WV Lottery Commission on track to meet budget revenue estimates - WOWK 13 Charleston, Huntington WV News, Weather, Sports

WV Lottery Commission on track to meet budget revenue estimates

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Although the West Virginia Lottery Commission had to decrease projections for 2011 and 2012, lottery revenues are on track to meet budget estimates.

John Musgrave, state lottery commissioner, told the House Finance Committee March 12 that despite competition from other states, the West Virginia Lottery will be able to meet all of its obligations.

"We're on track to meet our estimates for 2012 and to satisfy all appropriations that have been funded by this committee," Musgrave said.

The lottery revenue estimates were reduced to $233 million for fiscal years 2011 and 2012.

The Lottery Commission helps fund a number of programs, including senior services, education and veterans. Musgrave said each year, the commission sets aside $40 million to help fund those programs.

"We put aside out of (revenue) $40 million to start the senior programs, the community and technical colleges, School Building Authority, Economic Development Authority, Department of Education, (Department) of Culture and History, (Division of) Natural Resources, (Department of) Tourism and higher education," Musgrave said. "They need money starting July 1. As you know, at the beginning of the year, we're not generating tax dollars, so we set that money aside to start those revenue programs."

In addition, the lottery commission also has $35.3 million in a contingency fund to be used if any of the state's gaming centers have structural problems.

"We based that 10 years ago on our largest track, Charles Town," Musgrave told the committee. "We said if we lose that track for a month, we'd lose our revenue stream."

The Hollywood Casino in Charles Town is the state's oldest gaming center, Musgrave said. The structure is primarily wood, which would burn quickly. Wheeling Island Race Track's parking lot is prone to flooding. Musgrave said that although the building has never been damaged by flood, patrons can't gain access. Flooded parking lots have led to Wheeling Island's temporary closure several times, Musgrave said.

"We have a loss in revenue stream," Musgrave said of the temporary closures. "We can have other issues, so we back out $30 million to keep the revenue flowing."

Competition from other states is another reason for the contingency fund. Musgrave said new facilities in Pennsylvania, Ohio and Maryland are affecting revenues at West Virginia tracks close to the border. For example, Wheeling Island used to draw most of its customers from Pennsylvania. Now that there's a new facility close to Pittsburgh, the number of people visiting Wheeling has decreased. Pennsylvania's new facilities are affecting Charles Town, too.

"If we're getting competition from Maryland and Pennsylvania, you can see it is affecting that facility as well," Musgrave said.

Mardi-Gras Casino in Nitro hasn't seen much of a change, Musgrave said. Most visitors to that facility are people passing through the area, mostly from North Carolina, Virginia and Kentucky.

Because of increased competition, Wheeling Island is suffering the most. Now, the casinos at The Greenbrier and Mardi Gras see more activity. But that's a trend not unique to West Virginia, Musgrave pointed out.

"As a matter of fact in the industry, we were seeing a big decline," he said, noting casinos in Atlantic City and Las Vegas also saw big decreases because of the unstable economy.

"We're seeing a downturn in most places of about 6 percent," Musgrave added. "Indiana of course is being affected by the track that opened just a week ago in Cincinnati. We're seeing their riverboat operations greatly affected. Delaware is feeling the affects of Maryland as well. Most of it is due to the competition. There are only a few areas to have this type of gaming. Atlantic City has been very hard hit from competition in the East."

Perhaps the big reason West Virginia tracks are suffering so much is because they serve as a sort of prototype to new facilities in surrounding states.

"Here in West Virginia, we've been out on the leading edge," Musgrave said. "We started with the slots and have the table games and we have the different forms of gaming. Most everybody is following West Virginia's example, and that's what the problem is. Pennsylvania has followed just exactly what we've done. Ohio is doing the same thing. Almost every state going into this type of gaming comes here to pay us a visit."