Date Requested:January 13, 2012
Time Requested:03:20 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1213 Introduced HB4069
CBD Subject: CHARITABLE RAFFLES
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

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

     The stated purpose of this bill is to allow certain fraternal societies and veteran’s organizations to use electronic or mechanical devices to conduct raffles.
    
     According to our interpretation, Tax Department collections would increase by a minimal amount attributable to the annual raffle license fee on additional licensees, but Excess Lottery revenues would decrease due to competition from these machines. As written, the bill would allow the use of unregulated electronic slot machines that would play a “virtual” raffle ticket. This bill does not provide any type of licensing fees or other State regulatory laws to operate them, apart from the $500 annual raffle license fee. These unregulated machines would be in direct competition with slot machines regulated and operated by the State Lottery Commission. As unregulated electronic slot machines displace limited video lottery machines licensed by the Lottery Commission, State revenue will be reduced. The Lottery Commission fiscal note addresses the fiscal impact to the Excess Lottery Fund.
    
     Additional administrative costs to the State Tax Department from the passage of this bill could be significant if regulatory oversight is desired.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
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):
    According to our interpretation, Tax Department collections would increase by a minimal amount attributable to the annual raffle license fee on additional licensees, but Excess Lottery revenues would decrease due to competition from these machines. . As written, the bill would allow the use of unregulated electronic slot machines that would play a “virtual” raffle ticket. This bill does not provide any type of licensing fees or other State regulatory laws to operate them, apart from the $500 annual raffle license fee. These unregulated machines would be in direct competition with slot machines regulated and operated by the State Lottery Commission. As unregulated electronic slot machines displace limited video lottery machines licensed by the Lottery Commission, State revenue will be reduced. The Lottery Commission fiscal note addresses the fiscal impact to the Excess Lottery Fund.
    
     Additional administrative costs to the State Tax Department from the passage of this bill could be significant if regulatory oversight is desired.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
     The stated purpose of this bill is to allow certain fraternal societies and veteran’s organizations to use electronic or mechanical devices to conduct raffles.
    
     The proposed bill would allow the use of electronic “virtual” raffle tickets, replacing the paper tickets required by current law. This bill, if passed, would permit the users to operate slot machines that are in direct competition with those regulated by the State Lottery Commission, without any regulation. The bill would not require any kind of licensing fee (apart from the $500 annual raffle license fee), and the payout would not be subject to regulation.
    
     The bill provides for limitations on the number of machines allowed under the newly-created section 47-21-19a, as “not more than five electronic or mechanical raffle devices may be used or located upon the premises for which the license was issued.” However, since there is no statutory venue restriction on where raffles may be played, the language of this statute could be construed to allow an organization to use or operate an unlimited number of such devices off-premises.
    
     Also, there is no age restriction in the law on who may play raffles. As a result, these machines could proliferate in public venues, such as gas stations and convenience stores where anyone could play them, regardless of age.
    
     The proposed bill authorizes the use of electronic devices by fraternal lodges and veterans organizations while maintaining the general prohibition on the use of such devices by other charitable organizations (e.g., volunteer fire departments or school booster organizations) that could be licensed to conduct charitable raffles. This unequal treatment of charitable organizations would have the effect of giving certain organizations a competitive advantage over other charitable or public service organizations in the same community.