I am writing this mostly to express my opinions and views from a gambler who lives in West Virginia. I have provided some facts and estimated numbers based on information that I have read, been told, and experienced. I am not affiliated with any of the industries mentioned. The State of WV should get out of the gambling business. I am not saying to make it illegal; I am merely saying they need to let it be run by someone other than a government body.

Governments notoriously take advantage of the system to use these things as slush funds. WV is no different. If they want more money they simply raise fees or lower payouts.

West Virginia has seen a decline in lottery revenue over the last few years. While you may not immediately make the connection between lottery and slots, allow me to explain.

Lottery has been in WV since 1986. The state needs this money like we need water and air. Nearly every attempt to allow gambling in the state had been met with little success until 1994 when the state allowed video lottery. This act classified “slot” machines as Video Lottery Terminals. This was initially for the states 4 racetracks. However, in 2001 the “Limited Video Lottery Act” (LVL) was passed.

“The machines were legal, the payout’s were not”

Poker machines had been in most bars and clubs in the state prior. The owners may or may not have paid out. The one’s that did pay out were called Gray machines because the machines were legal; the pay out’s were not.

It was common knowledge at this time that the state agencies were aware of them and would occasionally stage raids; so to speak. The bars in good standing (I don’t know what that meant) would receive a warning prior. The bars that were targets would not receive any warning. I believe this was allowed to go on because the state wanted it to become commonplace and thus, get less resistance later when they wanted to swoop in and regulate the criminal activity.

The LVL act of 2001 allowed the state to purchase machines and have a bidding process for the licenses. One license for each machine. I am not sure what it was in 2001. However, in 2011 they re-bid them and the price per license averaged around $16,000 each. There are 10,000 machines total. Quite a hefty amount for West Virginia.

You might be saying, wait a minute; WV has Casinos in the state. Yes, we do, but not until very recently. Prior, they were just racetracks, either horse or dog tracks, and were not allowed to have table games as they do now. It is all still controlled by the WV state lottery regardless. I know there were some “deals” that went on to allow the table games to enter the scene but I do not know many details, yet.

Let’s say that I want to open a place and have LVL machines. I am not allowed to have more than 5 machines in any one location unless I am a fraternal group. Then I am allowed 10. I cannot just call up the state and purchase a license. There are none, remember? I will need to contact a company that won the bid.

The WV lottery commission takes 52% of the revenue leaving 48% for the owner of the licenses/machine. Also, note it is a tradition for WV to raise their amount at will. The remainder (48%) is shared between the owner of the bar or lounge and license/machine owner. There isn’t a lot of meat left on the bone for the owner of a bar. However, most of these are in what is known as a “Lounge”. The lounges are essentially bars but the focus is on gambling.

The profit margin is truly slim, as they can only have 5 in any one location and is lucky to get 22% of the revenue. Not 22% profit; all expenses come out of that amount, rent, utilities, labor, cable, internet, food and drink. Even 22% of the Jackpots. The lounges normally give away Soda, Chips, and some sort of food item. They are not allowed to give beer away, nor are the Casinos. Why? You ask. The state of WV says it is an enticement for people to gamble. I will give you a moment to chuckle…

The lounges are NOT permitted to advertise or display signage that is related to gambling. It cannot say Casino, Lucky 7’s, High Rollers, or even have a depiction of dice on a sign. It can only display a WV lottery sign.

What this structure does is require the lounges to hold an ABC license as well. The more lounges (only 5 Machines in each) the more ABC licenses the state sells.

So, it’s 2014 and the Lottery is crying because the revenue is down. They are quick to blame the legalization of gambling in neighboring states. Mike McKown of the state budget office said this, “the downward trend is due to out-of-state competition by racetracks and casinos in border states, such as Pennsylvania.” McKown also said that the unstable economy is likely keeping fewer people from gambling.

While that is true; it is only a small part of the drop in revenue.

The same article goes on to say, “There was significant growth last year, but it was across the board in a couple of different areas,” said Mark Muchow, deputy secretary of the Department of Revenue. “Non-farm payroll employment actually increased a little bit during the year, and the increases were concentrated in the energy sector.

As a matter of fact, the article says it was 149% above projection. It doesn’t sound like the economy could possibly be the issue.

As a matter of fact according to the 2012 WV Lottery financial report. The WV lottery operated at a 1.9% overall operating expense. It returned $81 million back to the state.

What business or government operates on a 1.9% operating expense? I only wish. This is simply either a lie, or they are taking way more money than they should be.

While the proceeds are supposed to be for education, roads, and the elderly, looking at this report is like reading Swiss cheese.

“The Lottery’s mission is to generate revenue to fund programs

benefiting education, senior citizens, tourism and other programs that

the Governor and the Legislature deem appropriate.”

The public is being sold a bill of goods that doesn’t exist.

The State continues to propagate these lies by only advertising the money that they use for the elderly and education. Most people outside of the government have no idea that the money is being used however the Governor deems appropriate.

We are used to being lied to, the bigger issue is that the LVL machines have been continually tightened making people play them less.

They have not learned that if there is no ass in the chair, there is no chance at the customer’s money. They have furthered the problem by allowing fewer small winners and concentrating on jackpots. You know the magic amount that you have to pay 37% tax on. Again, the state’s accounting is delusional as most of these people fortunate enough to win a jackpot will not have to pay taxes. This is either because they aren’t required to file taxes or they have losses to offset them.

I have personally watched as this happened. I have had many hits that paid high amounts in the past. I usually document my bigger hits by taking pictures and in comparing them, noticed the same hits previously paid more. I have also witnessed the state removing individual games from machines and changing them before re-installing them remotely. You know, if they feel like they are playing well, they probably are. Anyone who sits down in Vegas long enough can usually tell right away those slots are far looser. Yes, it is that obvious.

You may ask yourself; who makes these evil super low-payback machines designed to be manipulated? They are all made by IGT (International Gaming Technology). Who manufactures many of the slots you see today. They are the world’s largest interactive video gambling company.

The point is that the WV lottery configures and bastardizes them however they wish, which is always in their favor, not the players. One example is that IGT’s enchanted Unicorns game is intended to have a possible 3 rows of Unicorns. The machines in my local lounges only have 2 rows. The WV Lottery monitors these games, live. What I mean by live is that they have a direct connection to each of the machines. I have witnessed many occasions where the internet drops out and the machines shut down until the internet is restored, and there is no one else regulating them.

See more at http://www.state.wv.us/lottery/CountyMunDistribution.htm

Doing the Math it All Adds up Right?

No. The total revenue amount is usually around 10% of the amount wagered monthly. So, a location that has $263,000 played, (Average for my area) in a month will produce around $26,300 in revenue. The Lottery keeps $13,676. Leaving $12,624 for the machine owner to share with the lounge. Approx. $5786.00 for the lounge. If you consider that the lounge operates 600 hours a month; that is $4,350 in labor at min wage. Average $1000 for rent. Utilities, insurance, and supplies could easily account for another $2500 per month. You can see expenses $2000+ higher than revenue, or a loss of $2000. The state profits the most from this scenario.

There is also a mysterious skim fund that has alluded many… until now!

It is a fund that is been used to help problem gamblers across the state. It is supposed to have 10% set aside at all times. I have spoken with people who were actually part of the board that set up the problem gambler program. The majority of the fund cannot seem to be found anymore. Money is being set aside for it. Last I heard it was only accessible to the Governor. With only 1 million per year being donated to 1800gambler.net where is the rest? Maybe it is not so legal after all.

The program for problem gamblers is essentially nonexistent. It usually includes a line at the end of a WV Lottery commercial stating “Please play responsibly”. While there is finally a phone number to a hotline established, it is only to refer you to a doctor or therapist. One that you must pay for yourself.