Making the News

Pittsburgh Post Gazette

Originally Published:Sunday, February 10, 2008

The more facilities, especially given that they're spread out, are exposing more people to this activity," said Joe Weinert, an analyst for Spectrum Gaming Group, "which is going to promote tryout by new customers as well as increasing visits among existing customers. That, by definition, is extending the market."

Mr. Weinert, the gaming consultant whose company advised the West Virginia Lottery Commission in setting up its table game regulations, cautioned that it's still too early to know how the West Virginia-Pennsylvania gambling market will ultimately shake out.

"Just when you think it's going to settle down -- boom -- [Majestic Star's] Don Barden will open up his place and inject a whole new dynamic into the broader market," Mr. Weinert predicted. "Then, when you think all that's settled, Pennsylvania's going to legalize table games itself."

Gamblers' losses just get bigger
Table games, casinos haven't redistributed bets; they've raised them

By Gary Rotstein
Pittsburgh Post Gazette

What a difference a year makes for gamblers, who are giving casinos in the region nearly a million dollars more a day than ever before.

In January 2007, the area's gamblers left behind about $35 million playing more than 5,000 slot machines in Wheeling and Chester, W.Va., the only casinos then available within a one- or two-hour drive.

Last month, with the addition of table games at those locations and nearly 4,000 slot machines at the Meadows Racetrack & Casino in Washington County and Presque Isle Downs & Casino in Erie County, gamblers dropped an estimated $63 million.

Even though January is typically one of the slower months in the casino industry, with winter weather a deterrent for older players, people found a way to spend $28 million more gambling nearby than they did a year ago.

If that level of wagering continues, gamblers' losses for the year would easily exceed $300 million, not even counting what's yet to come from the North Shore's Majestic Star casino in 2009 and still another casino planned for Lawrence County.

There have been questions of whether additional gambling opportunities in the region would merely cannibalize one another, but the West Virginia operators who put in table games Dec. 20 to offset Pennsylvania competition maintain they've created a new market.

Their poker rooms, craps, roulette and blackjack tables have been filled on weekends (and plenty of business on weekdays) from a crowd that's younger than typical slot players, say officials of Mountaineer Casino, Racetrack & Resort and Wheeling Island Hotel-Casino-Racetrack.

The West Virginia racetrack casinos had experienced revenue decline of more than 10 percent after the two Pennsylvania slot parlors opened last year. While seven weeks as full-fledged casinos may be no long-term barometer, early indications are that Wheeling Island is making up that lost revenue, Mountaineer is doing even better than that and Pennsylvania's operators may yet thrive.

"The more facilities, especially given that they're spread out, are exposing more people to this activity," said Joe Weinert, an analyst for Spectrum Gaming Group, "which is going to promote tryout by new customers as well as increasing visits among existing customers. That, by definition, is extending the market."

Mountaineer generated $18.2 million from slots and an estimated $3.8 million from table games in January, compared to $19.4 million from slots alone the year before, according to West Virginia Lottery Commission figures. Wheeling Island earned $12.6 million from slots and an estimated $2.6 million from table games, which combined nearly matched its $15.4 million take from slots in January 2007.

Meanwhile, The Meadows made $17.3 million from slots and Presque Isle $10.7 million. In both cases, those were among the lowest monthly revenues since opening, but not necessarily worse than an expected winter slowdown.

There was no evidence of severe impact from West Virginia's table games, although officials at The Meadows say they are spending more on marketing -- and thus eroding their profit margin -- to offset the new competition.

Presque Isle has reduced the work week for hundreds of employees due to slower winter play, said Ted Arneault, president of MTR Gaming Group Inc., which owns both Mountaineer and Presque Isle.

"If you add them all up, you see total slots play is up," Mr. Arneault said of the four casinos. "We were saying we would increase the whole market by going to a new demographic [with table games], and that's what it appears has happened. We've been able to increase the entire pie rather than taking away."

Anita and Victor Karas, a retired Whitehall couple in their 60s living off savings, pensions and Social Security, are among the customers helping nearly all of the enterprises. They play slots at the Meadows, a half-hour from home, every couple of weeks. They made an overnight trip to Wheeling for roulette and poker a month ago. And in warm weather, they go to Presque Isle near their summer cottage south of Erie.

"It's a lot better," Mrs. Karas said of the options. "If it was snowing before, or snow was expected, we just wouldn't go anywhere, because the closest place was Wheeling. ... I do spend more money now that they're closer, but I budget it. I'm not going to spend more than I can afford to lose."

Not everyone is convinced all of these options are a positive. The casino expansion may be diverting several hundred million dollars annually from spending on food, household goods and other entertainment, noted William Thompson, a University of Nevada Las Vegas professor of public administration.

"It's an economic loser for your region unless they can demonstrate the new table games and new Pennsylvania casinos are drawing in tourists -- people who are coming to the area to stay overnight and just to gamble," Dr. Thompson said. "I don't think they can show that, other than 1 percent or 2 percent of the players."

The West Virginia casinos say the table games that help them resemble the full-service operators of Atlantic City and Las Vegas will attract people from longer distances. Pennsylvania's casino backers also counter economic arguments by asserting that fewer local residents now take their money out of the local economy to gamble elsewhere.

In addition, the casinos tout the economic benefit of the jobs they've created: at least 2,500 new ones in the past year from the two Pennsylvania casinos and the West Virginia expansions. Both West Virginia operators also indicated plans to add more tables and employees in coming months.

"We're not quite where we want [in terms of revenue], but absolutely headed in the right direction," Wheeling Island President Bob Marshall said. "What you're seeing now is people coming in to sight-see and people-watch. It's fun, a different crowd than before."

He acknowledged one difficulty of table games: higher labor costs that dictate the casino has to spend more if capturing the same revenue it received from machines alone. To help offset those expenses, West Virginia set a lower tax rate for table games than slots.

Mike Graninger, general manager of The Meadows, has visited both West Virginia casinos since they started table games. He's grimaced at seeing some of his regular slots players there, but been impressed by the revenues being generated.

"Their play seemed astronomical," Mr. Graninger said. "They're using $25 [minimum wager] crap games, which is like unheard of....There's a lot of pent-up demand, because table games are nowhere else around here."

Mr. Weinert, the gaming consultant whose company advised the West Virginia Lottery Commission in setting up its table game regulations, cautioned that it's still too early to know how the West Virginia-Pennsylvania gambling market will ultimately shake out.

"Just when you think it's going to settle down -- boom -- [Majestic Star's] Don Barden will open up his place and inject a whole new dynamic into the broader market," Mr. Weinert predicted. "Then, when you think all that's settled, Pennsylvania's going to legalize table games itself."

That would be just fine with the Karases. Mrs. Karas said she feels like any gambling losses come slower at the table games than slot machines, so she prefers Wheeling Island and even the Seneca tribal casino in Salamanca, N.Y. But one benefit she cited of a nearby casino -- be it The Meadows or the future Majestic Star -- is she's willing to walk out quicker on a bad night, instead of stay and spend more to justify a long drive.

"I'll go home if I know I can come back easily another evening," the retiree explained. "It's almost like going to the grocery store."



First published on February 10, 2008 at 12:00 am Gary Rotstein can be reached at [email protected] or 412-263-1255.

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