she said.

Jim Simms, president and general manager at the Wheeling Island track, said table games have been good for business - but not good enough to counteract the effects of competition from the Keystone State.

"Our slots are down approximately $16.5 million from last year, primarily due to the impact from The Meadows," Simms said. "While our table games have contributed approximately $16.5 million, with poker adding $3.4 million, when you consider the extra labor costs associated with operating table games and our table games marketing expenses, Wheeling Island is actually trending approximately $3 million behind last year.

"Table games, while positively contributing to the business, have not offset the lost business from Pennsylvania slot Free Play initiatives," he added regarding $20-$50 credits that are being offered to slots players at Pennsylvania casinos. West Virginia tracks now are seeking to offer similar credits to retain customers.

In terms of table gambling earnings, the two Northern Panhandle tracks have combined to earn $836,288 from the game known as Big Six; $1.5 million from blackjack; $385,522 from Caribbean Stud; $9 million from craps; $860,419 from four-card poker; $1.7 million from Let it Ride; $373,975 from Pai Gow; $7.7 million from poker; $4.4 million from poker tournaments; $4.9 million from roulette; $4.8 million from three-card poker; $1.1 million from Texas Hold 'em; and $16,580 from mini bac.

State Delegate Jack Yost, D-Brooke, said the money earned from table gambling has benefited the state's budget.

"Because of the money we have received from table gambling, the governor has been able to use some other money to pay down various debts in the state," he said.

"Financially and economically, table gambling has been very good to the state," Yost added.

State Sen. Jeff Kessler, D-Marshall, said table gambling "has been successful for West Virginia."

Delegate Orphy Klempa, D-Ohio, said the games have provided job growth for the Northern Panhandle.

"It is really good to see that so many people have been able to get jobs at the tracks," he said.

In observing West Virginia's success with table gambling, Pennsylvania legislators are now holding a series of public hearings to allow casino executives and others to share their views on House Bill 2121, which would permit table gambling at Pennsylvania's slot machine facilities, such as The Meadows.

Kessler said West Virginia would be hurt by legalized table gambling in Pennsylvania.

"Many states are looking to pay off debts without raising taxes," he said, noting Ohio recently added Keno as a way to help pay off debt.

"If these other states take some of our business, we will just have to adapt," Kessler said.

Delegate Tal Hutchins, D-Ohio, also said the Mountain State would be hurt if its larger neighbors were to expand their gambling offerings.

"If Pennsylvania picks up tables and Ohio gets gambling, we would be in trouble. We knew we would take a hit once Pennsylvania started with slots, so it would be the same thing if they got tables," he said.

In addition to The Meadows, other Keystone State casinos that may eventually offer table gambling include Mohegan Sun at Pocono Downs in Wilkes-Barre; Philadelphia Park in Bensalem; Harrah's Chester Downs in Chester, Pa.; Mount Airy Casino Resort in Mount Pocono; Hollywood Casino at Penn Nation Race Course in Grantville; and Presque Isle Downs in Erie. Presque Isle is owned by MTR Gaming Group Inc., which also owns Mountaineer Racetrack.

There's also the Majestic Star Casino proposed to open on Pittsburgh's North Shore in 2009.

Given the possible proliferation of table gambling in the future, Hutchins said it is time for West Virginia to focus on different industries.

"I just don't see gambling as a growing industry here anymore," he said.

Both Hutchins and Klempa said the recently announced Northern Appalachian Fuels coal liquefaction plant to be built in Benwood by Consol Energy Inc. and Synthesis Energy Systems Inc. is an example of the way the state should grow its economy.

"We at the state are working to diversify our economy as much as possible with jobs focusing on energy and industry," Klempa said.

However, according to a Rockefeller Institute of Government report, West Virginia ranks second only to Nevada in the share of its state budget that comes from gambling dollars.

According to the Rockefeller report, gambling revenues in the Mountain State equaled nearly 9 percent of the state's 2006 general fund budget. Gambling in Nevada provides for 13.4 percent of that state's budget. The report did not include revenue figures from table gambling.

The Rockefeller Institute also found West Virginia's budget reliance on gambling dollars grew by 6.4 percent between 1998 and 2006, the most of any state.

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