Wheeling Island Casino

Dong...

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I am really getting the feeling that Wheeling Island is the entity for whom the bell tolls.

I have just been informed that ALL table games are going to be closed from 3:00a.m.-7:00a.m. beginning on August 1st and extending indefinitely. I understand that this is technically the correct decision if Table revenues do not exceed staffing costs for tables, but at the same time, I think that this sort of penny-pinching is probably a HUGE red flag for a casino. It will also be even more action that will start heading to The Meadows, and maybe some of those late-nighters (who may well start before 3:00a.m.) will stop coming altogether because they don't want to have a hard stop time of 3:00a.m.

I just think it is a bad sign, and I have inside information that it is either an hours cut or layoffs at that place coming as a result of this. They are pulling back on the late-night tables because they don't want to have to start laying people off.

The problem is that I believe they are just doing a rudimentary revenue analysis of staffing costs per hour vs. revenue per hour and leaving it at that. The fact that they cannot serve drinks during those times may also be a factor. I would tend to look at the revenue/person (divided into per hour) of the people that tend to come in prior to 3:00a.m. and leave after 3:00a.m. I understand that you may not be making your staffing costs back on them between 3:00-7:00a.m., but how much do you lose if those people cease to come at all?

I don't have any stock in them, but from an investor's standpoint, I don't like it. I see it as a sign of weakness.

The Breezeway Cafe will also reduce its hours to 7:30a.m.-10:30a.m. providing a breakfast buffet only.

There's no talk of closing the casino altogether from 3:00a.m.-7:00a.m., at least not at this point. It could be a legal requirement that they be open 24/7 (not sure) but if not, at least that means the Slots/Video revenue justifies the staffing/security/electricity to remain open during those hours. I would consider anything less full panic mode.

It must be the Slots/Video revenue that justifies it because there will literally be no other place for someone to spend money during those hours...well...the cigarette machine, I guess, but that's about it.

They have finally realized that a low expected revenue/hour is better than no expected revenue/hour when it comes to the fleas. It seems that all of the tables, except Blackjack, have been reduced to $5.00 Minimums. It seems that Blackjack tables are either $25/$1000, $10/$500 or $2/$4 ($0.25 ante), the latter of the BJ tables is apparently open anytime the tables are, now.

I have absolutely no idea why a serious BJ player would play against WI rules v. the rules dictated by the State of Pennsylvania at The Meadows. If I were going to one or the other with the intention of playing BJ and only BJ, I'd definitely go to The Meadows. BJ is simply a temporary diversion from the Slots, for me, though I do count, but don't spread enough to have an overall advantage.

They may have lost some Slots Players/Buses to Scioto Downs in Columbus, I'm not too sure about that. I have got to believe that it cost them some of their traffic coming from Zanesville/Columbus, particularly those that only went to WI because it was the nearest place to play Slots.

Hollywood Columbus is not even open yet, but things are already looking pretty dismal for Wheeling Island.

I went to Wheeling Island on a whim last week, just to see what had changed since I was last there over a year ago, and could also see the writing on the wall.

It's a shame, since they've actually spruced up the property quite nicely. It used to be very worn out, with torn carpet, a haze of smoke in the air, etc....but they've replaced the carpet, and I didn't want to gag on cigarette smoke after being there for a while, so I guess they've improved the ventilation as well. The buffet area has also been enlarged and no longer feels like eating in a prison compound, as well.

Also, the "sterile" area of the casino, containing the hotel front desk, Breezeway Cafe, steakhouse, and auditorium is no more. The security/ID check podium is now at the bottom of the escalator, right as you walk in the door. I have mixed feelings about this...while the casino certainly feels more open and inviting without that railing around the perimeter, it also means that under-21s can no longer visit those areas. Before it might have been possible for a family to bring their kids with them and still enjoy those aspects of the property...now only adults can go there, which I think might diminish their chances of survival (see below for my thoughts).

The table games have been moved to the back of the property, near the buffet, and have been reduced in number from around 60 to around 20, with only 10 of them open during the day. Between that and the closure of the tables during graveyard hours, it's not hard to imagine them getting rid of tables entirely in the near future and going back to just being a slot house, just like it was pre-2007...

The buffet is quite reasonably priced from Monday-Thursday, at $13.95, and the selection is pretty big. It's not the best food in the world, or even the best casino buffet in the region (that would be Rivers), but it's tasty enough for the price. To be honest, that's really the best aspect of the property.

As mentioned here before, the odds on craps have gone down to just 2x, with a $5 minimum during the day. I didn't ask, but would GUESS this is because they lost a lot of their experienced dealers to the PA casinos and had to train new ones, and didn't want them slowing the game down trying to figure out weird odds payouts. The newest game is Blackjack for $2, with a 25-cent ante; the less said about this the better, of course. Pai Gow poker and mini-bacc are gone.

I predict the property will continue to slowly shut down, piece by piece, until it is no more. The owner, Delaware North Corp., owns a few other racinos across the country, but their main business is sports-stadium and airport concessions, and it probably wouldn't be a huge loss to them to get rid of the place. It makes sense on a corporate level, but on a local level it will really be devastating to an already economically-depressed area.

I was not surprised too see the owners had other racino's. Delaware Park race track was like every other. Pay $5 to get in, with no seat reserved. pay to park, buy a form, buy a program. You are down $20 before you started. There is a reason that when a real casino opens anywhere near a horse track, the tracks revenue immediately drops 80-90%. And that same "open the door and let the suckers in" mentality still exists today. Penn National bought Bullwhackers in Blackhawk about 10 years ago. Even expanded to Bronco Billy's next door and also bought the Silver hawk. Bullwhackers had the best poker room at that time, and Penn national got rid of them as well as the BJ tables. Bullwhackers is not leasing what was Bronco Billy's to Sasquatch, the Silver hawk is closed, and Bullwhackers is half empty even on weekends.
But racinos are not the only poor casino operators. The Isle and Riveria are the first casino you pass when entering Blackhawk. And I do mean pass. Riveria was just bought by someone else and the Isle has gone from the highest revenue casino in BlackHawk to near the bottom in just a few year. Ameristar is the 800 lb gorilla. They also have the best buffet and comps. Not a co-incidence I think.
Few remember that casino opened up as Hilton casino. LOL Openeed 2 weeks late and closed 3 nights the first 2 weekends for lack of funds to cover jackpots. Common sense should apply when running a casino, but evidently common sense ain't that common.

We should meet up at WI or The Meadows sometime, OneAngryDwarf!

The ventilation system there is much better than it used to be, it seems that at some point last year these new inventions called, "Air filters," were created. I do remember that just over a year ago the place was too smoky for me, and I'm a smoker!

The second paragraph is also a good observation. I think that it hurts the restaurants a littlle bit, but one other thing that I noticed is that their hotel is no longer selling completely out every single night, at a time when most area hotels are perpetually sold out (except Sundays) for the first time in years!

It's not just during the day, I've been there at all sorts of different times on all sorts of different days. Half of the Tables in that place are just for show including, unfortunately, Let It Ride. Half of the tables in the Poker room are also for show, they don't even completely fill that area with the majority of their tournaments, anymore.

The buffet has always been really good for the price, and it is often half that on Tuesdays.

Fortunately, the economy around here is going to kick ass for a few more years with the gas drilling, but I doubt we do well after that is gone.

If they do go back to being a slot house, hopefully they dust off a few of the actual quarter-dispensing ones they have hiding in a room somewhere upstairs, God I miss those!!!

I haven't been there in the wheeling island yet.

um, thanks for sharing that last post

Quote: Mission146

Hollywood Columbus is not even open yet, but things are already looking pretty dismal for Wheeling Island.

Dong...

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The bell continues to toll, Hollywood Columbus is now open.

http://www.theintelligencer.net/page/content.detail/id/582090/WHEELING-ISLAND-SET-TO-LOSE--1M.html?nav=515

(Brief Paraphrases from the article are included below, but the majority of what is below are my original thoughts)

The Wheeling Island Racetrack and Casino reports a table games loss of $171,407 for Jan/Feb of this year and anticipates a loss of about $1,000,000 BEFORE paying the annual fee of 2.5M just to offer table games, which is due in June.

In the OP, I had mentioned that WI had already closed Table Games from 3:00a-7:00a, but they have occasionally been keeping them open longer on weekends and holidays, if the demand is there. They are definitely sweating the money, though, because you can tell they are paying close attention to the Theo during these times as you will look and see ten (or so) people spread out across three-four games, then one-two people leave and they pull the proverbial plug on it for the night.

Wheeling Island indicates that closing Table Games is a very real possibility if the State of West Virginia doesn't find some way to re-allocate these 2.5M fees charged to each casino every year to be able to have Table Games. The competition for Wheeling Island Casino, in terms of proximity, is as follows:

Mountaineer Casino-Chester, WV
Meadows Casino-Washington, PA
Rivers Casino-Pittsburgh, PA
Scioto Downs Racino (No Tables)-Columbus, OH
Hollywood Casino- Columbus, OH
Horseshoe Casino- Cleveland, OH

The West Virginia casinos initially lobbied the State Legislature to legalize Table Games around 2007 due to a projected revenue loss to PA who legalized slot machines. Pennsylvania Casinos then kicked off offering Table Games on July 8, 2010 and West Virginia casinos thus saw their market from the East for Table Games dwindling. Shortly thereafter, Wheeling Island introduced worse BJ Rules (they used to have some of the best in the country) in the apparent hope of increasing the HE and making up for the revenue lost from players who were no longer playing there. Given the close proximity and State mandated BJ Rules in Pennsylvania, it can be assumed that many of the sharp BJ players (though not necessarily AP's) from Ohio and WV then took their business to The Meadows. The Odds Bets on Craps were also reduced to 2x Odds shortly thereafter.

Horseshoe Casino Cleveland opened in May of 2012 with Hollywood Casino of Columbus opening in October of 2012. These openings also cost Wheeling Island many Table Games players from the North and the West, that is, those players who were not already going to The Meadows in the first place.

What could Wheeling Island do to compete successfully against major brand casinos? If your answer was, "Dramatically reduce comps," then perhaps you should go to Wheeling Island and apply for an administrative position.

How Much of this is WI's Fault?

I'm going to create a chart of tax rates which will roughly paraphrase the information in the article:

State	Slots	Tables
West Virginia	42%---"Effective Rate"---57%	35% + Separate 2.5M Annual Fee
Pennsylvania	55%	16%
Ohio	33%	33%

It is clear, especially given the 2.5M annual fee on Table Games, that Wheeling Island Racetrack and Casino is at a HUGE competitive disadvantage with the other casinos just off of the percentage of revenue that is being taxed.

How much can really be offered to the players when you are being taxed to within an inch of your life, have a 2.5M annual fee coming up, and would still be losing money on the product prior to this 2.5M annual fee? Keep in mind that WI is not a large casino to begin with.

General Manager Jim Simms will soon be leaving WI (around April) to head up operations at the re-vamped Lebanon Raceway located near Cinncinati Ohio. I did a little bit of research, curious about this amicable split between Simms and Delaware North Companies (parent company of WI), and it turns out that Lebanon Raceway is a joint venture of Churchill Downs and...Delaware North Companies!

It seems that they think their GM will be better serving them at the new location in Lebanon, Ohio.

http://www.theintelligencer.net/page/content.detail/id/581987/Simms-Leaving-Wheeling-Island--Says-Casino-May-Need-Tax-Break.html

In this February article, it was pointed out that the live greyhound racing, a constitutional requirement in the State of West Virginia if one wishes to operate a casino, is also losing WI significant money. Wheeling Island has dropped its weekly greyhound races for 2012 from 115 to 107 in number, though Simms points out that Wheeling Island could have saved 100K per week had they been allowed to drop down to 101 races per week.

Ultimately, you have high tax rates to begin with combined with a Constitutional requirement forcing the casino to abide by the terms of the State in its operation of life greyhound racing, which is clearly not profitable. In fact, slots were initially legalized for the casino because it was the only way to, "Save," the casino which was no longer a profitable greyhound racing operation.

What Can Be Done?

The answer to this question lies with the West Virginia Legislature. It is clear that something will need to be done about the 2.5M annual fee in order for WI to keep the Table Games going, but is there an incentive for WV to do that in and of itself?

Doubtful. The State Legislature is going to look at the overall revenues for the State of West Virginia, and right now, there are three other casinos that are paying the 2.5M fee with no evident problems. If you lose the Tables at WI Racetrack and Casino, then you lose 2.5M per year as well as whatever they collect on that 35% tax on Table Games per the above chart. The way I see it, the WV Legislature has the following options with the following pros and cons...and by all means, please add more as I may not have thought of everything.

1.) Reduce the Flat Fee to 1.875M for all casinos.

PRO: Provided Wheeling Island continues to offer Table Games and the revenues do not suffer, then WV still makes 7.5M off of the Table Game licensure, which is the same amount that they would make simply by letting WI close the Tables and continuing to collect 2.5M from the other three casinos.

CON: This is extremely risky because Wheeling Island could still choose to close the Tables at a later date, and now you have reduced the flat fee for the casinos that could pay it. This seems like something greater than an outside possibility because WI claims (is Summer not a better season than Winter?) that they expect to lose 1M on the Table Games this year. If WI determines that what the Table Games brings to the casino in other areas (hotels, slots, vending, food, liquor) does not equate to the loss on Table Games, they may close them anyway.

2.) Eliminate the Flat Fee and Increase the Tax Rate

PRO: It's still, "Fair," because even the more successful casinos will be paying the same tax rate, and actually, West Virginia may be able to orchestrate this in such a way that they actually make more money on the deal. If they do a good job anticipating the revenues and set the tax rate such that the percentage brings in more than an additional 10M, then the State has made more money. They might even go for only an additional 7.5M as that is what they would be getting if WI does not continue to have Table Games.

CON: Again, this could be risky. The first thing that needs to be considered is that if the Table Games at Mountaineer aren't hanging on by a shoestring, they're probably pretty close. However, depending on the increase to the rate, it may turn out that Mountaineer is better off than they would be paying at the 35% rate plus the 2.5M fee.

It could also be risky because the Southern WV Casinos have not yet fully experienced the competition that will be coming from the State of Maryland. It's quite possible that eliminating the flat fee could be catastrophic if the patrons of the Southern WV casinos drift over to other out-of-state casinos. With the 2.5M flat fee, the State knows it is at least getting that from those casinos operating Table Games.

3.) Alter the Flat Fee and Create a New, "Per Table," Flat Fee

PRO: It is reasonably easy to do the math to adjust the fee to a flat fee to be paid, "Per Table," at each casino and initially ensure the same amount of revenue. This would definitely benefit WI who almost never has all 20 of its Tables open at any given time. It also remains, "Fair," because the four WV casinos are still competing with one another on the same footing because each casino can either license x amount of tables or not license x amount of tables.

CON: Again, this is more risky than the 2.5M flat fee and a casino can simply have as many tables as they choose. Every casino is going to want to minimize the amount of Tables they have so as not to be paying the flat fee on something upon which they are making no money. Again, with the increased competition that is going to be coming from Maryland, though WV can essentially rig the flat, "Per Table," fee not to lose anything initially, they could still lose money in the long run as the casinos reduce the # of tables they have.

Thoughts?

The ebb and flow of legalized gambling rule will never be denied, just delayed. Amazing these people running casinos do not know this or else they would do things to stop it. Self-interests will not allow it by voluntarily conceding profits to ensure long time survival by not allowing competition to sprout. Maybe 20 years of profits aren't enough to starve competition due to forced competiveness which would have been necessary due to expected standards. I would imagine the state will balk on fees and taxes just to keep doors open all the way to 0 revenue potentially just to keep the jobs.

Something has to be considered when these topics are discussed and it is self-injury disguised as victimhood. One of WI's competitors got out of having slots trackside 24/7(by law). Apparently they proved to the state they were losing money, but I think it due to passive aggressive actions discouraging patrons. There was no AC and leaving doors open so the whole area smelled like horse manure, shrinking the slot floor, removing machines, etc. Now they have slots open only surrounding times when there are races. The state should not be tricked into lowering revenue, then only after seeing miraculous recoveries in play. It really has to be looked at carefully and written so any concessions are immune to manipulation.

Edit: Just wanted to point out SLOTS were better IMO before they got TABLES where I play and do wish they would get rid of them and offer better slots. I like your idea about resurrecting some of the old slots, but I bet they have been sold off to home casinos or South America or Africa.

Quote: Mission146

3.) Alter the Flat Fee and Create a New, "Per Table," Flat Fee

PRO: It is reasonably easy to do the math to adjust the fee to a flat fee to be paid, "Per Table," at each casino and initially ensure the same amount of revenue. This would definitely benefit WI who almost never has all 20 of its Tables open at any given time. It also remains, "Fair," because the four WV casinos are still competing with one another on the same footing because each casino can either license x amount of tables or not license x amount of tables.

CON: Again, this is more risky than the 2.5M flat fee and a casino can simply have as many tables as they choose. Every casino is going to want to minimize the amount of Tables they have so as not to be paying the flat fee on something upon which they are making no money. Again, with the increased competition that is going to be coming from Maryland, though WV can essentially rig the flat, "Per Table," fee not to lose anything initially, they could still lose money in the long run as the casinos reduce the # of tables they have.

http://theintelligencer.net/page/content.detail/id/582142/Any-Changes-in-Gambling-Fee-Would-Be-Made-by-Legislature.html

It seems that State Senate President, Jeff Kessler, states that the West Virginia Legislature is in very early discussions about potentially adjusting the fees that are charged to the casinos for offering table games. In the following quote, it would appear that my Option 3 is one of the ideas being thrown around:

Quote:

"If one of the tracks has 150 tables going and another one only has 40 tables going, maybe they should not have to pay the same amount," Kessler said. "Maybe you could charge some sort of a flat fee, which is lower than $2.5 million, and make up the rest based on the number of tables. The bottom line is: We need that $10 million."

As anticipated, the State of West Virginia is going to have exactly ZERO interest in losing any part of that 10M, but then it is possible that they could orchestrate some sort of solution which would keep them essentially at any amount higher than 10M + 35% (Tax on Revenue) - (2.5M + 35% of WI's Revenue) because certainly losing only a part of the revenue would be preferable to WI shutting down tables entirely. It is probably true that some of the WI Tables business would move over to Mountaineer Casino & Resort in nearby Chester, WV, so the State would likely take that into consideration.

The Cost of 2.5 Million

Imagine how much gambling has to be done just for Wheeling Island to make the 2.5M flat fee. Wheeling Island's Table Games business is predominantly centered around Poker, Craps, Roulette and Blackjack. If you look at the costs of poor Blackjack play, the 5.26% solid HE on Roulette (with exception to the basket bet) the Poker rake, Center Craps Bets and paying the $0.25 fee for the $2/$4 BJ Table.

Based on this:

http://gaming.unlv.edu/reports/nv_table_hold.pdf

I'm going to go ahead and use 12% as an overall hold rate, because I would say that the poker rake would bring the average down somewhat. This number is very unscientific on my part and meant for example only.

Wheeling Island must pay the flat fee of 2.5M annually just to have Table Games, however, they also pay a tax on Table Games of 35% of all Table Game revenues, (which I also doubt the State is willing to give up) so the amount of action you need to pay that 2.5M, BEFORE YOU EVEN START TO CHIP AT YOUR OTHER EXPENSES could be represented as follows, based on a 12% hold:

2500000/(.12 * .65) = x

x = 32,051,282 (Rounded to Nearest Dollar)

Basically, you need to see a little over 32 MILLION DOLLARS in total bets, at a 12% hold, or $87,671.23 in bets per day, before you have covered your 35% on all revenue and paid your 2.5M fee. At this point, you can BEGIN to worry about the expenses of your employees and implements for playing the games.

Wheeling Island project a loss of 1M for the year on Tables discluding the flat fee of 2.5M, for a total of 3.5M lost. In order to break even on that, based on 12% hold, you would need:

3500000/(.12 * .65) = x

x = $44,871,795 (Rounded)

An additional $44,871,795 million in additional total bets, coming from Table Games that were independently profitable as early as two years ago.

The high tax rates were all fun and games when there was no competition coming out of Ohio and PA, but unless the WV Legislature figures out something, Table Games at WI will be no more.

3500000/365 = 9589.04109589041

$9,589.04

That's the magic number, assuming the WV Legislature does nothing, that will determine whether or not Table Games remain open at Wheeling Island. Does the presence of Table Games generate a mean of $9,589.04, per day, in profits in other areas of the casino? That's the question that WI Administration will have to spend some late nights crunching numbers to answer if they can't get a reprieve from the State of West Virginia.