Restaurant's lottery revenue might not equal court costs

January 17, 2006|by ROBERT SNYDER


A Martinsburg restaurateur's placement of video lottery machines could cost him his full purse, and then some, if a city court rules to fine the establishment for each day the machines were in operation.

Tatra Restaurant Inc. owner Carter Craft said the revenue he earned from the five video lottery machines installed in an upstairs room of the Counsellor's Grill pales next to the $300-a-day fines he could face if the city's Municipal Court rules against him.

The restaurant grossed $2,534 on more than $14,800 played on the machines during the two months they were in operation last year, according to the West Virginia Lottery Commission's Limited Video Lottery Monthly Revenue Web page.


However, after 2 percent of gross revenue earned from video lottery machines is funneled back to the Lottery Commission for administrative costs, 46 percent of the remaining proceeds is gobbled up in state taxes. That leaves 54 percent to be split equally between the retailer and the machines' operator, said Mara Pauley, an accountant with the Lottery Commission.

"We never put the machines in there to become super rich," Craft said in an interview last week.

The Counsellor's Grill, at 100 N. College St./200 W. Burke St., opened in November.

While the building's co-owner, Dan Haleman, presenting the company's application before the city's Board of Zoning Appeals in October, argued for the approval of the gaming machines as a way to help the restaurant get on its feet, Craft said the machines also were part of an effort to create a place for customers to relax outside the dining room.

"We wanted to have more of an executive feel, a nice place to stay that was more of just 'give the people as many things as you can and they'll come back,'" Craft said.

Video lottery machines are increasingly seen as a way to improve an establishment's bottom line, according to Twiggy's Subs and Convenience owner Glenville Twigg, who said he twice was turned down for zoning requests that would have allowed him to install them in his store.

"We're a new, struggling business and we're doing a great volume, but we're not at that point where we're covering everything. We'd have been in great shape if we could have got those machines," said Twigg, a former city councilman. "We were just looking to ensure our business survival, and there's money to be made there."

As many as 84 establishments were operating 446 video lottery machines in Berkeley County in December, grossing more than $1.8 million on more than $22.3 million played. In all, 115 limited video lottery licenses were in issuance in Berkeley County that month, said lottery commission Marketing Deputy Libby White.

The three top-grossing establishments that month were the Bunker Hill Order of the Orioles, grossing $70,245 on $774,559 played; Sofia's in Old Courthouse Square, which earned $63,198 on $724,179 played; and Sofia's at North Mall in Martinsburg, which earned $62,913 on $711,595 played, according to the lottery commission's monthly revenue Web page.

The restaurant also could lose its Limited Video Lottery License, Lottery Commission attorney John Melton said. The restaurant was issued its license in October, but officials with the city's Planning Department are trying to have the license revoked, citing the submission of an alleged misleading application by Craft in July.

In a Dec. 2 letter to lottery commission Director John Musgrave, city Planning Director Mike Covell said the restaurant owner provided false information when he claimed the business was in compliance with the city's municipal zoning ordinance three months before its appearance before the zoning appeals board.

As a lesser measure, the commission also could disable the restaurant's machines from the state's central computer facility in Charleston, W.Va., making them inoperable until its problems with the city's zoning ordinance are resolved, Melton said.

"If Craft didn't lie then, that's not grounds for revoking the license," Melton said.

Melton called the matter complex because city officials are not appealing to its video lottery ordinance. Instead, Martinsburg officials are basing their case on the denial by the zoning board, which agreed to restore the building's nonconforming use, but failed to expand the noncomformity to allow the lottery machines.

"Martinsburg is not saying we didn't have a video lottery ordinance that this guy didn't pay attention to when he filled out his form," Melton said.

Craft, who said the city's ordinances don't distinguish between full-service restaurants and catering establishments, called the zoning board's decision the equivalent of turning down a marketing concept.

"We could have called (the Executive Lounge) 'the Side Chamber.' It's confusing how they turned down a marketing idea," Craft said. "They're getting to the point where they're trying to design the interior of my building."

But, in his decision, Circuit Court Judge David Sanders agreed with the city's argument, calling the request by Craft to add the gambling machines an "expansion of a nonconformity that has never been in existence."

Melton, who said the lottery commission will review the case Jan. 25, added such cases usually are pretty black and white.

"It's different in Martinsburg than I've run into anywhere else," Melton said.

By the numbers

In December, as many as 84 establishments were operating 446 video lottery machines in Berkeley County. The three top-grossing machines were:

  • Bunker Hill Order of the Orioles: Grossing $70,245 on $774,559 played.

  • Sofia's in Old Courthouse Square: Grossing $63,198 on $724,179 played.

  • Sofia's at North Mall in Martinsburg: Grossing $62,913 on $711,595 played.

Source: West Virginia Lottery Commission

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