MTR Gaming buys Scioto Downs

Dec 31, 2002 4:56 AM

MTR Gaming Group Inc. (MNTG), operator of the Ramada Inn and Speedway Casino in North Las Vegas, and one of the thoroughbred industry’s first "racinos" with slot machines at Mountaineer Park in West Virginia, has agreed to pay about $19 million to merge with Scioto Downs, a harness racetrack in Ohio.

The company indicated that the Scioto Downs operation fit the strategy of the company in focusing on middle market gaming businesses in states that border on West Virginia.

In past years, Scioto Downs was a shining jewel in the harness racing firmament. For decades, the track was operated by the late Charlie Hill and his wife, Laverne, with the assistance of harness racing experts Bob Steele as presiding judge and later, president, and the late Chuck Stokes, one of the industry’s most respected publicists.

More recently, the business has been operated by Laverne and President and GM Ed Ryan, who will remain in his current capacity. Laverne Hill will serve as a vice president following the merger, according to MTR’s president and CEO Ted Arneault.

MTR Gaming also plans to build a track in Erie, Pa., that will position the company to take advantage of any slots for racetrack legislation that is being proposed. Recently-elected Gov. Ed Rendell is on record as favoring such legislation.

Although a major movement has been made to get racetrack slots in Ohio, Gov. Bob Taft has adamantly opposed the expansion of gaming.

Commenting on the merger, Arneault said, "While we do not expect Scioto to contribute materially to MTG’s financial results in the near term, the addition of Scioto, coupled with our planned racetrack in Erie, Pa., would hedge our market position in the event of enhance gaming legislation in either state."

CIBC World Markets chief gaming analyst, Bill Schmitt, said he believes the transaction will be dilutive to the company’s earnings in the short term and has adjusted the company’s earnings estimates, accordingly. He has lowered the 2002 earnings per share to $0.64 and the 2003 EPS to $0.93.