With Racino Table Games, How Would Purses Benefit?

As West Virginia racinos consider a push for casino-style table games, questions loom. Would revenue from the games go to purses, and if so, how much?

MTR Gaming, owner of Mountaineer Race Track & Gaming Resort, has lobbied the West Virginia legislature for table games. An official with Penn National Gaming, which owns Charles Town Races & Slots, said recently table games could give West Virginia a competitive edge should neighboring states authorize racetrack slot machines.

"We look at everything we do as providing entertainment for our customers," MTR Gaming president Edson "Ted" Arneault said at the recent Racino 2003 conference held at Mountaineer. "If approached appropriately, any taxes levied must be done on a net-profit basis, not a net-win basis. Otherwise, we can't afford to operate (table games)."

Arneault said games such as blackjack and craps would draw a younger gambling crowd that would in turn fill hotel rooms, eat in restaurants, and use the facility's other amenities. Currently, non-gaming space makes up more than 80% of the Mountaineer property even though it accounts for only 5% of total revenue. Arneault said it's needed nonetheless to make Mountaineer a true destination resort.

"I do think (table games) would add directly to the bottom line," Arneault said. "They would add to the whole entertainment aspect."

Horsemen's groups would need to be on board if table-games legislation is to get anywhere. The dialogue has begun.

Under West Virginia law, 15.5% of revenue from track-based video lottery terminals funds purses at Mountaineer. At Charles Town, 14% goes to purses and 1.5% to breed development.

"I would maybe erroneously assume we would get the same percentage that we get from our slot machines," said Dick Watson, president of the Charles Town Horsemen's Benevolent and Protective Association. "I wouldn't be pleased to get less than that. On the other hand, I see no reason why we wouldn't support (table games) as long as there are guarantees live racing would persist and flourish."

Watson said there would have to be an educational process for horsemen and residents of Jefferson County, who might have to approve the games via local referendum should state lawmakers adopt enabling legislation. Watson said that with VLTs, every dollar is accounted for electronically; with table games, there is a question of how to account for "cash on the table."

A table-games referendum might have an easy chance at passage in Hancock County, home of Mountaineer, which helps drive the local economic engine. Twenty minutes down the road, Weirton Steel is planning to layoff more than 900 employees.

In Minnesota at the Canterbury Park Card Club, which features poker games, participants compete against each other without a true "house," but the track deducts a percentage from accumulated wagers. Purses earn 14% (90% of that goes to the general purse account and 10% to breed development), but the percentage will increase to 15 in 2004 as a result of negotiations with the Minnesota Horsemen's Benevolent and Protective Association, Canterbury president Randy Sampson said.

For house games such as blackjack and craps, revenue is determined by how much the house wins. Therefore, the revenue stream is unpredictable on a day-to-day basis, Sampson said. In addition, expenses are higher for pit games, so the percentage of net win that would go to horsemen could be quite small and could fluctuate from month to month, depending on how players do at the tables, he said.

There is no model or formula in the racing industry for funneling revenue to purses from table games that have a house.

Canterbury this year registered gains in handle and card-club play. Rose Mary Williams, director of racing at Mountaineer, said she believes table games could help drive wagering on horses because handicappers seem to be more prone to play cards than slot machines.

Joe Manchin, the West Virginia secretary of state who plans to run for governor in 2004, hinted he's amenable to expansion of the racinos, which have a become a leading revenue-producer for the state, but he didn't offer specifics. Aside from the two Thoroughbred facilities, West Virginia has two Greyhound racinos.

"We're going to look at our core industries and see what we do well," Manchin said during a Nov. 11 address at Mountaineer. "We are going to compete...We have to be poised to take advantage, and this will be an important industry to achieve that goal."

Manchin is close friends with Thoroughbred owner and breeder Sam Huff, president of the West Virginia Breeders Classics. Watson said he has spoke to Manchin and believes he understands how the industry works and what it needs to grow.

"I believe he's willing to help," Watson said. "He looks at things from the racing side. He stood there and told me, 'I'll be the best friend horsemen have ever had.' "