THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Tuesday, February 18, 1997 TAG: 9702180336
SECTION: LOCAL PAGE: B8 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: NEWPORT NEWS LENGTH: 42 lines
Colonial Downs officials will hit the road this week to convince investors that Virginia's first pari-mutuel racetrack isn't a long shot.
What they'll be selling in meetings with investment brokers is stock in a company that consists solely of a track in New Kent County and plans for up to six off-track betting parlors around the state.
It's uncertain how popular playing the ponies will be in Virginia.
Colonial Downs hopes to find buyers for 3.9 million shares in March at up to $10 each, raising about $35 million toward a $62 million construction price tag. Another $18.5 million in bank borrowings, a $3 million note and cash flow from OTBs already in operation are expected to fund the balance.
Business at the company's first OTB parlor in Chesapeake, which opened a year ago, and its second in Richmond, which opened in December, indicates Virginians will bet money on horses.
The track opens in September.
According to Colonial Downs' filing with the Securities and Exchange Commission:
``Although there is a long history of horse racing in Virginia, it is impossible to predict with any certainty the economic outlook or future of the pari-mutuel wagering industry in Virginia. There can be no guarantee that the market will be sufficient to generate enough revenue to make the company profitable.''
Lil Jarvis of Norfolk, placing bets at the Chesapeake parlor last week, put it another way: ``My broker said I might as well put my money through a shredder.''
The Chesapeake facility has averaged $110,000 in wagers a day. Its first-year total will be about $39 million, a figure industry analysts called good. Wagering at the Richmond parlor has averaged $165,000 in its first month.
Colonial Downs President O. James Peterson III estimated that each OTB will average about $40 million in annual bets. Colonial Downs is hoping to open two more OTBs, in Hampton and Brunswick County, this summer. The locations of the final two have not been announced.