Strong video lottery, scratch-off ticket play push Lottery back over $1B mark for 2020-21

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Record Limited Video Lottery play and strong sales of traditional scratch-off games helped offset a difficult year for West Virginia casinos, pushing state Lottery gross revenue back over the $1 billion mark for the 2020-21 budget year, after the pandemic during most of last year ended an 18-year streak of $1 billion revenue years.

“For the year, LVL helped us along quite a bit. It helped make up for the decrease in racetrack revenues,” Lottery Director John Myers said after Wednesday’s Lottery Commission meeting.

Through May, the Lottery grossed $1.07 billion, led by a record $440 million in Limited Video Lottery play at bars, clubs and fraternal organizations around the state.

Myers told commissioners that, when June revenue is tallied, the Lottery should finish the 2020-21 budget year with gross revenue of between $1.16 billion and $1.17 billion. The budget year ended Wednesday.

During Wednesday’s meeting, commissioners renewed casino licenses for four of the state’s five casinos, and auditors concluded that, despite a tough year, all of the casinos are financially sound.

The auditor conducting the financial review of The Greenbrier casino died of a heart attack, and that audit will not be completed until mid-July, commissioners were advised.

With casinos closed for nearly three months, and then required to operate at limited capacity under social distancing protocols for the remainder of 2020, all saw sharp declines in revenue for the 2020 calendar year, although two of the four managed to record small profits, auditors said.

Those included:

• Hollywood Casino at Charles Town, where revenue dropped from $319 million to $213 million, and profits fell from $38 million to $11.1 million.
• Mountaineer Casino, where revenue dropped from $99 million to $69 million. The casino had an operating loss of $9.2 million, following four straight profitable years.
• Wheeling Island Casino, which dropped from $115 million to $68 million, posting a profit of $1.5 million in 2020 after four years averaging $6.8 million a year in profits.
• Mardi Gras Casino, which dropped from $74 million to $47 million, and had an operating loss of $2.9 million following back-to-back profitable years.

Through May 2021, video lottery and table games at the state’s four racetrack casinos brought in a total of $371.43 million for the budget year. At the same point in May 2019, the last pre-COVID fiscal year, that total was $496.18 million.

(The Greenbrier resort’s casino has been the exception, grossing $7.29 million through May 2021, compared to $6.84 million at the same point in 2019.)

While the vast majority of casino patrons are from out-of-state, play of Limited Video Lottery at neighborhood establishments around West Virginia set records for 2020-21.

Through May, video lottery grossed $440.08 million, up 22% from $360.22 million at the same point in 2019, presumably driven by federal stimulus checks and bonus unemployment benefits. Limited Video Lottery set all-time monthly records in March and April, breaking the $50 million mark each month.

In May, video lottery revenue dropped back to $45 million.

Traditional lottery game revenue of $228.6 million year-to-date is up about 24% from the same point in 2019, driven by a nearly $52 million increase in scratch-off ticket sales, an increase Myers credited to Lottery staff. Responding to player demand, the staff has cut back the number of $1 games, putting emphasis on tickets that are higher-priced, but have larger and more frequent pay-outs, he said.

For May, the Lottery had gross revenue of $111.44 million, with the state’s share of profits totaling $52.28 million. Year-to-date, the state’s share of Lottery profits is $479.76 million.

Also Wednesday:

• Myers said that, for two of the past four weeks, racetrack video lottery revenue has outpaced LVL, which he said is an encouraging sign that the casinos are starting to bounce back.

Historically, racetrack video lottery revenue has far outpaced LVL, but the reverse has been true during the pandemic.

• Commission Chairman Ken Greear made note of casino data showing that out-of-staters continue to make up the large majority of patrons.

Mardi Gras has the highest percentage of West Virginia patrons, at 38%, while Mountaineer, at the tip of the Northern Panhandle, draws the lowest percentage, at 3%. Wheeling Island is at 10%, while Hollywood Casino, which draws heavily from the metro-Washington area, is at 13%.