House Finance Division II reviews gaming and education revenue changes; committee adopts several accounting and budget motions

Representative Sweeney told the House Finance Division II on Thursday that an amendment the committee adopted earlier to legalize video lottery terminals (VLTs) and remove wagering limits from charitable gaming would raise materially more revenue than current historical horse racing (HHR) machines, and he walked members through his revenue projections for the budget cycle.

Sweeney said the amendment legalizes VLTs, taxes them at 30 percent, and removes limits on games; he said that under current projections HHR brings in about $29,000,000 in fiscal 2025 and would be projected to reach $33,800,000 in 2027 with no changes. With the combination of removed wager limits and legalized VLTs, Sweeney said he expects a mix of machines in the first budget year that would average roughly 1,500 HHR machines (about $300 daily gross gaming revenue per machine) and 2,500 VLTs (about $425 daily gross gaming revenue per machine), producing about $102,000,000 in state revenue and roughly $55,000,000 for charities in the first year after legalization as used in his presentation to the committee.

Why it matters: the committee is shaping baseline revenue assumptions used in the budget. Lawmakers debated the tax rate and the effect it would have on operators’ incentives to convert from HHR to VLT machines, and on how much revenues would flow to the state versus charities.

Sweeney described the operators’ financial calculus for converting machines, saying an HHR device under current limits generates roughly $300 in taxable revenue per day, while a VLT in neighboring markets can generate substantially more per day. “At a hundred and $25 per day per machine, they're able to recoup the revenue of themselves choosing to…