West Virginia lottery

West Virginia Lottery Director John Musgrave believes that online gambling may offset losses caused by competition from outside the state. (Image: Charleston Daily Mail/Craig Cunningham)

West Virginia is contemplating the introduction online gambling, the state’s Lottery Commission said this week. Faced with increasing competition from neighboring states, and concerned about the commercial repercussions of a new smoking ban, Lottery Director John Musgrave said the commission is looking at a number of possibilities, including smartphone apps that would allow customers to purchase lottery tickets on their cell phones.

The first racinos opened in West Virginia in 1994, but have suffered recently, largely because of the rise of casino gambling in neighboring Pennsylvania, which legalized casinos a decade later, and has now supplanted New Jersey as America’s second-largest gambling destination. Meanwhile, the commission is intrigued by the newly regulated online gambling jurisdiction of New Jersey, and the additional $55 million that state expects to bring to state tax coffers in the coming fiscal year.

Mobile Lottery

“We’re still exploring [online gaming] because we feel that’s the way the industry’s moving, so we want to plan for it,” Musgrave said. “We have not yet made any decision for how we’re going to implement it, but we are looking at it, studying it and seeing how our casinos in our jurisdiction can move in that direction. We’re still seeing a decline [in revenue]. We still are experiencing competition as the new casinos are coming on in Maryland and some in Ohio. That hasn’t plateaued.”

According to Musgrave, online gambling may be able to plug the hole left by the lottery revenue that’s disappearing from West Virginia’s four racinos. While legalizing and regulating online gambling in the way that New Jersey has would involve a lengthy legislative process, the mobile lottery concept is something that could be implemented fairly quickly, without the need for the state’s legislature to alter its gaming laws.

Such a scheme would help reverse some of the losses in lottery revenue from the introduction of “pay-at-pump” gas stations, which prevent potential lottery customers from coming into stores.

“People used to go in and pay for their gas, and now they’re paying at the pump and not going in,” said Musgrave, adding that he’d like to find a way for small convenience stores and lottery retailers to benefit from the transaction the mobile transactions.

Smoking Ban

“We want to take into consideration how we would go through the retailer,” he said. “We want to keep those people in the mix going forward and how we can structure this to still keep the retail base to make this happen.”

The State Lottery posted total revenue of $101.1 million for the month of July, down 4 percent from the previous year, while racino video lottery sales declined nearly 5 percent. Members of the Lottery Commission are due to meet casino executives and their technical staff again in October to discuss their options further.

This week, the Hancock County Board of Health unanimously passed an indoor smoking ban, which, says the Mountaineer Casino in Chester, could result in a 20 percent decline in revenue. Other counties are planning similar bans. Ohio and Maryland do not permit smoking in their casinos, a fact that has always helped West Virginia casinos to this point.