Scratch tickets were the third highest type of gambling cited by callers to Virginia's problem gambling hotline. (Ned Oliver/Virginia Mercury)

The Virginia Lottery is still running during the COVID-19 pandemic, but its March profits dropped 28 percent, according to a new agency report.

The Lottery took in $48 million in profits for March, down more than a quarter compared to the same month last year.

Though Gov. Ralph Northam has shut down virtually all types of indoor entertainment – including the Rosie’s gambling facilities operated by Colonial Downs – he has not ordered the Lottery, a state agency, to stop selling tickets. Most Lottery products are offered at gas stations and grocery stores, which remain open as essential businesses.

“The Lottery field team of sales representatives continues to work remotely to service retailers and prize drawings continue to occur,” Lottery Executive Director Kevin Hall wrote in a letter to the governor this week accompanying his March report. “Essential employees have maintained ongoing operations necessary to continue the generation of profits for K-12 public education, though sales and profits have been significantly diminished due to the public health emergency and the related economic instability.”

Hall said the Lottery has taken several steps to respond to the coronavirus crisis. He said the agency has waived fees for retailers who stop selling Lottery tickets, canceled its advertising and highlighted ways to play that minimize person-to-person contact, such as self-serve vending machines.

Lottery revenues are used to bolster K-12 education funding. Last July the Lottery announced it had seen record annual profits of $650 million.

For the budget year to date, the Lottery has taken in $439.8 million in profits, down 11 percent from the prior year.

Though the Lottery said it had been closely tracking its revenue forecast for the year, the agency saw “significant impacts on sales and profits” in the last two weeks of March, the period when the state’s shutdown orders went into effect.

“That slowdown has accelerated into April, and we estimate sales of all lottery products have declined 20– 25% compared to forecast during a period that is typically the Lottery’s highest seasonal period,” Hall wrote. “We anticipate lottery profits will fall behind the forecast with April’s results, and those declines can be expected to continue through the remainder of this fiscal year.”

The Lottery’s situation could create more budgetary difficulty as lawmakers return to Richmond this week to finalize the state’s two-year budget. Northam has asked for all new spending to be put on hold and intends to reforecast the state’s budgetary picture over the summer when officials have a better handle on the fiscal impacts of the economic shutdown.

The General Assembly voted earlier this year to legalize casinos and sports betting, issues lawmakers are also expected to finalize when they reconvene Wednesday. But Virginia’s expanded gaming landscape looks uncertain with professional sports leagues sidelined and casinos shuttered all over the country.

Northam has proposed relying on one form of gambling — the unregulated slots-like machines that have shown up in bars and convenience stores across the state — as a source of revenue that could help the state respond to the pandemic.

The General Assembly has voted to ban the so-called skill machines, with legislators arguing the companies behind them exploited legal loopholes to establish an untaxed gambling enterprise with no state oversight. Restaurant and truck stop owners have argued the machines bring in new customers and revenue and give small business owners a piece of a gambling industry dominated by big-money interests.

Though Northam has ordered Colonial Downs to close all its facilities offering slots-like historical horse racing machines, he has not issued a similar order targeting skill machines. The games in convenience stores, which feature touch screens, are still available to play.

The governor has proposed allowing those machines to operate for at least another year.

Queen of Virginia – major operator of skill machines in the state – has made over $400,000 in political donations to Democrats and Republicans in the state. The company was listed as a top sponsor of the Democratic Party of Virginia’s annual fundraising gala in February. The company reported a $10,000 contribution to the party that month.

A restaurant on Main Street in Richmond around the corner from Capitol Square advertises Queen of Virginia Skill, a subsidiary of Georgia-based software maker Pace-O-Matic, which has won ABC approval and argues its games are the only legal varieties in Virginia. (Ned Oliver/Virginia Mercury)

Some anti-gambling advocates have called for state lotteries to be shut down due to the COVID-19 turmoil and the nation’s skyrocketing unemployment claims.

The organization Stop Predatory Gambling issued a letter this week calling on states to suspend their lotteries until 30 days after people receive their federal stimulus checks.

“Luring citizens to lose their money on lottery gambling games during this time defeats the intended purpose of the stimulus,” the group wrote in its letter. “Government sending stimulus and unemployment checks to families in need while states continue to operate lotteries will result in greater financial loss for our citizens, rather than fulfilling the intent of providing for essential needs and encouraging consumer spending to benefit the economy and create jobs.”