Profit falls 4% for NLV casino owner

Monday, Nov. 10, 2003 | 11:07 a.m.

SUN STAFF AND WIRE REPORTS

MTR Gaming Group of Chester, W.Va., reported Friday that increased competition in Nevada and costs associated with the purchase of an Ohio track resulted in a 4 percent drop in net earnings during the quarter ended Sept. 30.

A 6.2 percent increase in revenue at the company's Mountaineer Race Track & Gaming Resort in Chester offset the overall earnings decline, MTR said.

Overall, earnings for the 90-day period were nearly $6 million, or 21 cents per share, compared to about $6.2 million, or 22 cents per share, for the same period in 2002.

The company attributed the decline to higher interest expenses, increased depreciation from additional facilities and equipment and July's purchase of Scioto Downs, a track near Columbus, Ohio.

MTR said Scioto incurred $115,000 in losses between July 31 and Sept. 30.

Revenue at MTR's Speedway casino property in North Las Vegas fell 4 percent to $2.3 million. The property reported negative cash flow of $78,000 compared to cash flow of $3,000 for the same quarter of last year. The loss in cash flow was largely due to increased competition in the area, MTR said. The opening of the Cannery hotel-casino in North Las Vegas has boosted competition in that market.

The Nevada Gaming Commission voted 3-2 last month to grant MTR an unrestricted casino license to do business in Nevada but criticized MTR's management practices. That vote followed a 2-1 vote last month by the Gaming Control Board to grant the company its first permanent license in Nevada. MTR had in the past received only two-year limited licenses because of problems with the company.

Among the problems Nevada regulators raised were a former sheriff in West Virginia, now a special projects coordinator for the company, who knew about illegal bookmaking in the region but did nothing to stop it. Also, two former employees allegedly were involved in a kickback scheme involving purchasing, which a grand jury is now investigating.

Ted Arneault, MTR president and CEO, said he was pleased with the company's financial results, especially gains at Mountaineer.

Between 2002 and 2003, the Northern Panhandle track increased the number of slot machines by 225 to 3,220. Gaming revenue was up 6.2 percent to $69.7 million for the quarter.

Mountaineer's continue growth, coupled with anticipated growth at Scioto and planned racing ventures in Pennsylvania, has MTR "enthusiastic about the company's short- and long-term outlook," Arneault said.

MTR has been granted a Pennsylvania license to build a track in Erie, Pa. The license has been appealed by a rival group also hoping to build a track. A court will hear arguments on that case on Dec. 10.

The company also has an interest in a proposed thoroughbred track near Pittsburgh.