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Tom Miller: Maryland competition would hurt lottery revenues

Oct. 28, 2012 @ 12:29 AM

The biggest problem facing the West Virginia Lottery's financial future right now is one that this state's Lottery Commission cannot address. Voters in Maryland will decide at next month's election whether or not to authorize table games gambling in that state. If the voters give this issue the green light, experts estimate it could divert as much as $1.5 billion a year from West Virginia's most lucrative gambling operation in Charles Town.

No wonder Penn National Gaming, which owns the casino at Charles Town, has spent close to $20 million in advertising aimed at persuading Maryland voters to reject this proposal.

A report that was paid for by table game supporters in Maryland in an effort to increase support for the election referendum on table games concluded that an affirmative vote next month could divert $1.2 billion to $1.5 billion in annual revenues from Charles Town to Maryland operations.

For now at least, revenues generated by the West Virginia Lottery Commission at its four racetrack casinos continues to yield millions more each quarter than expected because of the lack of competition from surrounding states. Finance Director Jim Toney told commission members at last week's meeting that state lottery revenues continue to exceed estimates.

He said the $343.5 million in revenue for the third quarter (July though September) was nearly $50 million more than expected. But this revenue "gravy train" that has occurred because there are no such gambling facilities in neighboring states is about to change dramatically.

State officials expect the biggest new competition will come from the Hollywood Casino in Columbus, Ohio, which opened Oct. 8. And another horse track in Columbus recently installed slot machines at its location.

New casinos already had opened back in May in Cleveland and Toledo. Meanwhile, the state of Pennsylvania is about ready to open a new casino at the Nemacolon resort, which is only a 30-minute drive north of Morgantown.

The people running West Virginia's two Northern Panhandle casinos on Wheeling Island and at the Mountaineer Racetrack in Chester have told the Lottery Commission that they are already seeing initial signs of the financial impact the Columbus operation will have on this state's gambling revenues.

Currently, the casinos at this state's racetracks brings in more than half the total state lottery revenues that totaled $111.3 million for the month of September. But future competition from surrounding states is certain to make a major dent in those revenues, particularly if Maryland voters authorize competition in that state from the Charles Town operation.

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It is alarming to learn that the average student loan debt for graduates at West Virginia's universities and colleges last year was more than $26,000. And West Virginia students ranked 17th in this category among the 50 states. Students in New Hampshire graduated with the highest average debt -- $32,440 -- while graduates in Utah had the lowest average debt of $17,227.

That's the bad news. The good news is that in West Virginia at least the average debt for 2011 graduates at this state's colleges and universities was significantly lower than it was in the two previous years. West Virginia University had the highest average debt for its 2011 graduates among the nine public colleges in the state included in these statistics. But the $27,000 figure for WVU grads was still a major improvement over the 2010 WVU graduates who graduated with an average debt of $34,272. And 2009 graduates at WVU left with an average debt of $36,895.

Marshall University graduates had the highest increase in average debt from 2010 to 2011. According to the state's Higher Education Policy Commission, the average debt at MU for 2010 graduates was $21,530 but jumped to an average of $24,376 for students who graduated in 2011.

Graduation debt loads at the state's private institutions is even higher. Davis & Elkins College had an annual student debt of $39,077 for 2011 graduates but it did fall to $32,125 for those who graduated in 2012.

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The number of people unemployed in West Virginia has become a campaign issue between the two candidates hoping to win the governor's race in next month's general election. But economists for West Virginia University's Bureau of Business and Economic Research won't be issuing their annual economic forecast until Nov. 15 -- a full 10 days after voters have spoken.

The likely result is a mixed bag. The state's unemployment rate increased from 7.5 percent to 7.6 percent last month. It was the fifth straight monthly increase since April. when it dropped to 6.7 percent -- the lowest level in more than three years. And the real problem is the declining number of coal mining jobs in the state -- responsible for less than 5 percent of total employment but because miners are working in high-paying jobs, the mining industry accounts for about 15 percent of the state's overall economic picture.

Tom Miller is a retired state government reporter for The Herald-Dispatch. He is a regular contributor to The Herald-Dispatch opinion page.

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