WEIRTON WAGERS ON SUCCESS OF SLOTS

WEIRTON, W.Va. – Folks who haven’t been to Weirton for a while may be in for a surprise.

Pulling off Route 22 onto Main Street may feel more like a visit to a Nevada desert oasis, where the din of jackpot bells resound around the clock. Bright, eye-catching signs marking newly renovated game rooms have replaced rundown gas stations and previously vacant storefronts. The change is astounding.

After further loosening of the state’s gambling regulations to allow video gambling in adult environments, bars with slot machines have begun popping up along Main Street and other areas of the city.

Wedged between the borders of Pennsylvania and Ohio, states where video gambling is illegal, the city has been dubbed “Little Las Vegas” by its own elected officials, poking fun at themselves.

Weirton Mayor William Miller sees slots as a way to revitalize the downtown, “making the area a little presentable,” but he admits slots pose a double-edged sword.

“If you enjoy gambling and can afford it, I guess it’s a good thing,” Miller said. “If you happen to lose your welfare check in there, that’s a problem.”

Although Miller’s office has received some complaints about the operations, “There is really nothing the city can do about it. It is governed by state code,” he said.

As Pennsylvania lawmakers play tug-of-war with language in a slots bill that, if passed, will legalize video gambling at the state’s racetracks, West Virginia has been reaping gaming’s benefits for years.

Although the West Virginia Legislature in 1994 approved slot machines at its four thoroughbred and greyhound racetracks, the state’s Alcohol Beverage Control Administration in 1999 hand-counted more than 16,000 poker machines operating illegally. And the state was seeing none of the take, said John Melton, an attorney with the state lottery commission.

To cash in on some of the profits, West Virginia lawmakers passed the Limited Video Lottery (LVL) Act, which took effect in spring 2001. The law made West Virginia one of only five states, other than Nevada and New Jersey, to allow slots in bars and clubs.

“It has gone from an underground system to a legal system,” Melton said.

The law outlawed the pre-existing machines and limited the number of machines, which are available from licensed operators, to no more than 9,000 across the state. At the end of May, 5,259 were operating.

The state takes between 30 and 50 percent of the proceeds from the machines and dedicates the money to senior citizen, education and tourism programs, as well as funds the state’s Promise Scholarship.

According to Melton, every quarter, the lottery commission must calculate the average daily net income per machine, which determines what the state’s cut will be for the next quarter. That rate has stayed at 42 percent for the last three quarters.

“The remaining 58 percent is divided by the operator and the retailer. And they usually split that 50-50,” he said.

If the retailer buys the machines outright, however, he keeps the entire balance.

Daniel Guida is a Weirton attorney who opened his second slots location, Jackpot Jimmy’s Slots, Keno & More, in early August. Although the initial investment is significant, it’s worth it, Guida said. Including fees, the cost of a maximum five machines per location is roughly $75,000.

“It’s lucrative. People like to gamble. That’s the bottom line,” he said. “If you give (patrons) a place that’s nice and comfortable, hopefully they will come in.”

Australian Gaming Machine Manufacturers’ Association (AGMMA)

The application process is relatively simple.

The law stipulates that the machines can operate only in “an adult environment,” meaning a bar or fraternal or veterans clubs. So the first step is for the potential retailer to secure an ABCA Class “A” liquor license. That license entitles the bearer to apply for the LVL retail license. To obtain, the applicant must have been a resident of West Virginia for at least two years and free of any felony convictions involving “theft, bribery, gambling or moral terpitude,” Miller said. That license costs $500 per year.

“After that, you’re pretty much on your way,” said Guida.

Potential retailers must then bid on available permits, with a minimum $3,000 bid for each machine, which can be leased from an operator with no money up front. Or, machines can be purchased directly from the manufacturer.

According to the lottery commission, permit bids opened May 9 produced 317 bids of more than $950,000. As of July 28, 1,267 retailers were approved for licenses. The next bid deadline is Nov. 14.

“If you have a decent location, you can make up that $75,000 pretty quick,” Guida said. “You literally double your money.”

In the four other states where video gambling is legal – Oregon, South Dakota, Lousiana and Montana – the only games available are blackjack, poker, bingo and keno, a bingo-style game. West Virginia is the only state that allows multi-line, multi-coin machines, known as spin games, similar to the Cherry Master machines played for amusement only in some Pennsylvania bars, Guida said.

While attending a recent trade show, Guida discovered International Game Technologies, the industry leader in LVL machine manufacturing, spends close to $35 million per year in research and development and has found that 85 percent of patrons prefer spin games over blackjack and poker.

“The spin games are addictive,” he said.

The lottery commission began marking a state map with push pins indicating the location of slot machine establishments. The panhandle portions of the state are overflowing with push pins, Melton said.

“They are much more popular in metro areas and in the northern panhandle,” he said.

Weirton, which links Brooke and Hancock counties, receives some of the revenue from slots within its boundaries. But Miller said, “It is very profitable for the state and for the machine owners.”

The lottery commission could not provide an estimate of the total amount of money wagered, but video slot machines in West Virginia produced about $169 million in gross profits in the fiscal year ending June 30. Of that, $100 million was returned to the retailers, $66 million went to the state and $3 million was split by the cities and counties, Miller said.

“It would be nice if they got a little bit more to the city. But that might be wishful thinking on the mayor’s part,” he said. “Generally, it’s just a nice place to come and lose your money.”

For a city built on the shoulders of a once-flourishing steel manufacturer now in the midst of Chapter 11 bankruptcy, any influx of money or redevelopment is welcome.

The bankruptcy has “put a $1.4 million hole in our budget,” Miller said, adding that the city is in a “cost-cutting mode” and, among other things, has put a freeze on capital improvements.

Nick Palavis, whose son, Anthony, owns two slots locations in downtown Weirton, says limited video lottery operations have improved Weirton’s “image.”

“When I say, ‘image,’ I mean the visual of downtown Weirton between what was here before and what is here now,” he said. “We don’t have anything else coming into town.”

To establish a third facility, Palavis recently purchased a dilapidated house and used car lot across the street from the family’s first operation, Keno and Casino, which opened in March.

There are regulations governing the location of LVL establishments.

Because the operations essentially are bars, they cannot be within 300 feet of a church or school. Nor can they be within 150 feet of another LVL licensed establishment, Melton said, adding that the law specifically indicates the distance cannot be measured from door to door but from nearest wall to nearest wall.

Featheringham Realty and Auction Co. of Wintersville, Ohio, on Aug. 2 auctioned a residence at 3919 Main St. that listed for $87,000. The final bid for the building, located between two LVL establishments but within distance limitations, was $91,000.

Despite the gaming boom, boarded-up and soap-smeared storefronts still line most of Weirton’s Main Street.

For lawmakers to see the slots legislation through, they turned to veterans groups and senior citizens, promising them portions of the proceeds.

“But they promise everybody everything, and the money never gets back to where it needs to be,” Guida said, adding that 85 to 90 percent should be going toward economic development.

“In a perfect world, would it have been better if we had a mini Robinson Town Center in downtown Weirton? Sure,” Guida said. “Is that going to happen? No. The governments are turning to this now … they are financially strapped and need the money.

“I would prefer it didn’t go this route. But we have dilapidated buildings. Plus, you’ve got three property owners that own about 75 percent of the land in Weirton,” he said. “It is what it is, and at least there is some development. You have people investing money.”