Racino near Youngstown to carve out slice of Pennsylvania market

| Saturday, Aug. 23, 2014, 7:19 p.m.

Bulldozers move dirt as workers hook up machines, hang signs and put finishing touches on a new racino set to open next month near Youngstown — becoming the latest entrant into the tri-state region's ever-growing gambling marketplace.

“We think we have the experience to know what's going to work and what isn't,” said Bob Tenenbaum, a spokesman for Penn National Gaming, the country's largest regional casino operator, based in Berks County.

Hollywood Gaming at Mahoning Valley Race Course will be Ohio's seventh and final racino, combining horse racing and slots-like video lottery terminals. Gambling starts Sept. 17. Racing starts Nov. 24.

Penn National spent $50 million on a license for the racino, $75 million to move its racetrack from Columbus — where it owns a full-fledged casino — to Austintown, and another $125 million to build the racino with 850 video lottery terminals and a mile-long thoroughbred racetrack.

Management at Rivers Casino on Pittsburgh's North Shore appears less concerned about any competition Mahoning Valley presents than about the prospect of the Pennsylvania Gaming Control Board approving Lawrence Downs and Racing Resort. The casino and harness-racing track would be built near New Castle by a Philadelphia investment group and managed by Penn National.

“We would prefer not to have additional competitors in the market, but we get a very small percentage of our business from that region — less than 1 percent,” Craig Clark, Rivers' general manager, said of Mahoning Valley. “Lawrence Downs is a different subject because they are targeting the Pittsburgh market.”

Lawrence Downs' license application is being reviewed and another public hearing will be scheduled before any decision is made, a control board spokesman said. No timetable is in place.

Endeka Entertainment wants to build Lawrence Downs about 60 miles north of Pittsburgh in Mahoning, Lawrence County — about 20 miles from the Austintown racino. The $225 million project, which includes $66.5 million in licensing fees, would include the state's only one-mile harness racing track. The casino would feature 1,250 slot machines, 40 table games, 10 poker tables and a 200-seat restaurant.

Part of the cost would be covered with $50 million from gambling money earmarked for local economic development projects — a new wrinkle that raised the ire of Rivers officials.

“To us, that's just changing the rules of the game,” Clark said, noting Rivers covered all of its development costs and met additional financial obligations, including paying the mortgage on the Consol Energy Center.

Officials with Meadows Racetrack and Casino in Washington County and Presque Isle Downs & Casino in Erie previously expressed concerns, but declined comment for this story.

Alex Bumazhny, a casino analyst at Fitch Ratings, said the Mahoning Valley racino should have little impact on Rivers, now 5 years old.

“The property will do OK, but it probably won't do the type of numbers seen at Rivers or the Meadows,” Bumazhny said. “But it will do OK given its size and cost base.”

The Ohio Lottery Commission projected Mahoning Valley could generate $3 million a month with 1,500 machines — the original number planned. Penn National since scaled that figure back to 850 machines based on market analysis.

“We'd rather be conservative in opening and then expand rather than the other way around,” said Tenenbaum, who expects Penn National to attract a million visitors its first year.

By comparison, Rivers in July grossed $24.3 million from its nearly 3,000 slot machines. Lady Luck Casino at Nemacolin, the region's newest casino that opened last year, brought in $2.5 million in July from fewer than 600 machines.

Penn National believes it is sitting at the crossroads of success with its new property.

“We love the location,” Tenenbaum said, noting the proximity to interstates 80 and 76 as well as major Ohio highways. “You can get there from Pittsburgh and Cleveland, all of Western Pennsylvania and the West Virginia panhandle.

“That gives us a great deal of confidence that this is a very good market for us.”

Jason Cato is a staff writer for Trib Total Media. He can be reached at 412-320-7936 or jcato@tribweb.com.

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