FISCAL NOTE

Date Requested: February 02, 2018
Time Requested: 01:34 PM
Agency: Lottery Commission, WV
CBD Number: Version: Bill Number: Resolution Number:
2034 Introduced HB4409
CBD Subject: Legal Gaming


FUND(S):

State Lottery Fund

Sources of Revenue:

Special Fund

Legislation creates:

Creates New Revenue, Increases Revenue From Existing Sources



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.
    
    HB4409 will allow all traditional games [instant games and draw games] to be sold in the same locations by removing restrictions on where the "Travel Keno" game (KENO) can be sold. Currently, the Lottery's five minute KENO draw game may only be sold in certain ABCA licensed, adult only environments (bars and taverns); it is the only traditional game with such restrictions.
    
    The Lottery anticipates an increase in sales of approximately $3,000,000, which after commissions, prizes, and administrative expense, approximately $600,000 in total revenue is projected to be deposited to the Lottery Fund upon full implementation.
    
    HB4409 will increase revenues from Keno game sales and increase deposits to the Lottery Fund. Any increases or new revenues deposited to the Lottery Fund may positively impact the debt service coverage ratio and, thus, protect the state's bond ratings.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
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 0 592,300 592,300


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.
    
    By allowing KENO sales at any traditional lottery location, the Lottery expects an increase in sales of approximately $3,000,000 without installing any new equipment or additional costs.
    
     Explanation of deductions from sales (gross revenue):
    
     Retailer Commission: 7%
     Approximate Player Expense: 60%
     Vendor Administrative Fee: 4.23%
     Lottery Administrative Fee*: 9.72%
    
     *Lottery Administrative Fee includes advertising.
    
     Net sales/Estimated total revenues: $592,300 [deposited to the Lottery Fund]



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.
    
    While the Lottery has approximately 1,500 traditional lottery retailers, only a small percentage are located in adult environments (bars and taverns). Currently, less than 300 retail locations offer KENO, and most of those locations are operated by dual-licensees who have limited video lottery (slot machines), and, in many cases, may offer KENO themed video lottery games for patrons to play in the same location.
    
    HB4409 is intended to stabilize revenue from KENO sales which will contribute to a small increase in the deposit to the Lottery Fund.



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