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Lottery director says no position taken on casino-backed bill

CHARLESTON, W.Va. -- State Lottery Commission Director John Musgrave said Tuesday that the Lottery has not taken a position on a casino industry-backed bill to reduce table games license renewal fees and taxes, and to cut live racing days at the state's racetrack casinos.

"We've looked at it, and we've reported to the Budget Office that we think it will decrease the revenue, of course, and more significantly than has been estimated," Musgrave told the House Finance.

Proponents of the bill (SB455) contend the cutbacks are necessary for the state's four "racinos" to compete with 15 new casinos that have opened in Pennsylvania, Ohio and Maryland in the past five years.

Management of the hardest-hit racetrack casino -- Wheeling Island -- have indicated that without the changes in law, the casino will not renew its table games license July 1, and will have to lay off 100 to 150 employees.

Currently, table games at the four casinos bring in gross revenues of about $1.3 million a week, down from a peak of nearly $1.9 million early in 2012.

Musgrave agreed that the state's casinos are being hard-hit by out-of-state competition, and said the best-case scenario is that players will eventually come back to the West Virginia facilities after trying out the new locations.

"We think there's folks that will try the new facilities ... and find it's more convenient to go to Mountaineer or Wheeling Island," Musgrave said. "Do you drive to downtown Cleveland in the winter to play at that casino?"

Musgrave also noted that, under state law, if a racetrack-casino would end up shutting down, its licenses for racing, video slots and table games are not transferable.

"A license could not be reissued," he said in response to a question from Delegate Ron Walters, R-Kanawha. "We can't just say, move it over to Clarksburg or Fairmont."

SB455 would cut the annual table games license fee from $2.5 million to $1 million per track, and reduce the state tax on table games revenue from 35 percent to 25 percent.

It would also allow tracks to cut back live greyhound or thoroughbred racing from 220 to 150 days a year, and would transfer $6 million from the dog and horse purse funds to Senior Services, to make up for the reduced license fees, which are dedicated to providing in-home care.

Also Tuesday, Musgrave told the Finance Committee:

| Lottery officials are tracking national developments with online betting and lottery games, but said, "We have no plans at this time to move in that direction."

Musgrave said that while it is unlikely West Virginia will offer video poker, blackjack or other gaming on-line, it may eventually consider selling traditional Lottery tickets on-line.

"It will first start with things like an app on your phone if you want to buy a Powerball ticket," he said.

| He has done about all he can to assist limited video lottery operators and retailers notified late last year by slot machine manufacturer IGT that they will need to upgrade or replace nearly 7,000 video lottery machines by 2017, at an estimated cost of between $20 million to $100 million.

Musgrave said IGT wanted to discontinue an obsolete communications protocol used by the machines in 2015, but agreed after Lottery negotiations to extend that deadline to 2017. He said IGT has also promised to develop a conversion kit to upgrade current video lottery machines at a cost of less than $3,000 per machine.

"Some in LVL would say that's not good enough," Musgrave said. "I've indicated to them I've done about all I can do."

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

   


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