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Slot machines yielding rich take for local governments

February 04, 2002

Slot machines yielding rich take for local governments



By ANDREW SCHOTZ
andrews@herald-mail.com


Millions of dollars pour from the bellies of slot machines at Charles Town Races into the coffers of local government.

Jefferson County and its five municipalities received nearly $4.7 million in slot machine revenue from 1997 to 2001, according to the West Virginia Lottery.

Jefferson County Commissioner James Ruland expects another $3 million to come in this fiscal year.

For local governments, it may continue to get better.

Charles Town Races has applied to the state for permission to add 1,500 slot machines to the 2,000 now approved for the track.

Jefferson County and the five municipalities could see their share of revenue shoot past $5 million if that happens, Ruland said.

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The West Virginia Lottery Commission is scheduled to rule on the track's request Feb. 28.

Before the ruling, a public hearing is to be held at 9 a.m. that day at the Clarion Hotel and Conference Center in Shepherdstown, W.Va. Then, at 11 a.m., the commission will meet and vote at Charles Town Races.

The new machines are one piece of a $61 million expansion in progress, Charles Town Races President Jim Buchanan said. The project includes 75,000 feet for gaming, 25,000 square feet for operations and food support, a 200-seat food court and a 1,510-space parking garage.

Buchanan said the expansion will house the 1,500 new slot machines - if they're approved - plus 500 machines now set up in a temporary tent-like structure, which will be dismantled.

Video lottery slot machines have been popular since 400 were unveiled at the track in 1997.

As of Jan. 26, there were 1,994 in operation.

Net revenue from the machines in fiscal year 2001 was more than six times what it was three years earlier. It jumped from $21 million to $131 million in that period, according to the West Virginia Lottery.

Net revenue is divided into several parts. The track keeps 47 percent, the state lottery gets 30 percent and 14 percent goes to racing purses.

Jefferson County gets 2 percent.

The five municipalities in the county began getting a share in fiscal year 2000. Once the total net revenue for the slot machines reaches $45,603,174 in any year, the five municipalities get half of the county's 2 percent. The municipalities divide that money by population.

Phase I of the $61 million expansion - the parking garage, gaming space and the food support area - is under way. It is expected to be finished Aug. 1, when 300 slot machines would be added, according to the track's application.

Phase II is more gaming space and a live entertainment lounge. The estimated date of completion is Sept. 1, 2003, the application says. Another 900 slot machines would be added then.

The date of phase III - when the last 300 slot machines would be phased in - is July 1, 2004.

Through a Freedom of Information request, The Herald-Mail obtained part of the track's latest request from the West Virginia Lottery.

However, the Lottery withheld information about "forecasted growth" at the track because Penn National Gaming, which owns the track, is a publicly traded company whose stock is regulated by the U.S. Securities and Exchange Commission.

Because the pool of gambling money could dry up, Jefferson County tries to use slot machine revenue only for one-time expenses, and not salaries, Ruland said.

The same is true in Ranson, which received $101,993 in fiscal year 2000 and $290,318 in fiscal year 2001.

Ranson Mayor David Hamill said some money helped refurbish the former post office for the police department to use. Other money paid for some fire department and animal welfare requests.

While the city enjoys its slot machine revenue, "it's secondary to what (the track is) doing for the community," Hamill said, naming jobs as a primary example. "It's an economic enhancement."

Slot machine money has paid for vests for Shepherdstown police officers, maintenance at the sewer and water plants and some of the town's outstanding debt, Mayor Arthur J. Auxer III said.

The town received $45,669 in fiscal year 2000 and $103,374 in fiscal year 2001.

There are advantages and disadvantages to adding more slot machines at Charles Town Races, but "the drawbacks of having the machines are more difficult to ascertain," Auxer said.

"The track has been a good corporate neighbor," Ruland said. "They have, in my opinion ... fulfilled all of the promises they made. ... They said they would make improvements. That's all happened. The money has gone where they said it would go."

Commissioner Jane Tabb was surprised to hear about the plan for 1,500 more slot machines. She suspects that the slot windfall won't last forever.

"The feedback from Maryland, with a new governor (next year), is it would have a lot of its own slot machines," Tabb said. "I would expect ours to decrease ... but obviously (the owners of Charles Town Races) don't agree."

The track says that 34 percent of its patrons come from Maryland and 94 percent live outside West Virginia.

Revenue is one thing, but the repercussions of gambling, like addiction, are another, Tabb said.

"I am concerned about the social costs, and that's something that's very hard to resolve," she said.

In 2000, before the track expanded from 1,500 slot machines to 2,000, some Jefferson County residents argued that gambling brings some bad social side effects.

But Ruland said the fears that gambling would lead to higher alcoholism, spousal abuse and prostitution haven't panned out.

"The ladies of the night and the houses of prostitution - I keep looking for those high-heeled ladies... and I can't find them," Ruland said.

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