NEWELL, W.Va. - A bill pending in the West Virginia legislature could reduce by 15 percent the video lottery proceeds that help fund local government projects and the horse racing industry in Hancock County.
The bill, introduced Jan. 24 at the behest of Gov. Earl Ray Tomblin as a way to address an anticipated shortfall in the state budget, would reduce certain racetrack video lottery and limited video lottery net terminal income distributions by 15 percent - a change that could affect everything from the thoroughbred purse fund at Mountaineer Casino, Racetrack & Resort to the Hancock County commissioners' annual budget.
"This bill would annihilate the racing industry," said John W. Baird, president of the Mountaineer Park Horsemen's Benevolent and Protective Association. "It will cause thousands of residents to sell their homes, businesses and farms to move to another state."
Baird said he plans to testify at a public hearing on the bill scheduled for 4 p.m. today in the West Virginia House of Delegates chamber.
Hancock County Commissioners Dan Greathouse and Jeff Davis also plan to attend the hearing.
"It's a very dangerous bill," Greathouse said. "It would probably, at the very least, take $450,000 a year from Hancock County."
Greathouse said the county commissioners use the video lottery money for special projects and also distribute a portion annually to the county's three cities - Chester, New Cumberland and Weirton.
"That money we get is a big part of our budget. When you cut $450,000, you're going to put a crimp in our budget," he said.
Two percent of the revenue from the video lottery machines at Mountaineer goes to Hancock County commissioners, who share those profits with the cities based on their population. Since 2002, commissioners have distributed $7.6 million in video lottery revenue to the three cities, he said.
Greathouse recently touted the video lottery money - saved up over the last several years - as a big reason why the county has been able to undertake a variety of capital improvement projects.
"Part of it balances our budget. Part of it goes to the cities," he said.
On Monday, Greathouse appealed to members of Chester City Council to register their displeasure with District 1 Delegates Randy Swartzmiller, D-Hancock, and Ronnie Jones, D-Hancock, over the proposed cuts.
"This is unprecedented," Greathouse said. "Going forward, it could have a damaging effect on all of us."
Greathouse told councilmen that annual video lottery revenues from Mountaineer have dropped from $5 million to $3 million in the last five years. If it drops below $2.8 million, the annual $140,000 allocation for Chester will likely be cut in half next year, he said.
"We've been bracing for this for years," Chester Mayor Ken Morris said. "We all knew some day that it was going to happen, but I never thought we'd get blindsided by our own governor."
Revenue from legalized gambling in West Virginia comes from three main sources: table gaming at the state's racetrack casinos, slot machines at the casinos, and limited video lottery. The latter is played at the hundreds of video lottery cafes that have sprung up since limited video lottery machines were legalized in 2001.
Video lottery was introduced as an alternative revenue source at the state's racetracks in 1995, and Mountaineer currently houses more than 2,500 slots machines that are tied into the West Virginia Lottery system.
Over the years, because of the falloff in pari-mutuel betting purses, Mountaineer and the state's other racetracks - Wheeling Island Hotel-Casino-Racetrack (greyhound), Hollywood Casino at Charles Town Races (thoroughbred), Mardi Gras Casino and Resort (greyhound) - have become more dependent on revenue from video lottery terminals and table games, which were introduced in 2007.
However, after peaking in 2005, racetrack video lottery revenue to owners for purses and development funds dropped by close to 30 percent by fiscal year 2013, according to a new study by the West Virginia University College of Business and Economics.
Casino racetracks also have suffered a decline in revenue from increasing competition from legalized gambling in surrounding states - Ohio, Pennsylvania and Maryland, according to the WVU study. The anticipated opening of a racetrack casino in Austintown, Ohio, could further cut into Mountaineer's profits, Baird said.
Mountaineer is the largest employer in Hancock County, and, as such, plays "an outsized role in the county's economy," the WVU study said. The casino side generated an estimated $231 million in revenue in fiscal year 2013, with $19.4 million going to purses, $3.2 million going to breeder development funds, $135.9 million going to the racetrack operator and $72 million going to state and local government, the WVU study said.
Baird said the economic impact of Mountaineer on Hancock County goes beyond the direct employment numbers, which, in 2013, were between 1,270 and 1,300 people.
"This just doesn't affect jobs, it affects families," he said. "Families who work hard seven days a week to care for their animals. Despite how the media portray owners and trainers in the racing industry, we are not the wealthy individuals you see at the Kentucky Derby. We are farmers who take care of our animals and provide for our families."
Baird said the new legislation could affect the percentage of the purse that is used for the horsemen's health insurance fund and retirement fund.