Monday, March 05, 2007

West Virginia's racetracks would pay an additional 1 percent of net profits
for the privilege of offering table gambling under legislation passed
Thursday out of the Senate Finance Committee. The tax rate would be raised
from 35 to 36 percent under an amendment proposed by state Sen. Vic Sprouse,
R-Kanawha. The additional money would be used for the gradual reduction of
limited video lottery machines in West Virginia communities - not those
already at racetracks. The table gambling legislation, House Bill 2718,
passed the Finance Committee by a 10-6 vote Thursday. The measure gets its
first reading before the entire Senate today, with a second reading and
amendments scheduled for Monday and a vote on the bill set for Tuesday. The
Senate's version of the table gambling bill is significantly different than
that earlier passed by the House. If the full Senate passes the legislation,
the House would next have to vote to concur with the changes before the
measure is final. All legislation must be passed before the lawmakers
adjourn at midnight March 10. If approved, officials at the state's four
racetracks would get the right to petition to place a local referendum on
table gambling before their respective county's voters. The racetracks are
located in Ohio, Hancock, Kanawha and Jefferson counties. Local state Sens.
Jeff Kessler, D-Marshall; Ed Bowman, D-Hancock; and Andy McKenzie, R-Ohio,
crafted most of the changes inserted into the Senate's table gambling
legislation when it was before the Senate Judiciary Committee. These changes
cut in half the table gambling tax proceeds earmarked for race purses and
redirected the funds to counties and municipalities where the state's four
tracks are located. "We are pleased that the Finance Committee adopted the
changes we made to the bill," Bowman said. "Senators Kessler, McKenzie and I
worked together diligently on this legislation. We believed our first duty
was to take care of our municipalities." Bowman, both a Finance Committee
member and an employee of the Mountaineer Race Track and Gaming Resort, was
permitted to vote on the bill Thursday. He asked chairman Sen. Walt Helmick,
D-Pocahontas, for a ruling on whether he would be allowed.
Helmick told Bowman he falls into the class of many teachers who serve in
the Legislature who are permitted to vote on teachers' pay raises. Bowman
voted in favor. McKenzie said it was important that the bill allow county
residents to vote on table gambling, and that money generated from table
gambling be returned to racetrack communities. As a result of the changes,
the city of Wheeling is expected to receive an additional $800,000 annually;
the city of Bethlehem, $50,000; and the town of Bethany, $18,000, according
to McKenzie.

Kessler said he believed the additional 1 percent tax added by Sprouse to be
"more symbolic than effective."

"The 1 percent tax would generate $1.5 million annually," he said. "The
limited video lottery machines brought in net revenue of $152 million last
year.

"To suggest that this could be used as a financial incentive to help reduce
the limited video lottery machines is absurd. It would be like trying to
kill an elephant with a pea shooter."

Kessler, instead, suggested that the state consider changes in the number of
limited video lottery machines permitted in the state when the licenses for
these machines come up for renewal in 2011. His thought is to reduce the
overall number of machines in the state, while allowing more to be placed at
one location.

"This would have the overall effect of reducing the number of ... machines
in the community," he said.

Wheeling Island Racetrack and Gaming Center President and General Manager
Robert Marshall said he feels confident about the legislation's eventual
passage, but he is concerned about paying more of the profits from table
gambling to the state.

"This will further impede the amount of investment we can make at the
tracks," he said. "It's just another percent we can't reinvest."

Ted Arneault, president and chief executive officer at Mountaineer Race
Track and Gaming Resort, concurred that the additional percent "would make
it more difficult for the facility."

"We will work to try to rectify it," he said. "Otherwise, we'll just have to
work with it."

Officials at both tracks have said table gambling is needed if they are to
continue to be profitable once video lottery machines in Pennsylvania go
online.

Both Marshall and Arneault have remained in Charleston as the legislation is
considered by lawmakers - though Arneault was absent Wednesday, as he
attended the opening of his new track and gambling facility in Erie, Pa.

West Virginia Racing Association President John Cavacini added that the
tracks, thus far, have not actively opposed the tax rates imposed upon them
in the legislation.

"We felt we acted in good faith by accepting them," he said.

Any attempt to limit the number of limited video lottery machines should
have been contained in a separate piece of legislation, he added.

Delegate Randy Swartzmiller, D-Hancock, who introduced the table gambling
bill in the House, said he expects the House to largely agree with changes
to the bill made in the Senate.

"I was a little surprised by the additional 1 percent tax amendment," he
added. "But it's not a back-breaking amendment. It won't doom the bill."