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A slots day trip to West Virginia
They piled into the black chartered bus in Baltimore on a sunny Wednesday morning -- weary at the hour, yet eager and excited. There were 38 of them.
They came with canes, walkers. One carried a portable oxygen tank. They moved slowly but deliberately, each settling comfortably into a seat for the 90-mile ride to play slot machines at Charles Town Races & Slots in West Virginia.
After stops in Towson and Pikesville, the bus would be on its way. Most of the passengers would be asleep before the charter hit Interstate 70, then heading onto U.S. Route 340 for the final stretch into Charles Town.
Their rest, however, only would be temporary.
"Let's go," Chuck Geisendaffer of Arbutus said, heading eagerly off the bus. "They're talking about getting slots in Maryland. I don't care where they get 'em -- I'm going."
It is Maryland residents like these whom Republican Gov. Robert L. Ehrlich Jr. hopes will pump millions of dollars into the state's economy instead of handing it over to West Virginia, Delaware and New Jersey.
Ehrlich is proposing to legalize slot machines at three racetracks in Central Maryland. According to his most recent plan, 3,500 slots each would be placed at Pimlico Race Course in Baltimore, Laurel Park and Rosecroft Raceway in Prince George's County -- as well as 1,000 more at a track planned for Allegany County.
Besides helping to reduce a $1.3 billion budget deficit, the revenues from these machines, Ehrlich has said, would be used to revitalize the state's horse racing industry and finance the Thornton Commission legislation adopted last year by the Assembly.
The legislation seeks to reduce inequities among the state's public schools. It would provide $1.3 billion in aid for schools by 2007.
In the Maryland General Assembly, the Senate has approved slots legislation. In the House of Delegates, it is sitting in the House Ways and Means Committee, being held there by Speaker Michael E. Busch, the Anne Arundel County Democrat who is a staunch opponent of slots. The House has approved a balanced budget without slots revenue.
The 90-day legislative session is scheduled to end April 7 but must continue if a budget has not been passed by both chambers.
As of June 30, the end of West Virginia's 2002 fiscal year, the state had 7,021 video lottery terminals at four racetracks -- 1,989 at Charles Town Races, 2,488 at Mountaineer Racetrack & Gaming Resort in Chester, 1,571 at Wheeling Downs in Wheeling and 973 at Tri-State Racetrack & Gaming in Nitro. Horses race at Charles Town and Mountaineer Park, while dogs race at the other two tracks. Each track also has off-track betting.
The total number of slots since has increased by 1,659, including by 723 at Charles Town Races.
In fiscal 2002, slots players lost $595.9 million at the four racetracks, according to the West Virginia Lottery. They spent $6.96 billion and won $6.36 billion.
At Charles Town Races, bettors spent $2.26 billion, winning $2.07 billion and losing $190.4 million, according to the Lottery. In fact, the racetrack's growth outpaced that of West Virginia's other three tracks last fiscal year.
These results have made West Virginia the fastest-growing jurisdiction among the 47 in the United States and Canada that comprise the North American Association of State and Provincial Lotteries, an Ohio-based nonprofit industry group established 32 years ago.
West Virginia's total lottery sales grew by 42.2 percent in fiscal 2002, with 75 percent coming from slots, said David Gale, NASPL's executive director. Next was Rhode Island, with a 19.7 percent increase.
"They have shown the greatest growth in recent years," Gale said. He noted that West Virginia's per-capita sales -- at $469 -- placed fifth, compared with No. 1 Rhode Island's, at $1,115 per capita.
"There's certainly growth opportunities for those jurisdictions who want VLT games," Gale said.
"The lottery is no different from any other product that is being sold by a particular company," he cautioned. "They have to promote, they have to advertise. Everybody is within a three-to-four hour car ride of a casino. They have to keep refining their product, improving on it and making it better."
Hoping for a 'hit'
Inside Charles Town Races, the 38 Baltimore players found 2,712 machines packed into a building about the size of a large discount store. They were grouped along such themes as "Slots City," "OK Corral" and "Nickelville." Their names ranged from "Little Green Men" to "Double Diamond" to "The Big Cheese" to "Filthy Rich."
The players joined the many others perched on leather stools in front of the lighted machines -- dropping nickels, quarters -- or $1 and $5 tokens -- into them. Most pushed a button to get things going; others pulled the lever. Those players lucky enough to "hit" found joy in hearing the brief, steady ring of the jackpot, while others weren't so fortunate.
When customers get thirsty, they can be served a drink by the numerous waitresses in short uniforms passing around drinks as they walk about Charles Town Races' carpeted floors. Should they get hungry, they can eat in the Sundance Cafe. When they want to rest, they can watch ESPN in the Silver Dollar Lounge.
Norma Mahn, of Arbutus, walked around dropping quarters in machines in the OK Corral.
"When you start getting short on money, you get a little something to eat -- or you walk," said Mahn, Geisendaffer's sister in law. The retiree budgets $40 to play slots.
"I play a quarter at a time, and I know that's cost me some jackpots," Mahn said. "On most of the machines, you have to play three quarters at a time."
In Slots City, Shirley Courtney of Parkville wasn't having much luck with the quarter machines.
"It was just one of those days where nothing was happening," she said later. "Normally, I stick with a machine, but I didn't do it this time. Nothing at all."
"The goal was to create a very attractive, clean alternative they will enjoy," said Roger R. Ramey, vice president of public affairs for Charles Town Races. Its owners -- Penn National Gaming Inc. of Wyomissing, Pa. -- has spent $160 million on the racetrack since it opened in 1997.
The company has 1,100 employees and another 2,500 "indirect" workers -- trainers, horsemen or other racing-related jobs. Horse-racing purses have increased by about 85 percent, to $140,000 a day, he said.
Ramey said the company's research shows that 25 percent of Charles Town Races' clientele comes from Maryland and Virginia, 17 percent from Pennsylvania and 6 percent from the District of Columbia. "Oddly, only about 6 percent comes from West Virginia," he said.
About 3 million people visit Charles Town Races a year, Ramey said. As many as 25,000 people could go through its doors "on a busy Saturday," while 15,000 is about average on a weekday. He called the busload of 38 from Baltimore "average."
Charles Town Races will house 800 more slots in a 40,000-square-foot addition that is expected to be open July 1, Ramey said. It will include a staging area that seats about 60 people.
"Most people in the city who don't go to the track, they don't know it's here," Ramey said. "It's something they don't participate in -- and it doesn't seem to disturb them."
Problems of crime, addiction
West Virginia began experimenting with slot machines in 1990, when lottery officials allowed Mountaineer Park to install 165 terminals to save the state's horse racing industry.
Legislators approved slots at the state's four racetracks in 1994. The law required that counties put it to a referendum. That same year, voters approved slots at every racetrack except Charles Town Races, which is located in Jefferson County. They backed slots two years later.
The issues surrounding the West Virginia referendums are not unlike those central to the debate in Maryland -- increased crime, broken families, lost jobs, even bankruptcy.
"Crime has increased significantly," said the Rev. Michael D. Withem, pastor of the First Baptist Church of Ranson for 27 years. The city borders Charles Town Races. His church, with about 150 active members, is about two miles from the racetrack.
"I am very aware of situations where the family has been decimated because of gambling," Withem said. "We never had a Gambler's Anonymous chapter until we got slot machines."
Chaplain Rick Mann, who co-founded the Gambler's Anonymous chapter in Charles Town three years ago, said he has counseled 15 people since the group started meeting at Zion Episcopal Church -- most of whom have had problems with horse gambling.
"It's a harder group to treat," said Mann, an ordained minister of the Church of God. "If they don't get into trouble with the law or their job, they don't have to come. It's a good program, it's an effective program; it's just not a big program."
Compulsive gambling masks other issues, Mann said. "Not everyone who's a compulsive gambler has a problem with gambling," he said. "Usually, it's another problem.
"If you go to the machines, and you have a problem, then it feeds on that and you get hooked on these machines," Mann continued. "If a marriage broke up because of gambling, they had another problem."
Still, neither he nor Withem support slots.
"You can take the money from slots and accomplish some good things," Withem said. "But the negative side far, far outweighs any positive benefits from the machines."
That's not the case, said Ranson Police Chief William Roper. He said about the only measurable increase in activity is the number of cars on the streets near Charles Town Races.
"The citizens were really concerned about robbery, drug-related cases and prostitution," Roper said. "We had heard about them coming along in other areas, and we were concerned about it, but we have not seen an increase in it in this area."
Ramey said the referendum succeeded in 1996 because Penn National promised to improve Charles Town Races -- and has made good on it. The company also lobbied voters through advertising, he said.
"The people gained a better understanding -- and [Penn National Chairman Peter Carlino] did do them, keeping the promises he made."
Distributing the revenues
Policies governing West Virginia's four racetracks are set by the West Virginia Legislature. They are enforced by the West Virginia Lottery, which is overseen by a seven-member commission.
Revenue from the state's slots is distributed under a complicated formula that includes "benchmark" figures that operate, in essence, like a progressive income tax. When they are reached, revenue payments are lowered to some funds or shifted to other uses. The benchmarks were approved in 2001, when legislators authorized track owners to raise maximum bets to $5 from $2.
For instance, track owners receive 47 percent of West Virginia's slots revenues. But the share is cut to 45 percent after the benchmark figure is reached.
"The thinking was that each track had its own infrastructure in place," said Virgil Helton, chief financial officer of the West Virginia Lottery. "If all you're talking about is more play on the machines, then you'll pay more taxes on the money from it."
Of the $595.9 million earned last fiscal year, the biggest share -- 58 percent -- went to track owners. That $349.4 million share includes the 47 percent cut to track owners, while the remainder goes for racing purses, employee pensions, breeders' programs -- and the West Virginia Racing Commission.
The next highest share -- 39 pecent, or about $229.5 million -- goes to the state. That includes a 35 percent cut to West Virginia's general fund, while 3 percent goes to finance tourism programs and the remainder is used for various other uses, including upgrades to the state's Veterans Memorial Archive.
The $500,000 West Virginia spends annually to treat compulsive gambling comes from the general fund.
After a 1 percent cut -- totaling about $5.8 million -- to the Lottery to cover its costs, the balance, about $11.2 million, goes to county and local governments.
Ranson received $400,000 from slots revenue last fiscal year, said City Manager P. David Mills. The city used the money to pave seven streets, buy two police cars, improve landscaping at two Ranson parks and upgrade City Hall.
"We treat it like a grant," Mills said of slots revenue. "It's a revenue source you just can't count on. You can't guarantee that you're going to see that money, so you can't fund programs. These projects would have been done anyhow.
"But don't get me wrong," Mills added. "The money we've received from gambling has been a shot in the arm. It's been good.
It's not a static product."
West Virginia officials also aren't counting on slots revenue as the panacea for all the state's financial woes.
"The gaming market is pretty-well tapped out in West Virginia," said Mark Muchow, chief admistrator for revenue operations for the Department of Tax and Revenue. "In the beginning, you get the big hits, but we'll end up in saturation mode soon. We're getting close to that now."
He expects a complete leveling off within two years. "Most of the gains have been realized."
For the fiscal year that begins on July 1, West Virginia will have a $9.33 billion budget. When Gov. Bob Wise proposed it in January, it included a general fund budget of $3.34 billion, which included an estimated $126.8 million in slots revenue.
But the general fund portion of the plan included a $250 million shortfall. Legislators agreed to close the gap with a 10 percent cut in many state agency budgets, a 38-cent increase to begin May 1 in the state's cigarette tax and reductions in other administrative costs. Education comprises 58 percent of West Virginia's total budget.
Still, state officials are mixed over whether fewer slots dollars will be coming into West Virginia should Maryland get the machines.
"There's no question that, over time, people will go to tracks locally -- but it won't happen right away," said Helton, the Lottery's CFO. "The racetracks here have built a customer base, and that's not going away overnight."
Mills, the Ranson city manager, said: "The facility here is really, really nice. The area is nice. We already have a tourism base. We may lose the everyday person who goes to the track, but we think they will still come."
And that is what Charles Town Races is betting on, Ramey said.
"These people are creatures of habit," he said. "They most likely will enjoy the scenic tour. To try to get to the inner city, you have to fight traffic. For those who like the convenience of being closer [to a racetrack], we'll lose them."
Slots over taxes
Five hours after their bus arrived at Charles Town Races, the Baltimore slots players headed for home. Many had less energy -- and less money. Only two could tally up monetary gains.
Regardless of their outcomes, these slots players said they were happy to spend the day in Charles Town. It was entertainment, something to do, and they parted with money they all would have been glad to spend in Maryland.
"You're making excuses for not wanting people to play slots," said Mahn, the Arbutus resident. "You have to be an adult to play. You work for your money; you do with it what you want."
One Baltimore woman, who lives near Pimlico, said she goes to Atlantic City, N.J., three times a month. "I've lived there 40 years, and I've never been there," the retiree, who only would identify herself as Elizabeth, said of the racetrack on Northern Parkway. "But if they put slots there, I would go."
Joe Sanzone, another retiree who lives in Perry Hall, said he'd take slots over taxes any day. "They keep raising taxes, and we shouldn't have to pay more taxes," he said. "They're living good in Delaware. In Atlantic City, they built up the city with slots money."
Wanda Edmonds, a nurse who lives in White Marsh, was among several who debunked concerns by legislators that slots prey on lower-income people, especially minorities.
"How is it going to hurt us?" asked Edmonds, who is African-American. "We're not wealthy. We play lotto anyway. It's not like people are going to be playing slots and using their lunch money.
"I don't take my ATM card," she said. She was on her second visit to Charles Town. "I don't want to spend any more money. I do it for enjoyment."
Edmonds' mother, Gwen Thomas, an East Baltimore nurse who goes to Atlantic City and Charles Town every week, expressed other concerns about slots in Maryland.
"You know you're not going to be able to have much of a chance to win anything," Thomas said. "Everybody's gotta have so much. I'd wait a year for it to get established."