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Clarksburg Publishing
Company 2002

Clarksburg
Publishing Company,
P.O. Box 2002,
Clarksburg, WV 26302
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CURRENT STORIES


W.Va. leads nation in budgeting with gambling revenue

Ahead of other states in filling

coffers with

lottery money

by Lawrence Messina

THE ASSOCIATED PRESS

CHARLESTON -- In his failed bid to abolish video poker machines, Jackson County lawyer Larry Harless argued before the Supreme Court that state government had become the biggest gambling addict in all of West Virginia.

"It is fiscally hooked," Harless told the justices during an Oct. 10 hearing.

Harless may be right.

West Virginia expects to reap $419 million from its lottery system this budget year. That's about 14 percent of general revenues, making West Virginia among the states most dependent on gambling proceeds for their budget needs.

The lottery -- the poker-style machines targeted by Harless, the racetrack video slots and the traditional instant games -- has earned the state $1.7 billion since the first tickets were sold in January 1986, according to the industry publication LaFleur's.

Those profits were drawn from $5.05 billion in sales. Sales topped $1.08 billion in the budget year that ended June 30, and equaled nearly $600 for every state resident.

On a per-capita basis, only three of the 39 other states that offer lotteries topped West Virginia in sales.

And West Virginia has geared its lottery system for this sort of haul. A 2002 study by industry analysts Christiansen Capital Advisors estimated that West Virginia's take equaled an effective tax rate of 36 percent. Nevada, with casinos and resorts that draw tourist dollars worldwide, had an effective tax rate of 7.6 percent.

If anything, West Virginia is cashing in on a national trend. According to CCA, people gambled away $68.6 billion last year at casinos, racetracks, riverboats and other settings allowed by state laws. That's a $10.4 billion increase from 1999, and these gamblers generated more than $20 billion in revenues for the states that hosted them.

This embracing of gambling by state budgets appears to be part of a cycle.

In his video lottery challenge, Harless noted that the framers of West Virginia's Constitution singled out state-run lotteries for a ban because of Virginia's bad track record with them. According to a 2001 Indiana University report on state-run gambling, most states had abandoned lotteries by 1900 largely because of fraud and abuse.

Although New Hampshire and New York started lotteries in the 1960s, interest in the games did not catch on until the following decade. A dozen states adopted them then, and 18 more, including West Virginia, followed in the 1980s.

Meanwhile, nine states have joined Nevada and New Jersey, home of Atlantic City, to offer traditional casinos. Four confine gambling to riverboats: Indiana, Illinois, Mississippi and Missouri. A fifth riverboat state, Iowa, also offers "racinos," or slot machines at racetracks.

Colorado, Michigan and South Dakota have land-based casinos, while Louisiana has both riverboats and casinos.

American Indian casinos, meanwhile, became a $12.7 billion industry last year, CCA estimates. At least 23 states see gambling on their American Indian lands, with tribal casinos in California and Connecticut raking in nearly half the total action.

Now, all but Hawaii and Utah allow some form of gambling. Tennessee had also been a holdout, but voters there removed a constitutional ban on lotteries last fall.

But the renewed interest in gambling as a revenue source could come at a price for West Virginia.

The state's lottery sales have increased by double digits for 14 straight years. The Indiana University study estimated that only three other states saw greater growth in the 1990s. But Lottery Commission revenue estimates predict an end to this growth, and soon.

Lottery officials believe sales will again top $1 billion this budget year, and project a gross of $1.135 billion. But sales will stay at that level and remain flat for the next two budget years, officials estimate.

What's more, officials expect the budget year will end with all four of the state's racetracks maxed out on the number of video lottery machines "that are economically feasible to operate as well as having fully implemented the higher maximum bet limits to meet market demands," according to this year's budget proposal from Gov. Bob Wise.

This trend will likely aid efforts by the racetracks and the counties that host them to expand to full-blown casinos. As the budget proposal observed:

"In addition, states contiguous to West Virginia may be poised to take some action in these years to legalize racetrack video lottery. Such action by one or more states could have a detrimental impact on racetrack video lottery revenue."

------

Lawrence Messina covers the statehouse for The Associated Press.