The limited video lottery act is a law that was passed in West Virginia in 1994 to legalize video lottery terminals (VLTs) in certain licensed establishments across the state. The act created a regulated video lottery program run by the West Virginia Lottery Commission to provide entertainment while generating tax revenue for the state.
What does the limited video lottery act do?
The limited video lottery act legalized the use of video lottery terminals for playing electronic versions of games like poker, blackjack, keno, and other variations. The terminals are similar to slot machines but the outcomes of games are based on probability like regular lottery games. The act restricts VLTs to only operating in bars, clubs, and retail outlets that have liquor licenses. It does not allow VLTs in locations that are strictly retail establishments like gas stations or convenience stores.
The act established a state video lottery where VLT retailers have to be licensed through the West Virginia Lottery Commission. Retailers receive a commission from the lottery for hosting the terminals, and the state collects tax revenue from the games. The limited video lottery program is administered by the Lottery Commission to regulate licenses, track revenue, and ensure the integrity of video lottery operations.
Key Provisions of the Act
Some key provisions under the limited video lottery act in West Virginia include:
- Created a state regulated video lottery program overseen by the Lottery Commission
- Restricted VLTs to facilities with liquor licenses like bars and clubs
- Established licensing requirements and fees for VLT retailers
- Provided tax revenue distribution from VLTs to state and local governments
- Required retailers to purchase or lease VLTs from licensed manufacturers
- Set maximum bets on VLT games and payout limits
- Required machines to have tamper-proof meters to track activity
- Banned anyone under 21 from playing video lottery games
What types of locations can have VLTs under the act?
The limited video lottery act specifies that approved retail outlets must hold a valid liquor license from the state to operate VLTs. This restricts video lottery terminals to these types of licensed liquor establishments:
- Bars
- Private clubs
- Restaurants
- Hotels
- Racetracks and gaming facilities
- Fraternal and veterans clubs with liquor licenses
Gas stations, convenience stores, and other retail locations without liquor licenses are prohibited from having video lottery terminals under the act.
What state agency regulates video lottery?
The West Virginia Lottery Commission is the state agency responsible for regulating and administering the limited video lottery program. The commission was given oversight authority under the act and handles:
- Licensing of video lottery retailers and manufacturers
- Testing and approving allowable VLT games
- Accounting and distribution of video lottery revenues
- Installation and maintenance standards for VLTs
- Security protocols and fraud prevention for video lottery
- Auditing and supervision of licensed retailers
- Addressing complaints related to video lottery
The West Virginia Lottery Commission maintains full regulatory control over every aspect of the video lottery program under the act.
What are the tax rates on video lottery games?
The limited video lottery act set a tax rate of 50% to be collected on the gross terminal revenue from VLT games. Gross terminal revenue refers to the total amount wagered at a VLT minus prizes paid out to players.
From the 50% tax rate, the revenues are distributed as follows:
- 48.5% goes to the State Lottery Fund
- 33.5% is distributed to county and municipal governments
- 7% goes to the Lottery Commission to cover operating and administrative costs
- 6% goes to the State Racing Fund
- 5% goes to the Tourism Promotion Fund
This tax structure allows the state to generate substantial revenue from the video lottery while also providing funds for local governments, tourism promotion, and the horse racing industry.
What are the limits on bets and payouts?
The act established some statutory limits on VLT betting and winnings to restrict the scale of wagers and payouts:
- Maximum bet limit of $2 per play
- Maximum payout on a single play is $500
- Maximum payout on a single promotional play is $1,000
- Maximum aggregate payout for promotional plays is $25,000 per promotional period
These limits prevent very large bets and jackpot-style payouts generally seen in other casino games. The restrictions aim to maintain video lottery as an entertainment option while generating regular tax revenues under controlled conditions.
Who cannot play video lottery games?
The limited video lottery act prohibits anyone under the age of 21 from playing video lottery games in West Virginia. Retailers are required to verify the age of players before activating VLTs or allowing play.
In addition, the act bans certain people related to video lottery operations from playing the games. Individuals prohibited include:
- Employees of the West Virginia Lottery Commission
- Contractors hired by the Lottery Commission to conduct services related to VLTs
- Any immediate family living with individuals employed by the Lottery Commission or its VLT contractors
- Retailers licensed to operate VLTs and their immediate family members
- Manufacturers licensed to provide VLTs and their immediate families
These measures help maintain integrity in video lottery operations and prevent insider manipulation or advantage play.
How are retailers and manufacturers licensed?
The act lays out a licensing process for retailers to operate VLTs and manufacturers to supply VLTs and associated equipment:
Retailer Licensing
- Applicants submit license application and fees to the Lottery Commission
- Lottery Commission reviews suitability based on qualifications and background checks
- Commission staff inspect proposed VLT premises
- Applicants and premises must meet suitability standards
- Annual license fee of $1,000 for approved applicants
- Licenses can be renewed annually for a $1,000 fee
Manufacturer Licensing
- Applicants submit license application and $10,000 initial fee
- Lottery Commission reviews manufacturer’s qualifications and product designs
- Testing of VLTs and associated equipment by approved facilities
- Annual renewal fee of $10,000 if manufacturer remains suitable
Licensed retailers and manufacturers are subject to penalties, suspension, or revocation of licenses if found in violation of video lottery regulations.
What types of video lottery games are allowed?
The Lottery Commission has approved various VLT games that fall into these major categories:
| Game Type | Description |
|---|---|
| Slots | Electronic slot machine games with spinning reels and payline wins |
| Video poker | Electronic versions of poker games like Jacks or Better with payouts for poker hands |
| Keno | Electronic keno games where players select numbers to match random draws |
| Electronic blackjack | Computerized games simulating the play of blackjack in a casino |
These VLT games mimic the entertainment experience of a casino while offering regulated lottery play. The games utilize random number generators and probabilities like traditional lottery products.
How are minors prevented from playing VLTs?
The limited video lottery act contains various requirements to prevent those under 21 from accessing VLT games:
- Retailers cannot allow minors to play or be near VLTs
- Minors are prohibited from playing VLTs under the act
- ID scanners must be used to verify age before activating VLTs
- Surveillance systems must monitor VLT areas for underage access
- Retailers face license suspensions or fines for allowing minor play
- Clear age requirement signage must be prominently posted
In addition, the Lottery Commission conducts undercover sting operations at retail locations to catch any violations of the minimum age requirement.
What are the penalties for violations?
The act establishes civil penalties and license suspensions or revocations for those who violate video lottery regulations. Violations include:
- Allowing access by minors
- Issuing improper payouts
- Tampering with VLTs
- Non-payment of prizes
- Underreporting revenue
Penalties can range from warnings and fines up to complete revocation of a video lottery license for serious or repeat violations. Criminal charges can also apply for certain violations like manipulation of VLTs or illegal payoffs.
How does the state ensure game integrity?
The Lottery Commission utilizes technical standards and security protocols to ensure the integrity of video lottery operations. This includes measures such as:
- Independent testing of VLT software and hardware
- Secure communication protocols for data and transactions
- Encryption and tamper-proofing of VLT components
- Restricted access to critical VLT systems
- Surveillance monitoring of VLT areas and access points
- Accounting standards for VLT meters, revenue, and payouts
- Investigations into irregularities or anomalies
Licensed retailers must also adhere to security standards for controlling access to VLTs and protecting critical systems. Any evidence of tampering or manipulation can result in severe penalties against responsible parties.
What are the main aims of the act?
The limited video lottery act in West Virginia was primarily designed to:
- Generate tax revenue: Creates a regulated video lottery program to earn tax income for state and local budgets.
- Provide entertainment: Offers controlled video gaming options as an entertainment activity.
- Support in-state industries: Provides business opportunities for hospitality and tourism sectors.
- Limit gaming: Restricts VLTs to specific licensed premises unlike casino gaming.
- Curb illegal gambling: Creates a legal alternative to unregulated slot machines and video gambling.
The act aims to balance gaming entertainment with responsible regulation and take advantage of potential economic benefits for West Virginia.
Conclusion
The limited video lottery act legalized regulated video lottery terminals in West Virginia under the administration of the state Lottery Commission. The program allows VLT gaming in licensed liquor establishments to generate tax revenue for state and local budgets. Strict licensing and security protocols aim to ensure integrity and prevent abuse. The act provides controlled gaming entertainment while capturing economic benefits for the state’s tourism, racing, and government sectors. The Lottery Commission oversees all aspects from licensing to auditing and enforcement to uphold the regulatory standards of the video lottery program.
