Tavern owners face losing hand

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Dilligaf's Bar & Grill in Medford has experienced a decline in video poker gambling this year. Statewide, video lottery sales have dropped by nearly $77 million in 2009.Jamie Lusch

June 08, 2009

By Greg Stiles

Mail Tribune

A bad economy is tough on retailers, even bars. Combine that with a smoking ban, and lottery vendors are seeing their bottom line plunge, here and around Oregon.

Through the first five months of 2009, statewide video sales declined by almost $77 million — nearly 20 percent — over last year. In Jackson County, receipts from video lottery outlets dropped by nearly $3.5 million during the same period.

Oregon retailers took in nearly $388 million during the first five months in 2008 and just over $311 million this year. Jackson County retailers saw revenues slide from $17.3 million to $13.8 million.

"They say bars are recession-proof, but not this time around," said Ben Rice, who operates Dilligaf's Bar & Grill in Medford and Main Event Sports Bar & Eatery in Eagle Point.

"I've been in this business 32 years, and this is a different critter this time. It's a big one."

Rice says lottery receipts accounted for 65 percent of his revenue "a couple of years ago." It's now less than 45 percent, he said.

While the dollars have dropped off, there is no single explanation, said Mary Loftin, public affairs manager for the Oregon Lottery.

"There is no way to know exactly how much the smoking ban affected sales," Loftin said. "We call it a perfect storm. There was a snow storm the last two weeks of the year before the ban went into effect and sales dropped dramatically. Looking at the last three months of 2008, sales dropped dramatically and it has accelerated as the economy got worse."

While retailers had 18 months to prepare customers for smokeless venues — many of them building patio areas — a rapidly deteriorating economy was harder to mitigate.

"Even the economists at the state economic analysis office are not able to determine which (the economy or smoking ban) played the bigger role," Loftin said.

Anecdotal evidence suggests offended smokers stayed away from their lottery haunts for a short while, then returned.

"After a couple of months, the retailers said loyal players were coming back," Loftin said.

But not in every case.

David Hawkins, owner of Howiee's on Front in downtown Medford, said the ban has had a lasting effect.

"We used to have office workers take their break here," said Hawkins, whose establishment has five machines. "They'd sit in the lottery room and smoke and stick a few bucks in the machine. They still want their cigarette, but now they're staying outside and we've lost lottery sales. The group coming in every single day wouldn't stick much in, but they have just quit coming. We're seeing less and less of them. With the economy they probably don't think they have the money to spend on the lottery anyway."

While Howiee's break-time bunch has dissipated, it has picked up some residual customers from nearby Four Daughters, which removed its lottery machines earlier this year, and from the Purple Parrot on Jackson Street, Hawkins said.

"We got a little from those places, but we're still down."

Lottery officials said gamblers are wagering smaller amounts this year. In January 2008, the average bet per video play was $1.09, Loftin said. Now it's less than a dollar.

"It's both the economic downturn and the new players who don't smoke," Loftin said. "New players aren't used to playing and start slow and work their way up."

Rice said juke box sales also are off.

"The No. 1 juke box player demographically is women," Rice said. "Maybe it's the smoking and maybe it's the economy.

"As for me, I have to focus on my main operation, selling food and drink. The smoking ban has had quite an impact, it's definitely been a factor, a big factor."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

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