Big money in small places Penn profits from gamblers close to home

Gambling enthusiasts may dream of a pilgrimage to Las Vegas, but casino owners like Penn National Gaming rely on players placing bets close to home.

According to a January Forbes Magazine article, Penn National, owner of Bangor’s Hollywood Slots gaming facility, taps regional markets and encourages local gamblers to play its 21,000 slot machines located at 16 casinos, racetracks and off-site betting centers in Maine, Pennsylvania, Colorado, Louisiana and Mississippi.

“Our bread-and-butter customers are middle-income American gamblers with average incomes between $40,000 and $90,000 a year,” J. William Clifford, Penn National’s chief financial officer, told Forbes. “And they are almost always within a 90-minute drive of our casinos. We haven’t focused on destination gambling; we are not trying to get people to travel across the country.”

Amy Kenney, Hollywood Slots’ manager of marketing and public relations, said Clifford’s comments apply to the Bangor facility as well.

“We’re not looking to compete with our destination gaming facilities such as what you can find in Connecticut with Mohegan Sun and Foxwoods,” Kenney said. “Our main focus is throughout the state of Maine, and we’ll stretch that a little farther as we begin opening our new property.”

Hollywood Slots is in a temporary location as it prepares to build a $90 million racino in Bangor that will house up to 1,500 slots. The new facility is expected to open on Main Street, across from Bass Park, in 2008.

The current Hollywood Slots facility is equipped with 475 slot machines. From its opening in November 2005 to the end of November 2006, Hollywood Slots had more than 930,000 visitors. Players gambled more than $570 million in the first year, but 93 percent of that money was returned to players in the form of jackpots, according to data from Hollywood Slots and the Maine Gambling Control Board.

After wagered money is paid to winners, the remaining revenue is taxed 51 percent. The gaming tax is distributed to the city of Bangor, prescription drug programs for the elderly, and community college and state university scholarship programs.

Forbes listed Penn National as one of the country’s Best Managed Companies in the category of hotels, restaurants and leisure. Penn National’s stock was up 12 percent in the first 11 months of 2006 and has shot up an astronomical 984 percent since the middle of 2000. Nationwide sales since 2001 have quadrupled from $520 million then to roughly $2.2 billion in 2006.

The company relies on slot machines for its success. One way it increases business is by adding slots to existing horse racing facilities, Forbes said.

But Penn National has not limited its sites to suburban America. It may enter the Las Vegas market eventually. “We’d like to buy several properties at once, probably on the Strip,” Clifford told Forbes.