MTR Gaming Group Inc. reported Aug. 9 it swung to a loss in the second quarter due to costs related to the launch of its new slots parlor at Presque Isle Downs racetrack in Pennsylvania.
The company, which owns and operates racetrack, gaming, and hotel properties in West Virginia, Pennsylvania, Nevada, Ohio, Michigan, and Minnesota, posted a loss of $502,000 (down 2 cents per share,) compared with a year-ago profit of $472,000 (an increase of 2 cents per share).
In the latest quarter, the company incurred higher net interest expense of $4.7 million associated with increased borrowings for the development of Presque Isle Downs.
President and CEO Ted Arneault said he is pleased attendance levels and early operating results at Presque Isle, which may see a jump in business when the racetrack reopens in September. Since the property near Erie, Pa., opened Feb. 28, it has generated revenue of nearly $44 million, he said.
MTR's net revenues for the quarter surged 40 percent to $132.8 million from $94.9 million.
Analysts polled by Thomson Financial, on average, were expecting earnings of 11 cents per share on revenue of $133.6 million. Wall Street estimates typically exclude one-time items.
But the company's flagship property, Mountaineer Race Track & Gaming Resort, struggled in the second quarter. Revenue fell to $68 million from $74 million, reflecting the impact of Pennsylvania's new casinos, which have cut into Mountaineer's traditional market base, Arneault said.
Profitability was also hurt by the $400,000 cost of promoting table games for the track, he said. But that investment paid off; Hancock County voters gave MTR permission to install blackjack, poker and other types of table games in a June 30 election.
Mountaineer expects to add 37 poker tables and 13 other table games during the fourth quarter, Arneault said. Although he had been aiming for a third-quarter debut, the state needs more time to develop regulations and train enforcement staff.
"We believe that table games will enhance the property's competitive position by drawing new customers and driving increased play from our existing customers," Arneault said.
In Las Vegas, MTR's Binion's reported $15.5 million in net revenues for the quarter, up slightly from $15.1 million in the same period last year. Its Speedway Casino in North Las Vegas reported net revenues of $2.8 million, compared with $3 million the same period last year.
MTR has agreements to sell both Nevada properties. -- Ryan Coney