Track losing money on table gaming

WHEELING – Once profitable table gambling is now a liability at Wheeling Island Hotel-Casino-Racetrack, as the venue is on pace to lose about $1 million due to running poker, craps, roulette and blackjack this year.

That projected operating loss does not include the $2.5 million annual fee the track must pay the West Virginia Lottery Commission to operate the table games.

“We have done everything we can to reduce our costs and to increase our customer base, but our ability to drive revenue is very limited now,” said Jim Simms, president and general manager of the Wheeling track.

Information Simms provided shows that through the first two months of 2012, the track only lost $3,365 on table gambling. For the first two months of this year, however, the loss totals $171,407. A major difference between 2012 and 2013 is that the Hollywood Casino Columbus opened in the fall, taking away some of Wheeling’s loyal customer base.

“The competition we are now facing from both Ohio and Pennsylvania – combined with the fact that table games are a very labor intensive venture – is making our situation very difficult,” Simms noted.

Simms said there are now 105 track employees whose jobs are tied directly to table gambling, each of whom he thanks for their efforts. The number of employees has declined over the past few years in response to the drop in business, as there were more table gambling dealers when the games began in late 2007.

“I take great pride in my responsibility to keep the business stable – and to keep our associates in a comfortable working position,” he said. “But if we have to pay this $2.5 million fee again, we are going to have to seriously consider whether to continue offering table games.”

Simms emphasized that no decision has been made regarding the table games. The track’s current table gambling license does not expire until July 13, about three months after Simms plans to leave his post as the general manager at the facility; he recently accepted an opportunity to open a new casino in Lebanon, Ohio.

Review of

Table Gambling

Other West Virginia tracks, all of which now offer table gambling and slot machines, include Mountaineer Casino, Racetrack & Resort in Chester, the Mardi Gras West Virginia Casino & Hotel (formerly Tri-State Racetrack) near Charleston and the Hollywood Casino at Charles Town Races in the Eastern Panhandle.

Most of the impetus for legalizing table gambling in West Virginia in 2007 centered around Wheeling Island and Mountaineer projecting slot machine revenue losses when Pennsylvania plugged in its slots. Leaders from both Northern Panhandle casinos intensely lobbied the West Virginia Legislature to permit table gambling to proceed in the state, emphasizing it would allow them to maintain an edge over the Pennsylvania facilities, while also creating new jobs.

Following much debate, including spirited discussions over how much tax to levy on the games, the Legislature eventually agreed to tax table gambling at a 35 percent rate, in addition to applying the $2.5 million annual fee on each of the four racetracks.

However, legislators also agreed to allow residents of the four counties that are home to the racetracks to vote on whether to allow table gambling. Under the campaign “Jobs for Ohio County,” the Wheeling track convinced voters to allow the games. By the end of 2007, roulette wheels were spinning on Wheeling Island.

Current Predicament and Possible Solution

Since West Virginia adopted table gambling at the 35 percent tax level with the $2.5 million annual fee, both Ohio and Pennsylvania have introduced slot machines and table gambling at brand new facilities in Pittsburgh, Columbus and other areas. Pennsylvania taxes its table games at no more than 16 percent, while Ohio charges 33 percent.

For slot machines, Pennsylvania taxes at a 55 percent clip, while Ohio levies the same 33 percent rate it does for tables. West Virginia charges about a 42 percent tax for slot machines, though Simms said the “effective slot tax rates” for Wheeling Island are about 57 percent because of purse funds, breeders’ funds and local supplements.

“As long as we are going to be taxed at rates higher than our competition, we are at a complete disadvantage. They have brand new facilities in prime locations. They have deeper pockets for promotions and marketing,” Simms said of the Ohio and Pennsylvania casinos.

Simms said he would like the Legislature to “have a discussion” about taxation for table gambling in West Virginia, especially the $2.5 million annual fee.

“I am asking for this issue to be escalated before the (legislative) session closes so that we can find a solution,” he said regarding the current regular legislative session set to end April 13.

Simms said there are several potential ways the Legislature could help resolve the problem, including the possibility of applying the fee on the state’s four casinos in a more equitable manner that would be based on how much business each property actually does, rather than just charging each one $2.5 million.

“That $2.5 million that we pay ends up going to different charitable groups. We are absolutely not trying to take money from those organizations that we are glad to support,” he said. “All we are asking for is to have a discussion to see if there is any way the Legislature can revisit this issue.”

Simms said he has “the highest regard” for Gov. Earl Ray Tomblin, Senate President Jeff Kessler, D-Glen Dale, and House Speaker Richard Thompson, D-Wayne.

“We are raising this issue now because we need to keep our business competitive. Anytime there is a loss of jobs, it hurts the community,” Simms said.

“Our people have been through so much here, with floods and various other challenges along the way. The least I can do for them before I leave is to try to find a solution to this problem so we can keep the table games going,” he added.