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 Bill would redistribute "Gross Profits" from limited video lottery collections. The state's share would be reduced by two percent, and this share would be given to local governments, doubling their current shares. The bill would also grant an additional eight percent of gross profit from limited video lottery games to the licensed limited video lottery retailers [bars and fraternal/veteran clubs]. This distribution would leave less money for operators and retailers to divide by contract, and state law guarantees retailers at least a forty percent shared of this division; most contracts are 50%-50%. The state and local share of limited video lottery games is based on a sliding scale that is calculated every three months. Currently the state and local government combined share of "gross profit" is 50% with the state receiving 48% and the local governments sharing the remaining 2%. The bill would change the distribution to State - 46%, municipalities - 4%, limited video lottery retailers - 8%, and operators and retailers sharing the remaining 42%.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2009 Increase/Decrease (use"-")	2010 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	-7,665,000	-7,665,000

Explanation of above estimates (including long-range effect):

The new distribution pattern will cost nothing in extra administrative costs for the West Virginia Lottery. The West Virginina Lottery's current forcast for revenues to the Excess Lottery Revenue Fund for FY 2010 shows no surplus beyond the statutory distributions in W.Va. Code 29-22-18a. Therefore, the $7.6 million decrease for the Excess Lottery Revenue Fund in fiscal year 2010 will cause certain distributions, notably the West Virginia Infrastructure Fund and the State Park Improvement Fund, not to receive the full distribution provided by statute, but to receive a lesser prorata share.

Memorandum

The new eight percent share that is to go to retailers does not define HOW the share will be distributed. The way the bill is drafted will cause the Lottery to EFT sweep the regular state-and-local amount plus the new eight percent amount from the permit holders' accounts. Current W.Va. Code 29-22B-1408(b)(1) provides the distribution method for municipal and county commission portions of gross profit. There is no corresponding road map for the distribution of the new retailer 8% share. If a drafting modification is undertaken, keep in mind that the money electronically swept monthly comes from the permit holders' designated bank accounts. In most cases, the 'permit holder' is the operator, not the retailer. We have no way to credit or offset a retailer's account under those circumstances.

Person submitting Fiscal Note: John Melton
Email Address: jmelton@wvlottery.com