June 19, 2018
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Slots company expects low earnings

By Eric Russell, BDN Staff

BANGOR, Maine — The parent company for Hollywood Slots Hotel and Raceway said Thursday that it expects 2009 first-quarter profits to come in below analysts’ initial estimates.

Penn National Gaming Inc. of Wyomissing, Pa., which owns 19 gaming facilities across the country, already closed out 2008 with a fourth-quarter loss of $378.6 million. Now, it has forecast first-quarter earnings of $33.8 million, or 31 cents per share, on revenue of $610.6 million. That is below analysts’ estimates that had predicted a first-quarter net income of 37 cents per share on sales of $607.5 million. Analysts’ estimates typically exclude one-time items.

The numbers are not broken down by facility so there is no way of determining how business at the Bangor facility affected its parent company numbers. However, the most recent numbers released by the Maine Gambling Control Board indicated that net revenues from Hollywood Slots decreased from $6.3 million in July 2008 to about $3.5 million in December 2008.

The numbers for January did show a modest increase to just more than $4 million.

“Every business across the country is feeling the negative impact of the economy,” Hollywood Slots general manager Jon Johnson said Thursday. “We’re no exception. But we feel that this is a temporary situation and with time we’ll all recover.”

Still, Johnson said, total revenue from the facility has increased every year since Hollywood Slots opened in 2005, although it’s important to note that 2008 was the first year that the racino operated at full capacity.

“If you just look at our gaming revenue year over year, we’re actually up,” he said. “There are not many companies who can say that.”

Johnson did concede that the new facility has created much higher operating costs as well and has been a challenge. Late last year, Hollywood Slots reallocated some personnel in a cost-saving move. The facility has altered some of its operating hours as well to cut down on operating costs.

“We’re doing OK,” Johnson said. “Once the economy settles and the consumer feels more comfortable and confident, I think we’re positioned nicely.”

Next week, the gambling control board is expected to approve a request that would allow Hollywood Slots to expand its Sunday morning hours.

“We’re doing what every other business is doing in this economy, that is, continue to offer a terrific product and value,” Johnson said.

In recent months, many gambling companies have taken substantial hits as fewer and fewer consumers seem willing to spend discretionary income on gambling.

For the 2009 calendar year, Penn expects profits of $143 million, or $1.29 per share, on revenue of $2.53 billion.

Besides Maine, Penn National also operates gaming facilities in Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia and Canada.

The Associated Press contributed to this story.

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