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Erie casino seeing plenty of green in first full month
Wednesday, April 04, 2007

The first full month of operation for Presque Isle Downs & Casino brought it and the state far more revenue than expected, and Erie area officials are thus far finding little fault with it.

Slot machine players patronizing the first casino to open in Western Pennsylvania wagered more than $206 million in March, and lost $19.1 million of that, with the amount they lost divided between Presque Isle Downs and the state to cover business costs, taxes and profit.

Two of the three other racetrack casinos in the state took in more money last month, but Presque Isle Downs' early revenues are running well ahead of the long-term projections for its volume of business.

The slots parlor just off Interstate 90 in Summit opened Feb. 28, though its racetrack won't begin operating until about Sept. 1. While the casino's initial popularity is undoubtedly due in part to its newness, and from temporary lack of competition within Pennsylvania, the early figures have been surprising in their strength.

The Pennsylvania Gaming Control Board predicted before Presque Isle Downs opened that its 2,000 slot machines would generate $132.7 million in annual revenue in a "stabilized" year down the road, or about $187 daily per machine. In the first full month, the machines produced $308 each per day, which over 12 months would total $229 million if they continued producing that amount.

"The future is rosy," said Richard Knight, the facility's chief executive officer. "It's much better than anybody expected. ... The one thing people forget is that while casinos might usually have a nice grand opening, they also have to build business up because not everyone's aware of them."

He noted that Presque Isle Downs' primary gambling competition, the Seneca Allegany Casino & Hotel more than an hour away in Salamanca, N.Y., has just opened a 212-room hotel in a $160 million expansion project, giving it 2,235 slot machines and 40 table games. The tribal casino cut into Presque Isle Downs' business in late March with its new facilities, Mr. Knight said, but he expects the market to sustain both operations.

Only 15 percent of the 50,000 individuals who have joined Presque Isle Downs player loyalty club come from Erie County, Mr. Knight said, while 25 percent are Ohioans. He did not have a figure on how many come from the Pittsburgh area two hours away, but he said any such business is "gravy."

The opening of a slots parlor at The Meadows in Washington County in late May could affect those numbers, and another harness racing track and casino could be added within several years in Lawrence or Beaver County.

"I think certainly the first month of results are encouraging, but one month does not make a trend," Joe Weinert, an analyst for the Gaming Industry Observer, said of Presque Isle Downs' early success.

The first six months of operation, he said, will show to what extent people want to gamble around Erie in the warm months, when there are more visitors present but also more recreation options.

That time frame will also show whether people from Ohio and northern Pennsylvania prefer driving an extra hour to the more resort-style, full-service surroundings of the Seneca tribe's operation.

The casino in Salamanca saw no drop-off in revenue in March from the new competition, said spokesman Phil Pantano, and he said it only expects to increase business as a result of its expansion.

Hotel operators in the Erie area, meanwhile, have reported an occupancy increase in the past month attributable to Presque Isle Downs, even without a formal relationship with the casino.

At the same time, few problems have arisen related to crime or congestion, according to local officials. State police have reduced special traffic details outside the casino to weekends only, and criminal incidents have primarily consisted of a few thefts within the casino.

"Considering the number of people that come in here, we've really had nothing noteworthy," said Trooper Mark Barsotti, of the state police gaming enforcement bureau.

Chris Scott, vice president of Scott Enterprises, which owns numerous franchise hotels and restaurants within a few miles of the casino, said it has produced a noticeable increase of perhaps 15 percent in weekend business.

Public complaints about Presque Isle Downs have been few, although it is too soon to detect any spike in social problems from gambling addiction among customers.

The main problem acknowledged by casino officials was the quality of their buffet, but it has reduced prices and expanded offerings to counter dissatisfaction.

"It's been a very definite positive," Marlin Coon, chairman of the Summit supervisors, said of Presque Isle Downs, whose presence will increase the township's revenue by about 50 percent.

"As far as the whole atmosphere, the quality, Erie is fortunate to have something of this nature," he said. "They're giving back over 90 percent [from wagers as prizes], so there's a lot of losers but there's got to be a lot of people who won some money, too. If they go out with 30 bucks, they're happy."

First published on April 4, 2007 at 12:00 am
Gary Rotstein can be reached at grotstein@post-gazette.com or 412-263-1255.
Read the PG's Casino Journal by Bill Toland
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