In first year, Meadows casino is coming out a winner

Monday, June 09, 2008
By Gary Rotstein, Pittsburgh Post-Gazette
Five hundred people lined up on a June morning a year ago outside The Meadows Racetrack & Casino, happy to be the first ones to risk their money on beeping, flashing machines offering a chance -- albeit slim -- to fatten rather than flatten wallets.
They and thousands like them have been returning regularly to the Washington County slots parlor ever since, generating revenue well above expectations. The month of May was the biggest since the facility opened, and by one measure -- the $417 it generated per day per machine -- it has become the most successful of the seven casinos operating in Pennsylvania.
Not even the temporary shell building that lacks most casino amenities, nor ongoing construction that creates parking headaches, nor the addition of table games by West Virginia competitors, nor an economic slowdown accompanied by soaring gasoline prices has discouraged a mostly middle-aged and elderly crowd from flocking to the location 25 miles south of Pittsburgh.
By the time the one-year anniversary is marked Wednesday with giveaways to patrons, slots players will have lost about $230 million -- the less positive way of describing the casino's gross pre-tax revenue -- in the 1,800-plus machines of The Meadows' prefabricated structure. They didn't want to wait until April 2009 for the nicer, permanent casino, which is expected to include 2,000 more machines, multiple restaurants, a racetrack betting operation, bowling alley and attached parking garage.
"I think the people in southwestern Pennsylvania have found their casino, and they've gravitated toward it in unbelievable numbers," said Sanford Rivers, a Pennsylvania Gaming Control Board member from Churchill. "I've not heard the same kind of enthusiasm [from patrons] at some other casinos as I have at The Meadows."
Twenty-one months ago, the gaming board was skeptical of estimates by operators of The Meadows that the facility would eventually generate $215 million a year. A consultant told the board $123 million was more likely, which concerned board members as being insufficient for the facility to sustain itself, considering operating costs. Also, the state counts on taking 55 percent of that for property tax reduction, economic development and other purposes, so whenever the casino makes less money, the state does too.
The first-year revenue has exceeded even The Meadows' own estimates, although it does not yet have to compete with the Majestic Star casino in Pittsburgh, which is expected to open a year from now.
Mr. Rivers said the financial concerns have diminished, even allowing for the future competition. The bigger, permanent facility in North Strabane will help it retain customers, and he and the executives running The Meadows have come to believe there's plenty of gamblers to go around for all of the gambling sites.
"The figures will definitely go higher" once the new building opens, said Bill Paulos, principal of Las Vegas-based Cannery Casino Resorts, which owns The Meadows. "Right now, we're basically maxed out on weekends. We can't park any more people, and it's difficult to get in and out."
By aggressively offering bonuses of free slots play to its regular customers, the casino has also run at a brisk pace on many weekdays. At midday Wednesday, about 1,300 of the 1,825 machines were in use. No parking spaces were open within a few hundred yards of the entrance, and older patrons relied on shuttle buses circulating in the parking lot.
The Meadows gave away $2.4 million of free play in May to those who carry its club cards and insert them into machines while playing. Casinos commonly reward frequent players for loyalty in that manner, but the level of giveaways has become far greater than casino officials anticipated.
General Manager Mike Graninger said the expanded promotion, which erodes some of the casino's profit, is a reaction to the addition of table games late last year by the West Virginia casinos. The facilities fight for many of the same customers.
The casino has altered its slots floor since opening to recognize the preferences of its many older, traditional players, compared with those who patronize Cannery Casino Resorts properties in Las Vegas.
The Meadows replaced glitzy video-image machines with more options to play traditional spinning-reel slots. It also reduced the number of penny slots and video poker machines, while adding more higher-denomination slots, including a separate room for machines with $1 minimum wagers on up to those costing $25 a spin.
"There will always be adjustments," said Mike Jankowiak, director of slots operations, noting 180 of the original machines a year ago have been warehoused.
"We definitely need the bigger facility. We need more slots so that when a guest comes in, they will be able to play their first or second choice of machine. Right now we get so busy that they might be forced to their third or fourth choice."
The machines are regulated by the state and, like at other Pennsylvania casinos, are returning as prize money about 92 percent of what players put in. While some losers grumble, the operation of The Meadows has drawn little public criticism since opening.
It has received none of the 15 fines issued against Pennsylvania casinos by the gaming board for various infractions. It has had none of the six emergency suspensions of licenses of gaming employees across the state. And the five complaints filed against it by the board for modest regulatory problems are relatively small, considering there have been 46 statewide.
North Strabane Manager Frank Siffrinn said the casino's officials have been willing partners on all traffic and construction issues, leaving little for local residents to complain about.
The Meadows is also credited for being more supportive of community needs than some casinos by offering its frequent players options to obtain gift cards and vouchers to patronize local businesses. Also, the Greater Washington County Food Bank received more than 10,000 pounds of food through a promotion last week that gave players $5 in free slots play for donating a can of food.
A food bank representative said there's no indication that losses by casino customers have increased the number of hungry families in the area.
Professionals who treat compulsive gambling say it commonly takes years for problem gamblers' issues to become visible.
Still, the traditional Gamblers Anonymous group that meets Wednesday evenings in Washington, Pa., has seen increased attendance in recent months, according to Norm B., a Western Pennsylvania GA spokesman. On some nights, it is double the six to 10 addicts who used to come, he said.
There's no evidence it's because of The Meadows opening, he said, but the newcomers have more frequently been women and older adults than in the past, fitting the profile of slots players.
While Cannery Casino Resorts is in the process of being sold to an Australian firm, Crown Ltd. -- approvals are awaited from the Pennsylvania and Nevada gaming boards -- officials at The Meadows don't expect that to change any of the operations or plans there, since Crown officials view it as successful.
The primary difference in coming months would be if the state Legislature approves legislation this week that would restrict smoking to 25 percent of the casino floor. Smoking is allowed throughout The Meadows now.
Mr. Paulos vigorously opposed a blanket prohibition on smoking, which some states have enacted, but he said reducing the allowable smoking area is an acceptable compromise.
More long term, he and other casino owners across Pennsylvania have lobbied the Legislature for the right to add poker, blackjack, roulette, craps and other table games, as West Virginia has done. Such a change is apparently at least several years away, but the permanent casino is being built with sufficient space to allow such games to be put in.
For now, there seem to be plenty of gamblers coming through the door unconcerned about that addition. Carol Mortimer of Clairton jokes with a friend that at a travel time of 35 minutes, "it's too close," but they enjoy the afternoon's diversion, the gift cards, meal discounts and other rewards as a trade-off for the money they lose.
"I don't think you ever come out ahead on the slots in the end," the 59-year-old former medical assistant acknowledged. "Sometimes you win, sometimes you lose, and you just have to be careful you don't bet over your head."