Hollywood Slots hopes to hit jackpot with table games vote

By Andrew Neff, BDN Staff
Posted Oct. 21, 2011, at 2:08 p.m.

BANGOR, Maine — Despite accounting for only 10 percent of most casinos’ gambling revenue, Hollywood Slots Hotel and Raceway is betting the addition of 14 table games to its 1,000 slot machines will help it hit the jackpot.

Penobscot County voters will decide if table games can be added to Penn National Gaming’s Bangor racino on the Nov. 8 ballot.

“If you want to look at it from a financial perspective, what generates the most revenue are gaming machines, not table games,” said Alan Meister, principal economist and gaming analyst for Nathan Associates, a 65-year-old economic consulting firm based in Irvine, Calif. “Table games are manned and hour-intensive, as you have to pay employees to run them, but adding them enhances the complete gaming package a facility can provide and that accentuates your overall attractiveness.”

According to Hollywood Slots General Manager John Osborne, adding table games will also add 89 new local jobs, $4 million more in annual payroll-salaries and benefits to Maine workers, $1.4 million in new annual tax revenue for the state and sustained funding for the arena and events center under construction across Main Street in Bangor.

“For us, it wasn’t about whether it was gambling or not,” said Miles Theeman, co-chair of Arena Yes! and president of Affiliated Healthcare Systems. “It was about jobs, economic development, and making Bangor a destination for people, not just to come, but to come and stay. To me the arena and the growth of Hollywood Slots are parts of that.”

The plan is for Hollywood Slots to add one roulette table, six blackjack tables, one dice table, one three-card poker table, four Texas Hold ‘Em-type tables and one Let It Ride card game table.

There has been very little opposition to the drive for table games despite previous campaigns by CasinosNo! members and other organizations opposing the establishment or expansion of casinos in Maine.

“People always call us an anti-gambling group, but we’re not,” said CasinosNo! spokesman Dennis Bailey. “We’re against the expansion of casino gambling, specifically slots. Most casinos, and it won’t be any different in Bangor, get most of their revenue from slot machines.”

Regardless of their stances on gambling — or table games themselves — everyone seems to agree that adding table games will add to the revenue stream at Hollywood Slots.

“What we’ve found is when you introduce table games, slots revenue goes down, but on the other hand, total revenue goes up and more than makes up for declines in slots revenue,” said Richard Thalheimer, economist and president of Thalheimer Research Associates in Lexington, Ky., at the 2009 Global Gaming Expo.

Putting their cards on the table

Hollywood Casino in Charles Town, W.Va., provides a glimpse of what is likely to happen in Bangor. Bangor and Hollywood Slots bear striking similarity to Charles Town and Hollywood Casino.

Both are owned by Penn National Gaming. Although both are in largely rural states, Charles Town is about an hour’s drive from Washington, D.C., and Baltimore.

Both facilities are the result of Penn National’s purchase of aging horse tracks struggling with declining crowds and total betting handles. Since Bangor’s facility opened in November 2005, Hollywood Slots has generated approximately $147 million in taxes from slots revenues while the Charles Town facility, which opened in 1997, generates about $287 million in slots tax revenue annually.

The Charles Town casino has added 865 jobs and become Penn National Gaming’s highest-earning casino, bringing in nearly $110 million over a three-month period (May-July) this year. Table games alone generated $58 million in profit for the casino and another $20 million in state and local tax revenue in the first eight months they were offered at the 24-hour facility, according to General Manager Al Britton.

A vote by Penobscot County residents to allow table games would also allow Bangor to remain competitive with other casinos being built or being voted on, according to Hollywood Slots officials.

“I think the introduction of additional casinos within the state will have an effect on Bangor, and the location will determine the degree of that effect,” said Osborne, referring to the Oxford casino which has already been approved and potential casinos awaiting voter approval in Biddeford, Lewiston and Washington County. “Presently, 20-30 percent of our business is coming out of the southern part of the state, specifically the Portland and Augusta areas.

“A 30-percent reduction in our revenues would obviously adversely affect us and everyone in the Hollywood Slots funding stream, and the principal recipient in that stream is the city of Bangor,” Osborne said.

While the national trend has been a decrease in profits for most casinos, Bangor has bucked the trend.

Hollywood Slots has seen its gross revenue increase each year since debuting in November 2005. In 2006, revenue — which is defined as the amount of money wagered minus what is paid out in winnings — totaled $37.5 million. By 2010, revenue had jumped to nearly $61.7 million. Taxes collected by state and local government have gone from $19 million in 2006 to $30 million last year.

Policing the odds

While police practices may not change, monitoring procedures will if table games come to Hollywood Slots.

“Things have gone very well in terms of monitoring and regulation, so we now have to get regulatory process in place for the table games, and I’ll be doing that in the month or so,” said Patrick Fleming, executive director of Maine’s Gambling Control Board. “The rules have already been written and the next step is a hearing.”

Currently, the slots are monitored both on site by Hollywood Slots personnel and electronically in Gardiner to compile daily reports and audits.

But that kind of instantaneous electronic monitoring is not practical for table games.

“So the monitoring of table games will require on-site monitoring,” Fleming said. “They already have 400 cameras in there watching, so yes it’ll be watched via TV, but there will also be human monitoring games, watching the handling of money, and randomly auditing.”

If Charles Town is any indicator, Bangor’s crime rate won’t be greatly affected by the addition of table games.

“Concerns were about crime with drug use, prostitution, white-collar [crime], robberies, and thefts by people who are addicted to gambling, but since games have been implemented here, those concerns haven’t been justified,” said William Roper, the police chief of Ranson, W.Va., a neighbor to Charles Town.

Roper, who has been chief for 16 years, said the crime rate has gone up but the casino had little to do with it, and he hardly ever investigates white-collar crime.

“With more people, we are having a very slight increase in our crime rate more due to population growth,” he said.

That sentiment is echoed locally by Bangor Police Department officials, despite detractors who point to Bangor’s 38.6 percent rise in crime from 2005 to 2009, according to the Maine Department of Public Safety’s Uniform Crime Reporting Unit.

“We’ve seen crime statistics go up and down over a period of 20 years and sometimes there’s no rhyme or reason to it,” Bangor police Chief Ron Gastia said. “Over the last few years, I predicted that when the economy started to recess, we’d be seeing more property crimes due to a failing economy; we did see an increase in that, and that’s being echoed by my peers across the country.”

Bailey counters that while Bangor’s crime rate went up, the rates in Portland and Lewiston, larger cities, decreased over the same period by 3.2 and 8.9 percent, respectively.

“Now, this year, the Uniform Crime Report stats have been released and our crimes are back down,” Gastia said. “Earlier this year, I did a review of all the incidents we responded to at Hollywood Slots and most of them were fairly insignificant.”

Bailey said one type of crime he believes is on the increase, due partly to four well-publicized cases over the last two years, is white-collar, particularly embezzlement.

“Where you find casino-related crime is things like the $400,000 embezzlement case with the woman who stole from her business and gambled it away,” Bailey said. “In Ledyard, Conn., embezzlement cases went up 400 percent since Foxwoods opened.”

“We haven’t seen any significant crime related to Hollywood Slots or its presence,” Gastia said. “In fact we respond to incidents related to other retail establishments … more than we respond to Hollywood Slots.”

Fleming said other police reports support Gastia’s assertion.

“There is a state police detective assigned to this unit who gives a monthly report on how many calls to 490 Main Street they get and not all of them are even related to Slots,” he said.

That doesn’t come as a surprise to Jefferson County Sheriff Robert E. Shirley in West Virginia, whose prime concern — much like Gastia’s — is drug use (heroin) and theft of scrap metals.

“It’s kind of worked the opposite of how bad people said it was going to be … for our towns,” said Shirley, a 27-year law enforcement veteran. “I can tell you I don’t have a dog in the fight. I’m not for it or against it, but when Charles Town Track sold to Penn National, we had nothing going on here with no jobs. Land wasn’t worth much and crime was bad at that time.

“We spent a lot of time over there at the barns, where drugs were real bad and a lot of people would just go to hang out,” Shirley said. “We had pitchfork stabbings and assaults when I was a deputy coming up. We had a lot of rapes over there and alcohol abuse.”

And now “it’s decreased our workload, land’s at more of a premium, and it’s added a lot of money to the county commission,” Shirley said. “We had much more crime due to the track back then than we do now.”

Dealing with addiction

While the number of known or reported gambling addicts is low in Bangor and the rest of the state, there is concern that the numbers of problem or compulsive gamblers will increase once table games are introduced.

“Maine has not been able to afford to do a prevalence study, but nationally, 1-3 percent of the population has a problem with gambling,” said Guy Cousins, director of the Department of Health and Human Services Office of Substance Abuse Services and acting director of the Office of Adult Mental Health Services. Whenever “a new form of gambling — anything from lottery tickets to sports betting — is introduced to a community, that number jumps up to 5-7 percent.”

Over a 14-month period from January 1, 2010, to February 29, 2011, Maine 211, a toll-free gambling addiction hot line funded by part of the 1-percent tax taken from Hollywood Slots’ gross revenue, received 149 calls.

Bangor’s Behavioral Health Center hardly talks to or sees any gambling addicts.

Social worker Bill Donahue said the center’s office at 77 Court Street has only provided services for two addicts over the past year.

“It’s very infrequent that we even get a gambling addict call. Maybe less than once a month,” he said.

In addition to the 211 line funding, Hollywood Slots keeps plenty of gambling addiction support pamphlets on premises. The facility also advertises the 1-800-GAMBLER hot line operated by the American Gaming Association.

Hollywood Slots also allows individuals to place their names on lists to ban themselves from the facility for one year, three years or for life.

“There are 200 on the self-excluded list currently,” said Osborne. “When I first got here in October of 2009, there were 160 on it.”

And it’s not something individuals can take themselves off easily.

“If they change their mind, we make them be on there at least a year before they can get off the list,” Osborne said. “Once they sign up, we make them stay away for as long as the term they signed up for lasts.”

And people who return must first provide a written letter before being allowed in.

“When someone self-excludes for a third time, we automatically put them on the lifetime ban list,” Osborne said. “We’ve actually placed 16 people on lifetime self-exclusion for that reason, and that applies to all Hollywood Slots properties including the hotel and the racetrack.”

Sheriff Shirley, who goes to Hollywood Casino at Charles Town infrequently to attend dinners or functions, can personally attest to the havoc problem gamblers can wreak.

One of his own family members developed a gambling addiction and went from being well-off and financially secure to near-bankrupt due to reckless gambling.

“Yes, I have a personal connection,” he said. “And I’m not a bettor or a gambler, but I’ve found nothing but good that’s happened to this county from this casino.”

http://bangordailynews.com/2011/10/21/politics/hollywood-slots-hopes-to-hit-jackpot-with-table-games-vote/ printed on July 30, 2014