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Oxford casino might hurt Hollywood Slots

CAPTION Beverage server Erika Martin of Orono makes her rounds past the slot machines at Hollywood Slots in Bangor on Friday, June 26, 2009. Their newer, larger gaming facility opened a year ago (July 1, 2008) on Main Street in Bangor. (Bangor Daily News/John Clarke Russ) (WEB EDITION PHOTO)
By Eric Russell, BDN Staff

BANGOR, Maine — Consistent revenue month after month suggests that Hollywood Slots has developed a successful business model, but those flush numbers could be in jeopardy if voters decide to expand gambling in Maine this November, a University of Maine economist said.

Today’s poll

Would you visit a casino in Oxford County?



Question 1 on the ballot asks: “Do you want to allow a casino with table games and slot machines at a single site in Oxford County, subject to local approval, with part of the profits going to specific state, local and tribal programs?”

University of Maine economist Todd Gabe recently released an economic impact study on the proposed casino in southern Maine. While his research relied on Hollywood Slots revenue as the basis for projection, the study did not indicate whether the Bangor facility would lose income if competition comes to Oxford.

But this week, Gabe said that could be the case.

“There is certainly the possibility that they would take a hit,” Gabe said. “It depends on what market you assume. If you’re talking one hour [driving time], there is no impact. If you assume three hours, there likely would be impact.”

In the past, Hollywood Slots General Manager John Osborne and others have said that the biggest market for the Bangor casino is the 100-mile radius around the city, but the facility has made marketing pushes into the Portland area and Atlantic Canada.

If there is widespread concern that a new Maine casino would take big chunks of revenue from Hollywood Slots, its executives are showing a good poker face. Osborne said he couldn’t predict what a yes vote on Question 1 would mean for his operation, although Hollywood Slots and its parent company, Penn National Inc., have opposed the Oxford County casino initiative.

Penn National has consistently opposed competing casinos in states where it operates and has spent millions to fight new casino proposals. In 2008 in Ohio, Penn National spent more than $40 million on ads to help defeat a casino initiative.

Hollywood Slots, the only gambling facility that has been approved by voters to date, has become almost machine-like in its revenue generation. From August 2009 to August 2010, the average monthly net revenue at Hollywood Slots was just over $5 million, and revenue never dipped below $4 million in any month.

Any concerns that Maine’s only gambling facility would see a financial drop-off in a weak economy have been exaggerated, Osborne said.

“Thanks to a strong first quarter this year, we’re projecting a 4 percent increase over last year,” he said. “And we believe there is growth still on the slots side because of recent success in reaching new markets.”

Dan Cashman, a spokesman for Citizens Against the Oxford Casino, a coalition that includes the owners of Hollywood Slots, said the opposition is not from a fear of competition but from fear of creating an unlevel playing field.

The Oxford County casino as proposed would allow both slot machines and table games such as poker and blackjack. Hollywood Slots currently is licensed only for slot machines.

“The coalition is not opposed to healthy competition; it’s the unfair advantages that have us concerned,” Cashman said. “Our goal is to educate voters. On the surface, it sounds good. It has the potential for jobs and new construction, but at what cost?”

Earlier this month, Gabe projected that the proposed Oxford County casino would generate $127 million in annual revenue and visitors would spend an additional $51 million on food and services.

Gabe’s study also said the economic contribution of a casino in Oxford, including multiplier effects, would be $282.6 million in sales revenue, 2,784 full- and part-time jobs, and $80.7 million in wages, salaries and benefits.

The study was commissioned by Maine Taxpayers Taking Charge, a political action committee supporting the casino effort. Cashman said Gabe’s study overlooks some things, such as the differences between rural Oxford and the more urban Bangor.

Dennis Bailey, representing the group CasinosNO!, which has opposed gambling initiatives in Maine for the last decade, said Gabe’s report doesn’t say whether the generated revenue is new to Maine or existing revenue.

Gabe said it’s true that he didn’t assess where the projected revenue would be coming from, but he offered this example: If building a new casino in Oxford County prevents Mainers from going to Foxwoods or Mohegan Sun in Connecticut, that’s keeping money in Maine that would have been spent out of state.

Of the $67 million generated in net revenue at Hollywood Slots in the last 13 months, $23 million has gone to various state taxes.

Supporters and opponents of the Oxford County casino have been battling in television ads and through various websites in recent weeks. On Thursday, a local citizens group calling itself OHNO1 (Oxford Hills No on 1) formed to reject the casino planned for their backyard.

“There’s much more to the casino issue than the proponents are telling,” said Zizi Vlaun, a businesswoman in Norway and one of the organizers of the local group. “This has the potential to change our quality of life in the Oxford Hills, and once it’s here, it’s here for good.”

Each major party candidate for governor has opposed the proposed Oxford County casino.

Many in Bangor, though, say Hollywood Slots has not changed the quality of life in their community. In many cases, the racino has become a valued member of the business community, including its recent backing of the Waterfront Concert Series.

“Penn has a strong commitment to be active in the communities in which it operates,” Osborne said. “We recognize that Bangor’s success is our success and the success of many other businesses.”

The city of Bangor also plans to rely heavily on its own share of Hollywood Slots proceeds to help fund a new arena and renovated civic center. That facility, which is still in the design stage, is projected to cost anywhere from $50 million to $75 million.

City Council Chairman Richard Stone said Hollywood Slots is an important business in Bangor, and the city supports it.

Osborne, who has consistently advocated for adding table games at Hollywood Slots, said if the Oxford County casino is approved, he would heavily petition the state to allow table games in Bangor.

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