Making the News

Pittsburgh Post Gazette

Originally Published:Thursday, November 5, 2009

Ohio casinos will mean competition for Pa., W.Va.

By Gary Rotstein
Pittsburgh Post Gazette

More tri-state competition for gamblers is ahead, now that Ohioans legalized casinos with a vote Tuesday after rejecting them several times previously.

Passage of Issue 3, as it was called in Ohio, is expected to lead to opening as early as 2012 of casinos providing both table games and slot machines in Cleveland, Cincinnati, Columbus and Toledo.

The Cleveland casino would be the closest to existing facilities in Western Pennsylvania and West Virginia's Northern Panhandle, and therefore the one likely to divert the most patrons who are now making bus trips or day trips elsewhere.

Though the 3-month-old Rivers Casino on the North Shore has attracted less revenue than anticipated thus far, even without the additional competition, spokesman George Matta did not acknowledge any worries based on Ohio's approval.

While the new casinos are planned and constructed, he said, "We are developing a strong following out of the Ohio market. Our bus traffic is increasing, plus we have commuters for the day. ... You're developing a strong brand loyalty and effective data base" long before they open.

Neither Mr. Matta nor David LaTorre, spokesman for The Meadows Racetrack & Casino in Washington County, had figures on what percentage of their customers come from Ohio. But Mr. LaTorre said the new legalization makes it all the more imperative that lawmakers in Harrisburg approve table games in Pennsylvania, a topic now being debated among legislative leaders.

"We at least would be able to have a level playing field," once casinos are built across the border, Mr. LaTorre said. "The sooner it can be done the better. ... Any casinos located in a state right next door to The Meadows is a concern."

More affected than the southwestern Pennsylvania casinos, however, is MTR Gaming Group, the West Virginia-based firm that owns Mountaineer Casino Racetrack & Resort in Chester; Presque Isle Downs, an Erie County racetrack-casino just over an hour from Cleveland; and Scioto Downs, a Columbus harness track still denied the right to have slot machines or table games.

In Nasdaq trading yesterday, the value of MTR Gaming's shares dropped by 47 cents, or 20 percent.

When Presque Isle Downs opened, officials said they were counting on Ohioans to make up at least one-fifth of their customers. The casino, which generated $13 million in revenue last month, already places eighth of the nine Pennsylvania casinos in revenue.

And at Mountaineer, where more than half of the customers come from Ohio, revenue was off 11 percent in the third quarter of 2009 from a year ago, based on the Rivers opening and other factors, the company reported yesterday. Overall, MTR revenues decreased 5 percent.

Robert Griffin, MTR Gaming Group president and chief executive officer, said the company will be in better position if the Ohio Legislature legalizes slot machines at racetracks like Scioto Downs, which Gov. Ted Srickland has backed.

Joe Weinert, a Spectrum Gaming Group analyst who tracks casino trends in the Eastern United States, said Ohio's addition of casinos should actually have more impact on existing facilities in Michigan and Indiana than to the east.

"We've seen it time and time again for many gamblers convenience is the No. 1 criteria in choosing a casino," Mr. Weinert said.

And he noted that the Ohio operators will have the advantage of a lower tax rate, 33 percent, than exists in Pennsylvania and many new gambling states. That will enable them to invest more heavily in constructing grander facilities, he suggested.

Gary Rotstein can be reached or 412-263-1255.


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