House Ways and Means Committee Briefing. Stephen Martino, Director February 5, 2015

Transcription

1 House Ways and Means Committee Briefing Stephen Martino, Director February 5, 2015

2 Lottery Highlights Fiscal Year 2014 Highlights: Sales: Prizes to players: $1.72 billion $1.02 billion Revenue to the state: $521 million

3 Sales by Lottery Game

4 Fiscal Year 2015 Year-to-Date Lottery Sales and Revenue FY15 YTD % Change from FY14 YTD Sales $1,028,218, % Revenue $302,240, % We continue to see a shift in traditional lottery player behavior, as YTD scratch off sales are up 16%. An independent study revealed that the closer a player lives to a casino, the lower his propensity is to play lottery. Keno is the most negatively affected by proximity to a casino. Keno makes up close to 18% of annual sales, and FY15 YTD sales are down 8% or -$2.5 million. Total annual effect of all six casinos is estimated to be -$95.5 million (-5.5%)

5 Instant Ticket Lottery Machines The Agency began installing the Instant Ticket Lottery Machines (ITLMs) in September 2014 The ITLM program benefits Maryland veterans service organizations (VSOs). VSOs have made $718,000 via the program to support their organizations 160 ITLMs have been installed in 42 VSOs in Maryland 75 more ITLMs will be installed within the next six months

6 Maryland Casinos

7 Casino Revenue Distribution Casino Gaming FY14 - $833.3 million in revenue

8 Revenue Projections versus Actual Performance Although there is a greater variance between the consultants projections and actual performance when viewed by individual casino, overall, actual revenues are 1.6% greater than the consultants projections for the first half of FY Consultants Oct Projections July - Dec FY 2015 Actual Performance July - Dec FY 2015 % Change Horseshoe Casino Baltimore* $119,653,699 $96,900,188-19% Maryland Live $283,511,233 $315,382,053 11% Hollywood Casino Perryville $41,185,753 $39,107,224-5% Overall Percentage Change $444,350,685 $451,389, % *Horseshoe Casino Baltimore only operated for 128 days, compared to 184 days for the other two.

9 Gaming Revenue Contributions Since the inception of slots program in Maryland, contributions from slots revenue to the various funds and accounts continue to increase. Gaming Program Contributions to the State of Maryland TOTAL: $2,326,844,672 (As of Jan. 30, 2015) Designated Accounts Total Casino Operators $1,025,677,047 Maryland Education Trust Fund $980,984,427 Horse Racing Purse Dedication Account $125,023,792 Local Impact Grants $98,704,416 Racetracks Facility Renewal Accounts $32,043,082 Maryland Lottery and Gaming Control Agency $37,492,522 Small, Minority, Women-Owned Businesses $26,919,386

10 Casino Operator s Share of Slot Machine Revenue Horseshoe Casino Baltimore Maryland Live! Hollywood Casino at Perryville The Casino at Ocean Downs Rocky Gap Casino and Resort MGM National Harbor Pre-July 2013 Operator s Share - 33% 33% 33% 50% - As of July 1, % 33% 33% 43% 50% - Machine Ownership: April 1, 2015* Issuance of Prince George s license (no earlier than 7/1/16) Commission MAY award increase; not until July 1, % (6% included in opening rate) 8% 6% 0% 0% 6% **7% **8% 0% 0% 0% 38% Up to 3% Up to 2% Up to 5%** 0% 0% 0% May 22, 2023*** % - *Facilities with less than 1,000 slot machines (in Worcester and Allegany Counties) do not have to assume ownership of the machines; in turn, Ocean Downs gets a 43% operator s share, provided it spends 2.5% of slot machine proceeds on capital improvements each year. Rocky Gap has a different formula for its first 10 years of operation. **To be used for marketing, advertising, and promotional costs and capital improvements. If Commission increases percentage in Anne Arundel County, the Commission shall increase the percentage for Baltimore City by at least the same percentage point increase as for Anne Arundel County. ***After 10 years of operation, Rocky Gap reverts to a 43% operator s share, provided they spend 2.5% of slot machine proceeds on capital improvements.

11 Slot Machine Count by Casino Although 16,500 slot machines are authorized statewide, casinos have been requesting to reduce the number of slot machines on their gaming floors. Horseshoe Casino Baltimore Maryland Live! Hollywood Casino at Perryville Casino at Ocean Downs Rocky Gap Casino and Resort MGM National Harbor Total Authorized Slot Machines 3,750 4,750 2,500 2,500 1,500 3,000 16,500* Slot Machines Awarded 3,750 Amended to 2,500 4,750 1, Amended to 577 3,600** 15,250 Slot Machines Currently Authorized 2,200 3, ,349 *Per State Government Article 9-1A-05(a)(2), the state may not exceed 16,500 machines total. **Per State Government Article 9-1A-36(i)(2), the Video Lottery Facility Location Commission may allocate [slots] in a manner that is different from the allocation provided in paragraph (1), given certain factors are met.

12 Slot Machine Transition April 1, 2015: Maryland Live and Hollywood Casino procure their own slot machines The slot machines at both locations are currently owned or leased by the state. To minimize revenue loss to the state during the transition, MLGCA has repositioned state-owned slot machines and negotiated their sale primarily to Maryland Live and the Hollywood Casino. Proceeds from the sales, estimated to be $7.8 million, will be applied to the final $8.6 million bond payment for the slot machines that is due in September State law requires MLGCA to continue to provide slot machines to Casino at Ocean Downs and Rocky Gap Casino and Resort. MLGCA has repositioned these casinos from a state-owned to a state-leased model. MLGCA is currently engaged in a Request for Quotes (RFQ) to lease slot machines under the 5-year renewal period of the Master VLT contract for these two casinos.

13 Net Savings to State from Transfer of Ownership In a 2014 Joint Chairmen s Report, the Agency, in consultation with the Department of Budget and Management, estimates that the State could expect a cost savings as a result of the transfer of slot machines from State ownership to casino ownership. FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 $21,818,313 $54,666,547 $85,353,412 $85,080,426 $87,291,140

14 Table Game Revenue Currently, there are 375 table games at four casinos. It is expected that MGM National Harbor will have 160 table games. Ocean Downs does not operate table games. Table Games Revenue Fiscal YTD 2015 Non-Banked Games $16,674,835 Banked Games $151,517,174 Total $168,192,009 Education Trust Fund $33,638,402 Casino Share $134,553,607

15 Casino Employment Currently, there are approximately 5,940 casino related jobs at five casinos. When MGM National Harbor opens, it is estimated that another 4,000 jobs will be added. Horseshoe Casino Baltimore Maryland Live! Hollywood Casino at Perryville Casino at Ocean Downs Rocky Gap Casino and Resort MGM National Harbor Gaming Full-time Gaming Part-time Non-Gaming Full-time 1,390 1, , ,695 Non-Gaming Part-time Total 2,140 2, ,000

16 Responsible Gambling Casino Participants Lottery Participants Total Number of Participants The Maryland Lottery and Gaming Control Agency operates voluntary exclusion programs (VEP) for individuals who wish to ban themselves from Maryland casinos or the Maryland Lottery. Casino voluntary exclusion: Voluntarily excluded from entering any Maryland casino, as well as cashing checks and using credit cards, and removed from all casino direct marketing lists. Lottery voluntary exclusion: Ban themselves from receiving Lottery prizes or any direct mail/ promotional materials as well as second chance drawings and reward programs.

17 Questions?

18 Appendix A: Distribution of Slot Proceeds Accounts FY 14 *7/1/14 3/31/15 4/1/15 6/30/15 FY 16 FY 17 Local Impact Aid 5.50% 5.50% 5.50% 5.50% 5.50% Purse Dedication Account (PDA) 7.00% 7.00% 7.00% 7.00% ***6.00% Racetrack Facility Renewal Account (RFRA) Small, Minority and Women- Owned Businesses Account MLGCA Operations 1.75% *1.00% 1.00% 1.00% 1.00% 1.50% 1.50% 1.50% 1.50% 1.50% 2.00% 2.00% **1.00% 1.00% 1.00% *Change took effect on August 26, 2014 (the date a license was issued to Horseshoe Casino) with a not to exceed total of $20,000,000 to this account annually. **Change will take effect on April 1, 2015, with the transfer of slot machine ownership to the casinos. ***Change will take effect in FY17 (on the date MGM National Harbor is issued a license) with a not to exceed total of $100,000,000 to this account annually. NOTE: Rocky Gap s contribution to each of these accounts is different for its first 10 years of operation.

19 Appendix B: Table Games at Casinos Horseshoe Casino Baltimore Maryland Live! Hollywood Casino at Perryville Rocky Gap Casino and Resort Totals Banked Table Games Non-Banked Table Games Table Game Tax Rates FY 14 FY 17 *FY 17 Ongoing Operator s Share 80% 80% Education Trust Fund 20% 15% Local Impact Aid 0% 5% *The tax rate will change on the date MGM National Harbor is issued a license. NOTE: Ocean Downs does not currently operate table games