Oaklawn, Southland Plan Soaring Hotels, Bigger Gaming Areas

When 54 percent of voting Arkansans backed an amendment allowing casino gambling last year, they wrote into the state constitution two of the oldest names in Arkansas betting: Oaklawn Jockey Club Inc. and Southland Racing Corp.

Both companies have since announced nine-figure plans for new casino space and soaring hotels, but they’re taking opposite approaches.

Southland, the West Memphis operation built on greyhound racing, is emphasizing gaming, diving headlong into a $250 million project to create “the Mid-South region’s premier casino,” a 96,000-SF gaming space accompanied by a 20-story hotel.

Southland’s owner, Delaware North of Buffalo, New York, announced the project with fanfare on Thursday.

Oaklawn, the 114-year-old Hot Springs thoroughbred track that is already the state’s top visitor draw, announced a $100 million casino-and-hotel expansion of its own on Nov. 19. But it promises not to put the card before the horse: Casino gaming, officials say, will simply be “another amenity” to bolster racing.

“Everything we’re doing is to enhance racing,” General Manager Wayne Smith told Arkansas Business, though he admits the planned casino space and hotel overlooking the track could be “a very lucrative amenity.” The revenue, which he didn’t estimate, will help keep racing purses high, Smith said, preserving Oaklawn’s reputation as one of the top half-dozen or so thoroughbred tracks in the country.

Southland opened as a greyhound racing track in 1956. Both companies added electronic gaming in 2006 after a 2005 change in state law.

Smith said Oaklawn’s expansion plan, which entails the 200-room high-rise hotel, a 14,000-SF event center and 28,000 SF of new gaming space, “was in the works well before” November’s vote. “It really had nothing to do with the amendment. Our plans were developed and ready, and we actually had to hold up the announcement because of the vote.

“Everything we’re doing, the expansion included, is to enhance the racing product, what Oaklawn was built upon,” he added.

The Cella family, Oaklawn’s owners, have made it clear that “racing comes first and always will,” Smith said.

Louis Cella, president of Oaklawn Jockey Club, said in a statement that the hotel, spa and new gambling options will “enhance the entertainment experience” for customers. Dismissing assumptions that the Oaklawn expansion was a response to the vote on Issue 4, the casino ballot proposal that is now Amendment 100, “we actually began planning for this during our last expansion in 2014.”

Southland’s project will add as many as 60 live table games and 400 gaming machines to the current 2,000. Extras will include a larger buffet, an expanded steakhouse, a new food hall and coffee shop, a new player lounge and several added bars. Construction will begin by summer, and company officials expect the casino complex and parking garage to be finished by summer 2020, with the hotel to be completed about six months after that.

The expansion “represents the largest ever investment in a casino in Arkansas and one of the largest for a hospitality project,” Lou Jacobs, co-CEO of Delaware North, said at Thursday’s news conference. “We have long been committed to Southland, Arkansas and West Memphis, investing more than $100 million in the venue since 2006, and look forward to creating the state’s and Mid-South region’s premier casino.”

The 300-room hotel tower will offer 216 standard rooms, 72 corner suites and 12 penthouse suites. A new covered parking garage will be built with space for 1,250 vehicles.

Oaklawn’s plan details its third major expansion since 2009, Media Relations Manager Jennifer Hoyt said. “In 2009 and 2010 we built a $40 million electronic gaming operation, and we did a $20 million expansion that opened at the end of 2014, just before the 2015 race meet.”

Construction in Hot Springs — expected to begin in May with a completion target of January 2020 for the casino expansion and late 2020 for the hotel — should not disrupt operations, Hoyt said. Shuttles will be available to carry patrons from parking lots a bit further from the racing-gaming complex.

Oaklawn’s contractor is Flintco Construction of Springdale; its architectural firm is HBG Design of Memphis. Southland officials did not immediately respond to questions about contractors and architects for its expansion.

Cards, Dice, Roulette
Both Oaklawn and Southland have more than a decade’s experience in “casino-style” gaming, having built electronic gaming areas and expanded them after the 2005 law permitted electronic games of skill at the state’s “horse racing or greyhound racing franchises.”

The difference between previous gaming and what’s next at the two tracks is that actual casino mainstays like cards, dice and roulette wheels are coming to Arkansas.

Southland’s announcement said its new games will include blackjack, craps and roulette. Sports betting areas are also planned. (See Bet on the Hogs? Soon, Sports Gambling Will Be Legal in Arkansas.) Some of those attractions will be staffed by newly hired dealers and pit workers needed to cover the floor 24 hours a day. Oaklawn and Southland may also need more employees in marketing, sales, accounting, and hotel and dining services, hospitality industry experts said.

Oaklawn, which has about 500 employees now, says its expansion will bring 400 new permanent jobs and require 2,300 workers during construction. Blueprints include an outdoor swimming pool, luxury spa, fitness center and restaurant.

Southland, which has about 765 employees now, expects its project to bring 400 more, as well as 1,500 workers for construction. Delaware North, a privately held global hospitality chain, is using private financing for the project, with no public funds. Oakawn’s expansion is also privately financed, without government incentives.

Though both companies stood to profit from voter approval of casinos, Oaklawn and Southland also took different stances in the run-up to November’s vote. Southland favored the ballot issue publicly and made the potential for expansion a case for voting yes. Oaklawn took no official position.

Electronic Games of Skill
For fiscal year ended June 30

	Southland	Oaklawn
2019*	$20,120,929	$12,422,209
2018	$40,029,654	$24,348,030
2017	$37,552,748	$22,612,362
2016	$38,564,009	$20,829,531
2015	$29,546,536	$17,701,727
2014	$25,598,438	$13,818,198
2013	$23,376,460	$12,464,499
2012	$17,782,614	$9,570,747
2011	$9,015,075	$5,770,679
2010	$4,671,919	$3,818,576
2009	$3,869,991	$2,285,005

*July-December 2018
Source: Arkansas Department of Finance & Administration

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‘Hundreds of Jobs’
Gov. Asa Hutchinson, who attended Thursday’s announcement at Southland, predicted that the expansion will “enhance Southland as one of our premier tourism and entertainment venues” and create “hundreds of construction and permanent jobs for our people.”

Southland has a major impact on the region’s economy. With its payroll, operational spending, charitable giving and taxes paid to the state, Crittenden County and the city of West Memphis, it generates an estimated $144 million in the area annually, officials said.

The new project comes on top of a major Southland expansion in 2013.

“We’ve developed a loyal customer base and can’t wait to see more people discover Southland,” said David Wolf, president and general manager of Southland. In a statement, he praised the company’s gaming division, headed by Brian Hansberry. “It’s really going to expand our customer reach for new markets in the Mid-South.”

Delaware North, which purchased Southland in the mid-1970s, operates more than 25 lodging properties, including luxury resorts and historic hotels, the release said.

Beyond its effect on business at Oaklawn and Southland, which will likely face competition from casinos authorized by the amendment in Pine Bluff and possibly in Pope County, casino gaming is expected to have an impact on state revenue and highway funding.

Casinos will be subject to a 13 percent tax on the first $150 million of net casino gaming receipts and 20 percent after that threshold is met. The amendment allows imposing no other taxes. Here’s how the revenue will be split:

• 55 percent will go to the state’s General Revenue Fund;
• 19.5 percent is earmarked for the casino’s home city, if it is within city limits, or to the home county otherwise;
• 17.5 percent will go to the Arkansas Racing Commission to fund purses for live horse racing and greyhound racing; and
• 8 percent will go to the casinos’ home county.

That element fits right in with Oaklawn’s strategy of keeping purses high, an approach that has attracted championship horses to Arkansas, including major stakes winners Smarty Jones, Zenyatta and Triple Crown winner American Pharoah.

“We’re the only racetrack in the country that has raised purses every year for 11 consecutive years, and that’s because our business has done better each and every year,” Hoyt said. “A lot of tracks get gaming, and they forget about racing. Here, they complement each other very, very well.”