Slots lure big bucks to small racetracks

Dec 31, 2002 2:35 AM

Stop the merry-go-round! I’m getting dizzy and feeling faint.

The latest turn came last week, when MTR Gaming, which operates Mountaineer Park in West Virginia and the Ramada Inn and Speedway Casino in North Las Vegas and a Ramada Inn in Reno, announced it was buying pretty Scioto Downs in Columbus, Ohio, with its cantilevered roof and circular dining room and five-eighths mile track, for $19 million.

Mountaineer gave Scioto shareholders $32 a share, a 146% premium on their stock, which was trading at $13 when the sale was announced. Actually, in legal terms, it was a merger, but if it talks like a sale and walks like a sale, it is a sale, for practical purposes.

Scioto has been a harness track since the extremely popular beer distributor and horse breeder Charlie Hill opened it in October, 1959. His widow LaVerne still is the biggest stockholder, with 208,341 shares. Mountaineer did not buy, or merge, Scioto because it likes harness racing, or because of Scioto’s distinctive roof line. Mountaineer smells slots, which has made it hugely profitable in West Virginia. Despite Gov. Bob Taft’s bitter opposition to them in Ohio, MTR is willing to gamble, figuring Ohio’s budget deficit ”” a factor driving the gambling scene in most states ”” will wear down the legislature and bring VLTs to Buckeye tracks.

MTR is far from alone, and the wheeling and dealing has been dizzying. MTR also wants to build a track in Erie, Pennsylvania, over the dry bones of two others buried there. But of course they didn’t have slots, and they’re coming to Pennsylvania, too.

Besides that, in recent months:

Centaur out of Indiana bought Rosecroft Raceway in Maryland and a hotel-casino in Colorado.

Magna Entertainment bought Flamboro Downs, a harness track with slots in Ontario, and also bought controlling interest in the Maryland Jockey Club, with its historic Pimlico Race Course and Laurel Race Track in Maryland, where VLTs at tracks also are on the new governor’s menu.

A new $23 million track was opened in the cornfields of Shelbyville, Indiana, and a major campaign was launched for slot-like pull tab games in the Hoosier state.

Rockingham Park in New Hampshire, tired of fighting with its thoroughbred horsemen over contracts, threw them out and reverted to less expensive harness racing, which was raced there for years. It also announced that if it doesn’t get slots, it will close the place after 2004 and turn it into a real estate development.

Joe Lashinger Jr., a former executive with Penn National Gaming, applied for a license to build a harness track in Chester, Pennsylvania, on the depressed waterfront just south of Philadelphia, and Philadelphia Park wants to build there too.

A husband and wife without previous track operational experience want to build a backyard track in a residential district of Washington county, near Pittsburgh.

Monticello Raceway in the Borsht Belt of the New York Catskills, with slots on the way, is on the market, hoping for big bucks.

And of course there is Las Vegan Shawn Scott and Vernon Downs in central New York, a saga reported here last week. Scott appears to be trying for another Delta Downs, which he bought for $10 million and sold to Boyd Gaming for $120 million two years later after slots came to Louisiana tracks.

Scott loaned Vernon millions to stop its financial bleeding, which threatened to be fatal. He said he was buying the track, but as of the moment owns only 4%. And since last week there has been a dramatic change in the situation.

New York State, tired of Vernon’s continued problems and promised solutions, and of licensing arguments with a Scott associate, pulled the plug, and refused to issue a license or dates for 2003. As of now, Vernon is a racetrack with no racing.

Vernon aside, big dollars are being tossed around for small racetracks. People with slots in their eyes are looking at losing racing operations, yearnings without earnings. Mountaineer’s acquisition of Scioto, which lost $1.2 million in the first nine months of its fiscal year that ended October 31, is just the latest example. There will be more to come.