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Satellite casino bill dies in Senate Finance Committee

CHARLESTON, W.Va. — The House bill to allow the four racetracks to open satellite casinos in their home counties fizzled in Senate Finance Thursday morning.

The bill was intended to initially and primarily benefit the Wheeling Island resort, which is anticipating a loss of business during Division of Highways work on 26 Interstate 70 bridges in the Wheeling area through 2021.

John Myers

A successful amendment to require an annual $1.5 million license fee for the additional casino failed to win over skeptics on the committee. The amended bill also required county commission approval before the company could move forward.

HB 2901 would allow the racino, as they’re sometimes called, to open a second casino site in any building it owns or leases within the same county. The site would not offer a track or hotel, but could offer table games, slots, sports betting and possibly simulcast racing.

The bill provides that the city hosting the original racino would continue to receive its due share of funds; any funds above that generated by the new site would be divided between the original city and the locality hosting the new casino. This is a measure to prevent the new site bleeding off money from its parent’s host.

Answering various questions from senators, Lottery Director John Myers told the senators that, based on projections provided by Delaware North, the company that operates Wheeling Island and Mardi Gras in Cross Lanes, the state would see an estimated $8 million annual loss in revenue during that period, with a corresponding $2.34 million gain at the satellite site, for a net $5.66 million loss.

The new facility would be a $20 million investment and generate about 150 to 175 new jobs, he said.

He said that the Lottery Commission would expect to see no impact on local limited video lottery (LVL) operators – sometimes called hot spots – because they draw a different clientele. The casinos are destinations that draw out-of-state visitors; only 9 percent of their business comes from in state. The LVL sites draw local patrons.

Deputy State Highway Engineer Todd Rumbaugh gave the committee some information that concerned the skeptics. He explained how the bridge work will be phased in over several stages. It will be bid out in July and work could start late this year.

The portion of the work that will most disrupt Wheeling Island traffic, he said, will be on the Fulton bridges near the island. The eastbound lanes will be closed for nine months in 2020 and the westbound for nine months in 2021.

Kim Florence

The information played into the subsequent testimony from Kim Florence, Delaware North regional president and general manager, who oversees the two casinos.

Answering questions, she said the company hasn’t yet chosen a site or bought land. It could be at the Cabela’s-Highlands development, before the I-70/I-470 split, or it could be across the highway where a hotel and a couple car dealerships sit.

They’ve had some talks with officials but there’s been decision and no building plans drawn up. The satellite casino could range from 30,000 to 50,000 square feet and hold from 100 to 250 slot machines.

That worried Sen. Doug Facemire, D-Braxton, who said there’s no way Delaware North could complete all the necessary steps and have a building up before the bridge work is complete.

Florence tried to assure him they will pursue an “aggressive timeline” and that they’re committed to West Virginia and in for the long haul, but Facemire wasn’t sold.

Senator Bill Ihlenfeld

Florence pointed out some other challenges for the track. She’s seen five floods since she came aboard in 2003; two floods in 2018 closed the resort two times. In 2014, the tunnel closure produced a 17 percent drop in revenue.

“It is very problematic for people who are looking for convenience. If you’re already driving an hours or so from Pittsburgh to come into our property, adding another half hour to 45 minutes certainly can change your perception of how you want to travel to West Virginia.”

Senators also worried that allowing a satellite could open the door for Delaware North to close the main facility. Sen. Corey Palumbo added some wording to the bill to strengthen the provision requiring the main facility to continue offering its full range of services and amenities.

The issue of a license fee arose several times. Myers said that all four tracks pay a $2.5 million annual license fee for their table games, in addition to the taxes on the other gambling operations.

Senators said the new facility shouldn’t be allowed to operate without a separate fee, and Florence said she’d be agreeable to a reasonable figure. Sen. Billion Hamilton, R-Upshur, offered the $1.5 million figure the committee adopted.

Mike Maroney

But there were other concerns, particularly a lack of a county referendum to approve the second site.

Sen. William Ihlenfeld, D-Ohio, supported the bill, saying that while it’s unknown if Delaware North will build inside or outside the city, Wheeling has chosen to remain neutral on the issue. If Wheeling opposed it, he would too.

“It’s going to generate a lot of additional revenue,” Ihlenfeld said.

Sen. Roman Prezioso, D-Marion, said, “it’s got to be a windfall for the state of West Virginia. … I don’t see a problem with this. I think it’s a win-win for the state.”

But Sen. Mike Maroney, R-Marshall, was among the skeptics. “This is being sold as something we need because of the roads. This isn’t what it’s about. … It doesn’t pass the smell test.” And he fears for the small LVL operators, despite what the Lottery Commission believes.

After a voice vote failed to produce a clear majority, the bill died in a show of hands, 7-8.

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