FISCAL NOTE

Date Requested: February 21, 2017
Time Requested: 01:14 PM
Agency: Lottery Commission, WV
CBD Number: Version: Bill Number: Resolution Number:
2521 Introduced HB2621
CBD Subject: Real and Personal Property


FUND(S):

"Say No to Drugs" Lottery Fund

Sources of Revenue:

Other Fund Lottery

Legislation creates:

A New Fund



Fiscal Note Summary


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


All monies derived from the “Say No to Drugs” game will reduce, by the same amount, the total amount of monies available for appropriation in the State Lottery Fund. Total available monies for legislative appropriation from the State Lottery Fund will be reduced by an estimated $385,200 in Fiscal 2017 and an estimated $539,280 in Fiscal Year 2018 (The “Say No to Drugs” game amounts). Revenue from the proposed “Say No to Drugs” game will not be incremental revenue. This game would be part of a larger product mix with no guarantee of annual revenues as each ticket will be competing for discretionary dollars of Lottery players and other instant tickets, including the dedicated Veterans' Cash game. More importantly, an additional dedicated ticket may also impact the debt service coverage ratio and secondary bond tests that rely upon deposits from traditional lottery games. A “Say No to Drugs” Lottery Fund may also reduce funding for existing Lottery beneficiaries as instant scratch-off revenue has remained relatively stagnant over the last decade. Each instant game produces a portion of the total instant ticket revenue. Dedicated instant tickets do not increase the total instant scratch-off revenue, but reduces total revenue available for appropriation to beneficiaries including Seniors, Education, and Tourism.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
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 0 385,200 539,280


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


The revenue estimates stated above are projections based on historical game performance and are not a guarantee of revenue. Revenue may be less based on actual performance and is expected to decline over time. Total available monies for legislative appropriation from the State Lottery Fund will be reduced by an estimated $385,200 in Fiscal 2017 and an estimated $539,280 in Fiscal 2018. Estimated costs include 7% sales commissions, base printing cost of 1.72% of sales, Vendor Fees of 4.28% of sales, 63.5%of sales in prizes paid, and administrative and advertising cost of 7.95% of sales. The estimated sales calculation for fiscal 2017 is based on an average of 2.5 dedicated $1 game orders of 960,000 tickets. The first year will not be a full year of sales due to the lead time required to design, print, and bring a new game to market. FY 2018 is based on an average of 3.5 games. There is not a defined end to this legislation, and sales are expected to diminish in subsequent years due to game fatigue.



Memorandum


N/A



    Person submitting Fiscal Note: Danielle Boyd, Managing General Counsel
    Email Address: dboyd@wvlottery.com