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Gambling on our future?

by Vicki Smith

THE ASSOCIATED PRESS

WHEELING -- All around Donna Connor, the machines sing. Thousands of them. Constantly ringing and pinging, they form a hypnotic, electronic melody punctuated by the clatter of coins.

Every few months, that song calls Connor to Wheeling Downs Racetrack and Gaming Center, where she spends as much as $400 on the slots in one day.

"It's an escape, more or less," says the arthritis-riddled retiree from Butler, Pa. "I know a lot of people want to go to Las Vegas, but for me, it's just too much. Too much to choose from."

Connor favors the small casinos in Tunica, Miss., but they're too far away. So when the mood strikes, she and her friends drive two hours west to Wheeling or north to Mountaineer Race Track & Gaming Resort in Chester.

"We don't come here to win," she says, "because chances are, we won't."

But West Virginia's gambling halls are winning more than ever, and with expansions under way at all four racetracks, the profits will only climb.

Twelve years ago this weekend, on June 8, 1990, the Lottery Commission allowed Mountaineer to install up to 165 terminals. Since then, all four tracks have become major tourism attractions, generating an ever-larger stream of revenue with an ever-larger number of slots.

Of the 21 million tourists who came to West Virginia in 2000, at least one-fifth, or 4.3 million, went to the racetracks. That's nearly six times the 750,000 who came to ski and 17 times the 250,000 who were lured by whitewater rafting.

Mountaineer and the Charles Town Races & Slots alone drew 4.5 million people last year, and they're projecting a combined 6 million visitors this year.

In fiscal 2001, gamblers plunked more than $5.1 billion -- almost twice as much as the state budget -- into 6,200 slot machines. After payouts and administrative costs, net revenues totaled $433.7 million.

And in March, the games produced nearly $57 million in profits, setting a single-month record.

The growth is expected to continue. The state Lottery Commission has approved expansion requests this year that will push the number of slot machines to 11,000.

The owners of Mountaineer, Charles Town, Wheeling Downs and Tri-State Racetrack & Gaming in Nitro have spent millions to get where they are, but they're now spending hundreds of millions more to position for competition from neighboring states.

Kentucky lawmakers just rejected a bill to allow slot machines at racetracks, but supporters plan to resurrect it. Similar legislation is being floated in Pennsylvania and Maryland.

West Virginia planners envision everything from a riverside shopping center and golf course in Chester to an outdoor amphitheater or sports arena in Nitro.

There are no limits on the number of machines a track can have, and the Racetrack Video Lottery Act appears to have been crafted to let the house win. As long as the Lottery Commission deems more machines "in the best interest of the tracks, the commission and the citizens of West Virginia," expansions are approved.

The commission stands ready to deny a request, Lottery Director John Musgrave says. So far, it hasn't.

The market will determine when enough is enough, he adds.

"The commission can decide either way, but if there is determined to be a need, they're going to take a look at meeting that need," Musgrave says.

Even the staunchest opponents have all but abandoned hope of stopping the growth.

Mike Queen, chairman of the Coalition Against Gambling Expansion, went to every Lottery Commission hearing for two years, objecting to requests for more machines.

"But now there's no use," he says. "There's not enough people in West Virginia who want to fight the system."

Queen and others say the commission is a rubber stamp for the track owners -- owners so confident of approval that they begin construction projects months before the go-ahead for more machines.

"We have a commission that doesn't regulate; they only endorse and promote gambling in West Virginia," says the Rev. Robin Crouch, pastor of First Baptist Church in Wheeling. "As long as you've got a dollar, they want it."

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Mountaineer led the pack in profits last year, making $75.3 million in fiscal 2001. Charles Town racked up $62.1 million, Wheeling Downs earned $45.5 million and Tri-State, the smallest of the four, made almost $21 million.

About $147.5 million from racetrack slots went to the state in fiscal 2001, up from $95 million the previous year. Over the years, slot machine profits have helped fund everything from parking garages and veterans' memorials to senior programs, tourism ventures and teacher pay raises.

"I just think it's sad we're so hooked on the revenue," Crouch says.

The state keeps 34 percent of the profits; the other 66 percent is split, with 47 percent going to track owners and 17 percent to breeders and other racing interests. Two percent goes to the county and local governments that host the tracks, adding up to almost $8.7 million last year.

The tracks also make countless donations to charities and civic groups.

"They are a group of people we can go to in a time of need, when we can't quite afford something," says Charles Town Police Chief Mike Aldridge, whose department has gotten equipment, support for its DARE program and money for a narcotics dog. "Charles Town Races has been a great neighbor."

And despite the year-round influx of gamblers, the tracks have not caused an increase in the crimes often blamed on casinos, such as prostitution, drug dealing and robbery.

"If there was an increase in crime, I'd be the first to tell you," says Ranson Police Chief William Roper.

The main gripe from law enforcement? Traffic congestion.

In a rapidly growing county like Jefferson, however, police say it's hard to tell whether the track is causing the problem.

The source is more clear in Chester, where traffic along two-lane state Route 2 can be bumper to bumper for 5 to 7 miles on a busy weekend, hindering emergency vehicles and other drivers.

Hancock County Sheriff Jeff Woofter isn't happy about the traffic jams, a perceived increase in drunken driving arrests or what he considers the unchecked growth of the casino.

When the experiment began, Woofter says he and his neighbors were told Mountaineer would have 400 slot machines.

"At most, it would double. That's 800. There are 2,500 here now, and we haven't had any more local-option elections," Woofter says. "That part does disturb me."

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In some ways, West Virginia's development mirrors Las Vegas.

Slots are in play for all but a few hours daily, as early as 7 a.m. and as late as 3:30 a.m.

Charles Town has the largest and most lavish casino, distinguishing itself with expensive decor designed to make gamblers so comfortable they'll stay and play -- and come back with friends.

The Silver Screen Gaming area exudes glamour, its walls lined with billboard-sized, glass-encased posters of classic films like "Ben-Hur."

The OK Corral was created when surveys found many patrons are country music fans. It has a modern Western motif with faux sky ceiling, stacked stone columns, cobalt chandeliers and support beams disguised as angular cacti.

Work is now under way on a parking garage and entertainment complex complete with new gambling rooms, a 600-seat buffet and a food court. When that's finished, marketing efforts in Virginia, Maryland and the District of Columbia will intensify.

"In the beginning, we didn't have the capacity to handle the people, so we didn't advertise," says track President Jim Buchanan. "We believe we're just scratching the surface of those markets."

Although some tracks now offer day trips by bus within West Virginia, all rely on out-of-state gamblers.

"When you get people to come to your community, drop some money and leave, that's the best situation in the world," says Paul Mills, a Ranson city employee who supports Charles Town's growth. "They don't use your schools and city services, but they eat and shop here."

If slot machines are approved in neighboring states, some patrons would stay closer to home and West Virginia's growth rate would slow.

"We've had double-digit growth for the last 10 years, which is phenomenal," says Musgrave, of the Lottery Commission. "At some point, though, it's going to plateau. We're going to sustain our growth, but it will be more gradual in the future."

The state has another form of slot machine to make up the difference.

The Lottery Commission is now installing up to 9,000 regulated "limited video lottery terminals" to replace the untaxed and now-illegal machines that once proliferated in bars and convenience stores.

Like the racetrack slots, those machines are already bankable: Gov. Bob Wise's budget counts on that revenue for PROMISE scholarships, a merit-based program for high school students that has never before been funded.

Queen, of the Coalition Against Gambling Expansion, charges Wise is also at the helm of the casino expansions. But Musgrave, who kept his job when the administration changed hands, insists his agency is independent.

"We don't have any conversation along those lines with the administration," he says. "We're not influenced or instructed by the governor."

------

Barbara Pabian wears latex gloves to keep her hands clean as she plunks quarters into a slot machine at Wheeling Downs. The fingertips are black with grime.

"Where we're from, so many people are laid off. They need some kind of distraction," says Pabian, who makes the 90-minute drive from Washington, Pa., once a month.

Like others entranced by the flashing lights and ringing bells, she says the slots are both stimulating and relaxing.

"It's competitive. You're trying to beat the machine," Pabian says. "It's a chance to win some money. Or break even."

In Chester, Mountaineer lures patrons with a Prohibition-era speakeasy theme, suggesting it ought to be illegal to have so much fun. And like many Vegas properties, it offers cheap eats and the occasional chance to see Elvis.

If the tracks don't continue to give gamblers what they want, they'll stop coming. And the money will stop flowing.

So, Mountaineer President Ted Arneault is starting to build support for legislation that would allow blackjack and other table games, something gamblers consistently request.

Arneault argues tables would create a more sociable atmosphere for gamblers to play the games they're already playing on machines.

But that's not where the money is.

Since the early 1980s, slot machines have overtaken table games in popularity, now accounting for two-thirds of casino revenue nationwide.

Last month, The Sands Hotel & Casino announced it would lay off 266 Atlantic City employees, removing more than half the tables to make room for more slots.

"Table games are much more complicated to manage," says Don McGhie, an industry consultant in Reno, Nev. Dealers have to be trained, then taught the ways of cheaters. Managers and security guards must supervise.

"From a business standpoint, as long as you have the market, you're better off going with slots," McGhie says.

In the 1970s and 1980s, slots were a novelty even in Las Vegas. That changed when computer chips expanded the playing possibilities and raised the odds of winning.

Progressive games now link banks of machines, even banks from different casinos, and pool the bets to produce huge jackpots. A nickel machine in Nevada once limited to a $7.50 payout can now produce a $500,000 prize.

In West Virginia, the largest progressive jackpot so far was $455,725, hit last June at Wheeling Downs. The Lottery Commission has since installed computers allowing even more games to be connected.

------

Frequently, gambling opponents charge that for every dollar a state receives from gambling, it spends $2 to $3 on social problems and public services.

Yet a 1999 survey for the National Gambling Impact Study Commission reached no clear-cut conclusion on whether casinos help or harm a community.

While newly opened casinos do not significantly increase violent crime rates, social costs were hard to quantify: Dollar values cannot be assigned to domestic violence, substance abuse or the breakup of a gambling addict's family.

Unemployment and welfare rolls typically decline, but per capita income is generally unchanged, the survey found.

That indicates there are more jobs, but not necessarily better jobs.

Randy Moore, a United Steelworkers of America representative for some 200 workers at Tri-State, says the racetrack offers good pay, benefits and the chance for advancement.

"We have people who have made a career out of working here," he says.

Nitro Police Chief Jack Jordan says those jobs pay off to the community at large, too: "When you bring more jobs to the city of Nitro -- or anywhere -- it decreases crime."

Hancock, Jefferson, Ohio and Kanawha counties all have unemployment rates below average, ranging from 3.4 percent to 5.2 percent for April. The statewide rate was 6.1 percent.

When the expansions are done, the tracks will employ some 4,700 people -- 1,750 at Mountaineer, 1,170 at Charles Town, 1,000 at Wheeling Downs and 775 at Tri-State.

And jobs were just what the track owners promised all those years ago.

Mountaineer was slowly dying when Excalibur Holding Corp., the predecessor of MTR Gaming Group, bought it in 1992 for $6.7 million. When then-legislators Sam Love and Tamara Pettit sponsored the Racetrack Video Lottery Act two years later, nearly 1,000 jobs were at risk.

Slot machines were a tough sell at a time when the lottery was plagued by scandal. Commissioner Butch Bryan and lottery attorney Ed Rebrook had been convicted on charges stemming from lottery contracts. Two Senate presidents went to prison for gambling-related misconduct.

"The public trust had been violated, and the Legislature was very wary of anything that had to do with gaming," recalls Pettit, now director of marketing for Mountaineer.

Every speech she gave in the House of Delegates focused on saving jobs.

"If you look at the demise of the steel industry, you see that Weirton Steel went from 13,000 employees to a little over 3,000," Pettit says. "Someplace has to absorb those workers, and Mountaineer has become the place to absorb them."

Today, job fairs still draw hundreds of applicants.

"At the time, we were just trying to hold the status quo," Pettit says. "We were just thinking, 'OK, it will help them survive.'

"The idea that it would be used as a lynchpin and this place would totally explode didn't enter my mind," she says. "I truly did not see the magnitude of it."

------

On the Net:

W.Va. Lottery: http://www.state.wv.us/lottery/vidsum.htm

Wheeling Downs: http://www.wheelingdowns.com/

Charles Town: http://www.ctownraces.com/

Mountaineer: http://www.mtrgaming.com/

Tri-State: http://tristategreyhound.casinocity.com/

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