As it approaches its biggest day of the year racing-wise, Mountaineer Casino, Racetrack & Resort is trying to hold its own in a glutted regional gambling market.
The West Virginia track will host the grade II West Virginia Derby the afternoon of Aug. 3. The all-stakes program generates more than $3 million in total pari-mutuel handle, roughly three times the handle on a typical night during the 10-month racing season.
For the first five months of this year's race meet, field size has averaged 8.01 horses per race, up from 7.61 for the same period in 2012, according to The Jockey Club Information Systems. Purses have averaged $111,804, almost even with an average of $111,337 from March through July last year.
The West Virginia track began its turf racing season earlier this year at the urging of horsemen. Grass racing began in early May rather than late May, and it appears to have helped with field size.
Handle across the state is down this year, as is revenue from wagering, according to monthly updates from the West Virginia Racing Commission. As for gaming, the major source of purse revenue at Mountaineer, revenue from video lottery terminals was down $6.3 million in the first quarter of 2013 compared with the same period in 2012.
Total purses paid, however, have remained steady at $11.96 million so far this year versus $11.91 million in 2012.
Mountaineer has in-state and out-of-state regional competitors: Wheeling Island Hotel, Casino, and Racetrack in West Virginia; The Meadows Racetrack & Casino and Rivers Casino in western Pennsylvania; and Horseshoe Casino and ThistleDown Racino in northeastern Ohio.
The Ohio casinos are new to the area, with two more on the way. The Northfield Park Rocksino is expected to open at the end of 2013, while Hollywood Mahoning Valley Race Course, another VLT facility to be built in Mountaineer's major market area of Youngstown, plans a 2014 opening.
And still in the mix is a planned racetrack casino in western Pennsylvania, about 15 miles from Youngstown.
"When we were at our peak, purses totaled $34 million or $35 million a year," said John Baird, president of the Mountaineer Horsemen's Benevolent and Protective Association. "For the last three years, we've been down to about $22 million a year. We've lost income."
MTR Gaming Group, which owns Mountaineer, knew the competition was coming. In recent years it has moved all but a handful of VLTs and the poker room from the racing building to the casino/hotel complex. It also has reconfigured parts of the casino and committed to an upgrade of the almost 15-year-old gaming hall.
"We've spent the last year and a half or two years redoing the property and right-sizing it," said Chris Kerns, general manager at Mountaineer. "With Ohio coming on board (with gaming), we've had to shine up our nickel a little bit.
"Service is going to be one of these things. We're taking steps to create brand standards. Due to some limitations with the facility, we need to 'wow' people with our service."
Kerns said adding more casinos to the regional market "doesn't make a lot of sense financially," and some gaming numbers in the Cleveland area already indicate some weakness. In addition, Penn National Gaming Inc., which is building the Mahoning Valley property, announced it would open with 1,000 VLTs instead of 1,500.
Kerns also said there has been more effort this year to tie horse racing into the overall marketing mix at Mountaineer. He acknowledged the difficulty in promoting live racing, however, when the weather is less ideal, so the focus is on the warmer months.
"We're trying some new things to generate interest in trackside racing," Kerns said. "We're purposely targeting racing fans more. We also do some cross-marketing with (Presque Isle Downs & Casino and Scioto Downs Racino, the company's two other properties). There's no reason we shouldn't talk to all our racing bettors."
Horsemen recently said their relationship with Mountaineer management has improved the last couple of years. Some of their issues are related more to state government, the regulation of racing, and a perceived dislike of horse racing by the West Virginia Lottery Commission, which oversees gaming at the state's four racetracks.
One big hang-up is payment of West Virginia-bred purses at Mountaineer. Under the current structure, the money runs out at certain times of the year, which creates months when the track can't card restricted races.
Horsemen attempted to get the $1 million cap removed, but the effort in the state legislature failed this year.
"People have committed to the (breeding) program, but they run out of races," Baird said. "There's no doubt that in the last five years, the number (of locally owned state-bred horses) has doubled. West Virginia-bred races fill, and we want full fields for our business."
Mountaineer currently cards West Virginia-bred races, though the cap most likely will kick in again as the season progresses.
West Virginia's other Thoroughbred track, Hollywood Casino at Charles Town Races, is located in the heart of the state's breeding industry and cards state-bred races year-round.