Video lottery games are highly profitable computer games that are played on video lottery terminals (VLTs). They are monitored and controlled by a central computer system overseen by a state’s lottery agency. VLTs were operated in nine states in 2008: Delaware, Louisiana, Montana, New Mexico, New York, Oregon, Rhode Island, South Dakota, and West Virginia. Three of these states, Rhode Island, Delaware, and West Virginia, launched the first multistate, progressive video lottery game in 2006 (a progressive jackpot is one that increases with each game played). Known as Ca$hola, the game begins with a $250,000 jackpot.
VLTs in Louisiana, Montana, and South Dakota are owned by private entities. Those in Rhode Island are leased by the state to private operators. VLTs in the other states are owned by state lottery commissions. In Delaware, New York, and Rhode Island, VLTs are only allowed at racetracks. Except in New York, profits from
the VLTs are split between the racetracks and the state lotteries. The VLTs in New York were challenged in court because the state’s constitution requires that lottery proceeds benefit education programs. Some VLT revenue was going to racetracks, so the courts declared the diversion of lottery revenue unconstitutional. In 2005 the state legislature amended the law. Under the new legislation the money for the racetrack owners comes out of the state’s general fund and all the money gathered from the VLTs goes to education.
In Iowa, VLTs were introduced in 2003, and eventually nearly six thousand VLTs were bringing in over $1.1 billion in revenue. However, according to the Cedar Rapids Gazette Online (July 15, 2006), calls to the state’s hotline for gambling problems rose 17% in 2005, largely because of VLTs, and the state legislature shut down the VLT program in May 2006.
Video lottery games have become controversial because many people consider them hard-core gambling. They allow continuous gambling for large sums of money, as opposed to lotto play, which features drawings only once or twice a week. Opponents of video lottery games contend that they are much more addictive than traditional lottery games because of their availability and instant payoffs. They also contend that the games have a special appeal to young people, who are accustomed to playing video games.