MTR Gaming Earnings Down for 2009

Fourth quarter earnings, however, show improvement.

Revenue from 2009 racing operations for MTR Gaming Group fell 5.7% and earnings were down 9.5%, according to financial statements released March 12 from the company whose properties incude Mountaineer Casino, Racetrack & Resort and Presque Isle Downs. A bright spot in the numbers was the fourth quarter earnings (before interest, taxes, depreciation and amortization) that were up 10% for Presque Isle and flat for Mountaineer.

“We believe our properties are holding up well in the face of increased competition,” said Robert Griffin, president and chief executive officer for MTR Gaming. “Mountaineer continues to perform well despite the revenue impact from competition. In addition, we are preparing for the addition of table games in July 2010 at Presque Isle. In Ohio, we look forward to the reintroduction of the slots at tracks initiative.”

Griffin said MTR Gaming’s properties faced about $1 billion in new gaming competition last year, primarily from The Rivers casino in Pittsburgh, Pa., which opened in August 2009, and The Meadows Racetrack and Casino, also in western Pennsylvania south of Pittsburgh.

The company expects to find growth in the market when it begins offering table games like black jack and poker at Presque Isle and, hopefully, through video lottery terminals at the Scioto Downs harness track in Ohio. Right now the future of racetrack gaming is in limbo. Democrat Gov. Ted Strickland in 2009 directed the Ohio Lottery to allow up to 2,500 VLTs at each of the state’s seven horse tracks. The Ohio Supreme Court then ruled that Strickland’s directive was subject to referendum so the issue is expected to appear on the ballot Nov. 2.

In the meantime, the state General Assembly is debating House Bill 250, which establishes the licensing and procedures for the horse tracks to operate VLTs. The bill mirrors Strickland’s plan for the state to receive 50% of gross revenue from VLTs, and the racetracks the other 50%. There were no provisions for horsemen in the form of revenue for purses and breed development, though the governor urged tracks and horsemen to reach an agreement on a percentage.

MTR Gaming executives said the company spent $5.7 million on lobbying efforts last year but does not expect to spend anywhere near that much this year.

“We don’t know if there will be a drive against it or not,” Griffin said in a conference call with industry analysts. “If HB 250 does pass, it won’t pass with the 50% tax rate and licensing fee proposed.”

Regarding the recent announcement that Penn National Gaming Inc. would acquire Beulah Park, in Grove City, Ohio, Griffin said he thought it was good news for the state’s pari-mutuel industry. One analysts asked about rumors he heard that MTR Gaming might be playing a role in the acquisition, which Griffin declined to comment on.

In other company news, Jeffery Jacobs has resigned from the board of directors and steps down as MTR Gaming’s chairman. Board member Stanley Gorom III also resigned. Jacobs, who has an 18.5% ownership interest in MTR Gaming, will be replaced by Steve Billick.

“Now that I have achieved my main objectives as an MTR board member—which was to transition the company to a strong executive management team of professional gaming operators and an independent board of directors—I am able to turn my primary attention to other business interests,” Jacobs said in a statement.