- As slots continue to come online in Pennsylvania, the effects are already spreading beyond the state's borders. And it's still early in the game - there's much more to come. The ground hasn't even started to be broken on the the two giant non-racetrack parlors in Philadelphia, where never-say-die opponents are mounting one last(?) stand, even after the state Supreme Court struck down an attempt to rush a referendum proposing a ban on the parlors being within 1,500 feet of homes, schools or houses of worship onto a May 15 ballot.
At Monticello Raceway in New York, slots business is down considerably.
At the 1,500 video gaming machines at Monticello Gaming & Raceway, the company's take declined 13 percent, or $2.2 million, in the first three months of the year as compared to the same period in 2006. The number of visitors — normally about 1 million per year — also fell by 9 percent over the same period, as did the daily win per machine, to $106 per unit from January to March, from $122 in the first quarter of 2006. Empire's net losses were $4.6 million. [Record Online]Competition from the Mohegan Sun racino at Pocono Downs, just two hours away, is blamed for the decline. Worse yet, Mohegan Sun recently broke ground on a lavish new facility there; and a slots parlor is also planned for the Mt. Airy Lodge, also located within a couple hours of Monticello (and just 45 minutes from Pocono Downs). So it certainly doesn't sound as if things are going to get any better. I wonder if casino operators being courted by NYRA to replace MGM are having a look at these alarming figures and assessing all the present and future competition in the metropolitan area.
One big problem is that New York racinos are saddled with a high tax rate; operators keep only around 32%, as compared to 45% in Pennsylvania. Thus, they claim they are unable to keep up with PA when it comes to amenities and entertainment. Monticello VP Cliff Ehrlich points out that: "That is over a $400 million investment at Mount Airy, as opposed to a $30 million facility." A bill introduced in the state legislature would increase the percentage to 40%, and raise the marketing allotment that is returned to the operators from the present 8% (which mostly offsets an additional 8 1/2% cut applied to purses) to 10%.
Back to Pennsylvania, there's a depressing, but not at all surprising report in the Patriot News regarding declines in on-track wagering and attendance at state tracks that have slots. At Philadelphia Park, wagering on horses at the track is down 7 percent, to $120 million, from $129 million during the same period in 2006. Declines were also cited at Penn National (where racino construction is ongoing), as well as at the Meadows and Pocono Downs harness tracks.
In the case of Philly Park, the decline is perhaps at least partly due to the fact that the horseplayers are being crammed onto the 5th floor. I sure as hell wouldn't be going under those circumstances. That was supposed to change with the construction of a new slots facility, but racino owner Greenwood Racing, who previously denied that they were abandoning those plans, wrote in an application to the Pennsylvania Gaming Control Board that it was “no longer prudent or feasible" to proceed.
“From a financial perspective, once the current expansion is completed, Philadelphia Park will have invested $136 million in its casino site — more than three times the amount originally proposed in its application....Anyone who has visited Philadelphia Park Casino can have absolutely no doubt that the present facility… is a permanent one.” [Bucks County Courier Times]Tommy Tomlinson, the area's state senator, defended the plan, saying:
“I should think that the horse racing industry would want the slot machines in the grandstands. That way people can play the slots and watch the races at the same time.”But as we're quickly learning, and as the Senator should educate himself before speaking on the subject, people don't play slots and watch the races at the same time; and, in fact, the racinos generally specifically discourage anything to distract slots players from their slot playing.
Greenwood, by the way, are the same wonderful folks who were perhaps the last holdout amongst "major" racetracks to increase insurance coverage for jockeys - and they've done so only to $500,000.
- And in West Virginia, where the looming competition from Pennsylvania has spurred the legislature to authorize local referendums regarding permitting table games at racetracks, the opposition has, not surprisingly, filed a lawsuit to stop the votes, scheduled for June 9. As you know, I'm not generally at all sympathetic with the religious right, and have little use for any organization with phrases like 'Family Foundation' in their name. But here, their ethical objections aside, the West Virginia Family Foundation seems, in my view, to be standing on quite logical grounds with their constitutional challenge to the law permitting the votes. It seems quite the stretch I think to claim that a 1984 amendment to authorize a state lottery would also legalize full-blown casinos. Whatsmore, state law requires that the state "regulate, control, own and operate" any gambling enterprises in West Virginia. The state is seeking to get around that by claiming that they own the "intellectual property" to the games. That seems like a stretch of a stretch. An attorney for the group challenging the law explains:
“We’re arguing that you can’t have an intellectual property that is in the public domain."The state's contention seems as illogical as arguments that the West Virginia Family Foundation, and certain Republican presidential candidates, may make against evolution. But it seems there should be little debate about the contention that slots in the Northeast are evolving into a situation in which there will be far too much in one region for anyone to profit in the long run. And that the industry will soon need to find a way to stand on their own.
“You have to have a patent. You can’t have a patent in that.”
[Michael Mann, an intellectual property lawyer] agreed, saying the state would have had to apply for a patent on the games in dispute.
“Here, of course, with table games decades old, perhaps millennia old, there are no currently valid patent rights on known games of chance such as poker, blackjack, roulette and baccarat,” the attorney said in the suit.
“A check of issued patents and published patent applications reveals no patents on games of chance owned by the state of West Virginia.” [Register-Herald, Beckley, WV]