Gambling firms lay bets on casinos, slots in Ohio
Tuesday, April 26, 2005
Tom Breckenridge
Plain Dealer Reporter
With pressure building to roll the dice on casinos in Ohio, two gambling companies whose flagship venues depend on Ohioans crossing the border are hedging their bets.
MTR Gaming Group Inc. wants to add table games to its sprawling Mountaineer "racino" -- race track and slots emporium -- in Chester, W.Va., just across the Ohio River.
Fifteen miles west of Cincinnati, in Lawrenceburg, Ind., Argosy Gaming Corp. wants to add 1,200 slots and table games to one of the most profitable riverboat casinos in the Midwest.
And both companies will soon own horse racetracks in Ohio, anticipating profits that could roll in if the Buckeye State should ever approve slots at its seven racetracks.
Argosy and MTR are trying to move the odds in their favor, said Brock Milstein, chairman of Northfield Park racetrack in Northfield.
"They are public companies and they have to answer to shareholders," Milstein said. "For a relatively inexpensive amount of money, they are trying to make sure they are covered in case something happens in Ohio."
The tracks are risky investments because Ohio's racing industry is declining.
But they could be winners, observers said, if Ohio gambling interests are successful in persuading Ohio voters to follow the "Pennsylvania model."
Pennsylvania's push into slots, along with estimates that Ohio loses hundreds of millions of dollars in casino-tax revenue to other states, have resulted in unprecedented unity among Ohio's gambling interests. Those interests historically stymied one another from gaining a slots or casino foothold.
Pennsylvania's gambling interests fought, too, until unifying last year behind a bill allowing up to 61,000 slot machines at 14 sites, including racetracks, big cities and resorts.
Kentucky, which has no casino-style gambling, might look more favorably upon expanded gambling soon.
The state attorney general recently issued an opinion that Kentucky legislators could allow casinos without a statewide vote.
Pennsylvania's play for slots was a wake-up call here. Ohio House Rep. Bill Seitz, at the request of House Speaker Jon Husted, called a closed-door summit of gambling interests last month that included casino developers, racetracks owners, American Indian tribes and big-city mayors.
Participants agreed to form a research subcommittee that will meet in private Thursday at State Street Consultants, a Columbus lobbying firm.
The group wants to conduct a poll to help shape a gambling campaign that Ohioans could support at the ballot box.
Any effort to land slots and casinos in Ohio will draw staunch opposition.
It's unclear when Ohioans might see slots or casinos at the ballot box.
But the uncertainty hasn't hobbled companies that thrive on Ohioans crossing the border for a Las Vegas-style fix.
Argosy wants to enlarge a Lawrenceburg riverboat that already claims 60 percent of the $735 million that three Indiana riverboats pull from Cincinnati-area gamblers.
In an annual report filed last month, Argosy said that slots in Ohio or Kentucky would hurt profits at Lawrenceburg. The casino is the largest of six that drew more than $1 billion in revenue for Argosy last year.
Argosy will also pay $20 million to acquire Raceway Park, a harness-racing track in Toledo. Spokesmen for Argosy and Penn National Gaming, which is acquiring Argosy, declined to comment.
Last year, a top Argosy official said Raceway Park would be "an insurance policy" in Ohio, according to a Cincinnati newspaper.
Rep. Seitz, a Cincinnati-area Republican, said Raceway Park gives Argosy a "seat at the table" in Ohio's gambling discussion. But he suspects Argosy will act in the best interest of the Lawrenceburg casino and not Ohio gamblers.
He complained that Argosy lobbyists in Columbus "slunk around the corridors" of the Statehouse last summer to torpedo Seitz's plan for slots at Ohio racetracks.
One of the lobbyists, Darryl Dever, laughed at Seitz's characterization and said it was his job to inform legislators about the impact of racetrack slots in other states.
MTR Gaming is maneuvering to protect its interests, too.
The company wants to boost the allure of its Mountaineer Racetrack and Gaming Resort by adding games like blackjack and craps.
Mountaineer accounted for most of the company's $315 million in revenues last year.
MTR and the owners of three other racinos in West Virginia want table games so they can become full-fledged casinos.
But a table-games bill failed in a recent session of the state legislature.
Legislators didn't acquiesce to warnings that the state's tax haul from slots -- $323 million last year -- could drop 40 percent if Ohio, Kentucky and Maryland join Pennsylvania in approving casino-style gambling in the coming years.
At the same time, MTR is pushing for slots at Ohio racetracks, because it owns Scioto Downs in Columbus. MTR also plans to build an $80 million racino in Erie, Pa., which would be about the same distance from Cleveland as the Mountaineer racino.
MTR officials could not be reached for comment.
Argosy and MTR aren't driven by fear of losing big bucks if Ohio takes the slots plunge, said William Thompson, a professor of public administration at the University of Nevada Las Vegas.
Instead, Thompson said, they are making "calculated bets" to expand their reach into the Midwest's lucrative gambling market.
To reach this Plain Dealer reporter:
tbreckenridge@plaind.com, 216-999-4695
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