NEW KENT COUNTY CELEBRATES RETURN OF COLONIAL DOWNS Analysis Estimatos County Will Gain Millions Annually in Tax Rmnua; Facility Will Cram of Jobs In County ?We are thrilled to celebrate the return of horse racing at Colonial Downs. Goodjobs and revenue are coming back to our county." Thomas W. Evelyn County Board of Supervisors Chairman Source: ColonialDowns.com Pamunkev tribe buys over 600 New Kent acres. "We're Parnunkey Indians. But we're also Virginians," Gray said. "We're working to do what will benefit both our tribe and the commonwealth as a whole." Eric Ramsey @Enc_Rarnsey Jun 21 LY FUN to be sharing all these punts on everything? st0nes while folks in the great states of Delaware. New Jersey. Rhode Island, West Virginia. and all be wagering on sports this year. lawmaker Says NY Sports Betting Bill ?Not Dead, But In A Coma;' Expects Wagering At Commercial Casinos In 2018 . . lottery giant is sole bidder to run sports betting in Ii.l. 1110 Week In Sports Betting: bye New You, Hello Rhode Island West Virginia Lottery Commission continues work on .. .. rules for sports betting lawmakers Could Revisit Mississippi Sports Betting In Special Session Amy Dilworth From: Amy Dilworth Sent: Monda Ma 14 2018 4:31 PM clawrenc Cc: Kevin Hall Subject: An update on the Supreme Court's opinion today re sports betting Dear Board Members: The Supreme Court issued its opinion today on the constitutionality of the Professional and Amateur Sports Protection Act (PASPA). The Court struck down PASPA, agreeing with the state of New Jersey that PASPA violated the 10th Amendment to the US Constitution, which prohibits Congress from issuing direct orders to the states. PASPA banned states from authorizing sports gambling, except for any state that did so within one year of the law's enactment in 1992. New Jersey did not pass a law authorizing betting on sports until 2014, at which time professional sports leagues brought a legal challenge based upon PASPA. The sports leagues had prevailed against New Jersey up until the case came before the Supreme Court. Legal scholar Amy Howe?s analysis of the COUrt?s opinion reads in part, "Today's ruling could also have a much broader reach, potentially affecting a range of topics that bear little resemblance to sports betting. For example, supporters of so-called "sanctuary cities? cities that refuse to cooperate with federal immigration officials to enforce immigration laws have cited the 10th Amendment in recent challenges to the federal government's efforts to implement conditions on grants for state and local law enforcement. Challenges to the federal government?s recent efforts to enforce federal marijuana laws in states that have legalized the drug for either recreational or medical use may also be based on the 10th Amendment.? Of the sports betting market itself, Howe observed that the economic impact of allowing sports betting cannot be understated. Legal sports betting in Las Vegas takes in over $5 billion each year, and most estimates put the value of illegal sports betting in the United States at up to $100 billion. The Lottery's preliminary research indicates that in VirginiaI the sports betting market (which is illegal at the present time) is probany between 2.2 billion to 7.2 billion of wa ers a ear. On that the bettin roviders? net win should be between 177 million and $432 million. In anticipation of a Supreme Court ruling striking down PASPA, a number of states in addition to New Jersey already have sports betting legislation in the pipelines. Virginia does not. In Virginia. sports betting will remain illegal until such time as the General Assembly acts to legalize it. if you would like to keep an on sports betting legislation around the country, a helpful tool is available at -Amy Amy Dilworth lGeneral Counsel Virginia Lottery 600 East Main Street. Richmond, VA 23219 Ph: +1 804-692-7902 adilworth@valottery.com we'regane [i From: To: mm Subject: FW: Oxford Study for American Gaming Association Date: Friday, November 9. 2018 9:34:11 AM Attachments: From: Hall Sent: Monday, July 16, 2018 9:48 AM to: man? Subject: FW: Oxford Study for American Gaming Association From: Kevin Hall Sent: Thursday, March 8, 2018 2:09 PM To: Amy Dilworth Subject: FW: Oxford Study for American Gaming Association Kevin Hall Execuiive Director Virginio Lo?ery 600 East Main Street, Richmond. V'rginio 23219 Ph: +1 804-692-7l00 I f?an Eli] From: Alan Hussey Sent: Thursday, March 8, 2018 12:04 PM To: Kevin Hall Cc: Tom Seaman Subject: Oxford Study for American Gaming Association I distilled the data in that 70 page study into 1 small table. Oxford Economics believes annual sports betting activity in Virginia will reach a volume of $2.2 billion to $7.2 billion once fully implemented. On that activity, they believe the betting provider sh0uld be able to win $177 to $432 million. Those are broad ranges. Their estimates are lower if bets must be placed at brick and mortar retailers, higher if sports betting is allowed online. Their study did not parse out varying effects from whether the providers are casinos, lotteries, or another structure. If sports betting is run by the State, more of the GGR might flow to good causes than if it is operated privately and taxed. Alon Hussey Director of Business Planning Virginici Lottery 600 East Main Street, Richmond. VA 23219 Ph: +1 804-692-7140 in @i Oxford Economics Economic Impact of Legalized Sports Betting - VIRGINIA Amounts in millions, except jobs Economic Impacts Fiscal (Tax) Impacts Gaming Tax Impacts Gaming Gaming Federal Rt 0t GGR ax ae Impacts Upu a or Employment GDP Total State& Federal Total Revenue Handle Handle of GGR) (Sales) Income Local Net Win Tax Tax 25% 6.7510.0015.00% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0] 2 6.75% Direct Impacts 233.2 51.3 1,158 120.3 63.1 22.2 40.9 24.2 15.0 9.3 3,701.7 222.1 0 10.00% Direct Impacts 219.0 48.2 1,086 109.7 62.3 27.6 34.7 28.3 20.9 7.4 2,979.2 208.5 8 a ?n 15.00% Direct Impacts 186.1 40.9 923 90.7 59.4 32.4 27.1 32.1 26.6 5.5 2,215.8 177.3 '6 6.75% Direct Impacts 439.3 85.3 1,788 230.9 116.9 41.1 75.8 47.2 29.2 18.0 7,199.0 431.9 a E: 10.00% 421.0 81.6 1,709 216.5 120.3 52.8 67.5 57.0 41.4 15.5 6,217.5 41415.00% Direct Impacts 385.7 74.4 1,552 188.6 125.5 67.4 58.1 70.0 57.0 13.0 5,214.8 379.8 V) 8 Handle represents annual wagers, 25% federal tax assumed. Gross Gaming Revenue (GGR) represents the gaming operator's net win on those wagers. May 2017 Amounu in masons or dollats except ,om Economic Impacts Fiscal Impacts Gaming Tax Impacts Gaming Gaming Tax Impacts State& Gaming Federal Adult Gaming Gaming Federal Output (Sales) Laborlncome Employment GDP Total Local FedetaI Total Revenue Handle Population Handle Revenue Total Revenue Handle . Tax Tax Tax Tax Tax Availability Impacts Rate Total Direct Total Direct Indirecta. Tom We? Total owed Indurect& Induced Induced Induced Induced Limited Base Total 101.4 31.0 468 61.9 0.0 0.0 0.0 0.0 0.0 0.0 Limited Base Direct 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6,585.5 0.0 0.0 0.0 0.0 0.0 Moderate 10% Total 544.4 219.0 325.4 152.6 48.2 104.4 2,373 1.086 1.787 303.4 109.7 193.7 104.6 42.4 62.2 28.3 20.9 7.4 0.0 0.0 0 0.0.0.0 From: 12mm 1?0: mailman Subject: FW: DFS - related, but not Date: Friday, November 9, 2018 9:35:09 AM Attachments: .n -4- . .- From: Kevin Hall Sent: Monday, July 16, 2018 9:49 AM to: rewa? Subject: FW: DFS - related, but not From: Kevin Hall Sent: Wednesday, March 7, 2018 10:44 AM To: Amy Dilworth Subject: Fwd: DFS related, but not FWIW. Sent from my uPhone Kevin Hall Executive Direclor Virginia Lo?ery 600 East Main Slreel, Richmond, Virginia 232l9 Ph: 804-692-7100 [mm 2M l?l Begin forwarded message: From: Maureen Watson Date: March 7, 2018 at 10:23:01 AM EST To: Alan Hussev Subject: Historical Risks to Lottery Sales and Profits I added a 'graph about the Pamunkey tribe?s plans. Alon Hussey 1 Director of Business Planning Virginia Lottery 600 East Main Street. Richmond, VA 232l9 Ph: +1 804-692-7140 Wagon) El Historical Risks to Lottery Sales and Profits North Carolina Education Lottery On August 30, 2005, the NC Senate approved a lottery through a tie-breaking vote by Lt. Governor Purdue with two Republican no-votes absent. At the time, North Carolina was the last east coast state without a lottery. The Virginia Lottery had been estimating sales coming from out-of-state players for many years with a reliable, well established methodology. At the time, we were confident about 10% of Virginia Lottery purchases were being made by North Carolinians, equal to about $136 million annually. Since it took until March 30, 2006 for NCEL to start selling its first scratchers, the VA Lottery had time to develop a plan to offset that loss. Within 1 year of NCEL starting sales, we replaced Lotto South with Win for Life, launched our first $20 scratcher, added Sunday draws for Pick 3, Pick 4 and Cash 5 and created a new Fast Play game category with Bingo (now called Print ‘N Play category). Shortly thereafter, we also offered our first Millionaires’ Raffle game and sold all 330,000 twenty-dollar tickets. All of this required Herculean effort, as we were working toward converting from the in-house system we’d had since startup to IGT on 8/15/07. The actual conversion date ended up being 10/28/07. NCEL was able to do a rapid startup, offering scratchers, Powerball, Pick 3 and Cash 5 all in year 1. We estimated at the time that we lost $68.3 million of sales on the North Carolina border. With these new initiatives, nearly all the sales loss was offset, but not all the profit. This was mainly because low prize expense had made FY06 such a profitable year. Fiscal Year 2005 2006 2007 Sales $1,333,946,125 $1,365,326,441 $1,362,342,592 Prize Expense $774,558,373 $773,551,631 $791,785,078 Profit $423,521,322 $454,931,308 $437,180,128 Colonial Downs We did not expect pari-mutuel wagering to impact lottery sales when OTBs opened in 1996. We were concerned about advance deposit wagering. Here is wagering history since the $200 mil high in 2007: Cal Per Population Track & OTBs Year Capita 2007 7,719,749 $26.02 $167,684,686 2008 7,795,424 $25.26 $149,629,200 2009 7,882,590 $21.86 $122,461,456 2010 8,024,417 $19.80 $105,505,800 2011 8,105,850 $19.79 $97,737,893 2012 8,186,628 $19.69 $91,927,194 2013 8,260,405 $19.30 $86,220,535 2014 8,326,289 $13.82 $21,198,321 2015 8,382,993 $9.52 $291,174 2016 8,411,808 $9.45 $2,726,164 2017 8,470,020 $12.03 $20,803,619 Total 1996 to 2017 $2,201,716,646 % of Phone & Handle Internet 83% $33,206,726 76% $47,303,439 71% $49,850,493 66% $53,392,088 61% $62,646,844 57% $69,233,853 54% $73,205,095 18% $93,858,388 0% $79,478,623 3% $76,725,493 20% $81,076,535 74% $762,257,488 % of Total Wagered Handle 17% $200,891,412 24% $196,932,639 29% $172,311,949 34% $158,897,888 39% $160,384,737 43% $161,161,047 46% $159,425,630 82% $115,056,709 100% $79,769,796 97% $79,451,657 80% $101,880,154 26% $2,963,974,134 The track at Colonial Downs opened in September 1997. CD began taking bets over land lines in late 2004. Devices such as Blackberry began making wagering digital by 2006. At its peak, advance deposit wagering reached $93.86 million in 2014 before Colonial Downs’ decline. Even while CD has been shuttered, Virginians have continued internet wagering legally on horseraces across the country through xpressbet, TVG (Betfair) and Twinspires. To date, over one-quarter of the nearly $3 billion legally wagered on horses in Virginia has been wagered by phone, internet or mobile. The track itself has seen attendance of less than 1500 for an entire annual racing meet i, so nearly all its handle (bettor’s wagers) arose from OTBs and digital wagering. As such, it is dispersed across the state and any impact from it is untraceable. Even before CD’s recent troubles, its wagering handle had been dropping 4% a year from CY07 to CY13 (-$41 million), while the Virginia Lottery was growing 4% a year from FY07 to FY13 (+$327 million.) Our tracking study asks Virginians if they have wagered on a horse or dog race in the past 12 months. Only 7% responded yes in FY18. Play of lottery games in the past year was close to 70% by comparison. Addition of historical racing machines is a sudden step in CD’s evolution. CD has secured an option to buy the defunct 140,000 square foot Kmart in south Richmondii to create a massive slots parlor. We would again expect visits to the track to take a back seat to visits to better-placed OTBs through the Commonwealth. It is likely that any impact from CD reopening and from historical horseracing machines will be widely dispersed and undetectable. MGM National Harbor Maryland commissioned a comprehensive study to determine the effects of casinos on their lottery iii. The study states that casinos opened in Maryland reduced lottery sales by $44 to $50 million each, depending on the methodology used. These data were largely driven by Maryland Live! Casino. Over half of this impact was on their Keno product which isn’t established here. Another 25% of the impact was on scratch, which is our lowest profit margin product. Possibly due to market saturation and possibly due to its border location, the study only predicted $18.7 million of annual impact on Maryland Lottery sales from MGM National Harbor. We should not expect more cannibalization of lottery sales on our side of the border, since Keno is not part of our present portfolio. Backing out what would have been impact on Keno, one certainly imagines less than $10 million of sales impact in Virginia. Impact of this scale would represent less than half of one percent of our annual sales in Northern Virginia. The key finding was the significance of driving time on lottery impact. They found that as travel time doubles, impact drops by more than half. While MGM hopes to be a tourist destination, much wagering there is likely to come from locals. Impact in zip codes an hour away was trivial. As we all know, travel in the DMV area is slow and difficult. A 15-minute drive time does not encompass much area. Pamunkey Tribal Casino Gross Gaming Revenue Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 12 Mos. Total Share Past 12 Months for Maryland Casinos Slots Tables Total 85,574,306 51,905,726 137,480,031 86,201,969 48,333,764 134,535,733 83,240,652 49,995,048 133,235,700 80,157,525 50,385,813 130,543,338 84,830,839 56,203,287 141,034,126 79,316,700 48,467,756 127,784,456 84,718,498 51,852,782 136,571,280 92,549,246 57,524,712 150,073,958 90,246,181 53,245,010 143,491,191 96,561,553 59,994,040 156,555,593 93,704,105 55,199,912 148,904,017 95,395,316 51,102,715 146,498,031 $1,052,496,891 $634,210,564 $1,686,707,454 62% 38% 100% With the Pamunkey purchasing 600 acres on the New Kent/Henrico border, a $700 million tribal casino is likely imminent. The land is one exit east of I-295 on I-64, less than 20 minutes from the Capital. The tribe and the Commonwealth have not agreed upon a gaming compact, so it is too early to tell whether it will only offer slots or whether it might offer table games as well. The $44 to $50 million per casino annual impact felt by the MD Lottery includes table gaming, though slots are most of the revenue. Sport Betting While the amount of money Americans illegally wagered offshore annually on sports is thought to be $150 billion a year iv, those numbers can be misleading v. While lotteries are accustomed to profit margins of 25% to 33%, sports betting operators typically hold under 5% of the handle in profits. There isn’t $37 to $50 billion of US profits in play, but more like $7.5 billion. Sports betting operators handle a lot of money, but 95% of it simply flows from losers to winners. If a lottery contracted with a sports betting provider to facilitate wagering, then both entities would be trying to squeeze revenue from the same 5%. That provider could end up being someone like IGT, who was the only provider to submit a bid to the Rhode Island Lottery when they published an RFP. If lotteries offer sports betting, they likely won’t be able to hold more than the usual 5% of handle or their propositions will be inferior to illegal sites’ and bettors won’t switch. Even with a similar hold percentage, some bettors might still prefer illegal sites, since legal sites must withhold taxes. Since Virginia represents 2.6% of the US population and the annual hold on US sports betting might be about $7.5 billion, Virginia ought not to count on there being more than $195 million a year of profits. Those profits would need to be divided between the Commonwealth and the sports book provider. Those profits would also be volatile, since it is hard for sports books to completely balance their wagering. Luck can affect the operator’s profits if they can’t align equal amounts of wagering on each side of their propositions. John Packett, “Colonial Downs makes a comeback during Thoroughbred season,” Richmond Times-Dispatch, Aug 4, 2011, https://www.richmond.com/archive/colonial-downs-makes-comeback-during-thoroughbredseason/article_0e86d802-ba7a-5adb-a849-fd1173dc4062.html (accessed Sep 4, 2018). i Graham Moomaw, “Colonial Downs eyeing former Kmart site in South Richmond for possible off-track betting parlor,” Richmond Times-Dispatch, Jul 16, 2018, https://www.richmond.com/news/local/city-ofrichmond/colonial-downs-eyeing-former-kmart-site-in-south-richmond-for/article_1a772ec5-11e2-5108-bf84171a1619dc42.html (accessed Sep 4, 2018). ii Cummings Associates in conjunction with Casinonomics Consulting LLC, “The Impacts of the Introduction of Casinos on the Sales of Traditional Lottery Products in Maryland,” Jul 24, 2014, http://gaming.mdlottery.com/wpcontent/uploads/2010/06/Casino-Impacts-Report-1107.pdf (accessed Sep 4, 2018) Arlington, Massachusetts. iii American Gaming Association, “Gaming Industry Files Amicus brief with United States Supreme Court Detailing Impacts of Failing Federal Sports Betting Ban,” Sep 5, 2017, https://www.americangaming.org/newsroom/pressreleasess/gaming-industry-files-amicus-brief-united-states-supreme-court-detailing (accessed Sep 4, 2018). iv Dustin Gouker, “Handle Does Not Equal Revenue In Sports Betting Or Daily Fantasy Sports, And Why It Matters To Get It Right,” Legal Sports Report, Aug 21, 2017 https://www.legalsportsreport.com/15160/revenue-sportsbetting-and-dfs/ (Accessed Sep 4, 2018). v Years at Funl Virginia Lottery FY19 Overview Presentation for Senate Finance Committee Kevin Ha" Executive Director AA Yearsod Fun! FY18 Results 0 Record sales of $2.14 billion 0 Record prize pay-out of $1.3 billion - Record retailer commissions of $121 million - Record dnnual profits of $606 million Deposited 33 million in unclaimed prizes in Literary Fund Collected $4.7 million in Virginia income tax withholdings Collected $2 million in overdue taxes, ?nes, child support Final audited results Aug. 2018 Yeats at Fun! 1st Quarter 1st Quarter Change from FY19 FY18 Prior Year Lottery Sales . Less: . Pnzes (61.6% of sales) (59.2% of sales) R.etsller Com missuons of sales) of sales) Expenses of sales) of sales) Lottery Profits - (28.0% of sales) (30.1% of sales) Yams of Funl RETAILERS OPERATIONS K-12 EDUCATION ?1 - I. I . I VVHERE VIRGINIA LOTTERY PROFITS GO $2322: Since 1999, all Virginia Lottery pro?ts have Career and Technical Education textbooks been used for K-12 public education in the Ai-Rlsk Commonwealth. The Virginia Lottery funds smden's Early a wide variety of programs each year Reading based on priorities set by the Governor intervention and General Assembly. Foster specie! 5332233; Primary Education Classosue School Reduction ?Wm? Project School Graduation Division Virginia Preschool initiative Priorities $01. Algebra Readiness Industry Top 20 in Net Income as a of Sales (36 States Reporting) Vi Profit of Sales 0 Industry omponson Years 0! Funl Lottery?s FY19 Business Plan Reach players in new ways and in new places YooaolFunl Lottery Vending Machines vending in 1,750 grocery drug stores Mobile app ~37,000 downloads since soft launch in July Virginia Lottery VA Lottery Screenshou Whom Im Apple wuch GET IT. CHECK IT. PLAY IT. Descriptions ?tarts .23 gm 5-190 Ann "\r'1ha5rh ~Chnc'k wmumg rman um 5 FEATURES Stun Vl'g'min Loner); sun":le mu! iiu?uw ?Janna ??ung In can it you wan 000000 0 -.. WM "1 for Vilghcill givuw gum-vs on! ?rights? plny?siip?. ~523)? {09' IO can)?: AM you a Winn"? OUYI Scan 8 lick-1. chock winning numb." and Mn ?ll out digilnl ploy?lps! tho Vieginil Lonny gaming app with omy?ing you nood. oil irom your mobile phone or tablet! YearsotFunl I - . A ram.Iill?- '1 w? . in; awn Convenience App - Information, latest winning numbers for all games - GPS locater to find nearby licensed retailers - Users can store their favorite numbers Elf. - Digital playslip with allows faster, more convenient transactions - Camera feature can scan barcodes to see if a ticket is a winner Phase 2: Nov 2018 Convenence App Enhancements - Sign-in to registered player accounts - Age verification and opt-in gaming controls - Ability to enter non-winning tickets for 2nd chance drawings SCRATCH HERE FOR Opt-in push notifications for information on jackpots and new game offerings chances Yearso! Fun! Phase 3: Feb/March 2019 - Bluetooth connection at licensed retail locations allows customers to purchase and download draw and instant win games 0 Soft launch at 30 retailers in February, statewide launch in March 2019 - FY19 Goal: 200 new mobile-only retailers, including sports bars microbreweries. Years of Funl Lottery Challenges A more competitive gaming environment in Virginia Historical video horse racing 0 New Kent Bristol casino proposals 0 Sports wagering Consumer shift to mobile commerce FY19 Business Plan Includes Marketing Emphasis on the lo?ery?s Social Purpose ?Q?xf .. I IEIZOI 30 YEA RS or FUN. YouVIN HOT A Years of Fun! The Virginia Lottery is the Commonwealth?s leading gaming authority, with a 30-year reputation for integritx, a robust retail footprint, proven marketingproticiencies, and a commitment to responsible gambling. NCPG VACPG SILVER MEMBER VIRGINIA COUNCIL ON PROBLEM GAMBLING muons 15 YEARS OF More lhon $9 Billion lo Virginio Public Schools since 1999 Kevin Hall 804 692 7100