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W.Va. lottery profits fall $54 million

By Phil Kabler, Staff writer

CHARLESTON, W.Va. — At $1.21 billion, West Virginia Lottery gross revenue for the 2013-14 budget year was down $114 million from the prior fiscal year, and the state’s share of profits fell $54 million to $533 million, the Lottery Commission was advised Monday.

Lottery revenues peaked in the 2006-07 budget year at $1.56 billion and have fallen since, as Maryland, Ohio and Pennsylvania opened gaming facilities to compete with West Virginia’s five licensed casinos.

Lottery Director John Musgrave said the number of video slot machines at the state’s four racetrack casinos tell the tale, dropping from the maximum of 13,900 to 7,354 currently in use, a decline of 53 percent.

“We’ve had quite a decline in the machines you’ve approved at the various facilities, and that’s because of competition,” he told the Lottery Commission. “You can see the impact competition has had on us.”

Video lottery and table games at the four casinos accounted for more than half of the Lottery’s gross revenue, at $641.36 million, dropping $84.57 million, 11 percent, in 2012-13.

The $80 million casino in The Greenbrier resort had gross revenue of $7.04 million for the budget year, falling more than 7 percent from the 2012-13 figure of $7.59 million.

Limited video lottery at bars and clubs around the state grossed $377.22 million for the budget year, down $22 million or 5.5 percent from 2012-13.

Traditional scratch-off and online Lottery tickets held up better, falling 1.6 percent to $188.62 million for the 2013-14 budget year, which ended June 30.

Lottery officials had actually projected a sharper decline in revenues, Musgrave said. The state’s share of Lottery profits exceeded expectations by 6 percent, or about $37 million, he said.

Also Monday:

n Musgrave advised commissioners that 23 limited video lottery machine distributors and 26 fraternal organizations had self-reported possible violations of Lottery regulations involving LVL machines at fraternal organizations.

That follows an investigation that found at least two LVL distributors had set up video lottery parlors under the guise of being fraternal organization lodges, in order to operate 10 LVL machines at each location, double the maximum of five machines permitted under state law for bars and clubs.

Musgrave said Lottery staffers are compiling the reports, which range in length from a few sentences to several pages, and anticipates scheduling a work session with commissioners to review the findings some time next month.

Penalties for violating Lottery regulations include fines of up to $10,000 per violation, suspension or revocation of Lottery licenses, and forfeiture of lottery machines.

In May, the commission approved more lenient penalties, including reduced fines and no license revocations, for distributors and fraternal organizations that self-report violations.

Musgrave said the Lottery will be sending investigators to locations that did not self-report violations to conduct random inspections.

n Commissioners approved a rule change limiting intrastate progressive jackpots to $1 million. That applies to video lottery machines located in state casinos that are electronically linked together to more rapidly grow jackpots.

The rule change was prompted by the introduction of new progressive jackpot machines that can accumulate jackpots in excess of $40 million. It does not affect multistate progressive jackpot machines operating at state casinos.

n Commissioners approved the annual transfer of $10 million of Lottery profits into a matching fund racetrack casino operators can tap into to upgrade their gaming facilities.

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


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