FISCAL NOTE

Date Requested: February 08, 2017
Time Requested: 05:13 PM
Agency: Lottery Commission, WV
CBD Number: Version: Bill Number: Resolution Number:
1696 Introduced HB2105
CBD Subject: Natural Resources


FUND(S):

State Parks Lottery Fund

Sources of Revenue:

Other Fund

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 State Parks Benefit 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 (assuming the effective date is amended to September 1, 2017, because the current bill says September 1, 2016), and an estimated $539,280 in Fiscal Year 2018 (The State Park Benefit Game amounts). Revenue from the proposed State Parks Benefit 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 ration and secondary bond tests that rely upon deposits from traditional lottery games. A State Parks 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. Additional, it is important to note that the effective date of the game in this bill is designated as September 1, 2016. This is likely a technical defect but, as written, may cause confusion as to whether revenue obligations will be retroactively owed to the State Parks Lottery Fund.



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 2,014,800 2,820,720
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


First, as mentioned above, it is important to note that the effective date of the game is designated as September 1, 2016. This is likely a technical defect and could cause confusion in re whether revenue obligations will be retroactively owed. Fiscal Note is "best case scenario" and reflects estimated revenues only.



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