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W.Va. casino offsets losses with smoking pavilion

Photo for the Weirton Daily Times by Stephen Huba Sheridan Hatter, of Macedonia, Ohio, near Cleveland, lights up a cigarette prior to playing a video lottery slot machine in the new smoking pavilion at Mountaineer Casino, Racetrack & Resort. She and her daughter, Galen Hatter, said none of the casinos near Cleveland have smoking facilities.
Photo for the Weirton Daily Times by Stephen Huba
Sheridan Hatter, of Macedonia, Ohio, near Cleveland, lights up a cigarette prior to playing a video lottery slot machine in the new smoking pavilion at Mountaineer Casino, Racetrack & Resort. She and her daughter, Galen Hatter, said none of the casinos near Cleveland have smoking facilities.

NEWELL, W.Va. — Playing a slot machine at Mountaineer Casino, Racetrack & Resort on a recent Tuesday afternoon, William Reynolds enjoyed a cigarette, the company of his wife and a warm breeze.

A warm breeze?

Although he was playing “inside,” Reynolds could barely smell any smoke because the air was moving all around him in Mountaineer’s new smoking pavilion.

Reynolds and his wife, Judith, of Alliance, Ohio, about an hour’s drive from Hancock County, are among the regular smoking patrons that Mountaineer is trying to lure back since the Hancock County Clean Air Regulation went into effect on July 1.

Otherwise known as the countywide smoking ban, the regulation prohibits smoking in enclosed public places, including all places of employment, and certain outdoor public places.

The Hancock County health board passed the regulation last summer over the objections of Mountaineer and veterans’ organizations, which said their business – and by extension the county – would suffer from a loss of patronage from smokers.

Why would out-of-state residents travel to a smoke-free Hancock County to gamble, Mountaineer officials asked, when they could do the same thing closer to home?

“The biggest hit has come from Ohio,” said Mountaineer General Manager Chris Kern. “Fortunately, with the smoking pavilion, we were able to minimize that impact to some degree.”

At the time the smoking ban was being debated, Mountaineer officials warned of dire consequences and estimated that gaming revenue would decline by 17-20 percent. Kern said the drop in revenue since July 1 has been closer to 8-12 percent.

“We are happy the impact has been less than anticipated,” Kern said.

The casino will get a clearer picture of the economic impact, he said, once Hollywood Gaming at Mahoning Valley Race Course, Mountaineer’s closest competitor, reaches its one-year anniversary.

Earlier this month, just 11 weeks into the smoking ban, Mountaineer reached the 100,000 mark for visitors to the smoking pavilion. Still, Kern said, the gain in nonsmoking patrons has not been enough to offset the loss of smoking patrons.

The retired Reynolds said he and his wife travel to Mountaineer two or three times a week. “We probably would have kept coming, but not as much (without the smoking pavilion),” he said. “We like it.”

The couple mostly enjoy playing the 200 video lottery slot machines that fill up the pavilion. “That’s when I do most of my smoking,” Judith said. “I just wonder what it’s going to be like in the winter.”

The 9,800-square-foot pavilion, the largest facility of its kind in the country, also boasts six table games, large ceiling fans and radiant heaters. Patrons can enter from the casino or through a large, open entryway.

Although it looks enclosed, the $2 million pavilion is considered in compliance with the Clean Air Regulation because its two exterior walls were moved five feet outside the roofline and do not touch the roof, Kern said.

“We wanted to make sure anything we built met with (the health board’s) approval,” Kern said. “We designed our new smoking pavilion with one goal in mind: to give our guests the best of both worlds.”

The health board amended the regulation in April to clarify the definition of an enclosed space – from an area that is “bounded on at least two sides by walls” to an area that has at least three walls.

Although Chester American Legion Post 121 also submitted plans for a smoking patio, the post has had to scale it back because of the loss of revenue since July 1, said Commander John Hissam.

The smoking ban’s impact on veterans’ organizations in Hancock County, Hissam said, has been “worse than what we expected.” Post 121 has been losing about $10,000 a week, and Chester VFW Post 6450 has been losing about $20,000 a week, officials said.

Much of that revenue decline has come from the drop in patronage for the organizations’ limited video lottery parlors. The West Virginia Lottery permits veterans organizations to have up to 10 video lottery machines per location.

West Virginia Lottery records for July and August show a significant reduction in net video lottery revenue for both Chester posts from 2014 to 2015. Net revenue represents the amount the posts take in after winnings and the state’s portion:

For American Legion Post 121, net revenue dropped from $54,966 in July 2014 to $47,080 in July 2015, and from $48,632 in August 2014 to $32,578 in August 2015.

For VFW Post 6450, net revenue dropped from $80,237 in July 2014 to $57,313 in July 2015, and from $77,197 in August 2014 to $58,429 in August 2015.

The practical impact of that decline is that the posts will have less money available for charitable donations, officials said.

“It’ll be very rare if we donate to anybody because the veterans have to come first,” said Post 6450 Commander David Ash. “We’re not going to be able to give to the community like we used to. We just don’t have the money.”

Ash said the post already has sent letters to Hancock County schools, clubs, youth organizations and athletic leagues, informing them that their requests for funding may go unfilled.

“It affects our buying power, our donation power, our doing the different things we do here in town,” Hissam said. “You take that chunk of money out of anyone’s budget and things have to change.”

But Hancock County Health Department Administrator Jackie Huff said it’s not fair to lay that economic impact at the feet of the health board. Huff said she too has looked at the West Virginia Lottery numbers and has noted a steady drop in net revenue over the last several years – prior to the smoking ban going into effect.

“If they’re already declining, how are we responsible for all their decline?” she said.

Huff attributes part of the reduction to the transition from smoking to nonsmoking patrons. She also can’t help but think that the negative attitude of some organizations to the smoking ban has led to negative outcomes.

“I would think that with any change, there’s an adjustment period. It’s all in how you perceive and react and plan for it,” she said. “If they are receptive to it, maybe that change or that decline in revenue would be less. If they’re promoting it in a positive light, maybe things would be different.”

Seventy-five percent of Hancock County residents are nonsmokers, Huff said.

Hancock County Commissioner Jeff Davis said it’s too early to tell what the economic impact of the smoking ban will be. But it’s clear that video lottery revenues are already on the decline.

The county’s 2 percent take of racetrack video lottery dipped below $2.8 million this year, reducing the amount it was able to share with the three municipalities – Chester, New Cumberland, Weirton – the volunteer fire departments, the public libraries, the senior citizen centers and special projects, Davis said.

“The biggest impact was on the share of money that the municipalities received ($445,092). They’re the ones that took the biggest hit,” he said.

Some of the decline in revenue is the result of growing casino competition from Ohio and Pennsylvania and the concomitant drop in patronage at Mountaineer, Davis said.

“A lot of it’s going to depend on the casino business in the Tri-State Area and the amount of revenue that customers have to spend,” he said. “Those customers have a decision where they want to play, based on wherever they feel they’re getting the best bang for their dollar.”

To the extent that the smoking ban hurts Mountaineer, it could also hurt the county’s bottom line, but it will take more time for that picture to become clear, Davis said.

“Mountaineer’s survival is very critical for Hancock County – from video lottery revenue, as well as property taxes. If Mountaineer did not exist, the commission would have some huge financial problems,” he said.

As the county’s largest employer, Mountaineer also is the county’s largest taxpayer, paying $1.650 million a year in real estate and personal property taxes, according to the Hancock County Assessor’s Office.

(Huba can be contacted at [email protected])

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