West Virginia Lottery officials are closely monitoring legislation making its way through the Pennsylvania General Assembly that would significantly expand legalized gambling in that state.
"Those guys are aggressive, I'll just say that," acting lottery director John Myers said Tuesday of the legislation, which would make Pennsylvania the fourth state to legalize internet gambling, would allow state casinos to operate satellite locations with up to 250 slot machines each and would allow slot machines in airport terminals.
The bill passed the House of Representatives on June 28, on a 114-85 vote, and is pending in the Senate.
"Since that's happened, I haven't had a meeting with any of the commissioners to talk about our options," Myers said. "There are certainly things we need to consider going forward. To stay competitive, we'll have to consider these, as well."
The proposed gambling expansion is projected to produce $400 million a year in new revenue for Pennsylvania, and is part of a plan to close a $1.3 billion funding gap in that state's 2016-17 budget. The remaining $900 million a year would be funded through a proposed $1-a-pack increase in the state's cigarette tax, raising the tax to $2.60 a pack.
"They're evidently having the same kind of budget problems that we just had," West Virginia Racing and Gaming Association President John Cavacini said Tuesday of Pennsylvania's budget shortfall, referring to the West Virginia budget impasse that ended when the Legislature passed a tobacco tax hike.
For the West Virginia Lottery, expansion of gambling in Pennsylvania would be the latest competitive threat from a border state, Myers noted.
"We're surrounded by competition," he said.
Cavacini said it is important that West Virginia be prepared to respond to new competition.
"I don't think it's too early to be concerned," he said. "We, basically, started this gaming concept 22 years ago, and the other states have followed us. As a state, we've always been on the forefront of gaming issues."
Having enjoyed a regional monopoly in racetrack casinos from the 1990s to the mid-2000s, the West Virginia Lottery has since seen revenue drop each year, as dozens of new casinos have opened in Pennsylvania, Ohio and Maryland.
In December, the $1.2 billion MGM National Harbor casino resort, east of Washington, D.C., will become the latest threat to West Virginia Lottery revenue. Myers said projections are that the casino will reduce revenue at the Hollywood Casino, in Charles Town — the state's largest and most-profitable casino — by 15 percent to 25 percent.
Myers said the Lottery Commission will need to consider ways to compete, if Pennsylvania expands gambling. He noted that the Lottery Commission and the Racing Commission have talked about internet gaming in the past.
He said existing law probably would allow the Lottery to sell tickets for drawings over the internet, but permitting wagering on races via computer or smartphone, or wagering on interactive gaming, would require passage of new legislation.
If there is movement to legalize internet gaming in the state, Myers said he believes the best option would be to let the casinos operate the games, with the government regulating and taxing them, as currently takes place with traditional video lottery and table games at the casinos.
"I think that's definitely the way to go with it, although I think we'd need to have the law changed to do that here," he said.
Cavacini said it is critical that West Virginia be prepared to act, if and when Pennsylvania expands into internet gaming and other new gaming options.
"I'm sure, as soon as Pennsylvania does it, the other states are also going to," he said.