West Virginia Lottery A Component Unit of the State of West Virginia
Comprehensive Annual Financial Report for the Fiscal Years Ended June 30, 2018 and 2017 MESSAGE FROM THE DIRECTOR
,DPSOHDVHGWRSUHVHQWWKLV\HDUèV:HVW9LUJLQLD/RWWHU\&RPSUHKHQVLYH$QQXDO)LQDQFLDO5HSRUWIRUWKHĆVFDO year ending June 30, 2018 to the Honorable Jim Justice, Governor; Dave Hardy, Cabinet Secretary, Department of Revenue; and the West Virginia Legislature. Our mission to operate responsibly with the highest standards of LQWHJULW\DQGVHFXULW\KDYHKHOSHGWRSURYLGHDFRQWLQXHGUHYHQXHVWUHDPIRUSURJUDPVWKDWEHQHĆWWKHFLWL]HQV of West Virginia for more than 32 years.
The Lottery was created in April 1985 pursuant to authority granted by the West Virginia Legislature with gaming operations beginning in January 1986. Since that time, the Lottery has generated nearly $10 billion in gaming revenue for the State of West Virginia with proceeds supporting education, seniors and tourism. Lottery operations have produced $3.3 billion for education, more than $1.2 billion for senior services, and nearly $1.1 billion for tourism.
7KHĆQDQFLDOHFRQRPLFGHPRJUDSKLFDQGVWDWLVWLFDO data contained in this report is intended to help provide a framework of understanding of the /RWWHU\èV ĆQDQFLDO SHUIRUPDQFH DQG UHSUHVHQWV only the activity for which the West Virginia Lottery exercises regulatory authority. Responsibility for both the accuracy of the data and the completeness A PDF download of this Comprehensive Annual Financial Report is available and fairness of presentation, including all at wvlottery.com. Go to the News and Info tab and to Financial Reports. disclosures, rests solely with the Lottery. An LQGHSHQGHQW FHUWLĆHG SXEOLF DFFRXQWLQJ ĆUP KDV DXGLWHGWKHĆQDQFLDOVWDWHPHQWVDQGDFFRPSDQ\LQJ QRWHV FRQWDLQHG LQ WKH ĆQDQFLDO VHFWLRQ RI WKLV report.
JOHN A. MYERS Director, West Virginia Lottery WEST VIRGINIA LOTTERY COMMISSION
KENNETH L. GREEAR WILLIAM I. CLAYTON WILLIAM R. LAIRD IV Chairman Vice Chairman Oak Hill Charleston Charleston Law Enforcement Computer Expert Public At Large
The Commission was created in 1985 to assist and advise the Director of the Lottery and to carry on a continuous study of West Virginia Lottery operations throughout the state. Members are appointed by the Governor with the approval of the Senate. ROY E. SHREWSBERRY II In accordance with state law, ANDREW B. KNICELEY Beckley Fairmont the Lottery Commission is Public At Large Marketing required to have seven members FRPSULVHGRIDODZ\HUDFHUWLĆHG public accountant, a computer expert, a marketing specialist, and one member with not less than five years experience in law enforcement. An additional two members represent the “public at large.” No more than four members may be from the same political party. Unless ĆOOLQJDQXQH[SLUHGDSSRLQWPHQW members serve overlapping DOUGLAS A. BICKSLER, CPA WHUPVRIĆYH\HDUVDQGDUHHOLJLEOH DAN A. MARSHALL Lewisburg for successive appointments to Parkersburg &HUWLĆHG3XEOLF the Commission. Attorney Accountant WEST VIRGINIA LOTTERY A Component Unit of the State of West Virginia
Prepared by Finance and Administration Division
Dean W. Patrick, CPA Deputy Director of Finance and Administration DQG&KLHI)LQDQFLDO2IĆFHU
Comprehensive Annual Financial Report For the Fiscal Years Ended June 30, 2018 and 2017 TABLE OF CONTENTS
INTRODUCTORY SECTION Letter of Transmittal • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •1 - 10 &HUWLĆFDWHRI$FKLHYHPHQWIRU([FHOOHQFHLQ)LQDQFLDO5HSRUWLQJ• • • • • • • • • • 11 3ULQFLSDO2IĆFLDOVDQG2UJDQL]DWLRQDO&KDUW• • • • • • • • • • • • • • • • • • • • • 12
FINANCIAL SECTION Independent Auditors Report • • • • • • • • • • • • • • • • • • • • • • • • • • • 15 - 16 Management’s Discussion and Analysis • • • • • • • • • • • • • • • • • • • • • 17 - 26 Financial Statements Statements of Net Position • • • • • • • • • • • • • • • • • • • • • • • • • • 27 6WDWHPHQWVRI5HYHQXHV([SHQVHVDQG&KDQJHVLQ)XQG1HW3RVLWLRQ • • 28 Statements of Cash Flows • • • • • • • • • • • • • • • • • • • • • • • • 29 - 30 Notes to Financial Statements • • • • • • • • • • • • • • • • • • • • • • 31 - 63 Required Supplementary Information • • • • • • • • • • • • • • • • • • • • • • • 64 - 70
STATISTICAL SECTION Statistical Section Overview • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 71 Sales by Product and Other Revenues Last Ten Fiscal Years (table) • • • • • • • • • • • • • • • • • • • • • • • 72 - 73 ([SHQVHV'LVWULEXWLRQVDQG1HW,QFRPH Last Ten Fiscal Years (table) • • • • • • • • • • • • • • • • • • • • • • • 72 - 73 Sales by Product Line Last Ten Fiscal Years (graph) • • • • • • • • • • • • • • • • • • • • • • • 74 - 75 Sales by Product Line Last Ten Fiscal Years (graph) • • • • • • • • • • • • • • • • • • • • • • • • • 76 Total Revenue Last Ten Fiscal Years (pie chart) • • • • • • • • • • • • • • • • • • • • • • • 77 Daily Averages Last Ten Fiscal Years (graph) • • • • • • • • • • • • • • • • • • • • • • • • • 78 ([SHQVHVDQG1RQRSHUDWLQJ'LVWULEXWLRQV Last Ten Fiscal Years (graph) • • • • • • • • • • • • • • • • • • • • • • • • • 79 7RWDO([SHQVHVDQG1RQRSHUDWLQJ'LVWULEXWLRQV Last Ten Fiscal Years (pie chart) • • • • • • • • • • • • • • • • • • • • • • • 80 Total Net Position • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 81 U.S. Lotteries Unaudited Sales for Fiscal Year 2017 (NASPL) • • • • • • • • • • • • 82 U.S. Lotteries Unaudited Sales for Fiscal Year 2018 (NASPL) • • • • • • • • • • • • 83 U.S. Lotteries Unaudited Sales for Fiscal Year 2017 (LaFleur’s) • • • • • • • • • • • 84 U.S. Lotteries Unaudited Sales for Fiscal Year 2018 (LaFleur’s) • • • • • • • • • • • 85 1XPEHURI(PSOR\HHV• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 86 6WDWH'HPRJUDSKLFDQG(FRQRPLF,QIRUPDWLRQ• • • • • • • • • • • • • • • • • • • • 87 6WDWH'HPRJUDSKLFDQG(FRQRPLF,QIRUPDWLRQ JUDSKV • • • • • • • • • • • • • 88 - 89 Player and Population Demographics (graphs) • • • • • • • • • • • • • • • • • • 90 - 91 3ULQFLSDO(PSOR\HUV• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 92 LOTTERY PROCEEDS
The West Virginia Lottery has generated nearly $10 billion in proceeds for the State of West Virginia since it began operations in 1986.
/RWWHU\SURFHHGVEHQHĆWWKHSHRSOHRI:HVW9LUJLQLDLQPDQ\ZD\V/RWWHU\SURFHHGVDUHXVHGWRKHOSIXQGQHZVFKRRO FRQVWUXFWLRQVFKRROLPSURYHPHQWVDQGWKH3520,6(6FKRODUVKLS3URJUDP7KH\DOVRKHOSIXQGYHU\LPSRUWDQWVHQLRU VHUYLFHVWKDWLPSURYHWKHTXDOLW\RIOLIHRI:HVW9LUJLQLDèVVHQLRUFLWL]HQV3URFHHGVDUHDOVRXVHGWRKHOSWKHVWDWHèV tourism industry and West Virginia Veterans. Since 1986, West Virginia has been able to invest: $428.5 MILLION $3.3 BILLION FOR THE PROMISE IN PUBLIC EDUCATION SCHOLARSHIP PROGRAM
MORE THAN $1.2 BILLION IN SENIOR PROGRAMS AND SERVICES ALLOWING MORE THAN 55,000 WEST VIRGINIA STUDENTS TO PURSUE THEIR COLLEGE DREAMS
(YHU\:HVW9LUJLQLDFROOHJHVWXGHQWKDVKRSHVDQGGUHDPVIRUDEULJKWIXWXUHDQGWRUHDOL]HWKHLUIXOOSRWHQWLDO+LJK VFKRROVHQLRUVHQWHULQJFROOHJHVDQGXQLYHUVLWLHVDFURVVWKH6WDWHEHQHĆWIURPORWWHU\GROODUVWKURXJKWKH3520,6( NEARLY Scholarship Program. $1.1 BILLION INTO THE STATE’S ,Q)<DSSUR[LPDWHO\ PLOOLRQIURPOLPLWHGYLGHRORWWHU\UHYHQXHZDVGLUHFWHGWRWKH3520,6(6FKRODUVKLS GROWING program to reward West Virginia’s best and brightest students with the opportunity to attend an in-state college or TOURISM XQLYHUVLW\6LQFHWKH:HVW9LUJLQLD/RWWHU\KDVSURYLGHGPLOOLRQWRWKH3520,6(6FKRODUVKLS3URJUDP INDUSTRY and in turn has helped more than 55,000 West Virginia students pursue a college education without the burden of KHDY\GHEW,QPDQ\FDVHVWKH3520,6(6FKRODUVKLSKDVEHHQFLWHGDVWKHSULPDU\IDFWRUWKDWDOORZHGWKHVHGHVHUYLQJ students to obtain a college degree. LOTTERY RETAILERS AND PLAYERS LOTTERY EMPLOYEES
7KH:HVW9LUJLQLD/RWWHU\FHOHEUDWHGLWVQG$QQLYHUVDU\LQ-DQXDU\,QWKH/RWWHU\èVĆUVW\HDUVPRUH
than $10 billion in lottery proceeds have made critical education, senior services and tourism programs possible. • • • • • • • • • • • •
• • • • • • • • • • • • • • • • • • • • • • • • • • • • :HVW9LUJLQLD/RWWHU\SOD\HUVZRQPRUHWKDQPLOOLRQLQSUL]HVIURPWUDGLWLRQDOORWWHU\JDPHVGXULQJĆVFDO • • • • • • • • • • • • • • year 2018.
• • • • • • • • • • • • • • •
• • • • • • • • • • • • • • • • • • • • • • • • • • • •
APPROXIMATELY 1,500 TRADITIONAL RETAILERS, MORE THAN 1,300 LIMITED VIDEO RETAILERS AND THOUSANDS OF • • • • • • • • • • • • • • • • • • • • • • • • • • • •
PLAYERS HAVE HELPED CONTRIBUTE TO THE ECONOMY. PL AY ERS
NEARLY $10 BILLION IN LOTTERY PROCEEDS TO THE STATE R The West Virginia Lottery began operations in 1986 with a single scratch off game called “West Virginia Jackpot”. By E WKHHQGRIWKDWĆUVW\HDUWKH/RWWHU\KDGUHFRJQL]HGVDOHVRIPRUHWKDQPLOOLRQGROODUV7RGD\WKH:HVW9LUJLQLD T Lottery regulates and governs several forms of gaming at four racetrack casinos, the Greenbrier Resort as well as video A gaming parlors statewide. Included are; Traditional Lottery Games, Racetrack Video Lottery, Limited Video Lottery and IL 7DEOH*DPHVUHDOL]LQJVDOHVRIQHDUO\ELOOLRQLQĆVFDO\HDU ER S The Lottery owes much of its success to a dedicated and diverse team of professional employees performing a variety of key roles. Thanks to these employees, and those who served before them, the West Virginia Lottery has been able to exceed the $1 billion mark in sales for 16 consecutive years. P.O. BOX 2067 3+21( &+$5/(6721:9 1-800-WVA-CASH James C. Justice John A. Myers Governor Director
December 3, 2018
The Honorable James C. Justice II, Governor Dave Hardy, Cabinet Secretary, Department of Revenue Kenneth L. Greear, Chairman, West Virginia Lottery Commission Members of the West Virginia Lottery Commission
We are pleased to transmit to you the Comprehensive Annual Financial Report of the West Virginia Lottery (the /RWWHU\ IRU WKH ĆVFDO \HDUV HQGHG -XQH DQG 7KLV UHSRUW KDV EHHQ SUHSDUHG E\ WKH )LQDQFH DQG $GPLQLVWUDWLRQ'LYLVLRQRIWKH/RWWHU\5HVSRQVLELOLW\IRUERWKWKHDFFXUDF\RIWKHĆQDQFLDOGDWDDQGWKHFRPSOHWHQHVV and fairness of presentation, including all disclosures, rests solely with the Lottery. To the best of our knowledge and belief, the enclosed data and information are accurate and are reported in a manner designed to present fairly the ĆQDQFLDOSRVLWLRQUHVXOWVRIRSHUDWLRQVDQGFDVKćRZVRIWKH/RWWHU\$OOGLVFORVXUHVQHFHVVDU\WRHQDEOHWKHUHDGHU WRJDLQDQXQGHUVWDQGLQJRIWKH/RWWHU\èVĆQDQFLDODFWLYLWLHVKDYHEHHQLQFOXGHG
Presented in this report is information about the Lottery, an agency under the Department of Revenue of the State of West Virginia. The State Lottery Act §29-22 was passed in April 1985 by the West Virginia Legislature. The Lottery operates as a business enterprise within the framework of State laws, rules and regulations. Its mission is to generate UHYHQXHWRIXQGSURJUDPVEHQHĆWLQJHGXFDWLRQVHQLRUFLWL]HQVWRXULVPDQGVXFKRWKHUSURJUDPVDVWKH/HJLVODWXUH PD\GHWHUPLQH7KLVPLVVLRQLVEHLQJSHUIRUPHGZLWKWKHXWPRVWLQWHJULW\WRHQVXUHSXEOLFFRQĆGHQFH
INTRODUCTORY SECTION The Lottery is considered a component unit of the State of West Virginia. This report presents Lottery activity in a single enterprise fund; the fund includes all activity for which the West Virginia Lottery Commission exercises oversight responsibility. The Lottery has no component units and this report includes only the activity of the Lottery. This report does not include data and information related to any other state agency or fund.
This letter of transmittal is designed to be read in conjunction with the complementary information offered in the Management’s Discussion and Analysis (MD&A) which can be found immediately following the independent auditor’s report.
John A. Myers Dean W. Patrick, CPA Director of West Virginia Lottery Deputy Director of Finance and Administration
www.wvlottery.com
1 OVERVIEW • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• •
The West Virginia Lottery has generated nearly $10 million in cash transfers from the Lottery. These included of 80 percent to 99 percent, which is set by statute and approved by the billion in proceeds for the State of West Virginia since PLOOLRQIRUVHQLRUFLWL]HQVPLOOLRQIRU /RWWHU\&RPPLVVLRQ3URĆWVGLVWULEXWHGIURP5DFHWUDFN9LGHR/RWWHU\ it began operations in 1986 with $3.3 billion invested in education, $54.9 million for tourism, $74.8 million to the The Greenbrier Historic Resort and Limited Video Lottery are directed education, more than $1.2 billion in senior programs and State’s General Fund, $53.1 million to the Infrastructure by statutory allocation and legislative budget appropriations. services, and nearly $1.1 billion to the state’s tourism Council, and $112.6 million to other state agencies industry. LQFOXGLQJ PLOOLRQWRWKH3520,6(VFKRODUVKLS State revenues from Table Games are derived from a 35 percent privilege program). tax rate that is applied to the table “win” and is distributed by statutory In Fiscal Year (FY) 2018, Lottery sales exceeded the DOORFDWLRQZLWKWKHODUJHVWSRUWLRQGLUHFWHGWR([FHVV/RWWHU\)XQG $1 billion mark for the 16th consecutive year. Despite A total of $25.2 million was also paid to county and the challenges posed by growing competition from local municipalities across the state in FY 2018. These :HVW9LUJLQLDèVJURZLQJWRXULVPLQGXVWU\DOVREHQHĆWVIURP/RWWHU\ surrounding states, Lottery sales totaled nearly $1.1 distributions are statutory transfers from Racetrack proceeds. In FY 2018, the Lottery contributed $5.7 million to the Division billion for the year ending June 30, 2018, and resulted Video Lottery, Limited Video Lottery, Table Games and of Tourism. In addition, Lottery revenue appropriated by the West in a cash transfer of nearly $474.0 million to the State Historic Resort. Virginia Legislature from other gaming sources to the Division of Tourism of West Virginia. totaled $8.1 million. With additional appropriations for the Division Overall sales in FY 2018 were $1.1 billion, of Natural Resources and the State Park Improvement Fund, the cash The Lottery continues to govern several and the Lottery’s total operating costs transfers used in enhancing the state’s tourism industry was $14.5 million. gaming environments and product types. were under 2.9 percent of total sales. In FY 2018, these operations provided &RQWLQXHGĆVFDOUHVSRQVLELOLW\UHVXOWHG Legislation was passed to provide Lottery revenue from a special instant the following transfers to the State: in the Lottery meeting its obligations ticket game to help support funding for West Virginia veterans in FY $226.1 million from Racetrack to the State and generated a surplus 2000. This special initiative has generated up to $1 million each year Video Lottery, $186.2 million from in excess of budgeted amounts of to support a skilled nursing facility and a cemetery for West Virginia’s Limited Video Lottery, $17.3 million $44.8 million, which are available for veterans. In FY 2018, a total of $698,976 was generated to support from Racetrack Table Games, $2.4 additional legislative appropriations. these facilities. million from the Historic Resort, and $42.0 million from Traditional Lottery West Virginia State law mandates %HVLGHVWKH7UDGLWLRQDO/RWWHU\GROODUV:HVW9LUJLQLDVHQLRUVDOVREHQHĆW products. that players receive at least 45 percent from the license fees for Table Games which are directly deposited to the of total traditional game sales in the form Bureau of Senior Services. In FY 2018, deposits to in-home health care The Lottery also continues to operate RIFDVKSUL]HV KRZHYHUWKLVSHUFHQWDJH services for seniors totaled $10 million from Racetrack Table Games and responsibly with the highest standards of integrity has averaged approximately 50 percent annually $500,000 from The Greenbrier Historic Resort. Those amounts are in and security in its operational and regulatory duties. since the Lottery’s inception in 1986. In FY 2018 addition to Legislative appropriations to senior services and programs The Lottery regulates several forms of gaming including /RWWHU\SOD\HUVZRQDWRWDORIPLOOLRQLQSUL]HV WKDWFRPHIURP/RWWHU\SURFHHGV2YHUDOO:HVW9LUJLQLDVHQLRUFLWL]HQV Traditional Lottery Games (Instant Scratch-Off tickets In addition, traditional lottery operating costs have EHQHĆWHGIURPDQHVWLPDWHGPLOOLRQLQ/RWWHU\UHYHQXHLQ)< and On-Line numbers games such as Powerball® and averaged approximately 12 percent, notably less than Mega Millions®); Racetrack Video Lottery (slot machines the 15 percent allowed by law. Licensed Lottery retailers :HVW9LUJLQLDVWXGHQWVZKRTXDOLI\DFDGHPLFDOO\DOVREHQHĆWIURP at the state’s racetrack casinos); Limited Video Lottery receive a 7 percent sales commission on Traditional /RWWHU\GROODUVWKURXJKWKH3520,6(6FKRODUVKLS3URJUDP5HYHQXH (slot machines at local video bars and taverns); and Lottery products, as well as bonuses based on validation from Limited Video Lottery provided $29 million to in-state higher Table Games which are fully operational at all racetrack RISUL]HV3URĆWVIURP7UDGLWLRQDO/RWWHU\JDPHVDUH education for high school graduates who chose to further their education casinos across the state. Furthermore, the Lottery directed by statutory allocation to state programs and at an in-state college or university and met the academic requirements. continues to regulate casino video lottery and table distributed accordingly. Since 2002, the West Virginia Lottery has provided $428.5 million to the games at The Greenbrier Historic Resort, which serves 3520,6(6FKRODUVKLS3URJUDP as the State’s only limited gaming facility. The payout rate for video lottery machines varies by location and game type. In FY 2018, the payout rate The 2018 West Virginia State Budget included $485.7 averaged 91 percent, with an established payout range
2 3 ECONOMIC OUTLOOK • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
The U.S. economy is continuing to grow at a moderate GHFOLQHWRWKHORZHVWUDWHLQWZRGHFDGHV(PSOR\PHQW Other notable sectors that impacted West Virginia’s :HVW9LUJLQLDèVĆVFDOJDLQVLQWKHJHQHUDOUHYHQXHIXQG pace. Supported by a healthy labor market and high GDP in professional and business services exhibited the most GDP growth were construction, manufacturing, DUHGULYHQE\LQFUHDVHGUHYHQXHLQWKHĆVFDO ĆUVW JURZWKWKH&RQJUHVVLRQDO%XGJHW2IĆFH &%2 SURMHFWV gains, adding 53,000 jobs in August and 519,000 jobs and retail trade. The construction sector grew at an quarter from severance tax, personal income tax, and the national economy will grow by 3.1 percent in 2018 over the past year. Mining employment increased by annual rate of 4.4 percent in 2017. This growth is consumer sales and use tax. Severance tax revenue and by 2.4 percent in 2019. West Virginia’s overall 6,000 in August and 56,000 over the past year. largely attributable to increased pipeline and highway in FY19Q1 was nearly $35 million above estimate economic outlook is optimistic compared to the recent construction projects around the State in recent and 71 percent over prior years collections. Personal SDVW6WDWH*'3KDVH[SHULHQFHGVLJQLĆFDQWJURZWKLQ (FRQRPLFUHSRUWVDQGLQGLFDWRUVVXJJHVWWKDW:HVW months. Calendar year 2018 first quarter numbers income tax revenue in FY19Q1 was $43.8 million DQG6WDWHUHYHQXHVZHUHXSVXEVWDQWLDOO\LQĆVFDO Virginia’s economy is expanding with employment showed continued expansion in construction activity in above estimate and 16.0 percent above of prior year ĆUVWTXDUWHU6WDWH*'3JURZWKUDWHRXWSHUIRUPHG numbers showing some improvement. According to the near term. After the manufacturing and retail trade collections. Consumer sales and use tax revenue in the nation in 2017, largely because of increases in WKH%($:HVW9LUJLQLDèV*'3JUHZDWDQDQQXDOUDWH sectors fell by 2.3 percent and 0.6 percent respectively FY19Q1 was $21.2 million above estimate and 16.6 coal production, natural gas prices, and construction of 2.7 percent, and outpaced national GDP growth in 2017, GDP in the manufacturing and retail trade percent above prior year collections. projects. Increases in coal production were responsible LQ7KH86(QHUJ\,QIRUPDWLRQ$GPLQLVWUDWLRQ H[KLELWHGJURZWKLQWKHFDOHQGDU\HDUĆUVWTXDUWHU for 96 percent of the resurgence in total exports. (,$ UHSRUWHGWKDWFRDOSURGXFWLRQLQ:HVW9LUJLQLD Manufacturing GDP was up 1.1 percent and retail trade Recently, West Virginia’s economy has experienced has increased by 4.2 percent so far in 2018 and overall GDP rose 3.0 percent quarter over quarter in calendar a period of expansion driven by increases in the (FRQRPLFLQGLFDWRUVH[KLELWDVWURQJDQGJURZLQJ increases of coal sales in the past two years have been \HDUĆUVWTXDUWHU extraction of the State’s natural resources and by the national economy. According to the U.S. Bureau of the driving force in the 40.9 percent increase of State various road construction and natural gas pipeline (FRQRPLF$QDO\VLV %($ WKH86H[SHULHQFHGVWHDG\ exports. Improving employment numbers reported West Virginia’s employment situation has shown infrastructure projects underway around the State. GDP growth of 2.2 percent in 2017 with similar trends by the BLS show that the monthly average of weekly modest improvements. According to the BLS, as of Continued expansion of the West Virginia economy is for early 2018. The U.S Bureau of Labor Statistics (BLS) jobless claims continues to trend downward with total August 2018 West Virginia added 7,400 jobs over expected in the short term and will be largely driven by reports a national unemployment rate of 3.9 percent for HPSOR\PHQWJURZLQJPRGHVWO\:HVW9LUJLQLDèVĆVFDO the course of a 12-month period, with nearly a the temporary impacts associated with construction August 2018, which is the lowest rate reported since RXWORRNLVRSWLPLVWLFJLYHQWKHVWURQJĆVFDO ĆUVW third of those jobs being added to the construction DFWLYLW\&RDOSURGXFWLRQLVH[SHFWHGWRVWDELOL]H &RQVXPHUFRQĆGHQFHKDVUHFHQWO\DSSURDFKHG quarter. The general revenue fund was 12 percent sector. Additionally, it is important to note in the short term with some decline anticipated in and remained near a 10-year high according to the RYHUHVWLPDWHLQĆVFDO ĆUVWTXDUWHUDQGQHDUO\ that most of the employment gains have been out years. Continued growth in natural gas production University of Michigan: Consumer Sentiment Index. SHUFHQWRYHUWKHSULRUĆVFDO\HDUĆUVWTXDUWHUUHYHQXH concentrated in counties experiencing Marcellus and pricing is expected as pipeline shale extraction, such as Doddridge and The largest and most meaningful sectors that comprise Two of the larger components of West Virginia’s GDP, generally strong economic activity, U.S. GDP are manufacturing, retail trade, and natural natural resource extraction and Health Care and Social such as Monongalia and Berkeley. UHVRXUFH H[WUDFWLRQ %($ UHSRUWV WKDW WKH 86 Assistance, have exhibited among the most substantial Weekly unemployment manufacturing sector, which comprised 11.7 percent short-term growth. The natural resource extraction insurance claims have of total GDP in 2017, grew at a modest rate of 1.9 sector comprised nearly 16.0 percent of West Virginia’s trended downward infrastructure work percent in 2017. Most of the growth in manufacturing GDP and had the largest annual growth of 19.2 percent and have approached is completed in coming is due to the 3.4 percent increase in durable goods, in 2017. The substantial gains in this sector are the an all-time low, while months. The modest short- whereas nondurable goods manufacturing growth was result of the recent increases in coal production and the the statewide term gains in the State’s labor QRWVLJQLĆFDQWLQFRPSDULVRQ5HWDLOWUDGHFRPSULVHG ongoing increases in natural gas production. Continued unemployment market are expected to continue 5.9 percent of GDP in 2017 and had an annual growth increases in natural gas production is expected in the rate has as road bond monies are injected rate of 3.5 percent. Natural resource extraction had an short-term as natural gas pipelines and infrastructure increased into the economy, leading to gains in Personal annual growth rate of 8.5 percent. are being developed. The Health Care and Social slightly Income Tax collections, withholding taxes, and Assistance sector made up 9.7 percent of State GDP to 5.3 consumer sales taxes in coming years. The BLS reported in August 2018 that nonfarm and grew at an annual rate of 2.7 percent in 2017. percent after employment increased by 201,000, and a labor force These increases are part of a long-term trend where a dropping to 5.0 participation rate of 62.7percent. National nonfarm compounding annual growth rate of 1.8 percent over the percent in March Written by Mark Muchow, employment gains have been consistent for the past past 10 years occurred and is largely due to the aging of 2017. Deputy Cabinet Secretary, Department of Revenue year and the unemployment rate has continued to population of the State.
4 5 LOTTERY PRODUCTS
was a draw game jointly operated by 14 states and the District of Columbia who are members of MUSL with drawings that were on Wednesday and Saturday. This game was introduced LQ$SULODQGHQGHGLQ1RYHPEHU:KHQDGGLQJWKH+RW/RWWR6L]]OHU®, you could WULSOHSUL]HV H[FHSWWKHMDFNSRW -DFNSRWVVWDUWHGDWDJXDUDQWHHGPLOOLRQLQFDVKDQG would increase by a minimum of $50 thousand each time the jackpot was not won. Jackpot winners would collectively receive no less than the advertised jackpot amount. Hot Lotto® offered eight secondary SUL]HVRIĆ[HGDPRXQWVUDQJLQJIURPWRWKRXVDQG The West Virginia Lottery has introduced 18 different games since its inception but currently provides players the opportunity to participate at 1,470 retail locations in a variety of 11 games: is a draw game offering jackpots of $40 Million or more paid either in a cash lump sum of the SUL]HYDOXHRUD \HDUDQQXLW\HYHU\:HGQHVGD\DQG6DWXUGD\3UL]HVDUHDOVRDZDUGHGLQ eight other win divisions ranging from $4 to $1 million. The game is jointly operated by 44 state lotteries, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, and are members of either the Multi- ® ® JDPHVZHUHWKH/RWWHU\èVĆUVWW\SHRIJDPHLQWURGXFHGLQ-DQXDU\ 7KHUHDUHGLIIHUHQW State Lottery Association (MUSL) or the Mega Millions Group. Powerball ZDVĆUVWLQWURGXFHGRQ$SULO ® ways to win in an instant or “scratch-off” game including matching three like dollar amounts, with 15 participating lotteries. The Power Play Multiplier feature was added in March 2001. Cross-selling with Mega ® V\PEROVRUOHWWHUVRUDGGLQJXSQXPEHUVWRDVSHFLĆHGWRWDOIRUH[DPSOH,IWKHFRUUHFW Millions Group members began January 31, 2010. On January 18, 2012, the price point for a single play increased to ® ® combination is revealed, the player becomes an “instant winner” without having to wait for the results of a drawing. $2 per and Power Play no longer used a multipler but was now set dollar values. The Power Play option match 5+0 ,QVWDQWJDPHVRIIHUDZLGHYDULHW\RIJDPHWKHPHV'XULQJĆVFDO\HDUWKHUHZHUHQHZJDPHVLQWURGXFHG SUL]HEHFDPHPLOOLRQDQGDOOORZHUSUL]HVZHUHPXOWLSOLHGE\RUDQGD[RSWLRQZDVDGGHGLIWKHMDFNSRWLV ® ,QVWDQWJDPHVSURYLGHGDSSUR[LPDWHO\SHUFHQWRIWRWDOĆVFDOVDOHV $150 million or less beginning October 4, 2015. Powerball sales are approximately 33.4 percent of total 2018 sales.
is a draw game jointly operated by 13 states who are members of MUSL. A game with the is a draw game introduced in February of 1987. Players choose three numbers from 0 to 9 VDPHQDPHZDVODXQFKHGLQ DQGWKHĆQDOGUDZLQJZDVKHOGRQ$SULO ZKHQLW IRUSUL]HVUDQJLQJIURPWR'UDZLQJVDUHKHOGVL[QLJKWVDZHHN became Powerball®. The name with a new game returned November 2017 with drawings RQ:HGQHVGD\DQG6DWXUGD\3OD\HUVFKRRVHĆYHQXPEHUVIURPWRIRUWKHUHGEDOOVDQGRQHQXPEHUIURPWR $ is a draw game also introduced in February of 1987. Players choose four numbers from 0 to ® ® $ 10 for the Star Ball . When adding the All Star Bonus for $1 per play, you can multiply your winnings (except for the IRUSUL]HVUDQJLQJIURPWR'UDZLQJVDUHKHOGVL[QLJKWVDZHHN $ $ JUDQGSUL]H E\WRWLPHV7KHJUDQGSUL]HVWDUWVDWPLOOLRQDQGLQFUHDVHVE\DPLQLPXPRIWKRXVDQGSHU draw until it is won. Lotto America®RIIHUVHLJKWVHFRQGDU\SUL]HVRIĆ[HGDPRXQWVUDQJLQJIURPWRWKRXVDQG
$ is a draw game introduced in February 1990. Players pick six numbers between 1 and 25 $ $
$ $ $ IRUDFKDQFHWRZLQFDVKSUL]HVUDQJLQJIURPWR'UDZLQJVDUHKHOGIRXUQLJKWVD is a draw game jointly operated by 44 state lotteries, the District of Columbia and the U.S. Virgin week every Monday, Tuesday, Thursday and Friday. Islands, with members belonging to the same groups that operate Powerball®. The game was LQWURGXFHGRQ$XJXVW DV7KH%LJ*DPH7KHĆUVWGUDZLQJWRRNSODFHRQ6HSWHPEHU LVDGUDZJDPHUHVWULFWHGWRORWWHU\UHWDLOHUVZLWKVSHFLĆFW\SHVRI:HVW9LUJLQLD$OFRKRO 6, 1996, with six states participating. The West Virginia Lottery and 22 other states began Beverage Control Administration licenses. The game was introduced in December 1992. selling Mega Millions® January 31, 2010 in a cross-selling agreement. The game is similar to (DFKSOD\FRVWVZKHUHWKHSOD\HUVHOHFWVIURPWRQXPEHUVDQGWKH/RWWHU\FRPSXWHU Powerball®, in play and jackpots. A feature called Megaplier® was added where non-jackpot winnings can be multiplied randomly picks 20 numbers between 1 and 80. With the Keno Bonus multiplier option, IURPDUDQGRPQXPEHU-DFNSRWVDUHSDLGHLWKHULQDFDVKOXPSVXPHTXDOWRWKHSUHVHQWYDOXHRIWKHDQQXLWL]HGDPRXQW SOD\HUVKDYHDFKDQFHWRLQFUHDVHWKHLUZLQQLQJV'UDZLQJVDUHKHOGHYHU\ĆYHPLQXWHVIURP DPWKURXJK or over 29 years with a guaranteed minimum jackpot of $40 million. Mega Millions®RIIHUVHLJKWVHFRQGDU\SUL]HV a.m. The winning numbers are displayed on monitors at 236 Travel Keno locations. ranging from $2 to $1 million. On October 15, 2017, a special offer called Just the Jackpot became available allowing a player to pay $3 for two plays towards the jackpot only. Drawings are held twice weekly on Tuesday and Friday. Racetrack Video Lottery games were implemented in 1994 when the West Virginia Legislature passed the Racetrack Video Lottery Act, making video lottery terminals available to the Table Games ZHUHLPSOHPHQWHGLQĆVFDO\HDUZKHQWKH:HVW9LUJLQLD/HJLVODWXUH four racetracks in the state subject to passage of local referendums. In September 1994, passed the Racetrack Table Games Act, making table games available to the four racetracks three racetracks (Mountaineer Casino Racetrack & Resort, Wheeling Island Hotel, Casino & in the state subject to passage of local referendums. In October 2007, two racetracks Racetrack, and Mardi Gras Casino & Resort) began operating with 1,200 video lottery machines. A fourth racetrack (Mountaineer Casino Racetrack & Resort and Wheeling Island Hotel, Casino & Racetrack) (Hollywood Casino at Charles Town Races) began video gaming in September 1997. Games offered are poker, began operating with poker tables only and added full table games in December 2007. In August 2008, a third EODFNMDFNNHQRDQGVSLQQLQJUHHOW\SHV(IIHFWLYH-XQH OHJLVODWLYHDFWLRQKDVDOORZHGPHFKDQLFDOUHHOFRLQGURS racetrack (Mardi Gras Casino & Resort) began operating with poker tables only and added full table games in October machines. As of June 30, 2018, the West Virginia Lottery Commission had an average of 5,841 terminals available 2008. The fourth racetrack (Hollywood Casino at Charles Town Races) began operating full table games on July 1, IRUSOD\DWWKHIRXUUDFHWUDFNVLQWKHVWDWH5DFHWUDFN9LGHR/RWWHU\VDOHVZHUHSHUFHQWRIWRWDOĆVFDOVDOHV 2010. Games offered are Poker, Blackjack, Caribbean Stud, Craps, Roulette, Three and Four Card Poker, and other PLVFHOODQHRXVJDPHV5DFHWUDFN7DEOH*DPHVVDOHVZHUHSHUFHQWRIWRWDOĆVFDOVDOHV Limited Video Lottery games were approved by the Legislature in April 2001. The legislation SURYLGHVXSWR YLGHRORWWHU\WHUPLQDOVWREHSODFHGLQUHWDLOHUORFDWLRQVZLWKVSHFLĆF +LVWRULF5HVRUWLPSOHPHQWHGYLGHRORWWHU\DQGWDEOHJDPHVLQĆVFDO\HDUZKHQWKH W\SHVRI:HVW9LUJLQLD$OFRKRO%HYHUDJH&RQWURO$GPLQLVWUDWLRQOLFHQVHV7KHĆUVWWHUPLQDOV West Virginia Legislature passed the Casino Act, which also required the passage of local were enabled for play on December 17, 2001. A total of 7,162 terminals were operating at referendum. In October 2009, The Greenbrier began operating both video lottery and table licensed retail locations throughout the state as of June 30, 2018. Limited video lottery sales were 33.7 percent of games. Table Games offered are Blackjack, Roulette and Three Card Poker. WRWDOĆVFDOVDOHVDWRSHUDWLQJUHWDLOHUORFDWLRQV
6 7 FINANCIAL INFORMATION
ENTERPRISE OPERATIONS receivable and general ledger accounting. Data input and processing are separate The West Virginia Lottery operating activities include sales of instant and on-line from system programming with management providing approval and oversight. In tickets, the regulation of video lottery and table game operations to the general addition, an internal auditor reviews all areas of Lottery operations and reports to SXEOLFDQGWKHUHODWHGVXSSRUWLQJIXQFWLRQV SHUVRQQHOĆQDQFHDQGDGPLQLVWUDWLRQ the Finance and Audit Committee of the Lottery Commission. video, marketing, security, table games and licensing. No general government functions or operations are managed by the Lottery or included in this report. Sales Since the Lottery manages a valuable ticket inventory and controls the disbursement LQĆVFDO\HDULQFUHDVHGSHUFHQWWR ELOOLRQIURPELOOLRQLQĆVFDO RISUL]HVWKHIROORZLQJVWHSVDUHWDNHQWRHQVXUHWKHRSHUDWLRQVUHPDLQVHFXUHDQG year 2017. Distributions to the State of West Virginia decreased 0.7 percent from meet the highest ethical standards: PLOOLRQLQĆVFDO\HDUWRPLOOLRQLQĆVFDO\HDU • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ï+LULQJVSHFLDOL]HGVHFXULW\DQGODZHQIRUFHPHQWVWDII ACCOUNTING SYSTEM AND POLICIES • Maintaining secure Lottery facilities and limiting access The West Virginia Lottery operates as an enterprise fund that, like a private • Performing background checks on retailers, contractors and Lottery employees EXVLQHVVXWLOL]HWKHIXOODFFUXDOEDVLVRIDFFRXQWLQJLQDFFRUGDQFHZLWKDFFRXQWLQJ • Printing lottery tickets with special inks, dyes and security codes principles generally accepted in the United States of America. • Providing detailed procedures for random on-line drawings ï+LULQJDQLQGHSHQGHQW&3$ĆUPWRZLWQHVVWKHGUDZLQJV BUDGETARY CONTROLS • Providing a variety of access and other controls to all computer systems 7KH/RWWHU\èVEXGJHWHGIXQGVDUHWKH6WDWH/RWWHU\)XQGDQG6WDWH([FHVV/RWWHU\ • Providing operating policies and procedures Fund. Budgetary control for these funds are addressed through their enabling OHJLVODWLRQVZKLFKSURYLGHVSHFLĆFOLPLWDWLRQVRQRSHUDWLQJDQGDGPLQLVWUDWLYH The Lottery currently has 175 employees; the majority of the staff is located at H[SHQVHV)RUEXGJHWDU\SXUSRVHVWKH6WDWH/RWWHU\DQG([FHVV/RWWHU\)XQGV Lottery headquarters. The drawing studio is located at the broadcast facility of the DUHFODVVLĆHGDVQRQDSSURSULDWHGVSHFLDOUHYHQXHIXQGVDQGGRQRWKDYHDOHJDOO\ television station in Charleston, West Virginia, which produces the nightly drawings. DGRSWHGEXGJHW$QHVWLPDWHRIH[SHFWHGH[SHQGLWXUHVLVĆOHGDQQXDOO\ZLWKWKH • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Budget Division of the Department of Revenue and is monitored throughout the INDEPENDENT AUDIT \HDUE\WKLV'LYLVLRQ,QDGGLWLRQ/RWWHU\ĆQDQFLDOPDQDJHPHQWVWDIIPRQLWRUV :HVW9LUJLQLDVWDWXWHVUHTXLUHDQDQQXDODXGLWE\DQLQGHSHQGHQWFHUWLĆHGSXEOLF actual expenditures for compliance with operational requirements and compliance DFFRXQWDQW7KHLQGHSHQGHQWDXGLWRUVèRSLQLRQRQWKH/RWWHU\èVĆQDQFLDOVWDWHPHQWV with lottery statutes. LVLQFOXGHGLQWKHĆQDQFLDOVHFWLRQRIWKLVUHSRUW • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • INTERNAL CONTROL ENVIRONMENT ACKNOWLEDGEMENTS Management of the Lottery is responsible for establishing and maintaining This report demonstrates the collaborative efforts of the Finance and Administration LQWHUQDOFRQWUROVZKRVHFRVWGRHVQRWH[FHHGWKHEHQHĆWVWREHGHULYHGEXWZKRVH Division and Marketing Division of the West Virginia Lottery. We appreciate the objective is to provide reasonable, rather than absolute assurance, that assets are contributions of this year’s project team comprised of Mara Dawson, Games protected from loss, theft, or misuse, transactions are executed in accordance with Accounting Manager/Project Coordinator; Sara Harpold, Advertising Manager; PDQDJHPHQWèVDXWKRUL]DWLRQDQGUHFRUGHGSURSHUO\WRSHUPLWWKHSUHSDUDWLRQ Michael Thaxton, Product Development Manager; and Randy Burnside, Public RIĆQDQFLDOVWDWHPHQWVWKDWDUHIUHHRIPDWHULDOPLVVWDWHPHQWDQGLQFRQIRUPLW\ Relations. We could not have successfully completed this report without their with generally accepted accounting principles. Internal control is also designed HIĆFLHQWDQGGHGLFDWHGVHUYLFHV7KH/RWWHU\FRQWLQXHVLWVFRPPLWPHQWWRSURYLGLQJ to reduce, to an acceptable level, the risk that errors or irregularities in amounts WKRURXJKDQGUHOHYDQWĆQDQFLDOLQIRUPDWLRQWRWKHSXEOLF WKDWZRXOGEHPDWHULDOLQUHODWLRQWRWKHĆQDQFLDOVWDWHPHQWVPD\RFFXUDQGQRWEH • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • detected within a timely period by employees in the normal course of performing 7KLVFRPSUHKHQVLYHDQQXDOĆQDQFLDOUHSRUWUHćHFWVRXUFRPPLWPHQWWRPDLQWDLQ their assigned functions. Management believes that the Lottery’s internal control the highest standards of accountability while working to maintain public trust meets the above objectives. through ethics and integrity. The Lottery also extends its sincere gratitude to • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Commission Chairman Kenneth L. Greear and the members of the West Virginia To enhance controls over accounting procedures, the Lottery has segregated the Lottery Commission for their diligence to the law in operating the Lottery in a following functions: personnel, payroll, purchasing, accounts payable, accounts professional and forward-thinking manner.
8 9 ACCOMPLISHMENTS & FUTURE PROJECTS
• • • • • • • • • • • • • • • • • • •
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ACCOMPLISHMENTS • • • • • • • • • • • • Lottery sales exceeded the $1 billion mark for the 16th consecutive year in FY 2018. Lottery sales totaled nearly $1.1 billion for the year ending June 30, 2018, and resulted in a cash transfer of nearly $474.0 million to the State of West Virginia.
• )LVFDO • Thanks to legislation increasing the maximum number of machines and allowing Sunday brunch sales, Limited Video Lottery (LVL) sales were up 5.9 percent in FY18. LVL sales of $368.1 million were $20.5 million higher than FY17. • The Lottery’s Request for Quotation (RFQ) for an instant game printing services contract was released. IGT Global Solutions Corporation was awarded the bid and production under this new contract began May 2017. • The conversion process to replace the current video lottery central monitoring and control system took place WKURXJKRXWWKH\HDU6FLHQWLĆF*DPHV&RUSRUDWLRQZDVDZDUGHGWKHFRQWUDFWDQGWKHFRPSDQ\èVODWHVWFHQWUDO PRQLWRULQJDQGFRQWUROV\VWHP&RQQH[XVöUHSODFHGWKH6FLHQWLĆF*DPHV$(*,6öYLGHRV\VWHP7KHQHZV\VWHP operates and controls both limited video lottery at 1,303 retailers and video lottery at the state’s casinos. • The West Virginia Lottery and IGT Global Solutions Corporation entered into a seven-year contract for a new traditional-lottery central system, new lottery retail and self-service customer terminals, a redundant, multi- • • • • • technology communications network, a Lottery mobile convenience app, and ongoing services. The planning, LPSOHPHQWDWLRQDQGFRQYHUVLRQWR,*7èV$XURUDöSODWIRUPLQFOXGLQJ$XURUD1DYLJDWRUEDFNRIĆFHDSSOLFDWLRQV ,*7èV$XURUD3HUIRUPDQFH,QWHOVROXWLRQDQG,*7èV$XURUD5HWDLOHU:L]DUGWRRNSODFHWKURXJKRXWWKHĆVFDO\HDU • 7KH:HVW9LUJLQLD/RWWHU\ZDVDZDUGHGWKH&HUWLĆFDWHRI$FKLHYHPHQWIRU([FHOOHQFHLQ)LQDQFLDO5HSRUWLQJE\WKH *RYHUQPHQW)LQDQFH2IĆFHUV$VVRFLDWLRQRIWKH8QLWHG6WDWHVDQG&DQDGD *)2$ IRULWVFRPSUHKHQVLYHDQQXDO ĆQDQFLDOUHSRUWIRUWKHVWFRQVHFXWLYH\HDU FUTURE PROJECTS • 7KHGHYHORSPHQWDQGODXQFKRIWKH:HVW9LUJLQLD/RWWHU\èVRIĆFLDO0RELOH&RQYHQLHQFH$SSWKDWZLOOEHDYDLODEOH WRERWKL3KRQHDQG$QGURLGXVHUVLVH[SHFWHGWRRFFXUQH[WĆVFDO\HDU7KHQHZDSSZLOODOORZSOD\HUVWKHDELOLW\ • • • WRFKHFNWKHLUWLFNHWVĆQGUHWDLOHUVQHDUWKHPFKHFNZLQQLQJQXPEHUVDQGVHH%RQXV.HQRGUDZVDPRQJRWKHU features. • West Virginia’s four racetrack casinos and the Greenbrier Historic Resort are expected to begin sports wagering RSHUDWLRQVLQĆVFDO\HDU IROORZLQJWKHSDVVDJHRIOHJLVODWLRQLQWKH:HVW9LUJLQLD/HJLVODWXUHDQGWKHVXEVHTXHQW United States Supreme Court Decision allowing States to offer sports wagering. West Virginia will be among the YHU\ĆUVWVWDWHVWRRIIHUVSRUWVZDJHULQJ,QDGGLWLRQWRUHWDLOVSRUWVZDJHULQJ:HVW9LUJLQLDèVODZDOORZVIRUWKH use of mobile apps to place sports bets within the State’s geographical boundaries. • 7KHFRQYHUVLRQWR,*7èV$XURUDöSODWIRUPIRUWUDGLWLRQDOORWWHU\LQFOXGLQJWKH$XURUD1DYLJDWRUEDFNRIĆFH applications, IGT’s Aurora Performance Intel solution, a comprehensive business intelligence and analytics tool WKDWSURYLGHVGHWDLOHGLQVLJKWVDQG,*7èV$XURUD5HWDLOHU:L]DUGLVH[SHFWHGWREHFRPSOHWHGQH[WĆVFDO\HDU 10 11 JAMES C. JUSTICE Governor LOTTERY COMMISSION: DAVE HARDY Cabinet Secretary KENNETH L. GREEAR WILLIAM R. LAIRD IV Department of Revenue Chairman Law Enforcement WILLIAM I. CLAYTON DAN A. MARSHALL Vice Chairman Attorney DOUGLAS A. BICKSLER ANDREW B. KNICELEY JOHN A. MYERS CPA Marketing Director ROY E. SHREWSBURY II West Virginia Lottery At Large Executive Organizational Chart JOHN A. MYERS Director DOUGLAS P. BUFFINGTON, II Assistant Director ROBIN GRALEY JUNE SOMMERVILLE Administrative Attorney Assistant BOB HUMPHREY TERRI MARTIN Deputy Director Human Resources Video Lottery Manager STEVE COMPSTON DEAN W. PATRICK, CPA Lottery Investigator Deputy Director Manager/Building Security Finance and Administration DAVID BRADLEY PAT CLARK TOMMY YOUNG Deputy Director &RPSOLDQFH2IĆFHU Deputy Director Casino Gaming and ANNAMARIE SHORT Marketing Limited Video Lottery Lead Internal Auditor TOM WHITE Internal Auditor PATTY LOOS Internal Auditor 12 13 FINANCIAL SECTION 14 15 Y ! "# $"%& $"%7( ) * + , *+-, # ! "#$"%&# ! "#$"%7(. / 0 # / %27.. !"#$!#$ % . $"%& $"%7. . $"%& $"%' / (. / 1 $%%(' %(%3 # 24'(% 4("3 $"%5( $$(" "(63 # 2%'(7 ('3 $"%5( 8 $%(5 "(3 # 225.2 6(&3 $"%5( 9 : $$(5 "(43 # $$'(5 4(3 $"%5(. : / ; # $(% "('3 # 2$6($ 6(&3 $"%5( %#$% ! &'( . ; # / < / (, # # : ( . # p / ; 9 = # : / ; ; > #?: @ 9 = . ) % '* +'% ' . 8 , ; A 8,;A ; 9( '4# B 8,;A; 9(64 8,;A; 9(4' - B 8,;A ; 9( 5& ! "#$"%&(. C 1 % D / C / = A = =?A (, # / $"%& /2%( (, # / =?A / 2(4 / 8,;A; 9( 75. 16 17 Y Y ) %'* +'% '' ) %'* +'% '' $ / ,! . (, # Liabilities#+ ) > and Net = 2" 25%$ (= 9 %4 2""" ( $"%8 $"%7 $"%6 , ./ %# 24(5 ("3 # 27( 6(&3 $"%5# / liabilities 2 %5'#47 2 %'6#4"5 2 %&4#654 ; - ( 9 / 5,775 6#&"" #"66 # D # /26( 7('3 C /21(% . / 2 %'#%6 2 %'7#"5 2 %&"7 $(63 $"%5# (@ # 9 5 ( + 2 %#'6 2 5' 2 %#77& ,! - Net p - net ment , + > 2 6&#"6' 2 6#''7 2 66#&'6 2""" Net p - '#%4$ 7#$6" '#67& $"%& $"%' $"%5 . net p 2 44#%77 2 4#"%7 2 4$#'$ , 2 %&"#4"% 2 %&5#%%& 2 %74#6$ & ! %% % # ! 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Fthe # $ (& ( # ') $10.0 5.93 26.5 (73 $"%6. > ./ 6( Table 7 the / by 926 the # # (? *%# 70 $"%6. 2%#""" / ( *%#$"%' / ,! < 4 ' (A / , $# $"%' / / ( ''& ( # ') =2& % ! > ./ 6( 9 : $3 / ( . / ( , < / < ( ! > ./ &(. / ; /2(% # /2$6(" $"%5( 24 10 11 25 WEST VIRGINIA LOTTERY WEST VIRGINIA LOTTERY Y STATEMENTS OF NET POSITION (In Thousands) STATEMENTS OF NET POSITION June 30, 2018 and 2017 (In Thousands) June 30, 2018 and 2017 ''& ( # ') =2& % ' 2018 2017 ASSETS 2018 2017 CURRENT ASSETS ASSETS ,! > Cash and cash equivalents (Note 4) $ 146,661 $ 156,550 CURRENT ASSETS Accounts receivable 32,136 27,533 & Cash and cash equivalents (Note 4) $ 146,661 $ 156,550 Inventory 529 553 ' ( )* Accounts receivable 32,136 27,533 Other assets 1,175 1,482 Inventory 529 553 Total current assets 180,501 186,118 Other assets 1,175 1,482 NoncurrentTotal assets:current assets 180,501 186,118 # Capital assets (Note 5) 61,552 55,732 Noncurrent assets: Less accumulated depreciation and amortization (Note 5) (13,505) (11,953) Capital assets (Note 5) 61,552 55,732 Total noncurrent assets 48,047 43,779 " Less accumulated depreciation and amortization (Note 5) (13,505) (11,953) Total noncurrent assets 48,047 43,779 Total assets 228,548 229,897 Total assets 228,548 229,897 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pension and OPEB (Note 12 and 13) 1,339 2,795 DEFERRED OUTFLOWS OF RESOURCES $ % Deferred outflows of resources related to pension and OPEB (Note 12 and 13) 1,339 2,795 LIABILITIES CURRENT LIABILITIES LIABILITIESAccrued nonoperating distributions to the State of West Virginia (Note 11) 120,860 132,693 CURRENT LIABILITIES Estimated prize claims 15,783 15,621 &'( %? # Accrued nonoperating distributions to the State of West Virginia (Note 11) 120,860 132,693 Accounts payable 1,581 1,404 Estimated prize claims 15,783 15,621 Other accrued liabilities 29,315 24,788 On *#$"%&# Virginia ; A 415 Accounts payable 1,581 1,404 Total current liabilities 167,539 174,506 < in Virginia Other accrued liabilities 29,315 24,788 D ( Total current liabilities 167,539 174,506 NONCURRENT LIABILITIES Net OPEB liability (Note 13) 3,501 - NONCURRENT LIABILITIES ; A : 10% : Net pension liability (Note 12) 2,274 4,800 Net OPEB liability (Note 13) 3,501 - / (. # #/ ( Total noncurrent liabilities 5,775 4,800 Net pension liability (Note 12) 2,274 4,800 Total noncurrent liabilities 5,775 4,800 @ % %*'( *'() ' Total liabilities 173,314 179,306 Total liabilities 173,314 179,306 . a (O DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pension and OPEB (Note 12 and 13) 1,374 367 C DEFERRED INFLOWS OF RESOURCES / + + @ , # Virginia # 900 Deferred inflows of resources related to pension and OPEB (Note 12 and 13) 1,374 367 = , # $4"$( NET POSITION Net investment in capital assets 48,047 43,779 NET POSITION Unrestricted 7,152 9,240 Net investment in capital assets 48,047 43,779 Unrestricted 7,152 9,240 Total net position $ 55,199 $ 53,019 Total net position $ 55,199 $ 53,019 The accompanying notes are an integral part of these financial statements. The accompanying notes are an integral13 part of these financial statements. 26 12 13 27 WEST VIRGINIA LOTTERY WEST VIRGINIA LOTTERY WEST VIRGINIA LOTTERY STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION STATEMENTS OF CASH FLOWS STATEMENTS OF CASH FLOWS (In Thousands) (In Thousands) (In Thousands) Years Ended June 30, 2018 and 2017 Years Ended June 30, 2018 and 2017 Years Ended June 30, 2018 and 2017 2018 2017 LOTTERY REVENUES 2018 2017 LOTTERY REVENUES 2018 2017 On-line games $ 77,840 $ 72,110 Cash flows from operating activities: Cash flows from operating activities: Instant games 99,195 94,369 Cash receipts from customers and other sources $ 1,099,083 $ 1,089,304 Cash receipts from customers and other sources $ 1,099,083 $ 1,089,304 Racetrack video lottery (Note 7) 504,295 521,318 Cash payments for: Limited video lottery (Note 8) 368,067 347,555 Cash payments for: Limited video lottery (Note 8) 368,067 347,555 Personnel costs (6,800) (10,181) Table games (Note 9) 35,152 38,958 Personnel costs (6,800) (10,181) Suppliers (11,516) (12,097) Historic resort (Note 10) 6,624 5,207 Suppliers (11,516) (12,097) Other operating costs (584,598) (580,168) 1,091,173 1,079,517 Other operating costs (584,598) (580,168) Cash provided by operating activities 496,169 486,858 LESS COMMISSIONS Cash provided by operating activities 496,169 486,858 On-line games 5,436 5,043 Cash flows from noncapital financing activities: Instant games 6,938 6,606 Cash flows from noncapital financing activities: Instant games 6,938 6,606 Nonoperating distributions to the State of West Virginia (485,781) (479,625) Racetrack video lottery (Note 7) 260,243 268,177 Nonoperating distributions to the State of West Virginia (485,781) (479,625) Distributions to municipalities and counties (7,149) (6,808) Limited video lottery (Note 8) 180,353 170,302 Distributions to municipalities and counties (7,149) (6,808) Distributions to racetracks from racetrack capital Table games (Note 9) 14,905 16,512 Distributions to racetracks from racetrack capital reinvestment fund (9,110) (11,309) Historic resort (Note 10) 3,511 2,733 reinvestment fund (9,110) (11,309) 471,386 469,373 Cash used in noncapital financing activities (502,040) (497,742) 471,386 469,373 Cash used in noncapital financing activities (502,040) (497,742) Less on-line prize costs 39,639 36,227 Less on-line prize costs 39,639 36,227 Cash flows from capital and related financing activities: Less instant prize costs 65,557 61,959 Cash flows from capital and related financing activities: Purchases of capital assets (5,820) (186) Less ticket costs 1,373 1,408 Purchases of capital assets (5,820) (186) Less vendor fees and costs 7,958 6,915 Cash flows from investing activities: 114,527 106,509 Cash flows from investing activities: Gross profit 505,260 503,635 Investment earnings 1,802 999 Gross profit 505,260 503,635 Investment earnings 1,802 999 ADMINISTRATIVE EXPENSES ADMINISTRATIVE EXPENSES Net decrease in cash and cash equivalents (9,889) (10,071) Advertising and promotions 4,771 4,157 Net decrease in cash and cash equivalents (9,889) (10,071) Wages and related benefits 10,082 10,305 CASH AND CASH EQUIVALENTS, beginning 156,550 166,621 Telecommunications 869 1,037 CASH AND CASH EQUIVALENTS, beginning 156,550 166,621 Contractual and professional 4,662 4,520 Rental 168 394 CASH AND CASH EQUIVALENTS, ending $ 146,661 $ 156,550 Rental 168 394 CASH AND CASH EQUIVALENTS, ending $ 146,661 $ 156,550 Depreciation and amortization 1,552 1,281 Other administrative expenses 1,938 1,572 24,042 23,266 Other operating income 12,734 10,677 Operating income 493,952 491,046 NONOPERATING INCOME (EXPENSE) Investment income 1,573 934 Distributions to municipalities and counties (7,214) (6,812) Distributions for capital reinvestment (13,455) (7,468) Distributions to the State of West Virginia (Note 11) (473,948) (477,053) (493,044) (490,399) Change in net position 908 647 NET POSITION, beginning 53,019 52,372 Cumulative effect of adoption of accounting principle (Note 3) 1,272 - NET POSITION, beginning of year, as restated 54,291 52,372 NET POSITION, ending $ 55,199 $ 53,019 The accompanying notes are an integral part of these financial statements. (Continued) The accompanying notes are an integral part of these financial statements. (Continued) 14 15 28 15 29 WEST VIRGINIA LOTTERY WEST VIRGINIA LOTTERY Y STATEMENTS OF CASH FLOWS STATEMENTS(In Thousands) OF CASH FLOWS (In(Continued) Thousands) Years Ended(Continued) June 30, 2018 and 2017 Years Ended June 30, 2018 and 2017 . !"#$% "&%' ( 2018 2017 2018 2017 !"#$%" & ' ( )* Reconciliation of operating income to net cash provided by & + + - - & Reconciliationoperating activities: of operating income to net cash provided by ++ ++ D ) ++ " & - operating activities: + + , . /- )0 " ++ Operating income $ 493,952 $ 491,046 & + " + &+ OperatingAdjustments income to reconcile operating income to cash $ 493,952 $ 491,046 ++ " + " Adjustments provided by to operating reconcile activities: operating income to cash &+ & 1 & providedDepreciation by operating and amortization activities: 1,552 1,281 && + ) - + + + - &2%3& + - DepreciationPension expense and amortization 1,552 436 1,281766 &+ & 4 - & + 1 PensionOPEB expense expense 436399 766- & + & ) 1 - " + & OPEBOPEB expensesupport (221) 399 -- & - + 5 ) OPEBChanges suppor in operatingt accounts: (221) - + - " + & & + + - & & Changes(Increase) in operating decrease accounts: in: + ) (Increase) Accounts decrease receivable in: (4,603) (890) AccountsInventory receivable (4,603) 24 (890)(173) . ((%)* +"!"+"'% '' "!, $"'"# InventorOther assetsy 2478 (173)241 OtherDeferred assets outflows of resources (1,111) 78 (863)241 6 & Increase Deferred (decrease) outflows in: of resources (1,111) (863) & & - + Increase Estimated (decrease) prize claims in: 162 (360) - ) 7 0 EstimatedAccounts payableprize claims 162177 (360)(557) & + &- + " & + AccountsOther accrued payable liabilities 5,324 177 (3,633(557)) & 5 & - 1 ) Other accrued liabilities 5,324 (3,633) Cash provided by operating activities $ 496,169 $ 486,858 0 & + Cash provided by operating activities $ 496,169 $ 486,858 + + 5 + + & & + / 8 ) & + + && &+ & + & - 1 & 5 + & + 4 +) - + && &+ + & + ) + - - &+& & + 9 "- " - + " + ) - + + + 4 + " + + + 4 - ) + & - - + & - ) - - + & " " - & - + )0 +& + " & - & + & & + ) : - &+ + 4 + ; " 4 1 & + 4 )7 ; 4 - && & & & The accompanying notes are an integral part of these financial statements. 4 ) The accompanying notes are an integral16 part of these financial statements. 30 16 17 31 Y Y . 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nterest rate r ; ++& - & 9 @ @ @ =&& - . I !G" I !G" I !G" 7 . DGJ . DG . DG$ 0) ) $ 86,189 472 " 0) ) 4 + $ "J2 $ $J $ - $ "!%G $ DG $ 2 $ JD# 32,546 56 "2!2 - - "2!2 D2 - "J$ " & 1 - 178,097 696 6 2J"DG - - 2J"DG D"G!J - 2$"D2! & - 147,817 44 7+ - + DJG - DJG - - - - 4 + 18,081 106 =5 + J"$#% - %2 J"2 2"D%$ - G"### ++ + - ; 3,014 52 $ %%"#JG $ $J $ 22 $ %%"!D $ J"%J $ 2 $ J"%%D Asset- ; 241,784 374 B +; & 5,054 - + + + $ 712,582 372 I !G" I !G" I !G" < r ; & - DGJ . DG . DG$ < ; & - & ;" ;" & 6 $ 2"GJ2 $ "$! $ - $ %"D2 $ "D# $ - $ J"2JJ ;) 7+ - + DJG , DJG , - -- =5 + J"JD #$ %2 J"GJ !!! - "G!# & ;is ;& + &n - + ) 67 - + B B; 8 $ "G$J $ "D$ $ 22 $ "#%! $ "%%D $ - $ !"%G% +6 8 &+ - + 5% & + ) 7 ,%) "'"2% " " 4$ "- % )* ;& - + ;" - & & & + + & B - B0 " + - ; " - - &i- + POWERBALL® > ; + " HOT < ; + & & ) M0 GD3& - " + & 67) 67 + &!!+ + " . & + 0 - & . 7 )B0 + 6 &. " + & &+ & ) T 6 &. F + B - ( ;is ; in 1 rates - && fair - & POWERBALL®" HOT < 40 26 27 41 Y Y 7 ,%) "'"2% " " 4$ "- % )*- "./ 7 ,%) "'"2% " " 4$ "- % )*- "./ = B0 + + ga+ ; +; ; & 1 B0 + 5 - 4 + & 4 ) l l 4 + + ) 4 & Pr 4 : - ry Pr 4 : - ry POWERBALL®, @< < F & 4 - & B0 &I !G" & +; + - + & DGG 9 + - ) & 23 & + - ? - & & ) 42 28 29 43 Y Y 1 %' )%'9". )*- "./ 1 %' )%'9". )*- "./ & +; + - + & DGG <B D"DG" 6 %%G - & & + - ) G3 + - " JD3& : ;B 4 ( ) B 4 ( - + ; & & " !$3 H& - HD && + 4 )( I !G"DG% & - + & & ;) & I !G"DGDG" & H# + &+ ; + - & & "2#3& + - & ++ 9 B 4 ( " ; ;2D3 ? - %3 ? + - & & )( I !G"2018 2017" + - + D3 ) + + - %3 & H#+ $2)% + : ;B 4 ( - ) & & : ; 5 " C ) "(" .". )* + &+ - + & + ; & 5 & + - & 5 + + 1 + + &+ ? + + & + & & + - + #"GGG + - 1 - & ) " : 7 . ) + 5 & + & + " B -I 8 - B 8 - + ) + & - 1 ) + " & && - > ; )B0 + & + ) & & + - + B 8 & - &+ + + + & & + - & + ) & &G)%3& I !G"DG$ I !G" ) " & & & =1 DG - ) : - ( ) !G %G > 5 ) + + ++& ;- - & I !G"DG$ DG"& ) + + & & K 9 + - ++ & + )B & 1 ) ++ & + - 1 - & I !G"DG$ DG & 9 $ %"JD!"%%# $ %"##"2% 1 4 %"G2!"2G %"DG!"$2 8+ J"G#$ 2"D$ $ 4,580,347 $ 4,D%#"2% B 8 DJ J% 4 2"DD"D$G !"#"#DG / + + %G2"D#% %D"!$ / + + 368,067 347,555 + - 2"%#G 2"J% + - "!J J"#% C + + 2$#"G% %GJ"%%! / & 360,706 340,604 ++ DJG"D2! DJ$" ++ $G"!%! 170,302 : ;- - . + "D2 J"$D - & $ DD#"2JD $ D!$"!J + - - - & $ !"!# $ J!"2#G ++& ;- - & & &+ & 9 : %;$ %(# 1 & + & + & & ( $ GJ"D%G $ G"$# ; - + ) & - 4 + =1 : - ( $"!GG D%"DD% - ;) : - + ( 2"#D %"!!D + ;> ;" " " - & ; ) - $ DD#"2JD $ D!$"!J - 1&!%3& > "&+ ;" ; F ; + & ) 44 30 31 45 Y Y : %;$ %(#- "./ : %;$ %(#- "./ (+ + + & " "+ 1 !3& > & + - 1 )(+ + - " HGG"GGG + H%GG"GGG & F + - + - 1 $ 35,152 $ 38,958 ga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l ) + > & I !G"DG$ DG $GG"2!%"%2J & & " + &- - 2D)!3 & $1"!G$"D%%" - ) ++& + - & I !G"DG$ + + ) ++& - DG & 9 - & I !G"DG8 DG7 & 9 46 32 33 47 Y Y <"# )"' # ) < $- "./ <"# )"' # ) < $- "./ 1 @ : @ ( $ 78,759 $ 68,721 4% + & ? 4 !"$$ 63,853 D)%3 + + & ? 8+ DJ 1,129 D)%3 - 5 + + / + + 4,845 3,739 + & ? - + DD$ 176 D)%3 - 5 " ++ + =1 /B 4 2! 33 & ? @ ++ D"G2# "581 D)%3 - 5 " + S - . C + + $ 2,525 $ 1,949 $J3 & =1 : - ( ) @ : @ ( $ "G $ 1,314 ++&@ : @ ( - & @ +: 6 & ( 824 635 & I !G"DG$ DG9 $ 2,525 $ 1,949 1 @ : /+ @ : @ - H "G H "!2 @ : + "%D% "D%$ = > - 1& & - !%3 & > 7 @ : @ ( 2 "& !G3 @ : @ ( @ : @ ( !"D!! D"%2 & - %3 @ +: 6 & ( ) + - 2# !#G + > & I !G"DG8 2G7 $%"G$"%2 H4,193,851" - ) @ : @ ( + H D"2D H D"$2 & - 1 & B K H !$2 H !G I !G"DG8 DG7: =1 : - ( D"!%$ "$ 1 H D"2D H D"$2 + - 1 $ 1,779 $ 1,468 2)% "!="# )"; " # 4 % +# ")!""% @ : @ ( $ 1,525 $ 1,258 & " 1 - &+ - &+ + - @ +: 6 & ( 254 DG & ;- & " & - ) ( I !G"DG$ DG" $ 1,779 $ 1,468 $%G"G"GG$ $%"D%"222 - & + & & & - & & ) ( " - + - - @ : @ ( & + & && - & + & ). - + &H"$GG"GGG" H"GGG"GGG" H%GG"GGG + @ : @ ( & & & %3 + - & & +& & - ) & + ) + @ : @ ( + %3 =1 : - ( - + 5 + ? - + & 9 $%"#GG"GGG +& & +& & )7 " - " & +" && =1 : - ( +; - + " + & &+ ( - 48 34 35 49 Y Y 2)% "!="# )"; " # 4 % +# ")!""%- "./ 2)% "! ="# )"; " # 4 % +# ")!""%- "./ & "& ( - + - + ): + 1 ( 5 + 5 +& + - )( . ( 8 I !G"2018 2017" + ; F+ . : ( 2,750 5,500 &+ ( =1 : - ( & . : ( 20,000 20,000 $DG"$JG"DG $1!D"J#D"22" - ) - / : - ( 9,764 1,514 ) @ : @ ( 34 34 : ++ 4,066 4,066 ++& 5 &+ C-/- + 6 & 10,112 10,112 - & 9 =1 : - ( 334,372 321,738 1 ( 9 : 5 6 & - $ J"!D# $ %#"!# 6 . 485,082 478,995 . + &= $"GGJ $"GGJ ++ "2D! "2D# 7 ; ( 699 630 @ = - <&& J"#2 "157 + J"2%J J"DJ & C : !"G$ !"G#J 485,781 479,625 . - & L@ !"%GG 2"!!D . + &= L s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une 30, 2018 June 30, 2018 Note 12. Pension Benefits (Continued) Note 12. Pension Benefits (Continued) Plan description (Continued) June 30, 2018 Deferred Deferred member is between ages 60 and 62 with at least ten years of contributory service, between ages 57 and Outflows of Inflows of 62 with at least twenty years of contributory service, or between ages 55 and 62 with at least Resources Resources thirty years of contributory service. The straight-life annuity retirement benefit is equivalent to 2% of Net difference between projected and actual average salary multiplied by years of service. Average salary is the average of the three consecutive earnings on pension plan investments $ - $ 553 highest annual earnings out of the last fifteen years of earnings. For all employees hired after July 1, Differences between expected and actual experience 202 5 2015, average salary is the average of the five consecutive highest annual earnings out of the last fifteen Difference in assumptions - 118 years of earnings. Terminated members with at least five years of contributory service who do not Changes in proportion and differences between withdraw their accumulated contributions may elect to receive their retirement annuity beginning at Lottery contributions and proportionate share of age 62. For all employees hired after July 1, 2015, this age increases to 64 with at least ten years of contributions 26 86 contributory service, or age 63 with at least twenty years of contributory service. Lottery contributions made subsequent to the measurement date of June 30, 2017 808 - Chapter 5, Article 10 of the West Virginia State Code assigns the authority to establish and amend the provisions of the plan to the State Legislature. Total $ 1,036 $ 762 Contributions June 30, 2017 Per Chapter 5, Article 10, members hired prior to July 1, 2015 contribute 4.5% of annual earnings. All Deferred Deferred members hired July 1, 2015 and later, will contribute 6% of annual earnings. State and non-state Outflows of Inflows of governmental employers’ contribution rates were 11%, 12.0% and 13.5% of covered employees’ Resources Resources annual earnings for fiscal years ending June 30, 2018, 2017, and 2016, respectively. Contribution rates Net difference between projected and actual for members are established by statutes, subject to legislative limitations and are not actuarially earnings on pension plan investments $ 1,509 $ - determined. Contribution rates for employers are established by the Legislature. Although contributions Differences between expected and actual experience 400 - are not actuarially determined, actuarial valuations are performed to assist the legislature in establishing Difference in assumptions - 234 appropriate contribution rates for employers. Contributions to the pension plan from the Lottery were Changes in proportion and differences between $808,333, $862,728, and $979,596 for the year ended June 30, 2018, 2017 and 2016, respectively. Lottery contributions and proportionate share of contributions 23 133 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Lottery contributions made subsequent to the Resources Related to Pensions measurement date of June 30, 2016 863 - At June 30, 2018 and 2017, respectively, the Lottery reported a liability of $2,274,227 and $4,800,254 Total $ 2,795 $ 367 for its proportionate share of the net pension liability. The net pension liability reported at June 30, 2018 was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016, rolled forward to the measurement The $808,333 reported as deferred outflows of resources related to pensions resulting from Lottery date of June 30, 2017 using the actuarial assumptions and methods described in the Actuarial contributions subsequent to the measurement date will be recognized as a reduction of the net pension Assumptions section of this note. The Lottery’s proportion of the net pension liability was based on the liability in the year ended June 30, 2019. Other amounts reported as deferred outflows and inflows of Lottery’s share of contributions to the pension plan relative to the contributions of all participating plan resources related to pensions will be recognized in pension expense as follows: employers for the year ended June 30, 2017. At June 30, 2017, the Lottery’s proportion was 0.53 percent, which is a increase of .01 from its proportion as of June 30, 2016. Year Ended June 30: 2019 $ (248) For the years ended June 30, 2018 and 2017, respectively, the Lottery recognized pension expense of 2020 191 $435,491 and $765,956. At June 30, 2018, the Lottery reported deferred outflows of resources and 2021 (3) deferred inflows of resources related to pensions from the following sources (in thousands): 2022 (474) (Continued) (Continued) 52 38 39 53 WEST VIRGINIA LOTTERY WEST VIRGINIA LOTTERY NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS June 30, 2018 June 30, 2018 Note 12. Pension Benefits (Continued) Note 12. Pension Benefits (Continued) Actuarial assumptions Discount Rate The total pension liability in the June 30, 2017 actuarial valuation was determined using the following The discount rate used to measure the total pension liability was 7.5%. The projections of cash flows actuarial assumptions: used to determine the discount rates assumed that employer contributions will continue to follow the Inflation 3.0 percent current funding policies. Based on those assumptions, the fiduciary net position of the plan was Salary increases 3.0 - 6.0 percent, average, including inflation projected to be available to make all projected future benefit payments of current plan members. Investment rate of return 7.5 percent, net of pension plan investment expense Therefore, the long-term expected rates of return on pension plan investments were applied to all periods of projected benefit payments to determine the total pension liabilities of the plan. Although The total pension liability in the June 30, 2016 actuarial valuation was determined using the following discount rates are subject to change between measurement dates, there were no changes in the current actuarial assumptions: period. Inflation 3.0 percent Regarding the sensitivity of the net pension liability to changes in the discount rate, the following table Salary increases 3.0 - 6.0 percent, average, including inflation presents the Lottery’s proportionate share of the net pension liability calculated using the current Investment rate of return 7.5 percent, net of pension plan investment expense discount rate of 7.5% as well as what the Lottery’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point Mortality rates were based on 100% of RP-2000 Non-Annuitant, Scale AA fully generational for active higher than the current rate (in thousands): employees, 110% of the RP-2000 Non-Annuitant, Scale AA fully generational for healthy males, 101% of RP-2000 Non-Annuitant Scale AA fully generational for healthy females, 96% of RP-2000 Disabled Net Pension Liability (Asset) Annuitant, Scale AA fully generational for disabled males, and 107% of RP-2000 Disabled Annuitant, Scale AA fully generational for disabled females. 1% decrease (6.5%) $ 6,296 Current discount rate (7.5%) $ 2,274 The actuarial assumptions used in the June 30, 2017 and 2016, valuation were based on the results of 1% increase (8.5%) $ (1,126) an actuarial experience study for the period July 1, 2009 through June 30, 2014. Note 13. Other Postemployment Benefits The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, Plan description net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future The West Virginia Other Postemployment Benefit Plan (the OPEB Plan) is a cost-sharing, multiple- real rates of return by the target asset allocation percentage and by adding expected inflation. The target employer, defined benefit other post-employment benefit plan and covers the retirees of State agencies, allocation and best estimates of arithmetic real rates of return for each major asset class are summarized colleges and universities, county boards of education, and other government entities as set forth in the in the following table: West Virginia Code Section 5-16D-2 (the Code). The financial activities of the OPEB Plan are accounted for in the West Virginia Retiree Health Benefit Trust Fund (RHBT), a fiduciary fund of the Weighted State of West Virginia. The OPEB Plan is administered by a combination of the West Virginia Public Long-term Average Employees Insurance Agency (PEIA) and the RHBT staff. OPEB Plan benefits are established and Expected Expected Real revised by PEIA and the RHBT management with approval of their Finance Board. The PEIA issues a Target Rate of Rate of publically available financial report of the RHBT that can be obtained at www.peia.wv.gov or by Asset Class Allocation Return Return writing to the West Virginia Public Employees Insurance Agency, 601 571h Street, SE Suite 2, Charleston, WV 25304. US equity 27.5% 7.0% 1.92% International equity 27.5% 7.7% 2.12% Benefits provided Core fixed income 7.5% 2.7% 0.20% High yield fixed income 7.5% 5.5% 0.41% The Lottery employees who retire are eligible for PEIA health and life benefits, provided they meet the Real estate 10.0% 7.0% 0.70% minimum eligibility requirements of the PERS or meet certain other eligibility requirements of other Private equity 10.0% 9.4% 0.94% Hedge funds 10.0% 4.7% 0.47% CPRB sponsored retirement plans. RHBT provides medical and prescription drug insurance and life insurance benefits to those qualified participants. Life insurance is provided through a vendor and is Total 100.00% 6.76% fully funded by member contributions. The medical and prescription drug insurance is provided through Inflation (CPI) 1.90% two options; Self-Insured Preferred Provider Benefit Plan - primarily for non-Medicare-eligible retirees 8.66% and spouses or External Managed Care Organizations - primarily for Medicare-eligible retirees and spouses. (Continued) (Continued) 54 40 41 55 Y Y 3. 4) , # (2$ *( >+" #- ".) 3. 4), # (2$ *( >+" #- "./ 6 & - - & ; - +& - & ; - +&&+ - ) :@6 B - + B - - C + = ( + - &+ B - 8 ) 0 + " - + & ;& - + - + - + & + - & 62#" + )C-B + 8=7 E8 & 8- 6 & && - I "DGD"+ U-D-#J) - + B < ) :@6 + &M < 4 -& H!G+ :@6( &+ & B< + + B<) - -& - 8 7 + 1( & + & & & :@6) H!G & + - ) + & & /- & + & &:@6 = & I !G"DGG" 5 & & + + - & I "DG!" - ) & - + ) 8 ) & :@6 + ) % + - & U6-D-!D) ( ( & + &H%+ %-16D-J 8=7 ( 6 :@6&+ - & + +" & " + 5 + & + + + )8 + + + &) H%+ & + 5 :@6) & :@6 I !G" DGDG) & 5 + & + )=+ - & :@6 + ) + - & & + +" + - & 62J# ++ & " - - " + " ( G"DGD" <8=6 & %% 6 &= && - I > + ) 5 - + & - "DGD) 8 8 & + - & + && - I !G"DG$"DG" DGJ" & & V + & + E 5 - " 9 & + + & + " + + - + + & 1 1 7 KK– 6/30/17 7/1/16-12/31/16 V" + 4 ) & 88 + + $ 177 H!% H196 H163 &+ 4 + & & ) " " ! " # ! $# " <8=6 &+ H!GD"$%"HD#D"2%J HD#"D$ & I !G"DG$"DG" DGJ" - ) I !G"DG$" & & :@6 <8=6 & & <8=6 - ) + B + & I " ##" 4 & <8=6 " " 4 " & & - )B + I "## & <8=6 & I !G"DGG" 4 + + E & - )B + : & I "DGG" - + 1 F & <8=6 H !"%G ) F & & <8=6 : - - &+ + E & # & - + ? & <8=6 H 2"DDG <8=6 + &I !G"DG" <8=6 • B + & I "#$$"+ - ; - GG3 & <8=6 + - &I !G"DGJ) F 5 ) & <8=6 & + - •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embers hired after July 1, 2010, are required pay 100% & 1 & - " : : &: + 1 + ) 5 " + + 1 &+ - ) .+ 17.0% C- .+ 22.0% & ' ( " 7 Q & 24.6% 7 C-Q & 24.3% The & F & <8=6 7 =5 26.2% " F & <8=6 - +( 1 0.5% be if it a rate that is 1- 1- - : ( 1 7 + 6.7% : ( 1 7 + 0.1% @ ( 5.7% )) 8 - =5 19.6% ?=')%# ="#' % ? ')%# : = 8.3% -7 6?/ -1 6?/ - 6?/ < 7 + 4.8% 0.0% F & <8=6 $ 4,077 $ 3,501 $ 3,023 ! & ' ( " + <8=6 )%3) > & & + + :@6 + 5 + " & - + ) & F & <8=6 " ( -& + H!G+ &+ DG!) F & <8=6 & 6 + " 8 1 & & & I rates that are 1- - - !G"DG!J" <8=6 E& > - +; > : & & + & + + ) & " - + 1 & <8=6 - + & > & + + )) <8=6 ). > + + ) <%$ 4'%) + <8=6 I !G"DGJ G)2%3 &+ I !G"DG% # ). - ) ?=')%# % # ? ')%# F & < ; + <8=6 $ 2,941 $ 3,501 $ 4,186 > + + &H%G+ &DG HG+ & DG$) " + + 3 %#"! ' "&" * > !)G3 + & The leases, leases, - && &field )The + & > > + + leases - && 5 + + be > ? + + E & 1 + ): 1 & & I !G"DG8 DG7 1 + HJ"#2$ & & + & & ) & DG!%" + $394,515 - ) > & & + &+ 1 + & &GG3 & )7 " The & && the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a ;+ + +& " + " - + wh ) + + 6:7B & - ) U 6:7B) & - + 6:7B ) 6:7B ; ;& & H+ - 1 - - ) =1 - + + HDGG + - " > + ) 6:7B H + - +1 + + - +). I !G"2018" - + + 1 - ) 62 48 49 63 THE WEST VIRGINIA LOTTERY SCHEDULE OF THE PROPORTIONATETHE WEST VIRGINIA SHARE LOTTERY OF THE NET PENSION LIABILITY (In Thousands) SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Public Employees(In Thousands) Retirement System Plan Public Employees Retirement System Plan Years Ended June 30 2018 2017 2016 2015 Years Ended June 30 Lottery's proportion (percentage) of the net pension liability 20180.53% 20170.52% 20160.55% 20150.55% Lottery's proportion (percentage) of the net pension liability 0.53% 0.52% 0.55% 0.55% Lottery's proportionate share of the net pension liability $ 2,274 $ 4,800 $ 3,044 $ 2,035 Lottery's proportionate share of the net pension liability $ 2,274 $ 4,800 $ 3,044 $ 2,035 Lottery's covered payroll $ 7,192 $ 7,259 $ 7,421 $ 7,415 Lottery's covered payroll $ 7,192 $ 7,259 $ 7,421 $ 7,415 Lottery's proportionate share of the net pension liability as a percentage of its covered payroll 31.62% 66.12% 41.02% 27.44% Lottery's proportionate share of the net pension liability as a percentage of its covered payroll 31.62% 66.12% 41.02% 27.44% Plan fiduciary net position as a percentage of the total pension liability 93.67% 86.11% 91.29% 93.98% Plan fiduciary net position as a percentage of the total pension liability 93.67% 86.11% 91.29% 93.98% Note: All amounts presented are as of the measurement date, which is one year prior to the fiscal year end date. Note: All amounts presented are as of the measurement date, which is one year prior to the fiscal year end date. REQUIRED SUPPLEMENTARY INFORMATION See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. 50 See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. 64 50 65 THE WEST VIRGINIA LOTTERY THE WEST VIRGINIA LOTTERY THE WEST VIRGINIA LOTTERY SCHEDULE OF CONTRIBUTIONS TO THE PERS THE WEST VIRGINIA LOTTERY (In Thousands) SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET OPEB LIABILITY SCHEDULE OF CONTRIBUTIONS TO THE PERS SCHEDULE OF THE PROPORTIONATE(In Thousands) SHARE OF THE NET OPEB LIABILITY (In Thousands) (In Thousands) Years Ended June 30 Retirement Health Benefit Trust Plan 2018 2017 2016 2015 2014 2013 Years Ended June 30 Retirement Health Benefit Trust Plan 2018 2017 2016 2015 2014 2013 Statutorily required contribution $ 808 $ 863 $ 980 $ 1,039 $ 1,075 $ 1,072 Years Ended June 30 Contributions in relation to the statutorily Statutorily required contribution $ 808 $ 863 $ 980 $ 1,039 $ 1,075 $ 1,072 2018 required contribution 808 863 980 1,039 1,075 1,072 Years Ended June 30 Contributions in relation to the statutorily 2018 required contribution 808 863 980 1,039 1,075 1,072 West Virginia Lottery's proportion (percentage) of the net OPEB liability 0.14% Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - West Virginia Lottery's proportion (percentage) of the net OPEB liability 0.14% Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - West Virginia Lottery's proportionate share of the net OPEB liability $ 3,501 Lottery's covered payroll $ 7,345 $ 7,192 $ 7,259 $ 7,421 $ 7,415 $ 7,658 Contributions as a percentage of covered- West Virginia Lottery's proportionate share of the net OPEB liability $ 3,501 Lottery's covered payroll $ 7,345 $ 7,192 $ 7,259 $ 7,421 $ 7,415 $ 7,658 employee payroll 11.00% 12.00% 13.50% 14.00% 14.50% 14.00% State's proportionate share of the net OPEB liability associated with the Lottery $ 719 Contributions as a percentage of covered- State's proportionate share of the net OPEB liability associated with the Lottery $ 719 employee payroll 11.00% 12.00% 13.50% 14.00% 14.50% 14.00% Total $ 4,220 Total $ 4,220 West Virginia Lottery's covered-employee payroll $ 5,264 West Virginia Lottery's covered-employee payroll $ 5,264 West Virginia Lottery's proportionate share of the net OPEB liability West as a Virginiapercentage Lottery's of its covered-employee proportionate share payroll of the net OPEB liability 80.17% as a percentage of its covered-employee payroll 80.17% Plan fiduciary net position as a percentage of the total OPEB liability 25.10% Plan fiduciary net position as a percentage of the total OPEB liability 25.10% Note: All amounts presented are as of the measurement date, whichNote: Allis one amounts year prior presented to the arefiscal as ofyear the end measurement date. date, which is one year prior to the fiscal year end date. See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. 51 52 See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. 66 51 52 67 THE WEST VIRGINIA LOTTERY THE WEST VIRGINIA LOTTERY < SCHEDULE OF CONTRIBUTIONS TO THE RHBT SCHEDULE OF CONTRIBUTIONS(In Thousands) TO THE RHBT AB =B,, (In Thousands) June Years Ended June 30 . ). + )(% " ,)# . 2018Years Ended June2017 30 2018 2017 + & F & Statutorily required contribution $ 303 $ 292 PERS F & C <8=6 StatutorilyContributions required in relation contribution to the statutorily required contribution $ 303 $ 292 :@6, 5 + &+ &G )@ - " & Contributions in relation to the statutorily required contribution 303 292 G + " &+ & & &+ - ) Contribution deficiency (excess) $ - $ - Contribution deficiency (excess) $ - $ - . ,#" ,$% (.( 8=: + +; + I "DG% " West Virginia Lottery's covered-employee payroll $ 4,999 $ 5,264 & 9 West Virginia Lottery's covered-employee payroll $ 4,999 $ 5,264 Contributions as a percentage of covered-employee payroll 6.06% 5.55% ( + I "DG%"5 & &+ + JG & - Contributions as a percentage of covered-employee payroll 6.06% 5.55% & - %% - 5 $G ) + + + & + + %% G & - " !G & - )( + I "DG% "5 & &+ + JD G & - ) + + & I "DG%+ & + + JG JD & - " % JD & - " %% JD & - ) & + & 5 - D3&- + & - )( + I "DG%"- - & - s & & & & )( + I "DG% " - - & & - - & & & & ) ( + I " DG%" + + + & - & - + + - + JD)( + I "DG% " 64 & - " J! & - )) ( + I "DG%" + 5 2)%3& ) + I " DG% " 5 J3 & ) 3. ,#" ##(2 " # 1 " DGG# DG2" + DG% - ) " - + & - & 9 See Independent Auditor's Report and accompanying Notes to Required Supplementary Information. See Independent Auditor's Report and accompanying53 Notes to Required Supplementary Information. 68 53 54 69 STATISTICAL SECTION < AB =B,, June 3. ,#" ##(2 " # - "./ 2015 - 2017 2014 8> 9 3.0-4.6% 4.25-6.0% 7KLVVHFWLRQRIWKH:HVW9LUJLQLD/RWWHU\èVFRPSUHKHQVLYHDQQXDOĆQDQFLDOUHSRUWGHSLFWVFKDUWVDQGJUDSKVWRDLGLQ C 3.35-6.0% 4.25-6.0% XQGHUVWDQGLQJWKHLQIRUPDWLRQSUHVHQWHGLQWKHĆQDQFLDOVWDWHPHQWVDQGQRWHGLVFORVXUHVDERXWWKH/RWWHU\èVRYHUDOO 7& !)G3DGJ DG ")#3DG% 2.2% ĆQDQFLDOKHDOWK B - -RP-DGGGC- " AA & FINANCIAL TRENDS/REVENUE CAPACITY - -RP-DGGGC- " "& 7KHDFFRPSDQ\LQJVFKHGXOHVGHSLFWLQJĆQDQFLDODQGUHYHQXHWUHQGVFRQWDLQLQIRUPDWLRQWRKHOSWKHUHDGHUXQGHUVWDQG @ + - G3&:8- @ + - #$!/ B KRZWKHĆQDQFLDOSHUIRUPDQFHDQGZHOOEHLQJKDYHFKDQJHGRYHUWLPHDQGKRZWKH/RWWHU\DVVHVVHVLWVPRVWVLJQLĆFDQW DGGGC- " revenue sources; traditional instant and on-line games, the video lottery segment and table games. The continued & @ & + - #/ B expansion of venues that offer a variety of gaming options has sustained revenues for the Lottery. @ & + - G3&:8- . + - #/ B DGGGC- " DEMOGRAPHIC AND ECONOMIC INFORMATION & . & + - : - The accompanying schedules, depicting demographic and other economic relationships, offer indicators to help the . + - #J3&:8-2000 #J-7 UHDGHUXQGHUVWDQGWKHHQYLURQPHQWZLWKLQZKLFKWKH/RWWHU\èVĆQDQFLDODFWLYLWLHVWDNHSODFH,QGH[HVVXFKDVSOD\HU . " & income distribution, per capita income and competitive revenues generated by other lottery systems are relevant in . & + -G3&RP-2000 assessing the Lottery’s performance. . " & OPERATING INFORMATION 7KHUHDUHPDQ\IDFWRUVWKDWLPSDFWWKHOHYHORIGHPDQGIRU/RWWHU\SURGXFWV)RURXURQOLQHJDPHVWKHVL]HVRIWKH 1.75-35.1% - 26% SXEOLFL]HGMDFNSRWVGULYHWKHVDOHVOHYHO$VDQH[DPSOHD3RZHUEDOO® jackpot of $250 million will generate more sales C- 2-!%)$3 D- 31.2% than a jackpot of $40 million. For our instant ticket games, the level of demand is impacted by many factors such as game . G- .675% G- )$3 WKHPHVSOD\VW\OHVSULFHSRLQWVDQGSUL]HSD\RXWV5DFHWUDFN9LGHR/RWWHU\DQG7DEOH*DPHVVDOHVDUHODUJHO\GULYHQ 3 ,> ##(2 " # by tourism. Weekends and holidays generate higher sales than weekdays. Limited Video Lottery sales are seasonally DIIHFWHG&ROGPRQWKVWHQGWRJHQHUDWHKLJKHUVDOHVWKDQZDUPHUPRQWKV,QDQHIIRUWWRPLQLPL]HWKHHIIHFWRIWKHVH 6 + DGJ DG%- 9 nuances, the accompanying schedules contain information by year and game type to help the reader understand how + - + 5 & ) + WKH/RWWHU\èVĆQDQFLDOSHUIRUPDQFHDQGRYHUDOOJURZWKKDYHWUHQGHG " + " ; + + - ; - " &+ - ) 6RXUFH 8QOHVVRWKHUZLVHQRWHGWKHLQIRUPDWLRQLQWKHVHVFKHGXOHVLVGHULYHGIURPWKHFRPSUHKHQVLYHĆQDQFLDOUHSRUWVRUWKHDXGLWHGĆQDQFLDO + 1 &+ :@6 statements for the relevant year. & - - 1 I !G"DG%) + +" + + + &+ & - ) ( I !G"DGJ- " + & + - + I !G" DG% <8=6 - ) B + + - - + ) DGJ DG%- & H!G+ 6 2#" I "2037, & " & & & ) " & - & I !G"2015, - ) 8 + & I "2010, + + 4 & - + )8 + & I "2010, 5 & & + + + ) 5 " I !G"2015, - - & <8=6 + & I "2010, & 0 & - " "& " - & + ) 70 55 71 SALES BY PRODUCT AND OTHER REVENUES - LAST TEN YEARS 2009 2010 2011 2012 2013 2014 2015 2015 2017 2018 INSTANT $113,853,880 $97,482,584 $115,697,423 $117,676,396 $108,634,752 $105,561,992 $103,276,392 $102,541,884 $94,368,751 $99,194,790 32:(5%$//p $51,016,100 $48,593,678 $35,669,004 $38,686,528 $48,688,807 $39,490,788 $34,099,437 $46,553,463 $34,514,013 $36,483,389 +27/27726,==/(5p $4,881,127 $6,447,315 $5,831,270 $4,736,542 $5,063,704 $5,310,353 $5,745,617 $4,790,589 $4,848,437 $2,219,730 DAILY 3 $8,916,094 $8,401,794 $8,621,978 $8,698,349 $8,301,649 $8,269,965 $8,109,719 $8,176,541 $8,144,181 $7,940,388 DAILY 4 $4,760,533 $4,694,743 $4,967,805 $5,028,983 $4,748,002 $4,905,892 $4,849,937 $4,904,381 $4,796,895 $4,746,084 CASH 25 $5,596,814 $5,512,376 $5,440,930 $5,465,460 $5,237,499 $5,191,451 $5,191,526 $5,062,256 $4,938,032 $4,833,798 75$9(/.(12 $9,070,501 $7,412,987 $6,423,516 $6,249,636 $5,671,808 $5,049,843 $5,103,370 $4,136,493 $3,811,709 $3,639,022 0(*$0,//,216p - $2,678,674 $10,915,389 $14,746,963 $9,274,409 $14,850,257 $13,623,552 $12,035,877 $11,057,403 $14,850,547 /2772$0(5,&$p ------$3,126,972 727$/21/,1( $84,241,169 $83,741,567 $77,869,892 $83,612,461 $86,985,878 $83,068,549 $76,723,158 $85,659,600 $72,110,670 $77,839,930 9,'(2(net of prizes) 5$&(75$&. $848,232,669 $746,208,159 $726,952,241 $764,898,326 $655,676,762 $590,918,374 $557,802,811 $537,729,110 $521,317,604 $504,294,811 /,0,7(' $412,488,946 $397,287,133 $397,544,342 $406,108,085 $399,223,893 $377,222,264 $373,220,741 $360,814,338 $347,555,459 $368,067,327 7$%/(*$0(6(privilege tax) $34,219,101 $31,725,645 $68,153,589 $78,121,131 $70,258,634 $50,464,934 $46,928,173 $43,545,330 $38,957,889 $35,152,441 9,'(2(net of prizes) - $1,132,902 $4,092,891 $4,950,083 $4,737,669 $4,440,596 $4,070,270 $4,486,215 $3,739,067 $4,845,200 7$%/(*$0(6(privilege tax) - $516,466 $2,138,796 $2,163,962 $2,858,962 $2,607,435 $1,982,451 $1,859,221 $1,467,848 $1,778,614 727$/+,6725,&5(6257 - $1,649,368 $6,231,687 $7,114,045 $7,596,631 $7,048,031 $6,052,721 $6,345,436 $5,206,915 $6,623,814 727$/6$/(6 $1,493,035,765 $1,358,094,456 $1,392,449,174 $1,457,530,444 $1,328,376,550 $1,214,284,144 $1,164,003,996 $1,136,635,698 $1,079,517,288 $1,091,173,113 /,&(16()(( $10,573,157 $10,317,529 $10,157,522 $71,847,082 $9,871,021 $9,776,116 $10,024,323 $9,396,576 $9,245,717 $10,806,586 0,6&(//$1(286 $827,731 $741,824 $1,648,012 $1,504,260 $1,989,230 $1,943,345 $1,288,429 $1,131,369 $1,431,996 $1,926,990 27+(523(5$7,1*,1&20( $11,400,888 $11,059,353 $11,805,534 $73,351,342 $11,860,251 $11,719,461 $11,312,752 $10,527,945 $10,677,713 $12,733,576 12123(5$7,1*,1&20( $2,719,936 $390,334 $297,669 $9,826,225 $252,688 $462,053 $406,819 $788,063 $934,085 $1,573,220 TOTAL REVENUES $1,507,156,589 $1,369,544,143 $1,404,552,377 $1,540,708,011 $1,340,489,489 $1,226,465,658 $1,175,723,567 $1,147,951,706 $1,091,129,086 $1,105,479,909 EXPENSES, DISTRIBUTIONS AND CHANGES IN NET POSITION - LAST TEN YEARS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 35,=(6(traditional) $119,449,497 $107,983,663 $120,706,835 $120,605,843 $116,230,326 $111,761,267 $106,475,947 $110,827,487 $98,186,374 $105,195,719 COMMISSIONS INSTANT $7,969,759 $6,823,692 $8,098,815 $8,238,580 $7,604,433 $7,389,339 $7,229,348 $7,177,932 $6,605,813 $6,938,222 21/,1( $5,900,642 $5,849,450 $5,456,854 $5,844,402 $6,094,540 $5,819,974 $5,371,955 $6,001,020 $5,043,296 $5,436,726 5$&(75$&. $463,649,031 $414,987,691 $404,944,515 $424,048,550 $370,827,992 $336,205,404 $286,777,829 $275,496,153 $268,177,388 $260,243,206 /,0,7(' $202,119,568 $194,670,681 $194,796,720 $198,992,951 $195,619,694 $184,838,897 $182,878,150 $176,799,014 $170,302,163 $180,352,974 7$%/(*$0(6 $13,458,369 $12,473,391 $29,288,210 $33,570,927 $30,674,243 $22,032,440 $19,885,019 $18,453,051 $16,512,256 $14,905,401 +,6725,&5(6257 - $846,922 $3,126,210 $3,671,152 $3,706,532 $3,456,421 $3,068,391 $3,302,272 $2,732,495 $3,511,074 TOTAL COMMISSIONS $693,097,369 $635,651,827 $645,711,324 $674,366,562 $614,527,434 $559,742,475 $505,210,692 $487,229,442 $469,373,411 $471,387,603 ADMINISTRATION (includes ticket costs) $35,215,252 $36,493,179 $40,838,831 $38,989,047 $34,991,775 $35,652,922 $33,663,094 $32,858,938 $31,589,554 $33,372,668 727$/23(5$7,1*(;3(16(6 $847,762,118 $780,128,669 $807,256,990 $833,961,452 $765,749,535 $707,156,664 $645,349,733 $630,915,867 $599,149,339 $609,955,990 12123(5$7,1*',675,%87,216 081,&,3$/,7,(6$1'&2817,(6 $8,084,783 $7,786,828 $7,791,869 $7,959,718 $7,824,788 $7,393,556 $7,315,126 $7,071,961 $6,812,087 $7,214,120 &$3,7$/5(,19(670(17)81' $15,983,212 $11,968,468 $21,558,438 $22,900,376 $18,820,278 $13,397,148 $11,716,851 $10,445,577 $7,467,510 $13,455,200 67$7(2):(679,5*,1,$ $616,622,965 $616,465,269 $565,256,651 $662,982,476 $545,203,685 $498,364,762 $508,328,566 $501,301,537 $477,053,471 $473,947,597 TOTAL DISTRIBUTIONS $640,690,960 $636,220,565 $594,606,958 $693,842,570 $571,848,751 $519,155,466 $527,360,543 $518,819,075 $491,333,068 $494,616,917 CHANGES IN NET POSITION $18,703,511 ($46,805,091) $2,688,429 $12,903,989 $2,891,203 $153,528 $3,013,291 ($1,783,236) $646,679 $907,002 72 73 SALES BY PRODUCT LINE SALES BY PRODUCT LINE LAST TEN YEARS LAST TEN YEARS INSTANT POWERBALL® TRAVEL KENO MEGA MILLIONS® $10,000,000 $16,000,000 $120,000,000 $60,000,000 $14,000,000 $8,000,000 $100,000,000 $50,000,000 $12,000,000 $80,000,000 $40,000,000 $6,000,000 $10,000,000 $60,000,000 $30,000,000 $8,000,000 $4,000,000 $6,000,000 $40,000,000 $20,000,000 $4,000,000 $2,000,000 $20,000,000 $10,000,000 $2,000,000 $0 $0 $0 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 HOT LOTTO SIZZLER® LOTTO AMERICA® DAILY 3 RACETRACK VIDEO LOTTERY LIMITED VIDEO LOTTERY $7,000,000 $10,000,000 $450,000,000 $900,000,000 $400,000,000 $6,000,000 $800,000,000 $8,000,000 $350,000,000 $700,000,000 $5,000,000 $300,000,000 $600,000,000 $6,000,000 $4,000,000 $250,000,000 $500,000,000 $200,000,000 $3,000,000 $400,000,000 $4,000,000 $300,000,000 $150,000,000 $2,000,000 $100,000,000 $2,000,000 $200,000,000 $1,000,000 $100,000,000 $50,000,000 $0 $0 $0 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 DAILY 4 CASH 25 TABLE GAMES (privilege tax) HISTORIC RESORT $6,000,000 $8,000,000 $80,000,000 $6,000,000 $7,000,000 $5,000,000 $70,000,000 $5,000,000 $6,000,000 $60,000,000 $4,000,000 $5,000,000 $4,000,000 $50,000,000 $3,000,000 $40,000,000 $4,000,000 $3,000,000 $30,000,000 $3,000,000 $2,000,000 $2,000,000 $20,000,000 $2,000,000 $1,000,000 $1,000,000 $10,000,000 $1,000,000 $0 $0 $0 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source: West Virginia Lottery Source: West Virginia Lottery 74 75 SALES BY PRODUCT LINE TOTAL REVENUE: $12,909,200,535 LAST TEN YEARS LAST TEN FISCAL YEARS 1 2 $1,600,000,000 $1,400,000,000 $1,6200,000,000 $1,4000,000,000 $1$8,20000,,00000,,000 $1$6,00000,,00000,,000 $8$400,000,000 $6$200,000,000 $400,000,00$0 15 9 0 1 2 3 4 5 6 7 8 0 1 1 1 1 1 1 1 1 1 Y Y Y Y Y Y Y Y Y Y F F F F F F F F F F $200,000,000 7 $0 13 ® ® 5 4 INSTANT 9 0 P1OWERB2ALL 3 4 5 HOT 6LOTTO S7IZZLER8 9 12 0 1 1 1 1 1 1 1 1 1 Y Y Y Y Y Y Y Y Y Y 11 10 DAILY 3 F F F DAILYF 4 F F F CAFSH 25 F F 6 8 3 14 TRAVEL KENO MEGA MILLIONS® LOTTO AMERICA® RACETRACK VIDEO LOTTERY LIMITED VIDEO LOTTERY TABLE GAMES (privilege tax) 1 RACETRACK VIDEO LOTTERY: $6,454,030,867 • 50% 9 TRAVEL KENO: 56,568,885 • 0.44% INSTANT POWERBALL® HOT LOTTO SIZZLER® 2 LIMITED VIDEO LOTTERY: $3,839,532,528 • 29.74% 10 HISTORIC RESORT: $53,868,648 • 0.42% HISTORIC RESORT DAILY 3 DAILY 4 CASH 25 3 INSTANT: $1,058,288,844 • 8.19% 11 CASH 25: $52,470,142 • 0.41% 4 TABLE GAMES (privilege tax): $497,526,867 • 3.85% 12 HOT LOTTO SIZZLER®: $49,874,684 • 0.39% TRAVEL KENO MEGA MILLIONS® LOTTO AMERICA® 5 POWERBALL®: $413,795,207 • 3.20% 13 DAILY 4: $48,403,255 • 0.37% RACETRACK VIDEO LOTTERY LIMITED VIDEO LOTTERY TABLE GAMES (privilege tax) 6 TOTAL OTHER: $176,448,815 • 1.37% 14 NONOPERATING: $17,651,092 • 0.14% 7 MEGA MILLIONS®: $104,033,071 • 0.81% 15 LOTTO AMERICA®: $3,126,972 • 0.02% HISTORIC RESORT 8 DAILY 3: $83,580,658 • 0.65% Source: West Virginia Lottery Source: West Virginia Lottery 76 77 DAILY AVERAGES EXPENSES AND NONOPERATING DISTRIBUTIONS LAST TEN FISCAL YEARS LAST TEN FISCAL YEARS $300 $250 PRIZES COMMISSIONS (traditional) (includes video distribution) $300 $140,000,000 $700,000,000 $200 $120,000,000 $600,000,000 $250 $150 $100,000,000 $500,000,000 $200 $80,000,000 $400,000,000 $100 $60,000,000 $300,000,000 $150 $50 $40,000,000 $200,000,000 $100 $20,000,000 $100,000,000 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 $0 $0 $50 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 ADMINISTRATION DISTRIBUTIONS to MUNICIPALITIES $0 (includes ticket costs) FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 and COUNTIES $45,000,000 $8,200,000 LIMITED RACETRACK $40,000,000 $8,000,000 $7,800,000 $35,000,000 $7,600,000 $30,000,000 TRADITIONAL LOTTERY $7,400,000 $25,000,000 DAILY AVERAGELIMITED SALESRACE TPERRACK RETAILER $7,200,000 $20,000,000 $7,000,000 $6,800,000 $15,000,000 $6,600,000 $10,000,000 $6,400,000 $5,000,000 $6,200,000 $250 $0 $6,000,000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 $200 DISTRIBUTIONS to CAPITAL DISTRIBUTIONS to the REINVESTMENT FUND STATE of WEST VIRGINIA $25,000,000 $700,000,000 $150 $600,000,000 $20,000,000 $500,000,000 $100 $15,000,000 $400,000,000 $300,000,000 $50 $10,000,000 $200,000,000 $5,000,000 $0 $100,000,000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 $0 $0 INS TANT ON-LINE FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source: West Virginia Lottery Source: West Virginia Lottery 78 79 TOTAL EXPENSES AND NONOPERATING DISTRIBUTIONS: $12,915,881,230 TOTAL NET POSITION LAST TEN FISCAL YEARS LQèV PRIZES (traditional) 2009 2010 2011 2012 2013 $1,117,422,958 1(7326,7,21 8% DISTRIBUTIONS to the 3 5(675,&7('%<(1$%/,1*/(*,6/$7,21 $69,871 $8,355 $2,039 $1,690 $1,640 STATE OF WEST VIRGINIA 1(7,19(670(17,1&$3,7$/$66(76 $3,306 $23,349 $30,421 $42,285 $40,220 $5,465,526,979 2 1 815(675,&7(' $10,011 $4,679 $6,612 $8,000 $13,006 41% 727$/1(7326,7,21 $83,188 $36,383 $39,072 $51,975 $54,866 2014 2015 2016 2017 2018 1(7326,7,21 5(675,&7('%<(1$%/,1*/(*,6/$7,21 $1,397 $1,130 $- $- $- 1(7,19(670(17,1&$3,7$/$66(76 $38,745 $37,763 $44,874 $43,779 $48,047 815(675,&7(' $14,878 $15,263 $7,498 $9,240 $7,152 727$/1(7326,7,21 $55,020 $54,156 $52,372 $53,019 $55,199 Source: West Virginia Lottery DISTRIBUTIONS to CAPITAL COMMISSIONS REINVESTMENT FUND (includes video $147,713,058 distribution) 1% $5,756,298,139 47% DISTRIBUTIONS to MUNICIPALITIES5 4 and COUNTIES6 ADMINISTRATION $75,254,836 (includes ticket 1% costs) $353,665,260 2% 1 COMMISSIONS LQFOXGHVYLGHRGLVWULEXWLRQ : $5,756,298,139 • 44.57% 2 DISTRIBUTIONS TO THE STATE OF WEST VIRGINIA: $5,465,526,979 • 42.32% 3 PRIZES WUDGLWLRQDO : $1,117,422,958 • 8.65% 4 ADMINISTRATION LQFOXGHVWLFNHWFRVWV : $353,665,260 • 2.74% 5 DISTRIBUTIONS TO CAPITAL REINVESTMENT FUND: $147,713,058 • 1.14% 6 DISTRIBUTIONS TO MUNICIPALITIES AND COUNTIES: $75,254,836 • 0.58% Source: West Virginia Lottery 80 81 U.S. LOTTERIES UNAUDITED SALES FOR FISCAL YEAR 2017 U.S. LOTTERIES UNAUDITED SALES FOR FISCAL YEAR 2018 INCLUDES VIDEO LOTTERY TERMINAL (VLT) SALES INCLUDES VIDEO LOTTERY TERMINAL (VLT) SALES PLOOLRQV PLOOLRQV SALES PROFIT POPULATION SALES PER CAPITA SALES PROFIT POPULATION SALES PER CAPITA ARIZONA $852.00 $198.10 6.9 $123.48 ARIZONA $981.38 $211.91 6.9 $142.23 ARKANSAS $449.14 $85.16 3.0 $149.71 ARKANSAS $499.71 $91.84 3.0 $166.57 CALIFORNIA $6,233.47 $1,545.53 39.3 $158.61 CALIFORNIA $6,965.79 $1,698.35 39.3 $177.25 COLORADO $555.33 $133.47 5.5 $100.97 COLORADO $611.99 $140.74 5.5 $111.27 &211(&7,&87 $1,216.26 $332.30 3.6 $337.85 &211(&7,&87 $1,267.59 $347.30 3.6 $352.11 '(/$:$5(1,2 $624.49 $205.96 0.7 $892.13 '(/$:$5(1,2 $642.12 $214.91 0.7 $917.32 DISTRICT OF COLUMBIA (9/30) $218.71 $45.60 1.0 $218.71 DISTRICT OF COLUMBIA (9/30) $210.26 $46.10 1.0 $210.26 FLORIDA $6,156.48 $1,656.35 20.6 $298.86 FLORIDA $6,700.81 $1,758.33 20.6 $325.28 *(25*,$ $4,528.95 $1,101.06 10.3 $439.70 *(25*,$ $4,597.78 $1,143.91 10.3 $446.39 IDAHO $239.93 $48.50 1.7 $141.14 IDAHO $265.08 $53.50 1.7 $155.93 ILLINOIS $2,846.17 $723.24 12.8 $222.36 ILLINOIS $2,928.42 $722.38 12.8 $228.78 INDIANA $1,213.08 $288.04 6.6 $183.80 INDIANA $1,270.07 $306.08 6.6 $192.43 IOWA $352.24 $80.77 3.1 $113.63 IOWA $370.96 $87.10 3.1 $119.66 KANSAS $258.03 $75.26 2.9 $88.98 KANSAS $268.95 $74.73 2.9 $92.74 .(178&.< $1,000.50 $248.57 4.4 $227.39 .(178&.< $1,042.51 $263.27 4.4 $236.93 LOUISIANA $454.97 $159.19 4.7 $96.80 LOUISIANA $490.98 $171.96 4.7 $104.46 0$,1( $265.95 $58.66 1.3 $204.58 0$,1( $294.13 $63.03 1.3 $226.26 MARYLAND1,2 $3,352.49 $1,040.23 6.0 $558.75 MARYLAND1,2 $3,721.76 $1,148.85 6.0 $620.29 0$66$&+86(776 $5,084.78 $1,039.70 6.8 $747.76 0$66$&+86(776 $5,276.90 $997.06 6.8 $776.01 MICHIGAN (9/30) $3,329.80 $925.10 9.9 $336.34 MICHIGAN (9/30) $3,578.36 $935.39 9.9 $361.45 0,11(627$ $563.50 $139.16 5.5 $102.46 0,11(627$ $596.48 $145.10 5.5 $108.45 MISSOURI $1,342.67 $291.58 6.1 $220.11 MISSOURI $1,400.22 $306.07 6.1 $229.54 MONTANA $52.71 $9.22 1.0 $52.71 MONTANA $56.60 $10.70 1.0 $56.60 1(%5$6.$ $173.82 $41.28 1.9 $91.48 1(%5$6.$ $183.37 $45.25 1.9 $96.51 1(:+$036+,5( $299.15 $76.12 1.3 $230.12 1(:+$036+,5( $332.75 $87.39 1.3 $255.96 1(:-(56(< $3,186.91 $994.00 8.9 $358.08 1(:-(56(< $3,299.70 $1,030.30 8.9 $370.75 1(:0(;,&2 $126.04 $37.84 2.1 $60.02 1(:0(;,&2 $134.03 $40.22 2.1 $63.82 1(:<25. 1 $9,675.72 $3,267.88 19.7 $491.15 1(:<25. 1 $9,973.52 $3,371.87 19.7 $506.27 NORTH CAROLINA $2,428.07 $623.51 10.1 $240.40 NORTH CAROLINA $2,605.31 $671.26 10.1 $257.95 NORTH DAKOTA $27.62 $6.94 0.8 $34.53 NORTH DAKOTA $31.31 $8.04 0.8 $39.14 OHIO1 $3,928.35 $1,043.72 11.6 $338.65 OHIO1 $4,147.41 $1,087.72 11.6 $357.54 OKLAHOMA $151.50 $53.81 3.9 $38.85 OKLAHOMA $221.11 $63.98 3.9 $56.69 25(*211 $1,246.30 $662.43 4.1 $303.98 25(*211 $1,302.33 $726.09 4.1 $317.64 3(116 82 83 U.S. LOTTERIES UNAUDITED SALES FOR FISCAL YEAR 2017 U.S. LOTTERIES UNAUDITED SALES FOR FISCAL YEAR 2018 EXCLUDES VIDEO LOTTERY TERMINAL (VLT) SALES AND TABLE GAMES EXCLUDES VIDEO LOTTERY TERMINAL (VLT) SALES AND TABLE GAMES PLOOLRQV PLOOLRQV SALES PER SALES PER TOTAL SALES INSTANT SALES DRAW SALES POPULATION TOTAL SALES INSTANT SALES DRAW SALES POPULATION CAPITA CAPITA ARIZONA $852.0 $632.8 $219.2 6.8 $125.29 ARIZONA $981.4 $710.9 $270.5 6.9 $142.23 ARKANSAS $449.1 $368.5 $80.6 3.0 $149.70 ARKANSAS $499.7 $407.6 $92.1 3.0 $166.57 CALIFORNIA $6,233.5 $4,576.0 $1,657.5 39.1 $159.42 CALIFORNIA $6,977.2 $5,088.8 $1,888.4 39.3 $177.54 COLORADO $555.3 $380.2 $175.1 5.5 $100.96 COLORADO $612.0 $407.5 $204.5 5.5 $111.27 &211(&7,&87 $1,216.3 $720.6 $495.7 3.6 $337.86 &211(&7,&87 $1,267.6 $730.7 $536.9 3.6 $352.11 D.C. $217.2 $51.1 $166.1 0.7 $310.29 D.C. $212.1 $49.1 $163.0 0.7 $303.00 '(/$:$5( $215.9 $69.3 $146.6 0.9 $239.89 '(/$:$5( $231.6 $70.6 $161.0 1.0 $231.60 FLORIDA $6,156.5 $4,243.6 $1,912.9 20.3 $303.28 FLORIDA $6,700.8 $4,652.3 $2,048.5 20.6 $325.28 *(25*,$ $4,528.9 $3,117.2 $1,411.7 10.2 $444.01 *(25*,$ $4,597.8 $3,163.4 $1,434.4 10.3 $446.39 IDAHO $239.6 $137.1 $102.5 1.7 $140.94 IDAHO $265.1 $146.9 $118.2 1.7 $155.94 ILLINOIS $2,844.0 $1,871.9 $972.1 12.9 $220.47 ILLINOIS $2,928.4 $1,880.5 $1,047.9 12.8 $228.78 INDIANA $1,213.2 $907.7 $305.5 6.6 $183.82 INDIANA $1,270.1 $935.0 $335.1 6.6 $192.44 IOWA $352.3 $237.7 $114.6 3.1 $113.65 IOWA $371.0 $244.3 $126.7 3.1 $119.68 KANSAS $272.2 $164.3 $107.9 2.9 $93.86 KANSAS $284.3 $171.6 $112.7 2.9 $98.03 .(178&.< $1,000.5 $603.8 $396.7 4.4 $227.39 .(178&.< $1,042.5 $613.1 $429.4 4.4 $236.93 LOUISIANA $455.0 $206.3 $248.7 4.7 $96.81 LOUISIANA $491.0 $217.2 $273.8 4.7 $104.47 0$,1( $270.4 $212.4 $58.0 1.3 $208.00 0$,1( $288.9 $219.1 $69.8 1.3 $222.23 MARYLAND $1,923.2 $676.8 $1,246.4 6.0 $320.53 MARYLAND $2,033.7 $750.9 $1,282.8 6.0 $338.95 0$66$&+86(776 $5,077.8 $3,518.6 $1,559.2 6.8 $746.74 0$66$&+86(776 $5,340.4 $3,651.3 $1,689.1 6.8 $785.35 MICHIGAN $3,329.8 $1,321.6 $2,008.2 9.9 $336.34 MICHIGAN $3,543.7 $1,465.3 $2,078.4 9.9 $357.95 0,11(627$ $563.5 $398.3 $165.2 5.5 $102.45 0,11(627$ $596.5 $411.2 $185.3 5.5 $108.45 MISSOURI $1,235.9 $869.5 $366.4 6.1 $202.61 MISSOURI $1,314.5 $907.3 $407.2 6.1 $215.49 MONTANA $53.2 $17.7 $35.5 1.0 $53.20 MONTANA $57.2 $18.6 $38.6 1.0 $57.20 1(%5$6.$ $173.5 $101.3 $72.2 1.9 $91.32 1(%5$6.$ $183.4 $100.8 $82.6 1.9 $96.53 1(:+$036+,5( $297.5 $223.6 $73.9 1.3 $228.85 1(:+$036+,5( $330.9 $239.0 $91.9 1.3 $254.54 1(:-(56(< $3,186.7 $1,839.6 $1,347.1 9.0 $354.08 1(:-(56(< $3,299.5 $1,852.3 $1,447.2 8.9 $370.73 1(:0(;,&2 $126.0 $72.4 $53.6 2.1 $60.00 1(:0(;,&2 $134.0 $72.3 $61.7 2.1 $63.81 1(:<25. $7,679.1 $4,001.2 $3,677.9 19.8 $387.83 1(:<25. $7,938.8 $4,178.5 $3,760.3 19.7 $402.98 NORTH CAROLINA $2,428.1 $1,695.2 $732.9 10.0 $242.81 NORTH CAROLINA $2,605.3 $1,782.8 $822.5 10.1 $257.95 NORTH DAKOTA $27.6 $27.6 0.8 $34.50 NORTH DAKOTA $31.3 $31.3 0.8 $39.13 OHIO $3,001.7 $1,527.1 $1,474.6 11.6 $258.77 OHIO $3,160.1 $1,600.6 $1,559.5 11.6 $272.42 OKLAHOMA $151.5 $68.0 $83.5 3.9 $38.85 OKLAHOMA $221.1 $127.6 $93.5 3.9 $56.69 25(*21 $332.2 $126.5 $205.7 4.0 $83.05 25(*21 $368.4 $130.4 $238.0 4.1 $89.85 3(116 2017 data source: La Fleur’s Magazine/Vol. 25, No. 1 September/October 2017 2018 data source: La Fleur’s Magazine/Vol. 26, No. 1 September/October 2018 84 85 NUMBER OF EMPLOYEES STATE DEMOGRAPHIC AND ECONOMIC INFORMATION PER CAPITA FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 GROSS PERSONAL UNEMPLOYMENT YEAR POPULATION PERSONAL (;(&87,9( 20 20 18 19 19 INCOME LQPLOOLRQV RATE INCOME ),1$1&( $'0,1,675$7,21 24 23 27 26 25 2008 1,840,310 $57,652 $31,328 4.4% 0$5.(7,1* 7 7 7 8 8 2009 1,847,775 $58,150 $31,470 7.7% 9,'(2 27 29 30 31 31 2010 1,854,315 $60,062 $32,390 8.6% 6(&85,7< 47 46 47 42 40 (traditional & video) 2011 1,854,891 $63,449 $34,206 8.1% 7$%/(*$0(6 47 51 69 69 61 2012 1,855,360 $65,252 $35,169 7.5% TOTAL 172 176 198 195 184 2013 1,852,333 $64,793 $34,979 6.8% 2014 1,847,624 $66,680 $36,089 6.6% 2015 1,839,767 $67,737 $36,818 6.8% FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 2016 1,828,637 $67,583 $36,958 6.1% 2017 1,815,857 $69,873 $38,479 5.2% (;(&87,9( 20 20 19 20 20 ),1$1&( $'0,1,675$7,21 25 22 23 22 24 0$5.(7,1* 8 8 8 8 9 Source: U.S. Bureau of Economic Analysis and Bureau of Labor Statistics based on calendar year. Note: 2018 information is not available and therefore not presented. 9,'(2 29 30 31 29 30 6(&85,7<(traditional & video) 41 38 38 39 38 7$%/(*$0(6 60 57 52 53 54 TOTAL 183 175 171 171 175 Source: West Virginia Lottery 86 87 STATE DEMOGRAPHICS STATE DEMOGRAPHICS POPULATION GROSS PERSONAL INCOME $70,000 1,925 1,750 $60,000 1,575 $50,000 1,400 1,225 $40,000 1,050 875 in millions $30,000 in thousands 700 $20,000 525 350 $10,000 175 0 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 UNEMPLOYMENT RATE PER CAPITA PERSONAL INCOME 9.0% $40,000 8.0% $35,000 7.0% $30,000 6.0% $25,000 5.0% $20,000 4.0% $15,000 3.0% $10,000 2.0% $5,000 1.0% 0.0% $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Bureau of Economic Analysis and Bureau of Labor Statistics based on calendar year. Source: U.S. Bureau of Economic Analysis and Bureau of Labor Statistics based on calendar year. 88 89 PLAYER AND POPULATION DEMOGRAPHICS PLAYER AND POPULATION DEMOGRAPHICS GENDER PERSONAL INCOME 60% 20% 50% 15% 40% 10% 30% 5% 20% 0% 10% UNDER $10K $15K $25K $35K $50K $75K $100K $150K $10K BUT BUT BUT BUT BUT BUT BUT OR LESS LESS LESS LESS LESS LESS LESS MORE THAN THAN THAN THAN THAN THAN THAN 0% $15K $25K $35K $50K $75K $100K $150K MALE FEMALE Player Base WV Player Base WV AGE EMPLOYMENT STATUS 25% 60% 50% 20% 40% 15% 30% 10% 20% 5% 10% 0% 0% EMPLOYED RETIRED, STUDENT, UNEMPLOYED 18-24 25-34 35-44 45-54 55-64 65 AND DISABLED, OTHER OLDER Player Base WV Player Base WV 50% EDUCATION 70% GAME PLAY PENETRATION 40% 60% 30% 50% 20% 40% 30% 10% 20% 0% SOME HIGH HS SOME COLLEGE POST 10% Source: SCHOOL GRADUATE COLLEGE GRADUATE + GRADUATE Source: West Virginia Lottery OR ASSOC West Virginia Lottery TECHNICAL DEGREE 0% Segmentation Study, SCHOOL ACS Demographic Segmentation Study, NEVER PLAYED MORALLY OBJECT HAVE PLAYED ACS Demographic August 2015 and Housing August 2015 and Housing Repass Inc. Player Base WV 2010 Census Repass Inc. Player Base 2010 Census 90 91 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO FIRST QUARTER 2018 NUMBER OF PERCENTAGE OF BUSINESS NAME EMPLOYEES TOTAL EMPLOYEED /2&$/*29(510(17 73,635 9.95% 67$7(*29(510(17 41,750 5.64% )('(5$/*29(510(17 23,512 3.18% :980(',&,1( 14,000 - 17,999 2.16% :$/0$57$662&,$7(6,1& 10,000 - 12,999 1.55% &+$5/(6721$5($0(',&$/&(17(5,1& 6,000 - 7,999 0.95% .52*(5 4,000 - 4,999 0.61% &$%(//+817,1*721+263,7$/,1& 3,000 - 3,999 0.47% 0 FIRST QUARTER 2009 Lottery Director NUMBER OF PERCENTAGE OF BUSINESS NAME EMPLOYEES TOTAL EMPLOYEED John A. Myers /2&$/*29(510(17 75,153 10.07% • • • • • • • • • • • • • • • • • • • • • • • • • 67$7(*29(510(17 40,064 5.37% 'HSXW\'LUHFWRURI)LQDQFHDQG$GPLQLVWUDWLRQDQG&KLHI)LQDQFLDO2IĆFHU )('(5$/*29(510(17 23,089 3.09% Dean W. Patrick, CPA :$/0$57$662&,$7(6,1& 13,000-14,999 1.88% • • • • • • • • • • • • • • • • • • • • • • • • • :(679,5*,1,$81,9(56,7<+263,7$/681,7('+263,7$/6 7,000-9,999 1.14% &+$5/(6721$5($0(',&$/&(17(5,1& 5,000-6,999 0.80% Project Coordinator .52*(5 4,000-5,999 0.67% Mara Dawson $0(5,&$1(/(&75,&32:(5 1,000-2,999 0.27% • • • • • • • • • • • • • • • • • • • • • • • • • (/'(5&$5(5(6285&(6&25325$7,21 1,000-2,999 0.27% 7 ST. MARY’S HOSPITAL 1,000-2,999 0.27% Layout and Design &6;&6;+27(/6,1& 7+(*5((1%5,(5$1'5$,/52$' 1,000-2,999 0.27% Sara Harpold 9 CONSOLIDATION AND COAL COMPANY 1,000-2,999 0.27% • • • • • • • • • • • • • • • • • • • • • • • • • /2:(è6+20(&(17(5,1& 1,000-2,999 0.27% Charts and Graphs Source: WORKFORCE West Virginia, Research, Information and Analysis Sara Harpold • • • • • • • • • • • • • • • • • • • • • • • • • Contributors Mark Muchow, Deputy Cabinet Secretary, Department of Revenue, Michael Thaxton and Randy Burnside • • • • • • • • • • • • • • • • • • • • • • • • • Photographs West Virginia Division of Tourism, Mike Ross, Sara Harpold, Digital Relativity and shutterstock photos (used with permission) 92 93 West Virginia Lottery 900 Pennsylvania Avenue • Charleston, WV 25302 P.O. Box 2067 • Charleston, WV 25327 304.558.0500 • www.wvlottery.com