Gov. Ralph Northam’s top finance official said on Thursday the state may have moved too quickly to open up to new forms of gaming this year.
Secretary of Finance Aubrey Layne said the state was caught off-guard by a dip in Virginia Lottery revenues and possible social impacts that have come as the state dabbled in new forms of gaming.
“I think we had some buyer's remorse by some of the people because of how much gaming was actually done so quickly,” Secretary of Finance Aubrey Layne said on Thursday.
Lawmakers approved Virginia’s so-called historical horse racing machines -- similar to slot machines -- in 2018. The first machines went online at Rosie’s Emporium at Colonial Downs in April 2019. At the same time, Layne estimates at least 12,000 barely-regulated “games of skill” have cropped up across the state; Attorney General Mark Herring has deferred prosecuting potentially illegal machines to local prosecutors.
The latter games have taken a sizable bite out of Lottery revenue, state officials say. Lottery profits are down 15% so far this fiscal year, according to a letter from Lottery director Kevin Hall to Gov. Northam dated Monday. The Lottery posted especially large decline this October compared to 2018, with profits dipping 36%.
“Sales of scratch tickets -- which represent over half of total Lottery sales -- continue to be affected by the expansion of the unregulated ‘games of skill,’” Hall wrote.
Layne said the dip has encouraged the Northam administration to take a cautious approach to adding new casinos or sports betting, even as he said the administration wouldn’t endorse specific approaches to the issue ahead of the General Assembly’s new session in January.
Last month, the General Assembly’s watchdog group, the Joint Legislative Audit & Review Commission (JLARC) issued a report on five proposed casinos across the state in Richmond, Portsmouth, Norfolk, Bristol, and Danville. Though some localities have pushed proposals from specific operators, JLARC recommended a competitive bid process, an approach also broadly endorsed by Layne.
“We do believe the more competition in terms of your procuring services for the Commonwealth,” Layne said.
The Lottery’s profits go towards Virginia’s K-12 public schools; it turned over a record $606 million to the Department of Education in fiscal year 2018.
