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Chris Jones

Local Casinos Can't Lift MTR Gaming's Profits

10 May 2005

Cash flow at Binion's, shown here in April 2004, rose in the first quarter, but the property's parent, MTR Gaming Group, said Monday that company profits in the quarter fell 4.5 percent from a year ago.

The parent company of Binion's Gambling Hall and the Speedway Casino in North Las Vegas on Monday reported decreased first-quarter earnings despite solid performances from its two Southern Nevada properties.

Net income for Chester, W.Va.-based MTR Gaming Group was nearly $2.9 million, or 10 cents per share, for the three months ended March 31. That marked a 4.5 percent decline from the prior year's first-quarter earnings of approximately $3 million, or 11 cents per share.

Cash flow -- a key casino performance indicator commonly defined as earnings before interest, taxes, depreciation and amortization -- was $13.5 million in the quarter, up 2.7 percent from the prior year's $13.1 million.

Companywide net revenue was nearly $76.6 million, up 2.9 percent from the prior year's $74.4 million.

The company spent an additional $1.8 million on administrative expenses during the quarter attributable to expanding existing properties and acquiring new gaming venues including the Jackson Harness Raceway in Jackson, Mich.

MTR Gaming's primary casino holding is the Mountaineer Race Track & Gaming Resort in West Virginia.

"Each property is situated for growth," President and Chief Executive Officer Ted Arneault said in a conference call with analysts. But he spoke in generalities when asked about the company's future and rumors of a sale.

"We think we're in a strong position for growth," he repeated, "but we still continue to look at the alternatives that are out there for potential acquisition or strategic alliances."

Arneault also said he will continue to lobby for table game legislation in West Virginia. A bill that would have let the four counties with racetracks vote on table games died in the session that ended in April.

"Mountaineer would benefit tremendously from table games if and when it passes," Arneault said. "We have worked to make sure people understand the implications if they come and if they don't come."

The company purchased the former Binion's Horseshoe from Las Vegas-based Harrah's Entertainment in February 2004 for a reported $20 million. The deal came one month after Harrah's acquired the downtown property -- as well as the rights to the World Series of Poker and Horseshoe brand name in Nevada -- for a reported $50 million from Becky Binion Behnen, whose father, Benny Binion, founded the downtown icon more than five decades ago.

Harrah's operated Binion's Horseshoe until March 10, when MTR employees took over and renamed the hotel-casino Binion's Gambling Hall.

Binion's quarterly income was $614,000 which contributed to a cash flow of $872,000, both substantial increases from the prior year's $84,000 and $212,000 totals. Because the property changed hands so late in the quarter, however, company officials cautioned Monday's numbers may not be indicative of future performances at Binion's.

Operating income at the Speedway was $86,000, up from the prior year's break-even performance. Cash flow there jumped to $342,000 from $291,000 a year ago.

The Associated Press contributed to this report.