W.Va. casinos fine despite revenue decline, commission says

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West Virginia’s five casinos were relicensed by the state Lottery Commission on Monday, after an audit found that all are financially sound, despite experiencing severe declines in revenue.

Revenues at the five casinos fell by more than $140 million between the 2012 and 2013 fiscal years, as the casinos have lost business to new rivals in Maryland, Ohio and Pennsylvania, according to an audit by the accounting firm of Gibbons & Kawash.

Hollywood Casino in Charles Town, by far the largest in the state, saw revenues fall $90 million to $456 million in fiscal 2013, while its operating income fell $29 million to $71 million.

Likewise, Mountaineer Casino’s revenue fell $22 million to $175 million, while revenues at another Northern Panhandle casino, Wheeling Island, dropped $25 million to $115 million.

Revenue at Mardi Gras Casino in Cross Lanes fell $4 million to $40 million. The audit found Mardi Gras has had operating losses for the past four years, losing $1.2 million in fiscal 2012 and $2.3 million in fiscal 2013, but concluded the operation remains fiscally sound, with $19 million in equities.

The casino at The Greenbrier resort maintained revenue of about $12.9 million for both fiscal years, the audit found.

“It’s always concerning,” Lottery Director John Musgrave said of the declining casino revenue. “It’s much better when you had the monopoly in the Eastern part of the country.

“We have significant competition, as The Wall Street Journal … pointed out,” he added, referring to an article in Friday’s edition noting that 26 casinos have opened in the Northeast since 2004.

“States that adopted gambling earlier than their neighbors, such as Delaware, New Jersey and West Virginia, are watching dollars drain away, and new projects have some wondering how many facilities the area can support,” the article stated.

West Virginia casinos need to redouble efforts to promote themselves as destination resorts, and to offer new and innovative gaming options, Musgrave said.

Also during Monday’s commission meeting:

n With one month remaining in the 2013-14 fiscal year, overall year-to-date Lottery revenues are down $105.8 million from the prior year, while the state’s share of Lottery profits is down $50.5 million, at $490.44 million.

May revenues of $106.23 million are down $11.65 million from May 2013, and the state’s profit for May, $47.53 million, is down $5.66 million. The state’s fiscal year ends June 30.

n Musgrave said the 172 fraternal organizations operating limited video lottery have a June 30 deadline to self-report any violations of state video lottery regulations.

That stems from an ongoing investigation of two LVL machine distributors who operated at least 23 video gaming facilities under the guise of being fraternal lodges, even though testimony indicated members of the organizations rarely or never visited the lodges, which were open to the general public.

Under the law legalizing LVL machines, fraternal lodges may have up to 10 machines, double the maximum allowed in licensed bars and clubs.

Penalties against LVL machine distributors and fraternal organizations that violated the law will be addressed at the commission’s July meeting, Musgrave said.

n Commissioners fined the owner of Hardball Café near Wheeling $500 after an incident in which an employee demanded a 10 percent “tip” in order to cash a $400 winning LVL ticket. An investigation determined the employee, who has since resigned, acted on his own, and that the owner subsequently reimbursed the $40.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.

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