Aaron Gomes

Chief Operating Officer, Peninsula Pacific Entertainment

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The first gaming operation of any kind was introduced in Virginia earlier this year with the opening of Rosie’s Gaming Emporium at Colonial Downs Racetrack in New Kent featuring historical horse racing devices (HHRs). Since then, two more Rosie’s have opened in other parts of Virginia.

Gaming veteran Aaron Gomes is COO of the company that owns and operates these parlors, Peninsula Pacific Entertainment, which also owns Del Lago casino in New York, Kansas Crossing in Kansas and Diamond Jacks in Bossier City, Louisiana.

Gomes spoke with GGB Publisher Roger Gros at Colonial Downs in August.

GGB: Congratulations on the opening of the Rosie’s properties in Virginia. What has the response been?

Gomes: It’s been overwhelming. All the feedback has been very positive. We put a lot of money and effort into it, and it’s great to see this kind of response.

We now have three facilities open. In addition to Colonial Downs with 600 games, we opened a location in Vinton, outside of Roanoke, with 150 games, and just last month we opened one in Richmond with 700 games and have another 700 games scheduled for Hampton in the fall, and then a location in Chesapeake with another 700 games early next year.

So that will give you close to 3,000 games? And you’ve got approvals for 10 locations.

Yes, 3,000 is the limit that is approved through the temporary regulations, but we’ll be asking them to raise that cap as the regulations progress. And we do have the right to build 10 locations as long as we hold a referendum in those communities and get their approvals. Of course, the cap on the number of games would have to be raised in that case.

For those of us who have not seen or played an HHR, what’s the experience like? And are your customers new to gaming, or have they gambled somewhere else?

It’s similar to a Class II bingo game; it’s very similar in terms of time on device, payouts, hold percentage and more. The only difference is you’re not playing against the house; you’re playing against other players in a parimutuel pool. Other than that, the experience is very much like a traditional slot machine. The themes are similar, even down to a players club for the customers.

As for our players, it’s a combination of both. We have a lot of customers who have played elsewhere and are grateful to have their entertainment hobby closer to home. Then there are other players who are new to the market or have previously been horse racing fans and have fun playing the games.

What is the tax rate on these games?

The tax rate is actually a percentage of the handle. We pay about 1.25 percent of handle, which based on the hold of each machine is roughly 15 percent to 20 percent tax. And then we supplement the purses of the horse races here at Colonial Downs, which is about 6 percent or 7 percent of the revenue. And then we have a technology fee paid to the manufacturer which is another percentage of the revenue. When you blend it all together, the effective tax rate is around 35 percent.

The Virginia legislature recently considered a bill that would legalize casinos in the state but pulled it back to conduct a study. Where does that stand now?

There’s a lot of moving parts right now, especially when you add the Pamunkey tribe that recently received federal recognition. The state has commissioned a study by The Innovation Group about introducing gaming, the risks and benefits, so we believe that much of what the state decides to do with gaming will hinge on that study.

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