CHARLESTON, W.Va. -- West Virginia's racetracks can blunt, but not prevent, the looming drop in revenue if they add casino-style table games to help them compete with Pennsylvania's soon-to-debut video slot machines, a study commissioned by table game supporters said.
But the tracks would add an estimated 2,254 jobs, as the games require more workers to run them, the study by The Innovation Group said.
And perhaps most crucial, the state government's share of gambling proceeds from the tracks would match the $323 million collected last year, according to the study.
The New Orleans-based consulting firm cautions, however, that the state cannot set betting limits on the games and must tax them at a lower rate than the tracks' video slots for them to succeed.
The study also notes lukewarm interest in table games by gamblers nationwide. Three-fourths of gamblers prefer slots while only 13 percent prefer table games, according to a survey conducted this year by the Harrah's casino chain.
"Table games is a potential answer to the preservation of the revenue and the jobs that we have been providing in recent years," said John Cavacini, president of the West Virginia Racing Association. The group represents all four tracks and commissioned the study.
Pennsylvania has enacted legislation to allow up to 14 racetracks, casinos and resorts to offer slot machines. The study estimates that by mid-2007 as many as six of these venues with a combined 11,900 machines will compete directly with West Virginia's tracks. The Mountain State's four tracks now host 10,336 terminals.
Without table games, West Virginia's tracks can expect revenues to plummet by $293 million, or nearly 30 percent of projections for the 2006-2007 budget year, the study said. Pennsylvania will steal away 4.9 million visits, meanwhile, including 3.3 million visits by residents staying in-state to gamble. More than a half-million of those lost visits would be West Virginians crossing the border, the study estimates.
With table games, West Virginia's tracks would lose $42 million in revenue, or a 4 percent drop from projections, the study said. Visits, meanwhile, would plunge by 1.5 million.
Tracks in Hancock and Ohio counties would suffer the bulk of the losses to Pennsylvania competitors, the study found. Kanawha County's dog track would prove the most insulated, as most of its gamblers hail from in-state. The study estimates it would lose only $187,178 in projected revenue and 4,101 visits without table games.
The fourth track, in Jefferson County, would see drops of $4.4 million in revenue and 64,389 in visits. With table games, both it and the Kanawha track would see both revenue and visits beat current projections.
"I think this is an issue that is going to be decided as an industry issue," Cavacini said. "What's good for one track county will be good for another track county."
Table game advocates hope the study will help sway legislators to back a measure allowing the tracks' host counties to vote on whether to allow the games. Gov. Bob Wise says he will call lawmakers into special session before he leaves office Jan. 17 if enough of them will support such a bill. Gov.-elect Joe Manchin, meanwhile, has said he would sign local option legislation.
"I think the study itself will make it easier for the legislators to understand the economic conditions being put forth by competition," Cavacini said.
The study banks on table games under the theory that gamblers would drive past more convenient venues to play games not offered there. Table games would also attract new gamblers who have little or no interest in the "existing game mix," the study said.
The study also explores a worst-case scenario: other neighboring states also adopt video slots. That would cut revenues by nearly half for West Virginia's racetracks during the 2006-2007 year, with nearly 8 million visits diverted. Aided by table games, the study estimates Mountain State tracks would still see revenue drop by $270 million, or more than one-fourth of projections. Visits would plummet by 8.7 million.
archive