MOUNTAINEER RACE TRACK & amp; GAMING RESORT From small change comes big changes Taking a gamble with slot machines has paid off well for W.Va. destination

Mountaineer plans to add an upscale golf course, boutiques and homes.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
CHESTER, W.Va. -- Once every couple of months, Dolly Davis rounds up $300 and hopes it's her lucky day.
The 49-year-old Kinsman woman drives 75 minutes and waits for good fortune in front of the blinking lights of a West Virginia slot machine. She pumps in nickel after nickel, or quarter after quarter, and watches for the three cherries that make the machine ring.
Four hours later, win or lose, she gathers up the friends and relatives she came with and heads home from Mountaineer Race Track & amp; Gaming Resort.
"I'm about half and half," Davis said in describing her trips over the past year. "Sometimes I do real good, and sometimes I don't come back with anything."
The small change of small-time gamblers such as Davis has turned around the fortunes of Mountaineer in a big way. Once just a small-town racetrack, Mountaineer is on its way to becoming a resort destination.
Before and after
Mountaineer used to be known as Waterford Park, a racetrack that was a last stop for horses too old or slow to make it elsewhere. Its lackluster races drew small crowds so the track often lost money and even closed briefly 20 years ago.
Then came the slots in 1994.
So many nickels, quarters and dollars have been shoved into these machines that Mountaineer has become profitable, with $18 million in earnings last year.
Each of its 3,200 slot machines average a daily take, after paying winners, of more than $200.
Mountaineer's parent company, MTR Gaming Group, saw its revenues jump $48 million last year to $266 million, with $40 million of the increase coming from the slots.
The slots have done more than make money, however. They have allowed Mountaineer to spend $170 million in the past six years to transform its grounds along the Ohio River near Chester, W.Va.
Happy to drive
Marlene Schwind, 61, of Brook Park, Ohio, likes what she sees. She's made the drive from suburban Cleveland four times since she heard about Mountaineer in May.
Not only is Mountaineer closer to her than the Detroit casinos, but it features a hotel that was completed last year. She said that improves the atmosphere and helps her feel safe. She stayed overnight on one of her trips.
The Grande Hotel at Mountaineer features a large lobby with high ceilings. It added 258 rooms to the 101 rooms already available.
The original lodge had limited services, but the new hotel has a fine-dining restaurant, mahogany-paneled piano bar, jewelry store and a spa, where guests can enjoy a sauna, message, manicures and pedicures.
"People nowadays like to be pampered," said Tamara Pettit, Mountaineer director of public relations.
Attached to the hotel is a convention center that can accommodate seminars for 1,800 people, and nearby is a fitness center with a swimming pool and variety of exercise equipment.
Also on the grounds is a new 5,100-seat arena for concerts and boxing matches. Singers Tom Jones and Wayne Newton are scheduled to appear.
Then there is the gaming room, called the Speakeasy, which is designed to create the feel of Chicago in the 1920s.
Started to turn around
This is where the transformation of Mountaineer began in 1994. Ted Arneault, who had been on MTR's board and became its president in 1995, saw slot machines as the way to turn around the property's fortunes.
He joined with others to convince state legislators that gambling would help the state, too. Legislators allowed residents to decide if they wanted slots at the state's racetracks, and voters in the Chester area approved them.
John Sorrenti, Hancock County commissioner, said many people in the northern panhandle of the state were worried about one thing when Mountaineer added slots -- increased crime.
It hasn't happened, he said. The only negative to the added gambling is that the increased traffic going through nearby small towns, he said.
Sorrenti said the county has benefited greatly from the slots because it receives 2 percent of the revenue, which amounts to $3.7 million a year. The county is putting in new waterlines and sewer lines, buying police cars and computers, funding senior citizen programs and installing streetlights and sidewalks.
Such spending is helping residents and making the county more attractive to business, he said.
Helping the area
The expansion of Mountaineer also has helped small businesses, such as gas stations and fast-food restaurants, he said.
"People come through, and they buy gas and not all of them eat at Mountaineer," he said.
As Mountaineer continues to expand and guests stay for several days, he thinks more businesses will sprout up around the resort.
Track owners in other states are pushing for permission to add slots because of how successful they have been in West Virginia, Delaware, Iowa, Louisiana, New Mexico and Rhode Island.
Before slots came to Mountaineer, its racing had fallen into a downward spiral. Low-quality horses attracted small crowds. Declining crowds meant smaller purses for winners, which further eroded the quality of the race fields.
The slots broke that cycle. State law provides for 15 percent of the revenue from the slots to go to horse-racing purses.
With bigger purses, Mountaineer began attracting better horses and that drew larger crowds. The daily average purse has grown from $22,000 six years ago to $160,000 today.
Bettors don't even have to be at the track to take part in the action. Mountaineer racing has become such an attraction that it has a video crew that simulcasts all of its races to 600 off-track betting parlors around the country.
Debate in Ohio, Pa.
Legislators in Ohio and Pennsylvania have debated permitted slots in those states this year, trying to weigh the promise of more funds with concerns about increased gambling addictions and added crime problems.
Ohio legislators eventually backed off a plan to put an issue on the November ballot, while Pennsylvania lawmakers are poised to approve slots at racetracks and possibly at nontrack venues in Pittsburgh and Philadelphia.
Arneault said he would welcome slots in Ohio and Pennsylvania because MTR bought a racetrack in Columbus last December and has plans to build one in Erie. It also owns a hotel and racetrack in Nevada.
More racinos -- the industry term for casinos at racetracks -- will help, not hurt, Mountaineer because it will raise people's awareness that this form of entertainment is available, Arneault said. Besides, Mountaineer is far enough along in its resort plans that it will take other tracks quite a while to catch up, he said.
Arneault is far from finished with his plans for Mountaineer. The company has 2,200 acres, including a 3-mile riverfront stretch, yet to develop.
Arneault wants to build an upscale golf course and a development with homes and boutique shops.
He said completing these plans, along with a new bridge over the Ohio River, will take up to 10 years and require partnering with developers of golf courses and residential resorts to provide expertise and financing.
Investors' reactions
Investors haven't been too impressed with Mountaineer's plans, however. The stock is trading at about $8.50, about half of where it was trading in spring 2002.
Arneault said he thinks stock analysts are uncertain about the company because of its unusual mission of turning a racetrack into a resort. He thinks it will take time to convince them that the company's aggressive growth strategy will pay off.
He has no doubt, however, that the plans he started in 1994 will work. As Mountaineer develops more forms of entertainment and adds housing, its reputation as a resort destination will increase, he said.
He sees this happening already. Mountaineer visitors used to come from a 75-mile radius, but the new hotel increased that to 150 miles. As the popularity of group trips grows, that radius will expand, Arneault predicts.
Schwind of Brook Park, who likes to visit Las Vegas, said there's one form of entertainment Mountaineer is missing -- table games, such as blackjack and roulette.
Arneault said he is working on it. He knows the demand is there and is lobbying legislators.
"We certainly hope it will happen," he said.
shilling@vindy.com