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West Virginia Revives Declining Gambling Industry

Posted on February 23rd, 2011

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Competition among businesses is the common consumers best friend. This adage is ringing loud and true in West Virginia as the state’s gambling industry is calling for legislative intervention to beef up its sharply declining earnings. The biggest threat to West Virginia’s gambling revenues is coming from the stiffer competition that it is facing on all fronts from Pennsylvania to Ohio. The request primarily calls for the West Virginia Legislature to allow gamblers to wage higher amounts at the racetracks and the Greenbrier resort. This is in response to the sharp tumble of slot machine earnings that original drove the West Virginia gambling industry forward but is now in danger of straining the system itself due to poor returns. In just a matter of three years, slot machine revenues are now down 30% and loses are projected to continue unless drastic changes are made to the system in order to attract more bettors.

Overall, the West Virginia gambling industry has lost $200million in revenues year-for-year comparing performances from 2007 and 2010. The $972 million revenue from 4 years ago is now down to $747 million while other states are reporting robust and increasing sales. It would seem, based on initial observation, that West Virginia is floundering while other states are growing. Pennsylvania has reportedly already added slot machines and built new casinos. Ohio is anticipating the opening of the grant Horseshoe Cincinnati and a second casino is under way; Maryland is already ahead in the slot casino planning department as it has two more planned on top of the two currently operation and one that is already pending.

If the request is to be believed, it blames the decline in West Virginia gambling revenues to the limitations in betting amounts for all Pennsylvania slot machines. Today, one cannot bet more than $5 in a slot machine in any of Pennsylvania’s track-casinos. The two Northern Panhandle casinos, the Mountaineer Park and Wheeling Island facilities, and the Greenbrier resort are all limited to a maximum bet while neighboring states have long moved ahead. Pennsylvania and Ohio in particular do not have betting limits. Maryland draws the line at $100; in comparison to West Virginia’s meager $5, $100 is still a boon. The thinking goes that capping your maximum bets will lead to smaller revenues per turn. A determined player can obviously go on forever at $5 per turn until exhausting his cash or winning the jackpot. In states with higher revenues per slot level pull, the casinos are guaranteed of higher cumulative earnings of the day even without factoring in customer persistence in working the slots.

Some 10,000 slot machines in the whole of West Virginia will get a much needed upgrade should the petition gain steam in the Legislature. Slot machine limits will be raised to $100 to equal Maryland’s and least drawing level with West Virginia’s closest competitor. Aside from the increase in slot betting limits, the bill also seeks to establish a capital fund to finance casino improvements across the state. The current proposal calls for 2.5% of net winnings to go into a fund which will then be matched dollar-for-dollar by each of the four track-casinos and the Greenbrier. The collected sum will be used to pay for the upgrades particularly in the purchase of new slot machines, security and gaming equipment. Current estimates peg the expected earnings at $19 million a year, which is good enough to buy 950 slots machines per year.

Said State Racing Association President John Cavacini, “These changes will put us on an even playing field with our contiguous states in an effort to secure as many visitors to West Virginia as we can.” Long gone are the times when West Virginia enjoyed a virtual stranglehold on the gambling business in the region. However, liberal legislation has transformed gambling revenues into viable state-funding sources and neighboring states are now investing heavily in their gambling facilities to attract more customers. The constant addition of newer features and more customer-friendly machines versus the old and outdated models in West Virginia certainly tilt the scale in favor of the new players. The changes are coming in at a good time. Only with sweeping changes will West Virginia be able to re-establish itself as a prime destination for high-rollers who are willing to try their luck on just about anything that has the right rewards.