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racinos - new revenue stream

  1. 1,745 Posts.
    FYI - The article is written by a lobbyist so caution when reading. However, he highlights the close relationship between Government and gambling and the need for new revenue streams to deliver essential services.

    Lobbyist sees expansion for racinos

    Fiscally strapped states not expected to look to Las Vegas-style resort model

    By JEFF SIMPSON
    GAMING WIRE


    Frank Fahrenkopf, president and chief executive officer of the American Gaming Association, tells listeners Thursday that racetrack owners see slots as a way to revamp aging tracks.

    The casino industry's top Washington, D.C.-based lobbyist predicts continued growth for the business, but believes the expansion will be fueled by racinos, not Strip-style casinos.

    American Gaming Association President Frank Fahrenkopf delivered the upbeat message Thursday in a keynote address at the American Gaming Summit.

    Racinos, a hybrid pari-mutuel racetrack with slot machines, have been around since Prairie Meadows opened in Iowa with slots in 1989.

    The powerful performance of racinos like Delaware's Dover Downs and Louisiana's Delta Downs, plus the political power of racetrack owners in fiscally strapped states considering gaming as a revenue source make the racino model the likeliest in those venues, he said.

    A Las Vegas-style resort model, casinos that lure out-of-town tourists to spend on the properties' hotel rooms, restaurants and shows in addition to its slots and table games, isn't likely to be tabbed as a solution in any of the states Fahrenkopf cited as possible new gaming jurisdictions.

    "There's really no demand for the resort model," said Fahrenkopf. "Plus, the (pari-mutuel) track interests are powerful, and they see slots at their tracks as a way to revitalize their aging tracks."

    The lobbyist cited Ontario's provincial casinos as a Canadian example of racino profitability, noting that the province's 15 racinos were outfitted with slots at a cost of less than $200 million, yet produce $20 million in gross profits every week.

    Delaware's three racinos added $565 million to the First State's coffers, 8 percent of the state budget.

    Racinos are a possibility in a number of states, he said, including New York, Florida, Ohio, Pennsylvania, Massachusetts and Maryland.

    Association member companies already participate in racino ownership and operations, he said, citing Boyd Gaming, Harrah's Entertainment and Park Place Entertainment.

    Fahrenkopf said current prospects don't mean that the industry has permanently given up on the resort model.

    MGM Mirage spokesman Alan Feldman agreed.

    "Tracks are coming to the recognition that having slots is better than the alternative, which is dying tracks or competing against casinos controlled by others," Feldman said.

    The summit, an annual conference with a focus on the business side of casino gaming, concludes today at the Rio.

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