West Virginia’s first round of bidding for new video lottery permits was oversubscribed, netting about $37 million for a state fund that issuers tap to secure bonds.
All of the state’s current 10-year video permits expire June 30, 2011.
Monday’s auction for 5,000 10-year video lottery permits drew strong interest from various restaurants, bars, and several large gaming operators. The total dollar amount from the bids received was about $56 million, according to John Melton, an attorney with the West Virginia Lottery.
The revenue, which goes into the state’s excess lottery revenue fund, will not arrive until fiscal 2012, which begins July 1, 2011. Melton cautioned that the bid revenues are non-recurring and not a sign of “a gambling revenue trend.”
The West Virginia School Building Authority issued $48.2 million of qualified school construction bonds backed by the excess lottery revenue fund last November and it sold another $25 million of tax-exempt bonds in July.
The West Virginia Economic Development Authority issued $155 million of lottery revenue bonds this summer that included backing from the excess revenue fund if needed.
A second auction of new video-lottery permits is tentatively scheduled for February or March and the final auction will likely be in May, Melton said.
Moody’s Investors Service estimated in July that West Virginia’s total lottery revenue would decline 8.6% in fiscal 2010.
Analysts said video lottery revenue is susceptible to competition from other states, especially Ohio, which last year approved casino-style gaming in cities along the West Virginia border.
