Mountaineer Parent Discusses Ohio Plans

MTR Gaming discussed second-quarter earnings and plans for Ohio Aug. 9.

MTR Gaming Group indicated Aug. 9 it could spend up to $100 million to construct a video lottery terminal casino at Scioto Downs south of Columbus, Ohio.

Company officials discussed the Ohio project during a conference call on second-quarter earnings but noted they and others with racetrack holdings in the state are playing the waiting game.

The Ohio Lottery, which would operate racetrack VLTs under a 2009 directive from Democratic Gov. Ted Strickland, is reworking the regulations. In addition, the state agency plans to seek a declaratory judgment from the court to ensure it can move forward.

“We need to see some final rules (before making firm plans),” said Robert Griffin, chief executive officer of MTR Gaming, which owns Mountaineer Casino, Racetrack & Resort in West Virginia and Presque Isle Downs & Casino in Pennsylvania.

Griffin said the Ohio Lottery is having discussions with industry representatives to “find out what makes sense” in regard to a tax rate for VLTs. Under a 2009 referendum, four full-scale casinos to be located in Ohio’s largest cities will pay 33% to the state; Strickland’s directive set the state tax on VLTs at 50%.

“They understand the rules of the road have changed,” Griffin said.

The actual construction of a VLT facility would be about $50 million, MTR Gaming officials said. If the company has to purchase the machines, that would add another $45 million. Also, tracks expect to pay a licensing fee, the amount of which has not been determined.

Other Ohio tracks appear to be quietly moving ahead with plans for VLT parlors, but Griffin noted there will be no timetable until legal issues are resolved and rules are in place. Other Ohio tracks owned by gaming companies are Beulah Park near Columbus (Penn National Gaming Inc.) and Thistledown near Cleveland (Harrah’s Entertainment).

MTR Gaming reported second-quarter revenue of $111.6 million, down 8% from $121.1 million for the second quarter of 2009. Adjusted earnings before interest, taxes, depreciation, and amortization came in at $21 million, up 6% from $19.9 million last year.

Net loss for the second quarter was $500,000, down from net income of $400,000 for the second quarter of 2009.

Revenue at Mountaineer was down 14% to $61.9 million for the second quarter. Net revenue at Presque Isle increased 2% to $48.6 million. Net revenue at Scioto Downs, a harness track with only pari-mutuel operations, was up a tick to $1.070 million from the second quarter of 2009.

Overall pari-mutuel commissions for the company totaled $3.634 million, down from $4.126 million last year but higher than the $3.488 million in pari-mutuel expenses.

“We had a good quarter considering the challenges this company faced,” Griffin said in reference to an expansion of slot machines and table games at facilities in neighboring western Pennsylvania.