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 transition from HHR to VLT within a couple of weeks of gameplay,” Sweeney said, noting that mechanical, regulatory and leasing constraints will stretch that conversion time for many operators to four to six months. He added: “In order to incentivize that transition, that's where we came to the 30% tax rate.”

Opponents and some members pressed Sweeney on his underlying assumptions and external validation. Representative Murray asked whether Sweeney had professional gaming-industry expertise; Sweeney replied he used publicly available reports and conversations with market participants. Representative Hacken Phillips (asked as a committee member in the transcript) and others urged caution and asked for supporting documentation; Sweeney said he would share the analysis and underlying projections with staff.

Keno local option repeal debated. The committee also considered an amendment (listed in the packet as amendment 1304) that would repeal the municipal local-option requirement for keno games, a change the sponsor estimated would generate about $2,000,000 in fiscal 2026 and $10,000,000 in fiscal 2027 in additional lottery profit. Several members said the keno local-option removal would remove municipal control, and at least one member said they would vote against the amendment because towns such as Portsmouth and Rye opposed keno. Other members said the change would expand lottery revenue and simplify licensing.

Budget accounting and adequacy: members continued a substantive discussion about where lottery revenue is recorded in state accounting and how the revenue should be dedicated. The packet and handouts presented a structure in which restricted lottery revenue would be dedicated directly to the adequacy line in the budget rather than flowing as an unrestricted deposit into the Education Trust Fund. Legislative budget staff explained that, under the state's chart of accounts, the adequacy activity will still sit under the Education Trust Fund accounting umbrella but lottery receipts intended for adequacy would be restricted and not counted as unrestricted trust fund surplus. Some members asked for a single-sheet display showing the remaining Education Trust Fund components and the amounts attributed to each component; legislative budget staff agreed to produce that committee-level explanatory schedule.

Education Freedom Accounts: the committee voted on updated cost estimates tied to expansion and uptake of Education Freedom Accounts (EFAs). Members debated available estimates and take-up assumptions. Representative Popovich moved the EFA-related adjustment on the tracking sheet and, after discussion, the committee adopted the item on a recorded voice/hand vote that the clerk recorded as 4 in favor, 3 opposed. Members opposing cited incomplete guardrails and accountability concerns; supporters said the estimates were produced using third-party analyses and historical takeup patterns and that the committee’s role was to reflect the likely fiscal impact of the policy choices already adopted.

Clerked votes and committee actions taken. Several recorded committee decisions were completed before the meeting adjourned: • The committee accepted revised base lottery revenue estimates provided by the Lottery Commission (the motion recorded on the tracking sheet as the adjustment on line 14). The committee voted to accept those revised base revenues by voice/hand vote (7–0). • The committee adopted item number 1 on page 8 of the tracking sheet (technical correction to an education trust fund line) as corrected in the meeting; the motion passed by voice/hand vote (7–0). • The committee adopted amendment 1346h (budget footnote language restoring boilerplate appropriations language for the community college/university footnote) on the tracking sheet; vote recorded 7–0. • The committee adopted the tracking-sheet consolidation of previously approved abolished positions (amendment 1348h on page 11 of the tracking sheet); roll-call/hand vote recorded 4–3 in favor. • The committee reconsidered and then voted to remove a previously placed amendment (the evidence-based bill, listed earlier in the packet as amendment 1189h) from HB 2; that reconsideration and the motion to withdraw were recorded and passed 7–0. • The committee authorized the Office of the Legislative Budget Assistant to make technical and mechanical changes to HB 1 and HB 2 to reflect the division’s approved recommendations; that motion passed 7–0.

What’s next: lawmakers set a follow-up session for Friday at 1 p.m. to complete two outstanding items flagged by staff — the University of New Hampshire line and proposed changes to business tax splits between general and Education Trust Fund accounts — and to allow the budget analysts to reconcile calculations after the day's votes.

Ending note: the meeting transcript shows members repeatedly pressing for supporting documents and for more-detailed revenue models before finalizing estimates tied to new gaming policy and voucher expansion. Legislative staff agreed to provide reconciliations and a one-page schedule of Education Trust Fund components for Division II to review before the next meeting.