By CHRISTOPHER LENOIS

In the executive summary of a 1999 report entitled “Video Poker: An Overview to the Truck Stop Industry in Louisiana,” by the firm T-Stop Interest LLC, company president Edgar G. Colomb Jr. writes in excited tones about the revenue potential of truck stop casinos.

One video poker machine earns $163 a day for its business, he proffers, and the state allows truck stops as many as 50 machines, as opposed to the maximum of three in local bars and restaurants.

“This new addition to truck stops has turned once marginal businesses into cash cows,” Colomb said.

Colomb’s company has handled all the tasks of consulting, designing and constructing truck stop casinos for more than a decade. His firm built both River Bend Truck Stops along Airline Highway in St. Charles and St. John the Baptist parishes.

Colomb said the average start-up costs for a truck stop casino runs between $2-3 million. Owners are typically a partnership between a party that owns land on a state highway, and either someone in gaming or fuel.

Funds from out-of-state interests is invested, but a Residency Rule in Louisiana prevents them from owning more than 49 percent of the operation.

“It’s a very small group of people with stable companies who can write a check or get the credit from a financial institution,” Colomb said.

According to Colomb, banks “love” video poker, because of the cash returns. But the owners must make many concessions.

They have to sell their fuel at cost plus at least 6 percent to allow smaller gas stations to stay competitive, and the state takes 32.5 percent in sales tax. Then there are the annual IRS audits and routine FBI checks.

“Owners choose to live under a microscope,” Colomb explained. “But if you can qualify, and you play by the rules, and take care of the client, you’re going to succeed.”

Despite the higher number of machines the truck stops are licensed to have, Colomb does not see a competition with the smaller clubs.

“Truck stop poker players are truck stop poker players. The market has segmented itself enough,” said Colomb. “A doughnut shop player is going to go to the same doughnut shop to get his or her coffee and play video poker because that’s where they’re comfortable.”

Women aged 40 to 70 are the most comfortable at the truck stop casinos. Colomb attributes their demographics to services offered like valet parking, or escorts to and from the parking lots, and a “defocusing” of alcohol that reduces any singles scene.

“We don’t want guys hitting on the ladies. We want the ladies to feel comfortable and safe,” Colomb said.

He estimated 75 out of every 100 drinks sold were coffee, water or soft drinks.

“I wouldn’t want my wife playing video poker in a bar,” Colomb said.

The licensing process put in place by the state attempts to keep the gambling industry competitive, while also keeping the money flowing through locally owned businesses. The machines themselves are manufactured by a Nevada-based firm, International Game Technology Group, which is the sole manufacturer licensed to sell video poker machines in Louisiana, following a merger with Anchor Gaming, of Bozeman Mont. But IGT must sell its machines to distributors in the state, who in turn sell them to vendors.

“The lion’s share of the money generated in Louisiana stays in Louisiana and the local parishes. Rather than having, for lack of a better word, carpetbaggers coming in and setting up shop and then taking the money out of the state,” explained Alex Dungan, whose Video Services Inc. company exclusively vends its machines for Finish Line off-track betting parlors, including the LaPlace location.

A vendor has to apply for separate license on each machine under the process created by the Louisiana State Police Gaming Division, with any number of factors determining the fees. An establishment needs only one license to have video poker on its premises, which it must renew each year. (There are 118 licensed establishments in the River Parishes.) License renewals cost $1,000, and are billed in $200 increments over the life of the license, according to officials from the Gaming Division.

After the license is approved it is up to the vendor and the establishment to consummate the agreement.

“You can liken a video poker machine to a (soft drink) machine,” Dungan explained. “Someone owns and operates the equipment and places it in the establishment with the agreement that they will split the profits.”

There is no standard agreement for the way profits are split. Dungan said it could be a flat fee, or based on an agreed-upon percentage, with any number of factors determining the final number. Anyway the pie is split, the numbers typically work out well for both sides.

“The State Police said a single video poker machine means about $1,000 month to a business,” said Kevin Friloux, an assistant in the St. Charles Parish School Board’s sales tax department. “If you’ve got a small, local bar with three poker machines, $3,000 a month will cover a lot of costs.”

University of New Orleans professor, Dr. Tim Ryan, who was the principle member of the research team that conducted a 1998 study of gambling’s impact on Louisiana, felt that one of the biggest surprises of the study was the support for video poker by the local community.

“Video poker is a little bit at a time and players get a return,” Ryan said. Statistics show that payouts from video poker machines run about 62 cents for every $1 spent. “Businesses will say, ‘I had a 5-6 year run that I wouldn’t have had.'”

Outside of video poker and off-track betting, the final option for thrill-seeking gamblers are the riverboat casinos like the Treasure Chest in Kenner. Don Casper, Treasure Chest’s marketing director, estimates 75-80 percent of their clientele comes from the immediate area.

“We’re always offering special incentives to the surrounding community,” he said.

The Treasure Chest made $111 million in 2001 for its Nevada-based parent company, Boyd Gaming. A figure that vice president of corporate communications Rob Stillwell defined as “profitable” with little inflection. (Boyd’s nine operating units generated more than $1.1 billion in 2001.) In February, Boyd built a 1,500 slot machine casino at the Delta Downs race track in Vinton. But Stillwell said the company has no future plans for development in the state. “That’s up to the Louisiana Gaming Commission,” he said.

Without larger entities like casinos and racetracks, the impact on employment is negligible. The Finish Line in LaPlace currently has 50 employees, according to Bryan Krantz, who is the president and general manager of The Finish Line OTBs as well as the New Orleans Fairgrounds race track. Krantz said the local location is profitable, but the company has lost business to truck stop locations.

“It’s all local business, and there’s a realistic limit to what the market will yield,” said Krantz.

It takes about 25 employees to run the three shifts of the truck stop for the mandated 24-hour, seven-day-a-week schedule. Colomb said employees are paid “a little more,” to prevent turnover.

Personally, he said the gaming locations may be getting close to market saturation in the area.

“You definitely couldn’t spend $8 million on a truck stop now. One million dollars, maybe,” Colomb said. “But you have to justify with the financial institution and that’s hard to do.”

T-Stop LLC might build five more truck stops in the next two year, but not in the River Parishes, and after that some renovations at the existing locations, according to Colomb.

“We’re not inventing new players. We’re recycling dollars now. Which probably ought to make the anti-gaming people happy,” Colomb said.

Editor’s Note: This is the second installment of a three-part series examining the economic and social impact of gambling on the River Parishes.