Manassas Park's 5,400 registered voters will decide Tuesday whether Northern Virginia should be home to a year-round, off-track betting parlor.
Colonial Downs, Virginia's only legal gambling company, is so confident it will win a proposal to allow off-track betting in Manassas Park that it already has leased space, gambling that Tuesday's vote will turn out better than the last one, in 1996, when a betting parlor was rejected by 74 votes.
Small jurisdictions are easier and less expensive places to wage political fights, and so the company is trying in Northern Virginia again. Plus, it says, its polling indicates it has a good chance to win in Manassas Park, a Prince William County city that is less affluent on average than its neighbors and has few businesses to tax.
Elected officials in the much larger city of Manassas and the outer suburbs of Prince William have spoken out against the proposal, which has touched off a lively political fight over whether the sports bar-like betting parlor would bring traffic and crime.
So far that hasn't been the case in the six betting parlors Virginia has permitted Colonial Downs to open in the past eight years, although in several cases they haven't brought in as much tax money as the company estimated, either. None is farther north than the two in Richmond, around the middle of the state.
Although gambling can be a tough sell in a conservative state such as Virginia, it is especially tough in affluent Northern Virginia. For one thing, residents worry that the negative side of gambling's image will scrape away at the value of their expensive houses.
"The big issue in Northern Virginia is quality of life," said Toni-Michelle Travis, an associate professor of government at George Mason University in Fairfax who studies Virginia politics. "But in southern Virginia, places like Brunswick County have so little industry they're building prisons and dumps. People are looking for anything that'll bring in revenue."
Colonial Downs needs those same affluent Northern Virginians as customers. Consider that Colonial Downs estimates the Manassas Park parlor would take in $90 million in bets a year. Last year, the whole company -- the racetrack and five betting parlors -- took in $130 million in bets.
Running a racetrack is expensive. Colonial Downs only recently turned marginally profitable, netting $278,000 on revenue of $33 million last year. That was an improvement over the previous six of its seven years, when it lost money. President Ian M. Stewart said he doesn't see Colonial Downs making much more profit this year.
The betting parlors are supposed to make it all worthwhile. Yet the company's "handle" -- the amount of money bet with it -- was fairly stagnant for five years, at a little more than $120 million, until last year. The company needs more urban markets if it is to grow faster than that, although its president insists that's not essential.
"It's not imperative we get into Northern Virginia," Stewart said. "But we'd like to get into a big market."
The betting parlors help in two ways. The vast majority of money wagered on horse races nationally is bet away from the track, through satellite betting parlors or the Internet. Those more convenient forms of betting have brought a big new stream of bets to horse racing even as fewer people go to the tracks.
For example, last year, during 30 days of thoroughbred racing at Colonial Downs, gamblers at the track bet an average $140,000 a day. At the company's betting parlors, they plunked down $1.2 million. Only 2,200 people a day attended thoroughbred racing last year at Colonial Downs.
Also, the additional betting means Colonial Downs can set aside more money for the purses the horses win -- a bigger purse attracts better horses and more bets. That's how the track might someday break into the big leagues of racing. But given the track's short seven-year record, lack of slot machines and relatively rural location in New Kent County, near Richmond, some racing experts are skeptical.
The competition is getting tougher. Tracks in West Virginia, Delaware and now Pennsylvania use lucrative slot machines to boost their business. Their purses have grown fat, and the quality of their horses improved.
Conservative Virginia is unlikely to approve slot machines, so off-track betting will likely continue to be by far the largest part of Colonial Downs' business.
Colonial Downs was bought and taken private in 2001 by one of its stockholders after it had a brief and unprofitable career as a public company. Former Cleveland developer and politician Jeffrey Jacobs and his father, who once owned the Cleveland Indians, tucked the racetrack into a company called Jacobs Entertainment Inc., based in Colorado, where it owns two casinos. It also owns video poker games at truck stops in Louisiana and a casino in Nevada.
The company racked up $125 million in debt to buy all those properties. Although the parent company is profitable -- it earned $6 million on revenue of $104 million during the first half of 2004 -- it warns in its federal financial filings that, should its businesses stumble, it might have trouble repaying its debts.
Jacobs declined to comment for this article. He has taken a relatively lower profile since the 1990s, when Colonial Downs had a contentious relationship with the state regulator, the Virginia Racing Commission, which once subpoenaed Jacobs to explain where he got the money to buy the horse-racing company.
Things have quieted down now. This year, Colonial Downs persuaded the General Assembly to allow it to open four more betting parlors, if local voters go along. Thus the vote in Manassas Park.
The racing business generally is good these days. The handle at the 100 or so thoroughbred tracks across the nation rose to $15 billion last year, almost 90 percent of it bet off-track, up from $10 billion a year ago, according to the National Thoroughbred Racing Association.
But the bigger handle masks trouble at individual tracks that, like Maryland tracks, for example, are losing ground to neighboring states with slot machines and big purses. Although betting is increasing, racing's popularity is nowhere near where it was several decades ago.
"Racing was at one time the most popular spectator sport in the country," said Sebastian Sinclair, president of gambling consultants Christiansen Capital Advisors LLC in New Gloucester, Maine. "But we've seen stock-car racing come from nothing in terms of coverage by the networks to be a major sport. I have a hard time seeing racing growing, absent a fundamental change in the declining fan base."
So why bother with the aggravation of trying to turn horse racing in Virginia into a profitable business? Jacobs and other Colonial Downs owners got fed up at least once. In 1999, they tried to sell Colonial Downs after the Virginia Racing Commission rejected a company request to open a racetrack in Northern Virginia. There was only one taker, who offered less than the amount of debt the company owed at the time.
That is not going to happen now, Stewart said. Jacobs, he said, "just likes horse racing."