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W.Va. Senate tries to address struggling casinos

Published on NewsOK Modified: April 3, 2013 at 2:54 pm •  Published: April 3, 2013

CHARLESTON, W.Va. (AP) — With more and more casinos opening and cannibalizing each other's business in the mid-Atlantic region, the West Virginia Senate passed three somewhat contradictory bills Wednesday attempting to address the state's flagging gaming industry.

Revenues at the state's four racetrack casinos are expected to be $200 million lower this fiscal year than they were last year although they are still expected to gross nearly $600 million.

The bills would lower the fees on existing racetrack casinos, order a study of the problems facing the gaming industry and authorize a new casino, the state's sixth.

The most contentious bill was the one lowering fees. It passed 24-10 with bipartisan opposition. It will mean a one-time $4 million loss in state revenue.

The Wheeling Island casino has said that if its $2.5 million fee was not lowered it would not renew its table gaming license, putting more than 100 casino jobs at risk. Wheeling Island says that it expects to lose about $1 million on table gaming this year.

Table games have long been looked at as a way to attract a broader audience to casinos. In West Virginia they have traditionally accounted for between 5 and 10 percent of the casinos' total gaming revenue. The vast majority of revenues come from slot machines. Wheeling Island has grossed $72 million in slot machine revenue in the first nine months of this fiscal year. That's double the amount that the Mardi Gras casino in Charleston has grossed on slots.

Mardi Gras has not asked for a reduction in fees, but it and the two other racetrack casinos would also receive the break on fees to avoid the perception of unfairness.

Senate President Jeffrey Kessler, the bill's sponsor, said he believed there was a "significant likelihood" that Wheeling Island would follow through on its threat if the fee was not lowered. Kessler said he could not risk the 105 job losses that would follow.

Wheeling Island's parent company, Delaware North, owns seven gaming facilities in six states. Delaware North also owns the Boston Bruins and their arena, the Boston TD Garden. They boast more than $2 billion in annual profits and Forbes ranks them among the nation's largest privately held companies.

Speaking against the bill on the Senate floor, Senate Minority Leader Mike Hall, R-Putnam, said he was not convinced that Wheeling needed the break, especially when the state's budget is so tight.

"In the year that we're asking for 7.5 percent cuts and we're resisting most pay raises, the three racetracks don't need these and it's questionable in my mind whether the one we're doing it for does," Hall said.

House Minority Leader Tim Armstead, R-Kanawha, said that he would like to see financial figures from Wheeling Island before the House considers the bill. Armstead also said that flagging finances alone would not be enough to justify a break on fees for the casinos.

"Even if they're able to justify and show us in their records and their books, again, there are many, many companies in different areas — the coal companies, the small mom-and-pop shops, the gas stations — they've all been struggling under the economic climate that we're in," Armstead said. "I would say that if you open the doors and say anyone who's struggling can get tax relief, there would be a line stretched to Braxton County."

The study of the gaming industry that the Senate ordered is in response to competing casinos that have opened in neighboring states. But while the state certainly views those casinos as competitive threats, it's unclear that the casinos themselves also do.

Penn National, the gaming company that owns the casino in Charles Town, W.Va., also owns casinos in Toledo and Columbus, Ohio; Grantville, Pa., and Perryville, Md.

MTR Gaming, the parent company of the casino in Chester, W.Va., also owns casinos in Columbus, Ohio and Erie County, Pa.

Sen. Craig Blair, R-Berkeley, was incredulous that the study could be helpful.

"What is it that we can go one step further to make it so we can compete and have a competitive edge over the other tracks?" Blair asked. "What is it? Tell me what study can possibly make that happen."

David Schwartz, the director of the Center for Gaming Research at the University of Nevada-Las Vegas, said that West Virginia could expand online gambling but he could not think of any other options. Schwartz said that the history of gambling in the Northeast is that when casinos open in new states, business declines in the states with existing casinos.

While it grappled with the problems of its existing casinos, the Senate also authorized the creation of a new one. That casino would be in Franklin, W.Va., and would hope to draw most of its customers from Virginia. The developers would have to spend at least $60 million on the project, building home sites and a hotel, in order to build the casino. The casino's supporters said that its rural location would mean it wouldn't poach customers from the state's other casinos.

Senate Majority Leader John Unger, D-Berkeley, was the only Democrat to vote against both the new casino and the reduction in fees.

"We have a lot of casinos already in the state," Unger said. "Some of them aren't doing very well. They're wanting help. Adding another just doesn't make logical sense to me."


Associated Press writer Lawrence Messina contributed to this report.


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