FISCAL NOTE
Date Requested: February 13, 2024
Time Requested: 03:49 PM |
| Agency: |
Lottery Commission, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3634 |
Introduced |
HB5667 |
|
|---|
| CBD Subject: |
Consumer Protection; Finance and Administration |
|---|
|
FUND(S):
State Lottery Fund; West Virginia Daily Fantasy Sports Contests Fund
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Revenue, Increases Existing Expenses, Creates New Fund: West Virginia Daily Fantasy Sports Contests Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
It is difficult for the Lottery to project revenue that may be generated by the regulation of Daily Fantasy Sports because DFS is currently unregulated, and the Lottery does not have intimate knowledge of the industry. However, the Lottery has used its Sports Wagering revenue and experience to offer a projection.
Projected new annual revenue to the State Lottery Fund would be $360,000 to $500,000. Notwithstanding the generation of new revenue to the Lottery Fund, HB 5667 would have annual administrative costs of $325,000 to $346,000. Therefore, accounting for the Lottery's administrative costs, HB 5667 would lead to a "profit" to the State of anywhere from $4,000 to $175,000. The Lottery has no mechanism to predict the amount that may be collected from license fees because the Lottery cannot predict with any accuracy the number of potential licensees or the gross daily receipts of the same.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
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 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
It is difficult for the Lottery to project revenue that may be generated by the regulation of Daily Fantasy Sports because DFS is currently unregulated, and the Lottery does not have intimate knowledge of the industry. However, the Lottery has used its Sports Wagering revenue and experience to offer a projection.
Projected new annual revenue to the State Lottery Fund would be $360,000 to $500,000. Notwithstanding the generation of new revenue to the Lottery Fund, HB 5667 would have annual administrative costs of $325,000 to $346,000. Therefore, accounting for the Lottery's administrative costs, HB 5667 would lead to a "profit" to the State of anywhere from $4,000 to $175,000. The Lottery has no mechanism to predict the amount that may be collected from license fees because the Lottery cannot predict with any accuracy the number of potential licensees or the gross daily receipts of the same.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The Lottery has several concerns with respect to HB 5667. HB 5667 allows for proposition parlay wagering as a part of DFS and not sports wagering which is contrary to the current definition of "Daily Fantasy Sports" (DFS) in 179 CSR 9, which the Lottery adopted in 2023 to clearly distinguish sports wagering from daily fantasy sports and protect our sports wagering operator licensees which make significant investment in West Virginia. HB 5667 eliminates the effect of such change by making uncertain what constitutes sports wagering and DFS.
29-22F-2(f) prohibits the Lottery from regulating DFS by removing its ability to dictate what DFS operators are permitted to offer and not offer in the way of contests, requirements of operator platforms, etc. Such provision also prohibits the Lottery from requiring DFS operators to remove contests the Lottery classifies as "sports wagering."
29-22F-6 contemplates collecting license fees from operators based on the amount of revenue they generate rather than a flat fee for all licensees. Additionally, such provision provides no incentive to earn the State revenue because the license fee is potentially $990,000 less for those operators who generate less revenue (under $1,000,000) and do not have 10,000 customers.
29-22F-7 allows for applicants with annual receipts of less than $1,000,000 to offer their platform in the state without initial audit or testing, which the Lottery strongly opposes.
Person submitting Fiscal Note: W. Brian Nickerson, General Counsel
Email Address: bnickerson@wvlottery.com