Ways and Means Debates VLT Tax Rates and Budget Impact as HB 2 Moves Forward

The House Ways and Means Committee met May 20 for a work session on HB 2 and related gaming proposals. Members heard testimony and data from New Hampshire Lottery Director Charlie McIntyre and State Senator Tim Lang (Senate Ways and Means chair) and reviewed DRA modeling of how the governor’s proposals would alter revenue flowing to the Education Trust Fund.

What the session covered The session focused on three linked issues: (1) technical and market differences between historic horse‑racing terminals and video lottery terminals (VLTs), (2) proposals for how gross gaming revenue from VLTs would be split between operators and the state, and (3) how proposed changes to business tax law and tobacco distributions in HB 2 combine with gaming proposals to affect the Education Trust Fund.

Senate and Lottery perspectives Senator Tim Lang, who chairs the Senate committee that reported a competing VLT bill, urged a middle ground on tax rates. He described a market‑sensitive approach that aims to keep New Hampshire competitive with nearby jurisdictions while giving operators enough revenue to reinvest in facilities and attract patrons. "Our tax rate we set was 35% on our tax rate," Lang said, explaining the Senate position and arguing that a tax rate materially lower than neighboring states helps operators reinvest in amenities that attract cross‑border customers. Lang suggested a compromise around the low‑to‑mid 30s percentage range if the House and Senate go to committee of conference.

Lottery director’s updated revenue estimates Charlie McIntyre told the committee the Lottery will update the fiscal note to reflect recent openings and rising per‑machine revenue. The director said earlier per‑machine estimates used in previous fiscal notes (about $150 per machine per day) are now "wildly low," and that the state is seeing an average nearer $287 per machine per day when outlier facilities are excluded. "If you're over $250 a machine, you add," he said, describing the industry rule of thumb that typically prompts operators to add machines or expand floor space as per‑machine revenue rises.

DRA analysis: education fund exposure Committee members reviewed a DRA spreadsheet that modeled how the suite of changes in HB 2 — including cuts to certain business tax distributions and the proposed allocations for gaming revenue — would affect the Education Trust Fund (ETF). The DRA model in committee materials showed, under the governor’s proposed layout and the state revenue baseline used by DRA, a net reduction in ETF receipts of roughly $95 million across the affected streams (BPT, BET and tobacco distributions). DRA staff advised that the size of that shift depends on the revenue baseline used; using the committee’s revenue estimates produces a somewhat smaller net shift (roughly $75–80 million in their sensitivity runs).

Committee discussion and next steps Members debated whether Ways and Means should recommend a specific tax rate for VLTs in HB 2, with some members urging retention of the governor’s figure pending finance‑side decisions and others urging a lower rate to keep the state competitive and to leave operators capacity to reinvest. Senator Lang recommended 32–35% as a practical compromise; other members advocated leaving the final tax decision for conference negotiations with the Senate. The Lottery director agreed to produce an updated fiscal note with revised revenue estimates by the committee’s requested deadline.

Key clarifying figures discussed - Estimated saturation point: roughly 6,000 machines statewide (spectrum report figure); current installed base about 3,500 (director’s estimate). - Recent per‑machine revenue (statewide, excluding some lower‑performing facilities): roughly $287 per machine per day, up from earlier estimates of about $150 per machine per day. - DRA sensitivity: under baseline used by DRA, combined changes in HB 2 would reduce ETF receipts by about $94.9 million; using the committee’s adopted revenue estimates produces a smaller shift (~$75–80 million).

Conclusion Director McIntyre will provide an updated fiscal note reflecting recent facility openings and higher per‑machine revenues, and the committee will weigh whether to recommend a specific VLT tax rate or leave the matter for conference with the Senate. Members noted that separate bills (such as HB 728) that specify allocations for charitable gaming and VLTs will interact with HB 2 and should be reconciled during final negotiations.