Lottery & Casino Gaming in Maryland Stephen Martino, Director March 12, 2015
Agency mission statement Maximizing revenue for Maryland's good causes by promoting the responsible sale of lottery games and from the thorough, transparent regulation of gaming.
Economic Benefits Lottery All Maryland Lottery revenue goes to the state’s General Fund Casinos Revenue is shared with casino operators, Maryland’s Education Trust Fund, and other dedicated funds.
The Maryland Lottery • In 1972, the citizens of Maryland approved a constitutional amendment to begin a government-run lottery, resulting in a lifting of the state’s 151 -year-old ban on state-run lotteries. • The Maryland Lottery was created in 1973 with the sole purpose of generating revenue for the State of Maryland. • The Maryland Lottery holds drawings seven days a week/365 days-a-year. • There are more than 4,500 Lottery retailers across the state in all types of businesses, including convenience stores, bars/taverns, gas stations, liquor stores, fraternal organizations, grocery stores and casinos.
Lottery Highlights Fiscal Year 2014* Highlights: • Sales: $1.72 billion • Prizes to players: $1.02 billion • Revenue to the state: $521 million • Retailer commissions: $122 million • Operating expenses: $56.5 million * July 1, 2013 through June 30, 2014
Sales by Lottery Game
MD Player Demographics * - Age AVERAGE AGE High-frequency players 49 Low-frequency players 49 Non-players 49 *MD Lottery Segmentation Study, The Key Group, 6/2014
MD Player Demographics* - Education High frequency players tend to be less educated compared to low-frequency and non-players. Non-players are the most educated segment. *MD Lottery Segmentation Study, The Key Group, 6/2014
MD Player Demographics - Household Income The majority of Lottery players fall in the middle income categories ($50K - $99K). Approximately one quarter of lottery players have high household incomes ($100K or higher) Low-frequency players have the highest average household incomes. AVERAGE HOUSEHOLD INCOME High Frequency Players $86,000 Low Frequency Players $89,000 Non-Players $83,000 *MD Lottery Segmentation Study, The Key Group, 6/2014
Perception of the Maryland Lottery The perception of the Maryland Lottery is lower with the non-players across all statements particularly in their view that it is “ fun and exciting” and “ encourages responsible gaming ”. MARYLAND LOTTERY PERCEPTION TOTAL SCORE (out of a possible 50 points) High Frequency Players 31.5 Low Frequency Players 28.4 Non-Players 23.8
MD Player Demographics - Study Findings ● Lottery game play crosses over all socioeconomic borders. ● The segmentation study indicates lottery players (high and low frequency) and non- players have similar demographics and lifestyle attributes across all the various income and residence location segments. ● Lottery play has less to do with where one lives or what activities they enjoy but is more dependent on their attitudes towards the lottery, gaming/gambling, and risk. ● 63% of the Maryland population plays the lottery, of which 16% are jackpot-only players. ● 18% of the population in Maryland will not play the lottery games. *MD Lottery Segmentation Study, The Key Group, 6/2014
Fiscal Year 2015 Year-to-Date Lottery Sales and Revenue FY15 YTD % Change from FY14 YTD Sales $1.217 billion +3.8% Revenue $358.6 million - 1.4% ● While revenue is slightly down, we continue to see a shift in traditional lottery player behavior as YTD scratch off sales are up 15%. ● An independent study revealed that the closer a player lives to a casino, the lower his/her propensity is to play lottery. (Cummings - Walker, 2014.) ● Keno is the most negatively impacted by proximity to a casino. ○ Keno makes up 16.8% of annual sales, and FY15 YTD sales are down 1.5% or $3.1 million. ● Total annual effect of all six casinos is estimated to be -$95.5 million (-5.5%)
National Disbursement Where does the majority of lottery revenue go in the U.S.? PreK-12 and Higher Education : Arkansas, California, Florida, Georgia, New ● Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington ● Environment : Colorado, Minnesota (44%) Property Tax Reduction : South Dakota, Wisconsin ● Senior Citizens : Pennsylvania ● State General Fund : Arizona, Connecticut, Delaware, Washington, D.C., ● Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota (56%), Missouri, Montana, North Dakota, Rhode Island, West Virginia
Revenue - National Comparison National sales rankings* Rank State Population FY2014 Sales 1 New York 19.7 million $7.314 billion 2 Florida 19.6 million $5.368 billion 3 California 38.3 million $5.034 billion 14 MARYLAND 5.9 million $1.724 billion 42 South Dakota 800,000 $54.9 million 43 Montana 1 million $53.3 million 44 North Dakota 700,000 $27 million *FY2014
Revenue - National Comparison National PER CAPITA sales rankings* Rank State Population FY2014 Sales Per Capita 1 Massachusetts 6.7 million $4.824 billion $721 2 Georgia 10 million $4.022 billion $403 3 New York 19.7 million $7.314 billion $372 8 MARYLAND 5.9 million $1.724 billion $291 42 Montana 1 million $53.3 million $52 43 Oklahoma 3.9 million $191 million $50 44 North Dakota 700,000 $27 million $37 *FY2014
C asino Gaming in Maryland
Casino Gaming in Maryland • In 2007 , Maryland’s General Assembly enacted legislation to allow Marylanders to vote on a limited number of slot machines in the state at specified locations in Anne Arundel, Cecil, Worcester, and Allegany Counties, and Baltimore City. • On November 4, 2008 , 58.7% of voters statewide approved the referendum to expand gaming in the state. • In August 2012, the General Assembly enacted legislation to allow Marylanders to vote on a sixth casino location in Prince George’s County, table games, and 24-hour operations at all casinos. • In a 2012 referendum, 51.9% of voters approved the gaming expansion.
Purpose of the Gaming Program • Raising revenue for the state’s Education Trust Fund, which supports education of children in public schools from pre- kindergarten through grade 12; public school construction and improvements; and construction of capital projects at community colleges and higher education institutions. • Funds also go to: - Horse racing Purse Dedication Account (PDA) - Racetrack Facility Renewal Account (RFRA) - Minority and Women-Owned Businesses Account - Maryland Lottery and Gaming Control Agency Operations - Local impact aid
Revenue Discussion Are lottery/gaming funds supplemental or supplanted? “The Education Trust Fund is a nonlapsing, special fund to be used for continued funding of the Bridge to Excellence formulas and programs, including the GCEI. The fund may also be used to support capital projects for public schools, public colleges and universities, and community colleges. In light of the substantial structural deficit currently forecasted for fiscal 2009 through 2013, it is assumed that all of the available ETF proceeds are used to support operating programs and therefore offset general fund expenditures. ” -2007 Special Session SB 3 Fiscal Note http://mgaleg.maryland.gov/2007s1/fnotes/bil_0003/sb0003.pdf (pg. 19)
Current Maryland Casinos
Casino Revenue Distribution FY2014 - $833.3 million in revenue
Gaming Revenue Contributions Since the inception of slots program in Maryland, contributions from slots revenue to the various funds and accounts continue to increase. Gaming Program Contributions to the State of Maryland TOTAL: $2,409,639,685 Designated Accounts Total Casino Operators $1,068,415,982 Maryland Education Trust Fund $1,012,218,242 Horse Racing Purse Dedication Account $128,633,675 Local Impact Grants $101,563,325 Maryland Lottery & Gaming Control Agency $38,560,854 Racetrack Facility Renewal Account $32,548,519 Small, Minority, Women-Owned Businesses $27,699,088
Slot Machine Count by Casino Although 16,500 slot machines are authorized statewide, casinos have been requesting to reduce the number of slot machines on their gaming floors. Horseshoe Hollywood Casino at Rocky Gap MGM Maryland Casino Casino at Ocean Casino and National Total Live! Baltimore Perryville Downs Resort Harbor Authorized 3,750 4,750 2,500 2,500 1,500 3,000 16,500* Slot Machines Slot Machines 3,750 4,750 1,500 800 850 3,600 15,250 Awarded** Slot Machines Currently 2,200 3,922 850 800 577 0 8,349 Authorized *Per State Government Article § 9-1A-05(a)(2), the state may not exceed 16,500 machines total. **Per State Government Article § 9-1A- 36(i)(2), the “Video Lottery Facility Location Commission may allocate [slots] in a manner that is different from the allocation provided in paragraph (1),” given certain factors are met.
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