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Video lottery upgrade debated

CHARLESTON, W.Va. -- Debate over the bombshell announcement that video lottery operators will need to replace or upgrade nearly 7,000 video slot machines in bars and clubs around the state dominated a lengthy, 21/2-hour Lottery Commission meeting Thursday.

IGT, the manufacturer of more than 6,800 of the 7,471 limited video lottery machines currently operating in the state, notified the Lottery Commission that it would be abandoning the computer protocol that allows those machines to communicate with the Lottery's central computer at the end of 2017.

Additionally, IGT will no longer provide parts or service for the older Game King machines, which account for the majority of limited video lottery machines (LVL) in the state, after 2015.

For video lottery distributors and retailers, who in 2011 spent nearly $70 million to renew 10-year video lottery licenses, that poses a substantial unexpected expense, video lottery distributors told the commission.

"We're talking $20-25-30 million. That's a very significant expense," George Carenbauer, lawyer/lobbyist for the West Virginia Amusement and Limited Video Lottery Association, told commissioners.

"To say abruptly that in the next four or five years these machines will be rendered inoperable is an enormous expense," said Carenbauer, who called IGT's plan "grossly unfair."

"The financial hardship of this is going to be amazing. You're going to see a lot of people out of business over this," LVL distributor Herk Sparchane told the commission.

Lottery director John Musgrave said the commission would work with LVL licensees to resolve the matter, but said ultimately the contracts are between IGT and the licensees, and not the Lottery.

"This is a serious issue," he said. "We can understand your concerns."

Also Thursday, the commission:

* Heard an extended debate, pro and con, about licensing a proposed limited video lottery location in a predominately residential area of Cheat Lake, in Monongalia County.

Commissioners postponed a vote on the matter, pending clarification on whether the state Alcohol Beverage Control Administration will appeal a court order to give the location a liquor license, as required to have LVL machines.

* Postponed action on whether to fine or suspend the limited video lottery licenses for Shaffer Amusement of Clarksburg, an LVL machine distributor, after Lottery investigators found 10 of the company's machines had been tampered with.

A subcommittee had proposed a fine of $2,500, after testimony that a technician for Shaffer had bypassed switches on cash boxes on the 10 machines because the switches were broken and he did not have replacement parts.

Normally, when a cash box on an LVL machine is opened, the switch sends a message notifying the Lottery's central computer.

The panel also determined that the integrity of the games had not been compromised, and no money was missing.

However, both Musgrave and Lottery Commission Chairman Ken Greear said that regardless of the circumstances, tampering with video lottery machines is a serious offense, and should carry harsher penalties.

"To me, it's like robbing a small bank versus robbing a big bank. You're still robbing a bank," Greear said of the infraction.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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