Senate committee passes gray machine bill in West Virginia

Randy Coleman

Thursday, March 2, 2000 | 10:22 a.m.

CHARLESTON, W.Va. - A proposal to legalize video lottery at bars and clubs in West Virginia has passed a second hurdle.

The Senate Finance Committee on Wednesday endorsed the bill and added amendments that designate how proceeds would be spent.

The bill would legalize video gambling in bars but remove the so-called gray machines from convenience stores and other places frequented by children.

Finance Committee members accepted an amendment offered by committee chairman Oshel Craigo, D-Putnam, that would dedicate half the machines' proceeds to infrastructure projects.

The remainder of the money would be divided among local communities in the form of grants. Craigo also proposed a program to help addicted gamblers.

Craigo said the money should generally be used to finance "capital expenditure-type things."

"We should not be depending on this money for day-to-day operating expenses," he said.

The state Lottery Commission would monitor the machines. The bill previously had been endorsed by the Senate Judiciary Committee.

The plan received little opposition, although some senators complained about the number of machines that would be allowed statewide.

Licensing fees of $10,000 would be paid annually by each licensed operator. There could be no more than five machines at any location and no more than 9,000 statewide. But Sens. Martha Walker, D-Kanawha, and Donna Boley, R-Pleasants, said 9,000 might be too many.

The bill would allow video gambling machines at adult-only establishments that hold a Class A alcoholic beverage license. By definition, that eliminates convenience stores and grocery stores. Also, machines not approved by the Lottery Commission would be illegal.

A recent count by the Lottery Commission and state alcohol regulators turned up about 8,900 video poker machines across the state. Lottery Commission Director John Musgrave told senators Wednesday that about 6,300 of those machines were in bars.

Musgrave said his agency has not estimated how much money West Virginia might collect by regulating the machines.

The commission has looked at Oregon and South Dakota, where video gambling games are controlled by lottery commissions.

Oregon, which started regulating video lottery in 1992, earned $225 million last year from 8,733 terminals. South Dakota, which has been regulating machines since 1989, took in $91 million from 7,989 machines.

Machines can now be found in restaurants, gas stations and grocery stores, something most lawmakers have said they object to. The machines are supposedly for entertainment only, meaning winnings cannot legally be paid out.

In West Virginia, there is a 6 percent tax on existing machines, but compliance is voluntary and tax revenue is believed to be significantly under-reported, state Tax Commissioner Joe Palmer said.