FOR IMMEDIATE RELEASE
MTR GAMING GROUP ANNOUNCES PASSAGE OF BILL RAISING
BET LIMITS FOR WEST VIRGINIA VIDEO SLOTS
CHESTER, WV - April 23, 2001 -- MTR Gaming Group, Inc. (Nasdaq:
MNTG) today announced that on Saturday, April 21, the West
Virginia Legislature passed HB 102, which raised the maximum
wager for video slots at the Company's Mountaineer Casino Racetrack and Resort from $2 to $5. The Company believes that the Governor
will sign the bill into law shortly, and the law will be
effective as of April 21, 2001.
State legislators estimated that in the first full year of
implementation, the increased bet limit, together with customary
revenue growth, would generate an increase in slot revenue
of approximately $178 million from the State's four racetracks.
For the State's fiscal year (which began July 1, 2000) through
April 14, 2001, Mountaineer has accounted for 37.3% of the
slot revenue from the State's racetracks. The Company hopes
to implement the change at Mountaineer within 60 to 90 days.
In addition to raising the maximum wager for slots at the
State's racetracks, HB 102 will legalize up to 9,000 video
lottery terminals for use in adult-only sections of bars, restaurants
and fraternal organizations. The machines contemplated by the
bill would be paper-out (as opposed to coin drop) terminals,
would be limited to five per location (ten for fraternal organizations),
and would have a $2 maximum wager. The bill likewise precludes
operators from advertising the machines. The State legislature
noted that officials have counted approximately 13,000 video
poker or "gray" machines operating in the State illegally.
It is therefore expected that HB 102 will actually reduce the
number of gaming machines operating in the State.
The bill also establishes a new distribution scheme for the
portion of each racetrack's net win in excess of that racetrack's
net win for the twelve months ending June 30, 2001. After deducting
the State Lottery Commission's 4% administrative fee (for which
the Commission will no longer have to account to the tracks
to the extent unused), this "Excess Net Terminal Income" -
as it is referred to in the bill - will be subject to a 10%
surcharge. However, the bill creates a capital reinvestment
fund to which the State will contribute 42% of the surcharge.
Generally, for each dollar a racetrack expends on capital improvements
for the racetrack and adjacent property, the track will receive
a dollar from the capital reinvestment fund. Further, after
deducting the administrative fee and the surcharge from the
Excess Net Terminal Income, the racetracks will receive 42%
(as opposed to 47%) of the remaining net win.
Commenting on the legislation, Edson R. (Ted) Arneault, MTR
Gaming Group's president and chief executive officer, stated, "We
are obviously pleased with the increase in the maximum wager
for our slots in West Virginia. We expect the higher limits
to generate a significant increase in slot play and net win.
A higher maximum wager will both provide more choices for our
existing patrons and should allow us to increase our market
penetration by attracting new patrons who prefer the higher
limits. We believe that of all the amendments to the Race Track
Video Lottery Act we have urged since its passage in 1994 (simulated
spinning reels in 1996, increasing the ratio of machines in
the lodge versus racetrack buildings from 1:1 to 2:1 in 1998
and eliminating the ratio in 2000, and coin drop slots in 1999),
the impact of this increase on Mountaineer's results will be
second only to the implementation of coin drop slots in 1999.
We wish to express our appreciation to the West Virginia Legislature,
which worked tirelessly through the regular session and an
extended session in order to give these issues a full hearing."
With respect to the legalization of limited video lottery
in bars, restaurants and fraternal organizations, Mr. Arneault
added, "These machines and the environment in which they
operate are very different from the variety of games and destination
resort we are creating at Mountaineer. Moreover, as the Legislature
noted, these machines have been in operation for years. In
short, we do not believe that competition from these machines
will have a material impact on our results at Mountaineer."
Finally, Mr. Arneault commented on the surcharge and increased
tax rate applicable to slot revenue in excess of Mountaineer's
slot revenue for the twelve months ending June 30, 2001. "While
we certainly would have preferred the bill not include a surcharge
- even on so-called "excess income" - we are pleased
that the Legislature, by providing essentially an investment
tax credit, recognized the value of our commitment to building
infrastructure and a tourist attraction that can continue to
grow and create new jobs. We anticipate that Mountaineer's
aggressive expansion plans will enable us to obtain the maximum
payment from the capital reinvestment fund for many years to
come."
MTR Gaming Group, Inc., a West Virginia-based corporation,
through subsidiaries, owns and operates the Mountaineer Casino Racetrack and Resort in Chester, West Virginia, the Ramada Inn and Speedway
Casino in North Las Vegas, and the Ramada Inn and Speakeasy
Casino in Reno, Nevada. The Mountaineer complex currently encompasses
a thoroughbred racetrack, including off track betting and export
simulcasting, 1,905 video lottery terminals, a 101-room hotel,
golf course, Spa & Fitness Centre, fine dining and entertainment,
the Speakeasy Gaming Saloon, and The Harv.
About MTR Gaming Group
MTR Gaming Group owns and operates the Mountaineer Casino Racetrack and Resort in Chester, West Virginia, which currently encompasses
a thoroughbred racetrack with off-track betting and export
simulcasting, 3,200 slot machines, 359 hotel rooms, golf course,
spa & fitness center, theater and events center, convention
center and fine dining and entertainment. The Company also
owns and operates the Ramada Inn and Speedway Casino in North
Las Vegas, and holds a license to build a new thoroughbred
racetrack with parimutuel wagering in Erie, Pennsylvania. MTR
is included on the Russell 2000® and Russell® 3000
Indexes. For more information, please visit www.mtrgaming.com.
Except for historical information, this
press release contains forward-looking statements concerning,
among other things, the acquisition of Scioto Downs, Inc.
Such statements are based on MTR’s current plans and
expectations. Such statements are subject to a number of
risks and uncertainties that could cause the statements made
to be incorrect and/or for actual results to differ materially.
Those risks and uncertainties are described in the Company’s
periodic reports filed with the Securities and Exchange Commission,
and with respect to the Scioto Downs acquisition are described
in the Merger Agreement, as amended, which is attached as
exhibits to the Company’s reports on Forms 8-K filed
December 24, 2002.
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