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Maryland, Ohio casinos continue to squeeze W.Va. Lottery revenue

CHARLESTON, W.Va. -- Competition from new casinos in Maryland and Ohio continues to put the squeeze on state Lottery revenues, which fell nearly 12 percent in April, compared to April 2012, and are down more than 9 percent for the budget year to date.

April revenue of $109.43 million was down $14.33 million from April 2012, as racetrack video lottery dropped $12.4 million to $53.9 million. Revenue from table games at the four racetrack casinos fell 21 percent to $5.09 million.

With two months remaining in the budget year, the Lottery has total revenues of $1.1 billion, down from $1.21 billion in fiscal 2011-12. The state's share of Lottery profits stands at $487.79 million, down from $538.87 million at the same point in fiscal 2011-12.

However, Lottery Director John Musgrave said the Lottery Commission had budgeted for a much more severe drop in revenue, projecting that the state would not reach $400 million in profits for the budget year.

"Compared to the estimates we did, we're running about 15 percent ahead," he said Tuesday. "We're running ahead of estimates, but behind in comparison to last year's revenue."

Musgrave said state casino revenues benefited from delays in Ohio to get four newly legalized stand-alone casinos up and running in 2012.

Also, a "racino" authorized for Youngstown, Ohio -- which poses a major threat to the already hard-hit Mountaineer and Wheeling Island casinos -- has yet to begin construction, he said.

"We overestimated the competition a little bit in that regard," Musgrave said.

Last month, the Legislature rejected a proposal to reduce the annual license fee for table games at the casinos from $2.5 million to $1.5 million. Proponents of the bill said it was needed in order for Wheeling Island to continue offering table games.

Wheeling Island management has indicated that because of competition from Ohio, the racetrack casino is losing money on the labor-intensive table games.

Musgrave said Tuesday that Wheeling Island officials have not advised him on whether they will renew the license on July 1, but said they have asked the Lottery Commission for permission to expand use of electronic table games.

In 2011, the Lottery Commission authorized the use of electronic roulette games, at the request of management of the Hollywood Casino in Charles Town.

"At the time Charles Town wanted that, they had people waiting in line to play the traditional tables," he said.

In addition to allowing more rapid play, the electronic table games reduce labor costs. Although they require a "dealer" to supervise play, each electronic game table can accommodate 12 players, compared to six players for most traditional table games.

Musgrave said the Lottery Commission will discuss the request at its meeting Friday, but may not act until the commission's June 14 meeting.

"The commission needs more information," he said. "We've got some issues we need to look at, such as, can you play using virtual chips?'

Competition from casinos in Maryland, Ohio and Pennsylvania poses long-term concerns for the Lottery, Musgrave said.

"We don't have a huge population, so it's hard to grow customers. You have to bring them in from across state borders, and that's becoming more and more difficult," he said.

While the racetrack casinos have taken a hit, limited video lottery at bars and clubs around the state is running just slightly behind last year, at $333.85 million in revenue, compared to $339.12 million in 2011-12.

Sales of traditional lottery games -- consisting of scratch-off instant tickets and tickets for nightly drawings -- also are showing a small decline, at $161.5 million, compared to $166.7 million in 2011-12.

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


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