Colonial Downs Owner Reports Higher Profits

The owner of Colonial Downs reported May 14 an increased first-quarter profit of $3.1 million, helped by the improved performance of its racing subsidiary.

Jacobs Entertainment Inc., a privately-held company which owns Colonial Downs along with five casinos and 18 truck-plaza gaming operations, also declared impairment on its stock investment in MTR Gaming Group, but said that financial segment is improving.

JEI more than doubled its $921,000 first-quarter profit of 2008 despite a 10.6% decline in company-wide revenues to $78 million. The net income for its Virginia subsidiary, which includes New Kent-based Colonial Downs and eight off-track betting outlets, was reported at $402,000 against an $86,000 loss in 2008, according to a filing with the Securities and Exchange Commission.

Ian Stewart, who is JEI’s president of pari-mutuel wagering operations, told analysts in a May 14 conference call that Colonial Downs had a solid quarter, but like others, was feeling the impact of economic turmoil. He said OTB handle was down $5.5 million, or 14.6%, while account wagering was up 5% to more than $12 million.

“The good new is that our account wagering handle continues to grow … but revenue from that is not enough to offset the decline in revenue at the OTBs,” he said.

Colonial Downs’ 40-day live meet is scheduled to begin June 5.

The company also declared a $635,000 write-down on its investment in MTR Gaming, a move that followed a $6.6-million impairment on the stock reported for year-end 2008. JEI owns approximately 3% of MTR Gaming’s outstanding stock, while individuals and entities affiliated with the family of JEI’s chief executive officer, Jeffrey P. Jacobs, owns another 15% or so. Jeffrey Jacobs was named chairman of MTR Gaming’s board of directors last October.

JEI president Stephen R. Roark said the ownership stake in MTR Gaming is volatile, noting the $635,000 impairment recorded on March 31 was valued at $309,000 on April 30 due to a rise in MTR Gaming shares. “So, I would expect some movement in that would have some affect on our bottom line,” he said.

In addition to Colonial Downs, holdings of Jacobs Entertainment include two casinos in Colorado, three casinos in Nevada, and 18 truck plaza video gaming facilities in Louisiana, which are collectively referred to by the company as “Jalou.”