VLT numbers down, but profits rebounding

No firm reasons for revenue upswing

Rob Antle rantle@thetelegram.com
Published on August 21, 2010
Finance Minister Tom Marshall

Fewer bells are swinging, but government coffers are still ringing.

The Williams administration has pulled the plug on roughly 25 per cent of the province’s video-lottery terminals (VLTs) over the past five years. But after a period of decline, VLT profits are returning to previous levels.

Finance Minister Tom Marshall says the reasons for the rebound in revenues are unclear.

But Marshall did offer some anecdotal evidence to help explain the reversal.

“We’ve had a bit of an increase in the population, but we also have an aging of the population, so I would think more people are retiring and have more time for entertainment activities,” he said.

“No. 2, I think the province has been much more prosperous than it was, and people’s disposable incomes have gone up.”

He also said that the games have changed, with new graphics, for example.

“I’m told that when that happens, you can see a bump in activity.”

According to Marshall, there were 2,687 VLTs in the province in the 2004-05 fiscal year.

Revenues for the Newfoundland and Labrador government came in at $86.7 million.

The next year, 2005-06, the number of machines had dropped to 2,644, and revenues were down to $73.4 million.

Profits continued to drop in concert with further reductions in machines over the next two years, according to figures provided by Marshall, bottoming out below $65 million.

“What was happening was what we envisaged: you reduce the number of machines and the revenue would obviously come down,” the minister noted.

But in 2008-09 — as the number of machines continued to drop, down to 2,157 — revenues rebounded to $73.8 million.

Last year, with fewer machines again, the government received more than $75 million from the swinging bells.

That means that the province was making more money from VLTs in 2009-10 than it was four years earlier — despite gamblers having nearly 600 fewer machines to play.

In 2006, the government launched a strategy to reduce the number of VLTs in the province by 15 per cent over five years.

That target has been exceeded. The number is closer to 25 per cent.

In 2007, the province brought in other measures to reduce VLT play.

VLT operating hours were cut to a 12-hour window between noon and midnight. Previously, the hours were 9 a.m. to 2:30 a.m.

The machines were reprogrammed to slow play by 30 per cent. And the stop-button feature was removed from VLTs, further slowing play.

According to Marshall, the most recent figures saw 2,013 VLTs operating in the province — down nearly 700 machines from six years ago.

The current five-year VLT reduction plan expires next March.

It’s unclear what will happen then.

“At some point, we will look at it again, with the steps for the next strategy. It would be premature to say what that is right now.”