MORGANTOWN, W.Va.—With a new synthetic track, fat purses for horse races and 13 miles of lakefront beaches a two-hour drive from millions, the summer is looking "really, really good" for Pennsylvania's Presque Isle Downs & Casino, its owner says.

Drivers weary of high fuel prices and looking for one-stop entertainment destinations also will likely consider MTR Gaming Group Inc.'s other key property, Mountaineer Casino, Racetrack & Resort in Chester, says President and CEO Ted Arneault.

Though revenues for the first quarter were up, MTR reported a net loss of $2.6 million Monday, or 10 cents per share. But the company said half that loss—$1.4 million, or 5 cents per share—came from discontinued operations.

The loss for the quarter ended March 31 compares to a profit of $559,000, or 2 cents per share, in the same period last year. It includes a $3.4 million hit for changing its main credit line and $400,000 in what the company called strategic development expenses.

MTR's corporate expenses were up $1 million, a jump Arneault attributed to investment banking, accounting and legal expenses associated with other investment opportunities the company had been exploring. He said he does not expect that expense to be a recurring one.

Revenues, meanwhile, surged 26 percent, from $92 million to $116.3 million. Earnings before interest taxes, depreciation and amortization were up 24 percent, from $13.1 million to $16.2 million.

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MTR said both gains were largely due to the inclusion of Presque Isle for the entire first quarter in 2008, compared to only 32 days in the first quarter of 2007. The numbers also reflect the addition of poker and other table games at Mountaineer.

Net revenues at Mountaineer were up 11 percent to $74 million, primarily due to table games. Poker generated $2.2 million in revenues, while other table games produced $10.1 million in revenues.

In a conference call with investors, Arneault laid out pieces of the strategy he says will make both casinos attractive in the coming months, including a player card good at both properties.

MTR has hired a database expert and identified 124,000 players at Mountaineer and 118,000 at Presque Isle, with only 14,000 of those playing at both properties. That means the company has nearly a quarter-million gamblers to target with a new crossover marketing campaign, he said.

Both tracks compete for gamblers with West Virginia's Wheeling Island Hotel-Casino-Racetrack and Pennsylvania's The Meadows Racetrack and Casino—two properties within 30 miles of each other and just south of Mountaineer.

But neither of those has table games.

"I think in summertime is when you're going to see our competitive edge really start to shine," Arneault said. "I feel we're right in there. There's a little bit of weakness in the market overall because of these gas prices and, I guess, a certain amount of uncertainty. But I believe table games give us a little bit of an edge."

Slot revenues at Mountaineer fell 9.5 percent year-to-year, or by $5.7 million, a problem Arneault blamed on the loss of machine players to new casinos in Pennsylvania.

Presque Isle had net revenues of $38.8 million, the company said. The property reported revenues of $21.1 million for the part of the quarter it was open last year.

Arneault also predicted racing at Presque Isle will begin to draw horses from New York, Pennsylvania and the Midwest as the weather improves, partly because of its new Tapeta Footings track surface. Golden Gate Fields near San Francisco is the only other U.S. track using that kind of synthetic surface, he said.

"We have had a lot of good interest around the country," but cold weather and a focus on the Triple Crown have kept many trainers otherwise occupied, Arneault said.

Besides Mountaineer and Presque Isle, MTR has interests and properties in Michigan, Minnesota and Ohio.

In the first quarter, MTR completed the sale of two properties, Binion's Gambling Hall & Hotel in Las Vegas and Speedway Casino in North Las Vegas. Binion's gave the company $28.5 million in cash, $27.6 million of which was used to pay down debt.

Speedway produced a gain of $2.8 million. MTR said the second phase of that transaction, which is pending regulatory approvals, calls for the sale of the gaming assets to Lucky Lucy D LLC, for $6.77 million—$2 million in cash at closing and the balance over the next four years through a formula determined by gross revenues.

MTR will continue to operate the property under a short-term lease. That transaction is expected to close in June.

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