Hollywood Slots marks first year at new Bangor facility

Posted June 30, 2009, at 7:40 p.m.

BANGOR, Maine — It’s hard to imagine any business in Bangor — and perhaps the entire state of Maine — that is more scrutinized than Hollywood Slots Hotel & Raceway.

When the state’s only gaming facility opened its temporary location in November 2005, there was no shortage of skeptics or naysayers. They feared the racino would bring unwanted crime and turn Bangor into a less-than-desirable destination.

When Hollywood Slots moved into its permanent, $138 million facility on Main Street exactly one year ago this week and doubled its number of slot machines, opponents reiterated their concerns.

But can 1.3 million visitors all be wrong?

As the business continues to generate revenue at a steady pace even in tough economic times, perhaps the best thing that can be said about Hollywood Slots is that it has blended almost quietly into the Bangor business landscape.

“We kiddingly talk about being under a permanent microscope, but it’s justified,” Jon Johnson, general manager of Hollywood Slots, said in an interview last week from his office. “I think it’s been proven that we operate a legitimate entertainment business.”

Hollywood Slots has a number of events planned for July to coincide with its one-year anniversary, including concerts and giveaways.

Bangor City Council Chairman Gerry Palmer said he’s never been a fan of gambling personally but always has supported Hollywood Slots.

“I like to tell anyone who will listen, I’m pleased at what this adds,” he said. “It’s created another entertainment option for residents and visitors, it’s pumped life into the harness racing industry, which had been dying, and it’s helping us get close to the goal of a new auditorium.”

Not everyone agrees, though.

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Dennis Bailey, who has led a number of anti-gaming campaigns in Maine throughout the last several years, said he doesn’t think Hollywood Slots has lived up to its promises.

“I don’t see how they have been that successful, although I guess it’s all relative in the casino business,” he said. “Their numbers are not that much different with 1,000 slot machines than with 475 slot machines. And their overhead has gone way up.”

Economics

Hollywood Slots, owned and operated by Penn National Gaming Inc., debuted in a temporary facility in November 2005 before moving into the permanent location in July 2008 about three years ahead of schedule.

Since the move, it’s hard to argue against the numbers. Revenue has increased for six consecutive months through May 2009. It hasn’t yet climbed back to the high-water mark of $75 million in the first month of the permanent facility, but Johnson said he’s pleased. Bailey said the numbers are deceiving.

In the first three years of the temporary facilities, May revenue averaged between $45 million and $52 million. This year, the first May that Hollywood Slots has operated at a full 1,000 slot machines, gross revenue was $64 million.

“It’s a lot of money, but it’s not double,” Bailey pointed out.

Either way, a significant portion of net revenue from Hollywood Slots (about 50 percent) goes back to the state in some fashion. The city of Bangor has received about $6 million to put toward a new auditorium. More than $3.5 million has been put into scholarship funds.

Johnson also pointed to recent improvements at Bangor Historic Track, including a $1.3 million paddock and a $900,000 barn, as a boost to the racing industry.

Already, purses at Bangor Raceway have increased from $525,000 in 2005 to $1.6 million in 2008. In addition, the track has added race dates every year from 28 in 2005 to 61 on the schedule in 2009.

Bailey, however, said the casino has not revived the harness industry.

“All it has done is subsidize it,” he said. “The interest still isn’t there.”

Because there is no template for gaming facilities in northern New England, Hollywood Slots is plowing new ground, and Johnson said things are constantly evolving.

“We’ve made adjustment on hours of operation; we’ve reduced the price of the buffet,” he said. “We’ve tried to listen to our customers.”

But there is still something lacking that customers continually request.

“We need table games,” Johnson said, referring to card games like poker and blackjack. “If we want to compete with Connecticut [Foxwoods, Mohegan Sun], we need to offer those options.”

Crime, or not?

Opponents of gaming always point to increased crime rates as a drawback.

According to statistics for the 2004 calendar year through the 2007 calendar year (the most recent data available), Bangor’s overall crime rate has increased slightly from 55 crimes per 1,000 residents in 2004 to 63 per 1,000 in 2007. Categories like murder, rape, robbery and aggravated assault showed little change, but larceny did increase substantially.

Robert Welch, executive director of the Maine Gambling Control Board, said the Bangor Police Department averages between seven and 10 calls a month originating from Hollywood Slots.

“Wal-Mart would love to have a rate that low,” he said. Bailey sees it differently.

“To suggest that there are no problems is inaccurate,” he said. “Crime has increased since [Hollywood Slots] opened. And what crimes are going up? Embezzlement.”

Welch said he knew of only two embezzlement cases linked to Hollywood Slots.

“That’s not unusual, especially if you look at the number of people over there,” he said.

Since the facility opened, a small portion of revenues has been set aside for gambling addiction resources. Welch said few people have taken advantage of those resources, and recently the funding was reduced.

“It doesn’t mean people out there don’t need resources, but we’re wondering whether we used the wrong template,” he said.

The Maine Office of Substance Abuse is working on a pilot project to develop statistics on problem gaming in Maine to determine which services would be most beneficial.

Problem gamers also can put themselves on what’s called a self-exclusion list, which bans them from being admitted into the slots facility. Welch said the number of people on that list usually sits at about 120.

The most important thing for the public to realize, according to Welch, is that Hollywood Slots operates with tremendous oversight, both on the financial side and on the public safety side.

Only game in town

It’s hard to tell what the future holds for Hollywood Slots, but Johnson said every indication from the parent company is that the facility is in Bangor to stay.

A new arena and civic center would help.

“I believe the [city] council is being careful and moving as quickly as possible,” he said. “Certainly, it would go quicker if there were other [funding] sources involved.”

Bailey, however, was skeptical of building a new auditorium with slots’ money.

“I would be very cautious if I was a city councilor in Bangor to tie one to the other,” Bailey said. “They are not going to recreate Las Vegas. A lot of communities have tried.”

So far, Hollywood Slots is the only gaming facility in Maine, although there have been numerous attempts to establish gaming facilities in other communities. In the last legislative session, there were seven individual bills that proposed expansion of gaming in some form, according to Welch. None was approved.

“We pay attention,” Johnson said, referring to other casino initiatives that so far have been unsuccessful. “We’re not afraid of competition, but we’d certainly rather be the only property around.”

The issue of table gaming is more pressing for Johnson. As the law stands now, table games are only allowed for nonprofit events. Any changes would have to come from the Legislature, and that’s unlikely to happen, at least while John Baldacci lives in the Blaine House.

Gov. Baldacci of Bangor opposed Hollywood Slots from the beginning and maintains opposition to expansion of gaming in Maine, according to David Farmer, the governor’s spokesman.

Palmer, however, said table games are probably the next logical progression.

“I think eventually that is something that will happen,” he said. “It’s something that’s a little different. It wouldn’t be harmful. But I think it will happen when people are comfortable.”

Whatever happens, the scrutiny is not likely to go away.

“I think we should always look at the businesses we have and how they fit what the community as a whole wants,” Palmer said. “But who else is investing $138 million into the city of Bangor right now?”

 

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