H. B. 2125


(By Delegates DeLong, Ennis, Manchin
and Swartzmiller (By Request))
[Introduced January 13, 2003; referred to the
Committee on the Judiciary then Finance.]



A BILL to amend and reenact sections 1101 and 1408, article twenty- two-b, chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, all relating to increasing lottery profits on video lottery terminals.

Be it enacted by the Legislature of West Virginia:
That sections 1101 and 1408, article twenty-two-b, chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:
ARTICLE 22B. LIMITED VIDEO LOTTERY.
PART 11. ALLOCATION AND DISTRIBUTION

OF VIDEO LOTTERY TERMINALS.

§29-22B-1101. Limitation on number and location of video lottery terminals.

(a) The lottery commission may not authorize the placement of more than nine thousand video lottery terminals in restricted access adult-only facilities in this state.
(b) No person may directly or indirectly operate more than seven and one-half percent of the number of video lottery terminals authorized in this section, which shall be located only in restricted access adult-only facilities.
(c) No licensed limited video lottery retailer may be authorized to have on the premises for which the license was issued more than five video lottery terminals except that a fraternal society or veteran's organization that is (A) a fraternal beneficiary society that is exempt from federal income tax under section 501(c)(8) of the Internal Revenue Code of 1986, as amended, (B) a domestic fraternal society that is exempt from federal income tax under section 501(c)(10), or (C) a veterans' organization that is exempt from federal income tax under section 501(c)(19) of the Internal Revenue Code may be authorized to have on the premises for which the license was issued not more than ten twenty-five video lottery terminals.
§29-22B-1408. Distribution of state's share of gross terminal income.

(a) The state's share of gross terminal income is calculated as follows:
(1) The commission shall deposit two percent of gross terminal income into the state lottery fund for the commission's costs and expenses incurred in administering this article. From this amount, not less than one hundred fifty thousand dollars nor more than one million dollars per fiscal year, as determined by the commission each year, shall be transferred to the compulsive gambling treatment fund created in section nineteen, article twenty-two-a of this chapter. In the event that the percentage allotted under this subsection for the commission's costs and expenses incurred in administering this article generates a surplus, the surplus shall be allowed to accumulate to an amount not to exceed two hundred fifty thousand dollars. On a monthly basis, the director shall report to the joint committee on government and finance of the Legislature any surplus in excess of two hundred fifty thousand dollars and remit to the state treasurer the entire amount of those surplus funds in excess of two hundred fifty thousand dollars to be deposited in the fund established in section eighteen-a, article twenty-two of this chapter.
(2) Gross profits are determined by deducting the percentage described in subdivision (1) of this subsection, from gross terminal income.
(3) (A) The commission shall receive thirty percent of gross profits as defined in subdivision (2) of this subsection except as otherwise provided in this subdivision from video lottery terminals licensed by a fraternal society or a veterans' organization described in subsection (c), section 1101 of this article.
(B) From all other video lottery terminals the commission shall receive thirty percent of gross profits as defined in subdivision (2) of this subsection except as otherwise provided in this subparagraph. On the first day of June, 2002, the The commission shall calculate the aggregate average daily gross terminal income for all operating video lottery terminals during the preceding three-month period Thereafter, the commission shall make the calculation on the first day of the month preceding the months of October, January, April and July of each year. So long as the aggregate average gross terminal income per day for the operating video lottery terminals does not exceed sixty dollars, the commission's share of gross profits shall continue to be thirty percent for the succeeding quarter of the year beginning the first day of July. Beginning on the first day of July, 2002 two thousand two and the first days of October, January, April and July in 2002 two thousand two and thereafter, if the commission's calculation of aggregate average daily gross terminal income per video lottery terminal yields an amount greater than sixty dollars, one of the following schedules apply: If the amount is greater than sixty dollars per day but not greater than eighty dollars per day, the commission's share of gross profits for the ensuing quarter beginning the first day of the quarter of the year described in this subdivision shall be thirty-four percent; if the amount is greater than eighty dollars per day but not greater than one hundred dollars per day, the commission's share of gross profits for the ensuing quarter beginning the first day of the quarter of the year described in this subdivision shall be thirty-eight percent; if the amount is greater than one hundred dollars per day but not greater than one hundred twenty dollars per day, the commission's share of gross profits for the ensuing quarter beginning the first day of the quarter of the year described in this subdivision shall be forty-two percent; if the amount is greater than one hundred twenty dollars per day but not greater than one hundred forty dollars per day, the commission's share of gross profits for the ensuing quarter beginning the first day of the quarter of the year described in this subdivision shall be forty-six percent; if the amount is greater than one hundred forty dollars per day, the commission's share of gross profits for the ensuing quarter beginning the first day of the quarter of the year described in this subdivision shall be fifty percent. This amount shall be known as net terminal income.
(b) Net terminal income shall be distributed by the commission as follows:
(1)(A) Beginning the first day of July, two thousand two, a county and the incorporated municipalities within that county shall receive two percent of the net terminal income generated by limited video lottery terminals located within the county;
(B) From this two percent of net terminal income, each municipality shall receive a share that bears the same proportion to the total two percent of net terminal income as the population of the municipality bears to the total population of the county as determined by the most recent decennial United States census of population, and the county shall receive the remaining portion of the two percent of net terminal income; and
(2) Any remaining funds shall be deposited into the state excess lottery revenue fund established in section eighteen-a, article twenty-two of this chapter.
(c) The licensed operators and limited video lottery retailers shall receive the balance of gross terminal income remaining after deduction of the state's share as calculated pursuant to this section.

NOTE: The purpose of this bill is to increase lottery profits on video lottery terminals. It authorizes an increase in the number of video lottery terminals on a premises from 10 to 25 and provides that the Lottery Commission shall receive 30% of the gross profits from video lottery terminals licensed by a fraternal society or veteran's organization.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.