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West Virginia Tracks Preparing for New Compeition

January 27, 2010

For years, West Virginia was the only game in town for video lottery at the state’s horse and dog racetracks. But our neighboring states Pennsylvania, Ohio and Maryland are closing in on the state hoping to cash in on gaming revenues. In 2009, West Virginia received more than $376 million in video lottery and table games revenues from the state’s four racetracks. That is more than $15 million less than the previous year. According to Ohio County Delegate Orphy Klempa, lawmakers are keeping a close eye on the situation.

“We are still trying to get our head around is this part of the gaming expansion in other states or is it more due to the economy. The first thing that you take out of the picture in my household when the economy gets bad are the entertainment dollars,” said Klempa.

Senator Ed Bowman, a Democrat serving Hancock County said he’s worried about how the new competition will affect his district.

“If you go into the parking lots of the Northern Panhandle racetracks and you take a look at the license plates, somewhere around 90-95 percent of those license plates are from outside of the state of West Virginia. That’s now going to change.”

The change will occur when Pennsylvania begins offering table games. Pennsylvania lawmakers recently approved a bill to allow table games like black jack and roulette at its casinos to help with budget deficit woes. Ohio is also moving forward with video lottery and in Maryland voters have approved slot machines in five locations.

“We have always budgeted approximately $620 million through our operations through the racetracks and other lottery operations. This year, because of the competition, we budgeted somewhere approximately around $560 million,” said Bowman.

Bowman said the competition will mean cuts in several programs.

“You will see a reduction in a lot of the programs in WV. These dollars have gone to building schools in all 55 counties in the state of WV. It’s gone into renovations in our recreational parks throughout WV, every senior citizen center in every county in WV has benefited. You will see some changes.”

Last year, West Virginia lawmakers passed a bill to allow racetracks to offer free play coupons to its customers without paying a tax on the promotion. Pennsylvania lawmakers also decided not to tax free play credits at its casinos when they crafted their video lottery legislation.

Mountaineer Casino Racetrack and Resort’s slot business dropped as much as 50 percent after Pennsylvania’s slots opened. “If we had not been successful in passing that legislation last year on promotional credits, the state would have seen a significant, significant drop and with the help of the legislature and the WV Lottery it has been a lifesaver to the tracks up North,” said West Virginia Racing Association President John Cavacini.

The state’s video lottery and table gaming revenues are also distributed to counties and municipalities where the racetracks are located. According to the West Virginia Lottery, last year HancockCounty received nearly $4 million from video lottery and table gaming revenues from Mountaineer Casino Racetrack and Resort.

Ohio County received around $1.8 million from Wheeling Island Hotel, Casino Racetrack, with the city of Wheeling getting a little over a million dollars. KanawhaCounty received more than $700,000 from Tri-State Racetrack and Gaming Center. The city of Nitro pocketed more than $250,000 in tax revenues.

Jefferson County, received more than $4 million from Charles Town Races and Slots and five cities around the racetrack received a total of more than $3 million in gaming revenues.

Cavacini said there are several issues facing the state’s four racetracks as competition from neighboring states moves in. He said the tracks will be looking to lawmakers once again for help and said the current tax rate the tracks pay to the state needs to be changed.

“We have been here 15 years and we have generated the last four or five years or at least until the competition started in PA, we were generating $450 million a year just at the four racetracks for general revenue budget for the state of West Virginia.

"Now that PA has a 16 percent tax and will go to 14 next year, that is something we are going to have to have some discussions on, so as to free up some of the money that is coming back to the tracks for us to reinvest in our facilities and keep them at the level they need to be at to compete with the brand new facilities in Pennsylvania.”

At Wheeling Island Hotel Casino Racetrack, 35 percent of its customers come from Pennsylvania and 55 percent come from Ohio. Many customers like Nancy DelRio of Massillon Ohio said the friendly atmosphere and amenities will keep them coming back, despite gambling expansion in their states.

“This seems to be very nice, the food is good so and the rewards are good and the people are nice so that is why we come down. They are very friendly,” said DelRio.

Pennsylvania residents Anne and Tom Matko made the trip from their home near Altoona, PA to Wheeling Island.

“Not us, because we usually do better down here. We just like it here we have been coming here for years ever since they switched over to the table games and all that. Mostly, we like the dog racing.”

The new competition and weak economy are also causing concerns with maintaining jobs at the racetracks. According to Cavacini, before table games passed in 2007, there were around 6,000 direct employees working at the tracks. He said today, that number is around 4,500. A bright spot is that about 500 more jobs will soon be added in Jefferson County at Charles Town Racetrack and Slots when table games begin later this year.