Lottery director plans for revenue decline
Lottery director John Musgrave hopes a multi-year decline in Lottery revenues will bottom out next year, but he will still plan for a decline when he submits revenue estimates to Gov. Earl Ray Tomblin.
Tomblin is preparing for a tight state budget next year. He has asked most state agencies to shave 7.5 percent from their general revenue fund budgets for next fiscal year so more money can be diverted to the state's burgeoning Medicaid program.
Musgrave said Thursday that Tomblin won't be able to count on any extra Lottery revenue to help with state finances next year.
"He's preparing for a tight budget, and we think it's going to be tight as well," Musgrave said.
For the last five years, new casinos in surrounding states have eroded the state's racetrack gaming revenue.
Since July 1, 2012, the state's four racetrack casinos have brought in more than $329 million in slot machine revenue, but that's down about $46 million for the same period the year before.
Overall Lottery revenues dropped from $706 million in July through December of 2011 to $664 million in the same months of 2012.
For years the state benefited from panhandle casinos drawing residents from border states that had few gambling options. But with growing casino markets in Ohio, Pennsylvania and Maryland, that advantage has dwindled.
"They've mimicked just about everything we're doing," Musgrave said. "So we've lost a lot of that cross-border business."
Musgrave said he expects out-of-state competition to have a further impact in 2013.
"We think that Ohio's going to open a few more facilities; we've still got Maryland table games getting up to speed. We think we will be impacted," he said.
Musgrave said he hopes the bottom will come soon but said the Lottery will stick to conservative budget projections.
"We're hoping that we're going to plateau here before long, but I think, for our projections, we're even cutting back just a little bit more for the out years," he said.
Even if the out-of-state competition is factored out, Musgrave said it's hard to make a case for significant Lottery revenue growth.
"One of the problems is that our population's not growing," he said. "We've got a steady population, and more of a senior population, so it's just hard to grow a product like the one we're involved with."
For the month of December, the lottery collected more than $106 million in gambling revenue, down $13 million from December 2011. Most of that decline was due to a nearly $10 million decrease in racetrack slot revenue, with the rest due to a decline in revenue from the neighborhood slot parlors.
Contact writer Jared Hunt at email@example.com or 304-348-5148.