Lottery Officials Outline Future Plans at Budget Hearings

July 28, 2006–The V.I. Lottery system has improved significantly over the past three years, and has so far contributed approximately $5 million worth of revenues to the local government, Lottery officials said during the first round of budget hearings Friday.
Lottery Executive Director Paul Flemming said the system plans to continue this trend, and will be working to put in place stringent rules and regulations to control the operations of video lottery terminals throughout the territory, as well as mechanisms to curb the influx of illegal gaming activities.
Marketing plans for the next fiscal year are already under way, he said, explaining that the system is targeting both the local and tourist populations through the televising of lottery drawings, along with radio and ad campaigns.
Flemming said the Lottery also plans on hiring an additional 200 dealers to push the sales of traditional tickets.
On average, approximately $800,000 in ticket sales is brought in each month through mobile vendors, Flemming said.
To assuage senators concerns about the fact that more local residents are seen playing at the lottery terminals, Flemming said efforts are being made to place more terminals in spots frequented by tourists – and to develop policies for individuals with gambling addictions.
To keep the system running at its present level, Lottery has also instituted educational programs to promote "responsible and legal gaming" in the territory, Flemming said. Additionally, lottery terminals are monitored, tested and replaced on a regular basis to make sure that the required amount of revenues generated are being placed into the government's coffers.
"Recently the Lottery has reorganized the enforcement division and added an investigation unit that is primarily focused on detecting illegal activity…as well as conducting separate surveillance activities that complement the enforcement division," Flemming said. "Both units have been actively pursuing illegal activities that affect the sales of the Lottery's operations, which has resulted in improved sales."
Flemming said the present success of the Lottery system can be measured by the revenues it generates and how much it has contributed to the local government. "For example, over the next year, we expect to bring in about $24.1 million in gross revenues," he said.
Flemming also estimated that approximately $1.6 million of the system's net revenues would go toward the General Fund in Fiscal Year 2007, while $2.4 million would be deposited into the Education Initiative Fund. Another $1.46 million will be transferred into the Pharmaceutical Assistance Fund.
After the meeting, Flemming explained that the V.I. Lottery is mandated by law to contribute 40 percent of its net revenues – generated by the video lottery terminals and contractual contributions from Caribbean Lottery Services and Southland Gaming of the Virgin Islands Inc. – to the two funds, which are both administered by the Finance Department.
"The remaining 60 percent would be put back into the Lottery system, where 20 percent of the net revenues generated from those operations are transferred to the General Fund," he said.
For FY 2007, Flemming estimated the system would generate approximately $8 million in net revenues – approximately $1.6 million of which will go into the General Fund.
Another $14 million would be generated from Lottery's traditional games, he said, which include instant scratch tickets, pull-tab games and PowerBall revenues, among other things. Of this amount, $7.6 million would go toward prize obligations, while another 20 percent is earmarked for transfer into the Disability Fund, the Education Fund, the Text Books Revolving Fund and the Summer Employment for the Youth Fund.
Approximately $4.47 million also goes toward the Lottery's operations, Flemming said.
After the meeting, he explained that the system's total budget also includes $890,307 in fixed assets (such as VLT machines and vehicles), giving the Lottery an overall budget of approximately $5.3 million for FY 2007.
During the meeting, Flemming said the money would be used to fill six vacancies (two on St. Croix and six on St. Thomas) and to purchase eight more vehicles (five for St. Thomas, three for St. Croix).
Another 1 percent of revenues generated from 2007 scratch ticket sales will also be set aside for salary increases for members of the Supervisors Union, whose negotiations are ongoing.
While the V.I. Lottery's budget does not have to be approved by the Legislature, it does have to be cleared by the V.I. Lottery Commission, a seven-member board responsible for supervising the system.
Flemming said the budget will be deliberated on by the commission in August.
Present during Friday's meeting were Sens. Roosevelt C. David, Liston Davis, Juan Figueroa-Serville, Louis P. Hill, Norman Jn Baptiste and Usie R. Richards.
Sens. Pedro "Pete" Encarnacion and Neville James were absent.

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