The Performance of LVL Machines in West Virginia

Brooke County has more retailers offering video lottery machines per capita than any other county in West Virginia-more than 3 ½ times the average in the state. Stacy Acree, the senior accountant for the West Virginia Lottery Commission, said on December 21st, 2009, that it is also the only county in the Northern Panhandle that has not experience any increase in LVL revenue in the fiscal 2010 from this point last year.

According to the commission's online site, seventy-five Brooke County retailers hold licenses to feature gambling on their facilities. That means that there is one facility with slot machine for every 313 individuals in the county, based on the 2008 census estimates. Statewide, there are about 1,619 license holders or about one for every 1,120 residents in the Mountain State.

Hancock County is not that far behind Brooke, with one for every 322 individuals. Elsewhere in the Northern Panhandle area, the ratios are well above the general average in the state: 428:1 in Ohio County and 448:1 in Marshall County.

The chief financial officer for the Lottery Commission, Jim Toney, said that he is not sure why Brooke County is lagging behind LVL earnings while the counties of Ohio, Hancock and Marshall each have experienced increases in earnings over the last year.

Toney said that the lack of accessibility of Brooke County from adjacent states could be a significant factor as main arteries like the US 22 through Interstate 70 and Weirton through Wheeling help bring gamblers from outside the state.

It is not a secret that the Northern Panhandle hosts a big percent of West Virginia's LVL machines. Despite being home to just more than 130,000 of the roughly 1.8 million residents in the Mountain State, Ohio, Brooke, Hancock and Marshall counties hold 1,749 of the eight thousand machines currently in West Virginia.

Toney said that smoking bans are another important factor that can affect the viability of the machines. Of the fifty-five counties in West Virginia, forty-five counties have restricted where gamers can smoke. Hancock County has no such smoking ban. Brooke County does not allow smoking in enclosed workplaces except in restaurants and bars while the smoking ban in Marshall County includes restaurants except for bars.

Ohio County's smoking ban includes both restaurants and bars but allows exceptions for rooms that offer LVL machines. According to Toney, those rooms considered "safe havens" for smokers can be beneficial for LVL revenue. Toney said that while Ohio County has about 2/3 the number of machines as Kanawha, Ohio County has earned more revenue from the LVL machines this fiscal year compared to Kanawha-which imposed a smoking ban including restaurants and bars in July 2008.

Since West Virginia approved the Limited Video Lottery Act in 2001, LVL gaming has produced more than $2 billion in net sales. The annual earnings of the state have grown steadily throughout the decade, from about $45.7 million in fiscal year 2002 to $397 million in fiscal 2007 and $411.5 million in fiscal 2008.

Lottery Commission Director John Musgrave said that there are a lot of reasons for the slowdown in LVL revenue growth-one of them is the current economic condition and the competition from neighboring states. Musgrave said that the low population of West Virginia means that the state has to rely on neighboring states to improve its player base.

But some out-of-state gamers now have the choice staying closer to home with the state of Pennsylvania offering slot machines. More gaming competition is expected with the state of Ohio's approval of Issue 3, which allows construction of casino facilities in Cleveland, Cincinnati, Cleveland and Toledo.

Thursday, 25 February 2010
Theo Evans