Oregon's
Video Strip Poker Parlors May Be Threadbare
The tavern owners and their hired guns at the Oregon Restaurant Association might be right: The vast majority of Oregon's video poker parlors may indeed be threadbare, poverty-stricken mom-and-pop operations that can't afford to have another dime cut from their lottery commissions. But the godfather of the video poker scene continues to be Richard Craig Estey, who owns the mother of all cash cows, Dotty's Delis.
In 2003, Estey's 26 Oregon casinos -- disguised as nondescript sandwich shops -- generated $21.65 million in video poker sales, according to the Oregon Lottery Commission. Of that total, $6 million, or 27 percent of the gross, went into Dotty's piggy bank in the form of lottery commissions.
Estey owns seven of the state's 19 top-grossing video poker retailers, and 12 of the top 34. The Dotty's on North Center Avenue in Jantzen Beach -- which began offering video poker only 13 months ago -- generated $320,000 in commissions in 2003, more than any retailer in the state.
Is this particular Dotty's Deli at the top of the heap because it's reinvesting those profits in ceramic roosters and other homey amenities that make the deli more gambling friendly? The reason that Jantzen Beach location is rolling in dough "is pretty simple," said Jim Mathews: "There are no machines in Washington."
Mathews should know. He owns Bradley's, a full-service bar and restaurant that sits 75 feet from Dotty's front door. In 2003, Bradley's six video poker machines generated $1.17 million in sales, the second highest total in the state, and $294,398 in commissions.
Their colorless strip mall is such a magnetic draw for Vancouver-area gamblers that five retailers offer video poker within 170 feet. Three of the five -- Dotty's, Bradley's and the Island Homestead Restaurant -- are ranked among the state's top 13 retailers in total sales.
Dotty's success is a sore subject for Mathews, who bought his lucrative location seven years ago. Because Dotty's offers little more than video poker, free drinks and cheap cigarettes, Mathews insists Estey's chain has an unfair advantage over retailers who maintain menus, bars, pool tables and a full staff.
"They're the ones who should be penalized," Mathews said. "They're the ones who are causing the problem. These people set up little delis, put $50,000 into it and draw off all the lottery money. Those kinds of places . . . that's what hurts us. But the state won't mess with them because Dotty's turns around and sues them."
Russ and Erna Bulow, Estey's management team in Oregon, obviously see things differently. They insist the state's overall lottery receipts are stagnant because the commissions are too low. "Craig originally planned to have 50 or 60 stores in Oregon," Russ Bulow said, "but when they started cutting commissions, it just wasn't worth it."
Estey, Bulow said, now has 25 locations in Nevada and three in Montana, two states where retailers own and service the machines and keep 80 percent of the profits.
Bulow offered conflicting opinions on how Estey will react if the lottery reduces retailer commissions. "We're going to shut Dotty's down and walk away. We're not going to work in Oregon for free," he said. He later reconsidered: "We'll probably be okay if they lower commissions, but any cut would put people out of business."
Just not the folks at Dotty's. As the Bulows reeled off the chain's annual expenses -- including $80,000 in employee theft, $80,000 in worker's comp claims, $60,000 lost to robberies, $80,000 in bank fees, rent for 26 stores, and minimum-wage salaries (without benefits) for 135 employees -- I kept going back to Dotty's 2003 video poker commissions:
Six million. Which, by the rules of the Lottery, is no more than 60 percent of the chain's total income. Small wonder the folks at Dotty's are so protective of this golden goose. They're guarding a pretty hefty nest egg.
