Bringing success back with horse racing and casino
Presque Isle is an arching peninsula of sand that protrudes from the corner of northwest Pennsylvania into Lake Erie. Its name was bestowed by French trappers and explorers in the 1720s and literally translates to “almost an island.”
Even so, the area is often surrounded by Great Lakes water – one such breech lasted 32 years. It is the Pennsylvania’s only “seashore” and as such is the most popular state park in the Commonwealth.
But don’t go there looking for Presque Isle Downs & Casino. The gaming facility is located 14 miles away, on the other side of the city of Erie.
When MTR Gaming Group, headquartered at Mountaineer Racetrack & Gaming Resort in the West Virginia panhandle, decided to go after one of Pennsylvania’s 14 available slots licenses, it appropriated the picturesque-sounding name.
Thoroughbred racing had been attempted in Erie once before with Commodore Downs in 1973. That name was a nod to Commodore Oliver Hazard Perry, America’s greatest naval hero of the War of 1812. Perry used a harbor on the east side of Presque Isle as a base of operations for the crucial Battle of Lake Erie on September 10, 1813. The track was not as successful as its namesake; it floundered with cheap horses for little more than a decade before expiring as Erie Downs in 1986.
The Pennsylvania Gaming Control Board forced MTR to divorce one of its management employees and divest itself of a money-sharing agreement with a real estate development company to proceed with its application. By that time the West Virginians were well-acquainted with its neighbor’s bureaucratic red tape.
Back in 2003, the Pennsylvania Horse Racing Commission had approved its racing license then withdrew it after a formal complaint from Magna Entertainment, owner of the Meadows harness track. The racing approval had to be approved a second time.
But MTR was confident enough of its ultimate license approval that it broke ground on Presque Isle Downs and Casino in 2005.
Architectural firm Weborge Rectenwald Buehler designed tilt-up pre-cast panels for fast-track construction at the 272-acre site. It took an extra month but Presque Isle Downs & Casino received the sixth and final of the original conditional racino licenses in October 2006.
With its jumpstart on construction, MTR met both its goals to open the slots parlor in February 2007 and the thoroughbred track seven months later. Company bean counters pegged the total bill to bring gaming online to northwest Pennsylvania at $292 million.
Drawing business from neighboring states
Presque Isle Downs & Casino opened with a commitment to bring first-rate gaming and entertainment to the depressed town of Erie. But from the beginning company officials expected to draw as much as 20 percent of its business from Northeast Ohio.
From its location off Exit 27 of Interstate 90, Cleveland is 100 miles away – the shortest distance Clevelanders had to drive to gamble at the time. Another revenue source was spied across the northern border in New York. MTR focused much of its early marketing dollars in both neighboring states.
Of Pennsylvania’s 12 operating casinos Presque Isle Downs is the most isolated – its nearest in-state rival is in Pittsburgh, 128 miles away. Ironically, Presque Isle has now become the facility most under siege from competition.
In 2011 Pennsylvania passed New Jersey to become the second-biggest gambling state in America behind Nevada. But ominously, that year Ohio passed legislation allowing casino gambling. When Buckeye State casinos began opening in 2012 the revenue at Presque Isle sagged by 18 percent.
Then came an internal challenge. In 2012 the Gaming Control Board issued its seventh and final racino license to backers of a proposed Lawrence Downs harness track outside of New Castle, less than 90 miles from Erie. MTR has sued to stop Lawrence Downs, claiming its existence would siphon away Presque Isle gamblers to such an extent the Commonwealth would be better served locating the track elsewhere.
The matter is still being adjudicated as of early 2014.
Isolation causes low revenue
Presque Isle produces by far the least revenue of any of Pennsylvania’s six operating racinos. Even in the good times, the return would be only half of what was expected of the other tracks.
From the pinnacle of 2011, the Erie-based facility has suffered the state’s steepest revenue declines.
Money from the 53 table games has dipped below $1 million a month at times and slot revenue, which was down 3.5 percent in Pennsylvania as a whole in 2013, plummeted more than 13 percent in Erie. That is partly attributed to the fact that the casino opened with 2,000 machines in 2007 and now offers 1,705.
MTR: the company behind the PA casino
Thoroughbred racing began on the banks of the Ohio River in Mountaineer Park, then known as Waterford Park, in 1951. Over the years the physical plant deteriorated and the racing card seldom featured anything but claimers running for purses of barely $1,000.
In 1990, the state of West Virginia legalized slot machine gambling in bars and taverns and four years later slots were added to racetracks, making West Virginia one of the first states to pioneer the racino. The impact was dramatic.
In less than a decade, purses at Mountaineer Park exploded and the park’s reputation was polished to such an extent that it was considered as a host site for the Breeder’s Cup.
MTR Gaming Group was formed to manage the new racino when it opened and Ted Arenault, who had trained as an accountant, was installed as Chief Executive Officer. Arneault realized that once the success of the West Virginia experiment with casino gambling was observed the business model would spread to neighboring states.
He moved to strengthen MTR’s position in the Ohio-Pennsylvania-West Virginia tri-state region by acquiring Scioto Downs in Columbus, Ohio and laying the groundwork for Presque Isle Downs even before Pennsylvania announced its intentions to add slot machines to its racetracks.
Arneault even embarked on adventures in Las Vegas by purchasing Binion’s Gambling Hall & Hotel and the Ramada Inn and Speedway Casino. He also bought a couple of harness tracks.
The company has since pulled back from its out-of-market acquisitions and currently operates only Mountaineer, Scioto and Presque Isle. It does so even as it realizes its properties are hungry cannibals.
In 2013, corporate revenues grew by double digits even as money at cornerstone Mountaineer Park was off sharply. Scioto Downs, MTR’s most recent property to bring in casino gaming, is now the star money generator of the company.
Small poker room with daily tournaments
The poker room at Presque Isle Downs & Casino is located upstairs away from the main casino floor.
The smallish room consists of nine tables and opens at 10:00 a.m. daily. Games are dealt only as long as there is substantial play.
Presque Isle offers Sit & Go mini Texas Hold’Em tournaments every day and Deep Stack tournaments every other Friday night through the year.
Commitment to quality with horse racing
MTR Gaming stayed true to its horse racing roots when it pursued the gaming license for Presque Isle Downs & Casino. Special attention was given to the sightlines for spectators to best view the action from the grandstand.
It invested in a high-tech synthetic racing surface called Tapeta Footings that had never been installed at a racetrack before.
For its inaugural meet race officials added a 75 percent supplement to the purses to ensure that Presque Isle Downs had one of the highest daily purse distributions of any track in America, insuring a steady flow of top horse and trainers. The horse racing at the Erie plant does not set it aside from other racinos but the commitment to quality does.