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W. Va. Operators, Locations Find Compromise On VLT Licensing

Posted On: 4/3/2010

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CHARLESTON, WV -- The Mountaineer State appears to be moving toward new procedures for awarding licenses that permit businesses to operate video lottery terminals. Operators and location owners agreed to a compromise proposal in March.

In recent years, tavern owners have expressed willingness to bid aggressively to take over the VLT licenses, which run 10 years, for their own locations, thus becoming operators. In response, VLT operators have argued that they have some rights to protect their investments in equipment, staff and support materiel.

Last fall, both houses of the State Legislature passed Senate Bill No. 651, a measure that would have created an option for current VLT license holders to protect their market position. It proposed that if a would-be new operator (mainly expected to be a location owner) outbids the location's existing operator for the in-house VLT license, the operator could automatically trump that bid with a 10% higher payment to the state and retain the right to operate in the location.

But on March 25, Gov. Joe Manchin vetoed the VLT measure, which he criticized as vague and potentially leading to turf wars between various state regulatory agencies. Following the veto, representatives of operators and locations met with government officials to find a compromise that could be considered later this year by the legislature. The two sides agreed on a new regulatory proposal.

According to the Sunday Gazette Mail, the compromise proposal would permit locations to shield 40% of the individual machine licenses in their venues from the re-bidding process. Assuming the compromise becomes law, in practice it could mean that if the bar owner in a five-machine location outbid the existing VLT operator, the operator could keep 60% of his licenses (i.e., three of the five machines) by agreeing to pay 10% more than the location owner's bid. But the bar owner's bid would stand for 40% of the licenses, allowing him to own and operate two of the machines.

Manchin said he would support the compromise measure in a special legislative session later this year. If passed by lawmakers, the revised re-bidding procedures would become effective in fall, with new licenses starting on July 1, 2011.