SENATE CONCURRENT RESOLUTION 66

(By Senators Snyder, Stollings, Romano and Unger)

[Introduced March 9, 2016]

Requesting the Joint Committee on Government and Finance to establish a select committee to study all aspects of the lottery, gaming and live racing industry in West Virginia.

Whereas, West Virginia’s lottery, gaming and live racing industries have become significant revenue sources for the State of West Virginia, as well as providing thousands of jobs to West Virginians; and

Whereas, The live racing industry has a long and storied history, beginning in 1787 when George Washington’s youngest brother Charles raced horses through the streets of what would become Charles Town, West Virginia; and

Whereas, Formal horse racing tracks were established in West Virginia some years later, with the racetrack at Charles Town opening in 1933 and the precursor to Mountaineer Racetrack being founded in 1937.  West Virginia greyhound racing followed with the opening of Wheeling Downs, a facility which found its racing origin in 1937 and in 1985, Tri-State Greyhound Park, now Mardi Gras Casino and Racetrack, opened; and

Whereas, In an effort to protect and preserve West Virginia’s celebrated racing industry and the thousands of jobs associated therewith, the West Virginia Legislature voted to allow slot-machine style video lottery in 1994, and casino-style table games in 2007, at our state’s four racetracks, with approval by the local electorate, in accord with the provisions of article twenty-two-c, chapter twenty-nine of the West Virginia Code; and

Whereas, Each of the four counties in West Virginia where a racetrack is located ultimately exercised their referendum rights under section seven, article twenty-two-c, chapter twenty-nine of the code, and voted to approve racetrack video lottery and table games at their respective racetrack facilities based on the promise that a portion of the revenues generated would be used to preserve and protect live racing, as well as promote the industry of breeding thoroughbred horses and greyhounds while creating greenspace; and

Whereas, Invariably, after five years, section seven, article twenty-two-c, chapter twenty-nine of the code also provides for a subsequent local county recall referendum to revisit the decision by local voters to approve casino style gaming at the racetrack venues; and

Whereas, The “racinos” in West Virginia not only employ thousands of West Virginians and generate hundreds of millions of dollars of revenue for state government, the statutory structure by which they are licensed and operate, has fostered the development of live racing and breeding of thoroughbreds and greyhounds as an industry as provided for in statute; and

 Whereas, Many individuals, companies, partnerships and entities have made and continue to make substantial investments in West Virginia based on the statutory framework designed to preserve and protect live racing and promote the industry of breeding of thoroughbred horses and greyhound racing stock; and

Whereas, In addition to supplementing racing and local governments, moneys generated by gaming at our state’s racetracks have been used to bolster our state’s general revenue fund as well as the state’s Development Office Promotion Fund, debt reduction funds, State Capitol improvements, the Division of Tourism, and to finance public school construction through the West Virginia School Building Authority, fund the Promise Scholarship Program, contribute to racetrack employee pensions and capital improvements for racetrack facilities; and

Whereas, West Virginia’s “racino” model proved most successful, becoming a reliable source of income for the state, but now the model is confronted with declining levels of performance for West Virginia; and

Whereas, Until recent years, West Virginia’s four “racinos” benefitted from modest market competition in neighboring states, thereby claiming a large portion of the gaming market east of the Mississippi River; and

Whereas, Our surrounding states have learned from our successful gaming regulations and have implemented similar models, allowing for new casino properties to open near to West Virginia’s borders in Ohio, Pennsylvania and Maryland; and

Whereas, Though West Virginia’s four “racinos” once enjoyed little competition for regional gaming dollars, there are now approximately twenty new casinos in neighboring states with which West Virginia’s “racinos” must compete for revenues and others under yet to become active which increases the competition for regional gaming dollars; and

Whereas, Due to this competition, racing and gaming revenues upon which our state has become so dependent are decreasing at a rapid pace, which creates a diminishing amount of money for all of the distributees of money generated by “racinos” and allocated in accordance with current law; and

Whereas, In addition to the loss of revenues for the state, the jobs of thousands of West Virginia families who rely on the live racing and gaming industries for their livelihood are also at risk; and

Whereas,There may be opportunities to capture additional revenues from the live racing, gaming and lottery enterprises in West Virginia, including models from other jurisdictions involving off-track betting; Automated Deposit Wagering or ADW to allow for convenient pari-mutuel wagering; equi-lottery; marketing West Virginia’s casino and live racing enterprises to regional and national markets; evaluating and improving marketing strategies of the West Virginia Lottery;  evaluating the operational efficiencies and effectiveness of the West Virginia Lottery, including a comparative analysis with similar sized lottery operations of the various states as to cost and number of employees; to evaluate privatization opportunities within the gambit of West Virginia Lottery operations from the perspective of overall effectiveness, cost savings and productivity; review and analyze the findings of the 2015 Report of the Select Committee of the West Virginia Racing Commission containing recommendations for enhancement of live racing in West Virginia; and in general review in the entirety role of, efficiency, cost and effectiveness of state government in overseeing gaming, lottery and live racing activities in West Virginia to provide greater understanding by legislative policymakers of such activities in order to better serve all of West Virginia citizens; and

Whereas, In recognition of the vitally important component they represent of the West Virginia economic and revenue base, the time has come to revisit the state’s gaming, lottery and live racing industry structures to determine a course of action that is in the best interest of West Virginia and its people; therefore, be it

Resolved by the Legislature of West Virginia:

That the Joint Committee on Government and Finance establish a select committee to study all aspects of the lottery, gaming and live racing industry in West Virginia; and, be it

 Further Resolved, That the Joint Committee on Government and Finance establish a select committee consisting of ten members, being five from the House of Delegates and five from the Senate with no more than three members from each house from a single political party, to be responsible for a comprehensive study of West Virginia’s racing and gaming industries as provided herein below, including recommending to and coordinating professional services procured in furtherance of the objectives herein described, conducting live hearings at sites determined by the committee to be optimum for gaining knowledge essential to making informed decisions regarding the areas of inquiry referenced herein, and receiving the testimony of persons directly involved in all aspects of the lottery, gaming and live racing industry in West Virginia; and, be it

Further Resolved, That the select committee is hereby requested to perform a comprehensive study of West Virginia’s gaming, lottery and live racing industries, which said study shall include, but not be limited to, the following objectives: (1) A review of all related laws, rules, regulations and operations associated with all facets of the West Virginia Lottery, including the advisability of privatization of operational aspects of lottery operations; (2) a review of the 2015 Report of the Select Committee of the West Virginia Racing Commission and the recommendations therein contained, along with all laws, rules and regulations of live racing of greyhounds and thoroughbred horses, with recommendations for the modernization and streamlining of the same and maximization of revenues for West Virginia and for live racing interests, including recommendations which enhance the convenience of the consuming public to engage in pari-mutuel wagering on races conducted at West Virginia’s racetracks consistent with the convenience they enjoy to place bets on races in foreign jurisdictions; (3) a review of all laws, rules and regulations associated with the business of both greyhound breeding and thoroughbred breeding, with recommendations for modernization and streamlining of the same consistent with providing continuing viable opportunities for these activities as a component of West Virginia’s live racing industry and the jobs it represents; (4) a comprehensive review of the flow of revenues generated from racetrack video lottery, table games and any other sources contributing to money administered by the West Virginia Lottery in the form of excess lottery proceeds as a means of information for state policymakers; (5) a comprehensive investigation of appropriate governing structures for live racing and gaming activities from neighboring jurisdictions and beyond, with a recommendation of revisions and/or statutory overhaul of the governance of all forms of gaming in West Virginia, including general lottery, adult video lottery, racetrack video lottery and table games; (6) a comparative analysis of the job functions of the West Virginia Racing Commissions with comparable agencies in jurisdictions with a similar racing presence to determine the appropriateness of staff and funding levels with recommendations as to appropriate levels of each; (7) an analysis of the staff and funding levels associated with administration of all facets of the West Virginia Lottery, recognizing its unique configuration of administering conventional lottery operations, adult video lottery, racetrack video lottery and table games, and recommendations for economizing the operations of the West Virginia Lottery consistent with best industry practices; (8) an analysis of innovative and creative additions to West Virginia’s gaming mix, including innovative and creative ways of more efficiently and profitably administering West Virginia’s gaming activities, of providing for convenient consumer access to products offered within the array of gaming products offered by West Virginia, to provide policymakers on the status of Internet gaming as a potential offering in West Virginia, and to identify any and all prospects which may enhance revenue generation by the entirety of West Virginia’s gaming activities of all descriptions through new and additional games or manner of delivery of products to the lottery and gaming consuming public; (9) the continuing legal effects, if any, of referendums on gaming heretofore undertaken to approve such in Jefferson, Hancock, Ohio and Kanawha counties, as well as the legal effects, if any, to reexercise those rights as provided in statute; and to provide all and any suggestions for the improvement, modernization, efficiency and economization of West Virginia’s entire complement of gaming activities, including live racing; and, be it

Further Resolved, That stakeholder representatives in all facets of West Virginia’s gaming industry of lottery, “racinos”, live racing, greyhound breeding and thoroughbred breeding, along with the solicitation of input from citizens living in communities which host live racing activities, be actively engaged as part of any study process through formal information gathering such as open meetings, public hearings, and surveys constructed to gather such citizen input; and, be it

Further Resolved, That the Joint Committee on Government and Finance report to the regular session of the Legislature, 2017, on its findings, conclusions and recommendations, together with drafts of any legislation necessary to effectuate its recommendations; and, be it

Further Resolved, That the expenses necessary to conduct this study, to prepare a report and to draft necessary legislation be paid from legislative appropriations to the Joint Committee on Government and Finance.