V.I. Lottery Would Lose Millions Per Year Without Video Lottery Terminals

Acting V.I. Lottery Executive Director Raymond Williams at Thursday’s budget hearing. (Photo by Barry Leerdam, courtesy of the V.I. Legislature)

The V.I. Lottery would likely lose around $5.6 million if not bolstered by about $12.3 million from Southland Gaming slot machine/video lottery funding, acting Lottery Executive Director Raymond Williams told the Finance Committee Thursday.

The 82-year-old lottery has lost money for many years.

With the video lottery money, the Lottery expects to more or less break even, after making statutory contributions to several government programs. Williams pointed to the precarious finances to emphasize that the “V.I. Lottery is not a cash cow.”

One thing the Lottery is doing to save money is switching to printing lottery tickets on-demand.

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Williams said the Lottery Commission, the volunteer entity that oversees the Lottery, has discussed prioritizing the placement of a new digital draw system, a new Point of Sale system and the potential for a Print on Demand system.

“We recently met with our contractor on these and other technical matters. I emphasized the sense of urgency to incorporate these fixes and others into our IT system. This face-to- face meeting was followed up with written correspondence to make certain we get it done,” he said.

Right now, the Lottery is under contract with a vendor to print tickets for the biweekly drawings at a cost of about $22,000, Williams said.

“By utilizing a Print on Demand system, we will see significant benefits (reduction in wasted paper stock and cost of shipment from Puerto Rico to St. Thomas then to St. Croix). We will also see the elimination of having to perform before and after ticket reconciliations for each drawing. This POD also gives our dealers a better opportunity to only request those tickets they plan to sell,” Williams said.

The Lottery currently prints 34,000 tickets per regular drawing and 40,000 for the Extra Special drawings biannually. Depending on the sales, it may have to destroy an average of 40 percent of the tickets.

According to the Legislature’s post audit, the Lottery projects spending about $150,000 on printing for 2020.

The Lottery Commission’s approved budget for FY 2020 projects $20.8 million in total revenue. Of that, $8.5 million is from the traditional lottery. It also expects $12.3 million from contractors, mostly Southland Gaming, but also Caribbean Lottery. Salaries and benefits come to $4.3 million, and total operating expenses come to $15.2 million.

V.I. law mandates several transfers of Lottery funds to government programs. Mandatory transfers for FY 2020 are projected as follows:

— Educational Initiative Fund $1,847,647

— Pharmaceutical Assistance Program $1,847,647

— GERS Retirees Bonus Fund $1,231,764

— Horse Racing Improvement Fund $328,486.

Although not mandated by law, $100,000 is budgeted for the Office of Veterans Affairs, for a total of $5,355,544 to be contributed to these government programs in FY 2020.

No votes were taken at the information-gathering Finance Committee budget hearing. The V.I. Lottery is self-financed.

Committee members present were Sens. Oakland Benta (D-STX), Marvin Blyden (D-STT), Allison Degazon (D-STX), Dwayne DeGraff (I-STT), Donna Frett-Gregory (D-STT) and Janelle Sarauw (I-STT). Non-committee member Sen. Kenneth Gittens (D-STX) also appeared briefly at the hearing. Member Sen. Kurt Vialet (D-STX) was absent.

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