Date Requested:January 25, 2011
Time Requested:02:51 PM
Agency: Lottery Commission
CBD Number: Version: Bill Number: Resolution Number:
2011R1826 Introduced SB98
CBD Subject: ELECTRONIC OR MECHANICAL RAFFLE DEVICES
FUND(S)
Excess Lottery Fund
Sources of Revenue
Special Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of the bill is to permit fraternal or veteran's organizations to have up to five electronic or mechanical raffle devices to be used at each location where a charitable raffle license is issued.
    
    The Lottery is unable at this time to reasonably project the specific impact this bill will have on Limited Video Lottery revenues because of vague and undefined terms and lack of regulatory oversight in the current version of this bill, although the impact will likely be a substantial reduction of revenues to the state (State Excess Lottery Fund). Consequently, the reason for the zero revenue estimate is explained in the Memorandum section of this fiscal note.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The Lottery would incur no increase or decrease in operating expenses.
    
    The reason for the zero revenue estimate is explained in the Memorandum section of this fiscal note, although please note that this bill is likely to CAUSE A SUBSTANTIAL DECREASE IN LIMITED VIDEO LOTTERY REVENUES, PARTICULARLY THE EXCESS LOTTERY FUND. The Lottery simply cannot reasonably estimate the impact at this time.
    
    


Memorandum
Person submitting Fiscal Note:
Monica Robinson
Email Address:
mrobinson@wvlottery.com
    In 2001, the Legislature passed legislation for the purpose of regulating the use of grey machines in West Virginia. The Limited Video Lottery Act goes to great lengths to regulate the types of video lottery terminals that can enter West Virginia. Regulation includes, but is not limited to, limiting the payout percentages, max bets, bill acceptors, the total number of terminals that can be located in the state (9,000), where the terminals can be located, whether credit can be used to play the terminals, age restrictions, and any other number of restrictions on the use of video lottery terminals.
    
    In 2010, the Legislature passed Senate Bill 577. The purpose of SB 577 was to ban the unregulated use of electronic raffle validation machines, which for every intent and purpose were video lottery terminals because someone playing either type of machine could not tell the difference between them. They even shared the same game themes.
    
    Unfortunately, this bill will reverse the passage of Senate Bill 577 and again allow for the unrestricted and unregulated use of electronic raffle validation machines that are identical to the limited video lottery terminals except that limited video lottery terminals are heavily regulated by the state. This bill fails to limit the total number of electronic raffle machines allowed in this state and the number could be limitless.
    
    Although this bill states that "not more than five electronic or mechanical raffle devices may be used or located upon the premises for which the license was issued," there are no statutory or regulatory venue restrictions on charitable raffle operations. Theoretically, a licensee could have multiple locations across the state where they could place these machines. Further, there are no age restrictions or tax placed upon the use of the raffle machines (only a $500 annual raffle license fee). Finally, although the purpose of charitable raffles is to raise revenue for charitable purposes, when an Elks club had 144 of these machines prior to SB 577 and netted several hundred thousand dollars, the charitable donations decreased from $9,725 in 2007 to $8,030 in 2008.
    
    The use of electronic raffle devices in West Virginia will significantly displace any and all revenues generated by the use of limited video lottery terminals. West Virginia has a limited total population of 1.8 million people and only a certain percentage is over the age of 21. Again please note that there is no age restriction for raffle games and presumably electronic raffle devices. The same persons currently playing limited video lottery terminals will likely play the electronic raffle devices due to the lack of regulations on payouts, the use of credit to play the machines, the availability of the raffle machines in more locations that can advertise and locations that are more easily accessible in neighborhoods due to the lack of zoning laws on electronic raffle devices.
    
    Upon the inevitable proliferation of these devices, the revenue from Limited Video Lottery will be significantly impacted. This will reduce contributions to cities and municipalities and the Excess Lottery Fund which funds the Economic Development Fund, Higher Education Improvement Funds, School Building Authority, Refundable Credit, Education Improvement, the General Purpose fund, West Virginia Infrastructure Counsel, State Park Improvement Fund and others.