Some say racinos pose threat to gambling take

By Lyle Moran
Associated Press Writer / July 24, 2010

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BOSTON—The centerpiece of the House proposal to bring casino gambling to Massachusetts is to allow the state's four race tracks to offer slot machines as a way to preserve jobs and boost local aid, while bringing only marginal competition to the planned resort-style casinos.

But if the example of other states holds true for Massachusetts, these so-called "racinos" don't stick with just slots for long.

Racinos in Iowa, Pennsylvania and Delaware have expanded to offer table games, in addition to slot machines, and have many of the amenities of large-scale casinos. And racinos in Maine and Rhode Island have increased their slots offerings and are seeking the ability to offer table games.

That has potential casino developers in Massachusetts nervous about any plan that would include expanded gaming at the state's race tracks, because it would mean a smaller piece of the gambling profits for them.

The House's proposal allows the development of two resort-style casinos and up to 750 slots at the state's four racetracks. Andrew Stern, a principal with KG Urban Enterprises, which has plans to build a casino in New Bedford, said if that plan is included in compromise casino legislation, he would build a resort with a much smaller gambling floor and far fewer hotel rooms.

"That's like strangling the baby in the cradle," said Stern of the House's plan.

Sen. Stanley Rosenberg said casino developers have told him that racinos would have a "chilling effect" on the type of casino investment they would make in the state. The Amherst Democrat said smaller resort casinos would make it much more difficult for Massachusetts to keep gamblers from traveling to Connecticut's two sprawling gambling complexes, which would mean a substantial loss of revenue.

"If we divide up the market into too many small facilities, we will not be able to grow the resort casinos to the style and level to bring players back home," Rosenberg said.

The Senate's plan for three resort-style casinos and no racinos could bring in up to $350 million dollars to the state, according to Senate estimates. A six-member legislative panel is trying to bridge the differences between the House and Senate bills.

Racino supporters argue the House bill would protect against racino expansion. The legislation stipulates that tracks receiving slot licenses would not be able to add more "gaming positions" for 15 years.

However, racinos in other states have often gone back to legislatures to ask for the ability to often more slots and have succeeded, said Richard McGowan, a Boston College professor of economics who has written about the gambling industry.

"As states want them to become more competitive, they let them offer more," he said.

Iowa has allowed slots at race tracks since 1994 and in 2004 became the first state to allow race tracks to offer table games. Now the racinos, with amenities like concert halls and hotels, are just like the seven riverboat and seven land-based casinos in the state, said Wes Ehrecke, president of the Iowa Gaming Association.

"They really are casinos," Ehrecke said.

Delaware's three racinos began offering table games earlier this year, following years of gradually increasing the number of slot machines at their facilities.

Delaware Park in Wilmington opened in 1995 with 715 slot machines and reached a high of 3,200 slot machines. The move to table games will allow Delaware Park to compete with gambling operations in Pennsylvania and future competition in Maryland, said Andrew Gentile, the facility's chief operating officer.

Racinos in Rhode Island and Maine are now seeking the ability to offer table games.

William Eadington, director of gambling research at the University of Nevada at Reno, said racinos are now seen as an easy way to get on the fast track to owning a full-fledged casino.

"Race track casinos are an alternative way of becoming a casino operator for track owners," Eadington said.

Stern, the potential casino developer, said he hopes the final compromise bill does not set conditions that would stop him from wanting to develop.

"We can't live with 3,000 slots up and running while we are creating a resort," he said.

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