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Letting Chips Fall

Want to know where expanded gambling will take Pennsylvania? Look next door.

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Ed Delancey's ice-cream shop is the pride of his Weirton, West Virginia neighborhood. Nestled in a lush, residential section off Pennsylvania Avenue, his quaint little store has a façade decorated in a country motif and homemade country crafts sitting outside. "Hidden Treasures Ice Cream and More," promises the sign.

The business is not unlike one you'd see in smaller towns across the state, or in neighboring Pennsylvania and Ohio. In fact, it is so wholesome-looking that it could fit neatly on Sesame Street. Amidst the old-fashioned décor and red-and-white walls, the bright red door to the right of the ice-cream counter is barely noticeable.

But as Delancey plops two scoops of vanilla into the cup, a lean, long-haired, youngish woman walks in from the heat wearing a spaghetti-strap top and shorts and plunks $20 down onto the counter.

"Could I get two fives and 10 ones, please," she asks without glancing at the crafts or other customers. With a nod, he counts out the money from the register, laying it in front of her without a word.

She scoops up her cash and doesn't even glance at the flavor of the day. Instead she walks toward the bright red door and opens it. Suddenly, from behind the red door comes the flash of bright lights and spinning 7s and cherries.

Norman Rockwell has left the building. It becomes obvious that this is not an ice-cream shop on Sesame Street, and Ed Delancey is not Mr. Hooper. He's selling rocky road to neighborhood kids and something a little more grown up to their parents.

The "and more" on Delancey's sign obviously doesn't mean a free second scoop. Behind the red door with a green West Virginia Lottery Commission decal on the front are five video slot machines, the kind found at the state's racetracks -- and much like the 62,000 slots heading for Pennsylvania in the near future. Delancey is just one of more than a thousand business owners who is taking advantage of West Virginia's Limited Video Lottery law, which licenses 9,000 slot machines to shops across the state, outside of the purview of any racetrack.

"Without the slots, we couldn't have the ice cream and the crafts," Delancey says. "But we don't advertise, we're off the beaten path and it's not our main business. It's just a vehicle that allows us to stay open."

As with Pennsylvania's slot gambling law, West Virginia instituted slot machines in 1994 as a way to save the state's three racetracks. But as the popularity of gambling took off, so did the state's legalization of the machines. From a few thousand machines at racing establishments, gambling has spread across the Mountain State into nearly every nook and cranny of every small town.

Some of the establishments try to look like casinos with bright colors, neon signs and names like Bourbon Street, Stars and Stripes, The Big Easy and Pirates Cove. Others are less intrusive in the back of restaurants like the semi-regionally famous DeeJay's Ribs, Undo's and Mario's.

They've popped up in empty storefronts and in the back of every conceivable type of business, from convenience stores to the little ice-cream shop off Pennsylvania Avenue. They sit across from cemeteries, within shouting distance of churches and schools. They sit in abandoned buildings that were once banks and Dairy Queens. In Weirton, along with Delancey's ice-cream shop, there are slot parlors in the back room of the Donut Connection, Main Street News and several car washes. There's even one across the street from Weirton City Hall, sitting next to a church and a community center.

Slot machines brought more than $800 million to West Virginia last year, with about $95 million coming from the so-called "gray machines" found in slot cafés and fraternal organizations from the Elks to the VFW.

But are those revenues enough to justify turning small towns into Renos in waiting? Weirton Mayor William Miller says his city of 20,000 has become known as "Little Las Vegas," a moniker he seems embarrassed to share.

It's hard for him and others to fathom how their state and city got here from a few thousand slot machines at a few struggling racetracks. And with the Pennsylvania Supreme Court's recent decision to allow the expansion of gambling here, some in the Mountain State wonder whether Pennsylvania will follow the same neon-lit path.

"Look at Pennsylvania," says Jody Kraina, spokesperson for RAGE (Residents Against Gambling Establishments), located in Weirton. "They're sitting where West Virginia sat years ago, allowing slots to help save racetracks.

"But they need to look very closely at where we are now. Once you allow those things in here, it's Katie bar the door."



It's hard to argue, although some certainly do, with the claim that gambling brings money to West Virginia -- especially to mostly rural, industrial-driven Hancock County, less than an hour's drive from Pittsburgh.

This is where the nationally known Mountaineer Racetrack and Gaming Resort resides, one of the originators of slot gaming in the state. Mountaineer is without a doubt the state's leader in gambling, and in marketing the attraction to tourists and visitors.

State Delegate Joe DeLong, who also works for Mountaineer promoting the resort's concerts, is quick to argue that tracks and resorts like Mountaineer don't target the locals and never have.

"Taking paychecks off local residents isn't good for business," DeLong explains. "They don't want that type of gambler here."

Judging by the number of tour buses and out-of-state license plates parked at the track, that may very well be the case. However, there are no tour buses at the "slot cafés," as the smaller establishments are known.

When you ask public officials if these establishments are making their money off of the people that the tracks are trying to avoid, few will give you a direct answer. But there is little doubt about who is gambling in the cafés: the people next door.

After all, any business with a liquor license and a back room to separate the machines from the rest of the store can apply for a slots license. Some buy their machines directly from vendors; others rent their slots and take a smaller cut.

But that still leaves plenty of money to go around. In a single month, for example, the Donut Connection saw players feed actual cash totaling $60,821 into the machines and payouts totaling $42,613. According to state records, that leaves net revenue of $18,207 -- a profit of more than $8,500 for the machine owner. During that same period at the Main Street News Stand, about $90,800 cash was put into the machine, with a profit for the storeowner hitting $14,570.

One of the best examples, however, of small businesses raking in the money can be seen at Darla's Hot Spot, which is connected to a car wash. For the month of April, the height of the tax-refund season, a total of $245,295 cash was put into the machines. After a payout of $180,403, the owner profited by nearly $31,000.

According to Mara Pauley, an accountant with the West Virginia State Lottery Commission, the lottery commission takes a 2 percent share of all revenues, the state takes 46 percent. The slot owner takes 47.08 percent, leaving about one-tenth of one percent for the host community.







With recent layoffs at firms like Weirton Steel and long-term population decline, things are not great in some of those host communities. According to the U.S. Department of Labor, the Weirton area had the country's second-largest unemployment-rate increase in 2003. The unemployment rate dropped to 6.2 percent in May -- but that's still considerably higher than the national unemployment rate of 5.1 percent.

Weirton's median household income last year was $35,212. According to a state payout breakdown sheet, that's just under what the locals at the Scale House spent in February alone: $37,272. Some months are better than others, but the machines at the Scale House could total almost a half million dollars over the course of a year. Pauley says that in the 2004 fiscal year, "gray machine" revenue in all of Hancock County totaled more than $13.7 million.

It takes a lot of nickels and dimes from laborers in a county with a population of 31,700 and falling. It's money coming not from tourists and casinos, but from mom-and-pop businesses taking money from ... other moms and pops.



There's a sign as you enter the city of Weirton from Ohio proclaiming it a city "Forged by Steel." Behind that sign, a new one has popped up for the Bada-Bing slot café on Freedom Way.

Borrowing from the promotional campaign used to attract tourists to Las Vegas, that sign boldly proclaims: "What Happens in Weirton ..."

What's happened to Weirton is an onslaught of gambling unseen in any other West Virginia community. According to the state lottery commission, Weirton has 98 machines for its roughly 20,000 residents. The city of Wheeling, which also has a racetrack, has a population of 32,000 but just one more slots parlor. But this is not Vegas. It's not even close.

As proposed now in Pennsylvania, slot machines were introduced in 1994 to help the state's two ailing horse tracks and one greyhound dog track, says DeLong, who grew up learning how to train racehorses from his father. When the state allocated the first 1,200 machines to the three facilities, he says, Mountaineer was on the brink of disaster.

For horsemen like DeLong and his father, the slots did exactly what they were supposed to -- provide a place to keep racing. But as the popularity of the machines grew, so did the request for additional devices from the track. The three tracks now offer 12,400 slot machines -- more than a tenfold increase over a decade -- in a distinctly casino-style setting.

In 2001, the issue of "gray machines" outside the tracks started coming into focus. There were already an estimated 9,000 machines operating illegally across the state, in the back of fraternal organizations like the VFW and the local American Legion, according to DeLong. Then-Gov. Bob Wise went to the legislature with a plan to either legalize them or begin a series of raids to confiscate them.

The money from legalizing slots, Wise proposed, would go to fund a program called the Promise Scholarship. The scholarships would pay for any student with a 3.0 grade-point average to attend a four-year state-funded school for free. In 2005, for example, 3,354 students were awarded Promise money.

DeLong says the initial idea was to control and legislate the machines, but the law was poorly written and did nothing to limit the placement of machines, or stop over-saturation in certain areas. But he says legislators were left with little choice but to approve the measure, and now that it's tied to the scholarship fund, there's little room to change it.

"I don't think that the decision to allow the gray machines on such a large scale ... was really thought out," he explains. "But at this point it's tied specifically to a program that we can't afford to abandon because of the commitments we made."

Revenue from tracks like DeLong's Mountaineer is earmarked for the state, county and municipalities to use as they see fit. "When you deal with the slot money from the race track, that money doesn't go into running the state. It's for infrastructure, expansion of water, sewage and road systems -- projects we're only able to do because we have the extra money," DeLong says. But at slots cafés, all of the state's share goes toward the Promise Scholarships. That means students who couldn't ordinarily go to college are getting the chance -- but only if their neighbors continue playing the slots.







"The worst thing you can do is become revenue-dependent on this money," says DeLong, "but that's what we did with the Promise Scholarships."

Hancock County Commissioner Danny Greathouse, who was an assistant to Wise when the slots scholarship program was launched, has seen the good gambling revenues can do. Hancock County received a $4.8-million share last year of the money generated from Mountaineer -- nearly half the county's $11 million annual budget. It receives about $15,000 monthly from slot café proceeds, according to information from the state lottery commission.

Greathouse says the county has in the past spent the money strictly on infrastructure, just like the state. However, this year, with loss of tax revenue from ailing Weirton Steel, officials may have to use it for things like salaries. Instead of using the money to take county water and sewage to outlying rural areas or expanding narrow roads, the day-to-day operations of the county may also become dependent on gambling revenue.

Any new business is good for a community, Greathouse says, especially one whose largest employer -- Weirton Steel -- is suffering. He sees the addition of slots in small communities as a way to attract tourist dollars -- if you build other attractions and destinations around it.

"Let's be honest, we're not getting Microsoft," he explains. "Gambling has to be just one part of marketing ourselves as a tourist and recreation destination. It's the start that will allow us to do other things."

Greathouse has plans to expand park facilities and other amenities. But if local and state leaders get their way, those "other things" will also include the introduction of table gaming to the racetracks. As with slots, DeLong and Greathouse want Hancock County residents to have the right to vote whether to allow table games -- roulette, blackjack, poker, etc. -- in their communities. The measure would legalize all major forms of gambling in the state except for sports wagering.

DeLong said the addition of this form of gambling is another facet the tracks can use to attract tourists. Both he and Greathouse say it's not a huge moneymaker, but contend it will bring more people -- especially high rollers -- into the area. With Pennsylvania and other states moving toward slot gambling, West Virginia is looking to keep an edge by offering things the others don't have.

"You might not make a ton of money off of a poker player," Greathouse said. "But when he brings his wife or his mother, they're going to the slots, getting a room, eating in the restaurant.

"I honestly believe if it's done right, it won't be a problem."

Already, though, "There's definitely more machines here than I'd like to have," says Weirton's Mayor Miller, a retired engineer turned city leader. Miller says he recently tried to pass a moratorium on slots cafes, but only two councilmen supported the idea. "We're dealing with a double-edged sword here. We do get revenue from these joints, and they have cleaned up certain areas where storefronts were abandoned.

"But then we also have to live with being known as Little Las Vegas."

What does the city get for having these establishments? Last year Weirton's take amounted to about $220,000. That couldn't even have paid the city's $270,000 electric bill last year, let alone made a dent in its $12.5 million budget.

For small business owners like Delancey, slot machines are nothing more than a sideline enterprise that allows him to offer ice cream and sell the work of local artisans. Unlike some with a big red door in the back of his establishment, the affable, gray-haired shop-keep isn't apologetic about his back room. He has regular customers and the only mention of slots is the "and more" on his sign -- words that have become West Virginia shorthand for "grab your quarters and come inside."

Delancey says he's never heard a complaint about placing slot machines in the back of an ice-cream shop. The place "except for the machines is geared toward the kids," he says. And the fact is, without his slot revenue, the ice-cream and craft store would disappear.

Delancey isn't getting rich off his machines. In April, according to state figures, $21,758 was put into his machines for a profit of $3,580 -- his cut totaled $1,682.60.

When asked if he thinks the city has an infestation of slots he acknowledges, "We have a ton. But like anything, it will level out. Some will survive and some won't."







Jody Kraina could not care less about the money generated by slots. The Assembly of God pastor, who does not currently have an active parish, would be happier if slot machines had never come to West Virginia. But since they're here, she's dedicating her time to getting rid of them and making sure that slots don't progress into table games.

Kraina, a Weirton native, moved back to the area on Dec. 15, 2003. She'd received her master's degree in practical theology and decided to return to her hometown to start a church. However, as soon as she saw the large number of slot parlors, she decided fighting gambling was where her energy needed to be directed.

"I knew gambling was here, but I didn't realize it took such a foothold on the community," she explains. "This was not the city with the thriving mill that I grew up in. This wasn't the city that I loved. I saw the devastation gambling was leaving in its wake and I had to do something about that."

She started that fight the day after she returned home. And she's not shy when it comes to those she perceives as standing in her way.

"Look who's here," she says to a companion as an editor from the local paper walks in to the Eat'n Park, where she is meeting with a reporter. "They never print anything bad about gambling, but most people don't because it's such a big part of the county now." She can't help but introduce the editor to her companion, as if to say, "Look, someone else is getting the big scoop."

But what's gone on in Weirton, Hancock County and the rest of the state is no scoop. It's no secret. It has slowly pushed its way into the culture without apologies or excuses.

Some can live with that. Jody Kraina can't.

Driving around her city, she excitedly discusses a study she's conducting on the link between gambling and prostitution. But she turns melancholy as she talks about a nice restaurant that now offers slots. No matter how nice the place or how good the food, she won't spend her money there.

"I just don't get why you need slot machines at a car wash," she muses. "But they'll put them in anything."

Kraina worries about the increase in crime that purportedly comes with gambling. Miller says last year just seven crimes directly related to the slot cafés were reported, but Kraina points out that there have been at least two robberies of slot cafés within the past month.

Federal crime data for Weirton has been sketchy at best since 2002. The last full reporting was done in 2001, the first year gray machines were legalized. Between 2000 and 2001, the number of armed robberies jumped from six to eight; burglaries went from 60 to 70; larcenies jumped from 65 to 96; shoplifting incidents increased from 47 to 91.

"As the addiction takes hold," Kraina says, "people will do anything to find the money to gamble. People who never had a criminal thought in their head are doing unspeakable things just to feed their addiction."

And the effects of gambling on a community go far beyond the police blotter, Kraina contends. She shares anecdotal evidence of people whose lives have been ruined by gambling -- from a man going through a divorce from his compulsive gambling wife to a woman serving a prison term downstate for embezzling from her employer to feed her addiction.

Like most activists, Kraina believes she can ultimately win this battle. She has testified before the legislature in Charleston and points to the defeat in the House of a bill that would allow residents of three counties to vote whether or not to allow table gaming. The measure passed the Senate but never got the required votes in the House.

She says table games will never be allowed, and if she has her way slots, at least in the small cafés, will be a distant memory. Asks Kraina, "How can we support businesses where the end result could be ruining someone's life?"



Rob Walgate knows all about ruining your life. A basketball star at East Liverpool High School, he started gambling on horses at an early age at Mountaineer Race Track. His love of gambling eventually swallowed him whole.

By March of 2000 he was at rock bottom, betting huge amounts of money during daily trips to the racetrack, on the NCAA tournament, on slot machines and anything else he could place a wager on. By the end of a four-day period, the soon-to-be-former college student had lost $23,000 and his self-respect.

"I maxed out credit cards," Walgate explains. "I was making money doing some shady things for bookies, and I even stole my dad's identity to steal from him.

"I put that money on basketball, horses and slot machines, anything to get even. That's what happens when gambling gets a hold of you. It's not bright lights, big city as it's portrayed on television and in the movies."

Walgate hasn't placed a bet in five years, but he doesn't want congratulations or pats on the back. Some call gambling a disease, but he refuses.

"I think by calling it a sickness, it takes away the personal accountability," he explains. "You're still the one who chose to make those bets, but once you're hooked it can destroy lives."

Luckily Walgate escaped. He now works for the Ohio Roundtable, a public policy organization that tackles many issues in Ohio, including gambling. There are a lot of promises made by gambling establishments, but like slot machines themselves, he says, they rarely pay out.

"Look at the area around Mountaineer," he says. "The only thing around there is a strip club. There's nothing across the road or down the street.

"The only thing gambling dollars bring is the greed for more gambling dollars."

That's what happened in West Virginia, and that's what Walgate and Kraina say will likely happen in Pennsylvania.

"Once it comes in, it spreads into other areas with the promise of cash for communities," Walgate says. "But wait until it comes to Pennsylvania. You're going to start hearing hundreds of horror stories, just like mine, worse than mine."

Mayor Miller says he can't stop the state from allowing gaming, but he hopes city leaders will try to control it. That's the advice he gives to community leaders in Pennsylvania.

"If I had my druthers, I'd rather have seen a moratorium when I proposed it about 50 or 60 cafés ago," he explains. "But I guess this is going to be the new commerce of our city."

That's the same cliff Pennsylvania now sits on. Once gambling enters the landscape, how easy will it be to control?

"When you think about gambling in Vegas, it takes a plan to get there," Walgate says. "You buy a plane ticket, rent a room and save for the trip. It takes some effort to go and gamble.

"But how much effort does it take to get off the couch, grab 50 bucks and go down to the corner store to play slot machines? People in West Virginia have found out how little effort it takes, and at some point in the near future, Pennsylvania will too."

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