FISCAL NOTE

Date Requested: February 07, 2018
Time Requested: 11:55 AM
Agency: Lottery Commission, WV
CBD Number: Version: Bill Number: Resolution Number:
2235 Comm. Sub. SB415
CBD Subject: Legal Gaming


FUND(S):

West Virginia Lottery Sports Wagering Fund, State Lottery Fund

Sources of Revenue:

Special Fund

Legislation creates:

Creates New Revenue, Creates New Expense, Creates New Program



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.
    
    As a preliminary matter, it is important to note that implementation of sports betting in West Virginia is contingent upon a favorable United States Supreme Court decision that overturns a federal law, or a change in federal law that permits the state to begin accepting wagers. We anticipate the Supreme Court will overturn existing federal law in late spring or early summer.
    
    In addition to this contingency, there are a number of variables that make it difficult to project revenues related to this program. The following estimates are conservative projections based on the information currently available, however, potential revenues could vary in a fairly wide range. Additionally, according to the vendor who performed a sports betting study in West Virginia, the first year of implementation will result in the smallest share of revenue for the state, but over five years, these revenues will continue to increase, and additional tax revenue may also be increased through more individuals frequenting the state casinos.
    
    In the first full year of implementation, the following projections reflect the revenue impact anticipated from SB415:
    
     Gross Gaming Tax Revenue: $5,000,000
     License Fees: $500,000
     Total Revenue from Sports Betting: $5,500,000
     Administrative Allowance: $750,000
    
    Estimated Net Revenue to the State Lottery Fund in first full year: $4,750,000
    



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 0 750,000
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 0 5,550,000


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.
    
    Please see above response. Additionally, it is important to reiterate that these projections are conservative, and because of the multiple variables involved with implementing this new program, a wide range of projections have been made by industry experts. Of note, it is projected that the first year's revenue will be the lowest and will incrementally increase until it begins to stabilize around the third year, however, revenues may continue to incrementally increase until year 5 according to the projections provided by Eilers & Krejcik Gaming.
    
    Further, these projections reflect the assumption that all five eligible casinos/racetracks will implement sports betting within 90 days once federal law no longer prohibits such activities.
    
    In the first full year of implementation, the following projections reflect the revenue impact anticipated from SB415:
    
     Gross Gaming Tax Revenue: $5,000,000
     License Fees: $500,000
     Total Revenue from Sports Betting: $5,500,000
     Administrative Allowance: $750,000
    
    Estimated Net Revenue to the State Lottery Fund in first full year: $4,750,000
    



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.
    
    *** THIS FISCAL NOTE WAS FILED TO REFLECT THE CHANGE IN PROJECTED REVENUE ESTIMATED FOR THE COMM SUB FOR SB415 WHICH HAS CORRECTED THE OPERATOR LICENSE FEE. THE INTRODUCED VERSION INCLUDED THE $100,000 RENEWAL FEE, BUT WAS NOT REVISED BY THE LOTTERY TO REFLECT THE $100,000 INITIAL APPLICATION FEE THAT WAS AGREED UPON BY THE CASINOS AND THE WEST VIRGINIA LOTTERY. The impact of this revision is ($750,000).
    
    It is important to note that additional tax revenue will be received in addition to the above estimates from gaming, because more individuals will frequent establishments in West Virginia and contribute to the state economy in other ways-- hotels, restaurants, etc. Further, Eilers & Krejcik Gaming estimated that approximately 200 jobs may be created in the first year of implementation, which is a further stimulus to the economy.
    
    Additionally, as stated above, Eilers & Krejcik Gaming also projected that revenue from sports betting should increase incrementally over the first five years. So even though revenues may seem low in the first year, the potential to grow state revenues from sportsbooks is likely to occur in the new five years.
    
    A copy of the final study report prepared by Eilers & Krejcik Gaming should be available sometime in the first week of February [next week], however, preliminary findings are now available upon request.
    



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