Vermont Legislature SmartTranscripts:

[Robin Scheu (Chair)]: Good afternoon. This is the House Appropriations Committee. It is Monday, 02/10/2025. It is a little bit after 01:30 in the afternoon, and we are continuing testimony on the FY 2026 budget. We are also piloting people, committee members being remote, as well as many rooms. So people can see who's there, and I will try to recognize folks on Zoom. If you have any trouble with me catching your eye, put your hand up, wave a lot, whatever, we'll find, or just speak up and say, oh, I'd like to say something. So we will make this work. It's our first time trying this. This afternoon, we have three organizations coming. We have the Department of Liquor and Lottery now, and then we have the Cannabis Control Board, and then we have the Human Rights Commission. So that's what our afternoon looks like. And, we're delighted to have, Commissioner Wendy Knight, partner of Liquor Lottery. Thank you for your patience as we kind of speak. Of

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: course. Of course. Nice to be here again. For the record, Wendy Knight, commissioner of the Department of Liquor and Lottery. And I'm gonna start where you've asked me to do so, which is to talk a little bit about our mission and the people we serve. I think I gave a quick overview the last time I was here on the BAA to talk about the mission of the department. So we basically have a dual mission. We generate revenue for the Education Fund and the General Fund through the proceeds of liquor sales for lottery funds and sports wagering revenue share. And then we have an equally important, if not more important mission, which is to do that in a responsible and safe manner. And so we look through those two lenses of commerce and then public safety and harm reduction. We essentially run the two Well, we run three enterprise funds. So Division of Liquor Control, Vermont Lottery, and the Sports Wagering Enterprise Fund. We serve Vermonters that are over 18 and want to participate in the lottery. We serve Vermonters over the age of 21 that want to participate in alcohol purchases, consumption, and online sports wagering. We also serve the thousands of licensees that we allow to sell either lottery tickets and or alcohol, including bars and restaurants and hotels and taverns that are often the economic engine or the anchor of many communities. And then we serve the 15,300,000 visitors, at least those that are of legal drinking age, that come to Vermont. So as Vermont is a tourist economy, it isn't just the Vermonters that we're serving, but the visitors that come here in terms of access to the eight zero two spirit stores and making sure that the bars and restaurants have the inventory, at least on the liquor side.

[Robin Scheu (Chair)]: So I'm gonna pause you for just a second, commissioner. I've neglected to welcome and recognize representative Lucy Boyden, who's on the government operations committee, and she's, sitting in for your presentation as well. So, Rip Boyden, thanks. And if you have questions, feel free

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: to raise your hand as well. Thanks for coming. So we don't unlike a lot of other state agencies and departments, we don't actually you're not actually funding us. We're actually the opposite. We're giving you revenue. And so this budget is the administrative cost of running the department. I talked a little bit about the public safety and harm reduction, and so that's in terms of educating. So we have to educate the licensees. It's a requirement to have a liquor license. You have to have a certification from the department every two years. And then we make sure that the licensees are compliant. So we pass laws and we have regulations, and then the job is to make sure that they're being followed. And so we have an investigative team of certified law enforcement agents that are responsible for making sure that, mostly, that we're not selling tobacco to minors and we're not selling alcohol to minors. We want to make sure that they're following those rules. And we do that with this, what I call an education first program, which is the idea is that most of these people want to be compliant, you just have to educate them about what the rules and the regulations are. And then the businesses that we operate, so we have an eight zero two Spirits operation, that's the retail network. That's where we, as a control state, require people to purchase the alcohol. So whether you're a bar, a restaurant, hotel, or a walk in consumer, if you're needing to purchase or wanting to purchase spirits, you do through an eight zero two spirit stores, and we have about eighty eight zero two spirit stores.

[Robin Scheu (Chair)]: So, Wendy, after COVID, we did change some rules around ready to drink and where those could be sold. And I guess maybe we didn't have it before. But has that affected your sales at AOG Spirits, do

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: you think? It hasn't not affected our revenue. It's just affected the different types of products that we carry. So for the ready to drink, low alcohol spirits category that we created, that's now in the private sector. So instead of being sold exclusively at eight zero two spirit stores, now they can be sold in up to 1,000 or 2,000 convenience and grocery stores. And so what we did is we substituted those products. We're not selling them anymore, so we don't leave the shelves empty, and we started selling other products. It did not affect our sales.

[Unidentified Committee Member (Speaker 2)]: And don't know if we can get to it or not, but sales down, but you have fewer licenses in the various categories. Probably not fewer liquor stores,

[Unidentified Committee Member (Speaker 3)]: but you

[Unidentified Committee Member (Speaker 2)]: have fewer beer and wine or restaurant licenses or different types of licenses, the stores I understand.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I understand the question.

[Unidentified Committee Member (Speaker 2)]: Did that trend down after COVID?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: A little bit. Since about 2000 and I have data, I just collected data on this I could follow-up. Since 2016, the number of licensees that we've had has mainly been flat. It's a little down now, but it was up a little bit. Immediately after post COVID was 2022, 2023, and we saw some of those bars and restaurants that had been closed for a period of time didn't reopen. And now we're starting to see a little bit more of an uptick, but our overall licensee numbers now versus 2016 are slightly down.

[Unidentified Committee Member (Speaker 2)]: What I was getting at is people consuming less or there were fewer outlets for them to go

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: to Yeah. No. Actually, the licensee sales, so when you go into a bar, restaurant, or hotel, the on premise licensees, those sales are starting to represent a greater proportion of our overall sales. So those sales are growing at a higher pace, whereas the walk in consumer is going down. And I think I talked about the reasons, it's just been the last year or so, Nationally, alcohol consumption is down, so people are buying less alcohol. Inflation is impacting. Legalized cannabis, in states that have legalized cannabis, they're seeing a decline in alcohol sales. People are trading their behaviors. And also the flooding impact in 2023 temporarily impacted us here in Vermont. We had 10 stores that closed temporarily. You're welcome. And then on the lottery gaming operations, so we basically operate a retail network. We have five eighty one licensed lottery agents, and then we sell a portfolio of lottery tickets through those agents. I talked about a little bit before I move on from the liquor control operations, we're looking at expanding the number of kiosk models. We're going to add a few more of those. Those are smaller footprints. They only sell Vermont made products in the top 50 or top 100 sales. They don't sell to bars and restaurants. They're just a smaller model. And we are using the work from our data analysts to put them in more tourist areas. Again, to the 15,000,000 tourists that come in, so if we're able to set up a few more kiosk stores to help in large part the Vermont manufacturers, because they really need to be able to have accessibility to the visitors. So we're setting up a couple more kiosk models. On the lottery gaming operations side, we're focused on putting in additional vending machines, and actually this work is complete already. So we have one more vending machine, an additional vending machine to put in, and this allows more of a player convenience. We know that a lot of the lottery agents are having trouble finding workers, so by having a self serving vending machine, players can have privacy and accessibility and a little bit more convenient to use the vending machine, as opposed to going up to the counter and requiring the agents to have additional staff.

[Robin Scheu (Chair)]: So if it's self serve, how do we know how

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: do we prevent underage people from using the vending machines? I don't know that question, but we certainly have a way of doing that, and

[Robin Scheu (Chair)]: I could follow-up with you.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I haven't used one of the self serving vending machines. I'm sure that they have to put identification in. Not just say, correct,

[Robin Scheu (Chair)]: it's not

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: for sale.

[Robin Scheu (Chair)]: Yeah. That never works. So

[Unidentified Committee Member (Speaker 3)]: just step back to the kiosk. Are there any in place right now?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yes. Yep. Where? Jericho. We have we have one in Jericho. We have one in Berlin, we have one in Randolph.

[Unidentified Committee Member (Speaker 3)]: They're little storefronts that have just a limited stock?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah, so they're usually a store within the stores. If you go up to Berlin, the Maplefields, where the travel center is, there's a little eight zero two Spirit store. It literally operates it's like one shelf, maybe two, and it mostly has Vermont products, and then it has some of the other sales top 50 sales product. So a maker's market.

[Unidentified Committee Member (Speaker 3)]: Separated out? Like, it I mean, I guess

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: It's a the

[Unidentified Committee Member (Speaker 3)]: watery store not separated out.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: No. They all they're all operating right. An eight zero two spirit store is also usually a wine store or a beer store. Right. And they're separate registers. You have to have separate registers. They're just a smaller footprint.

[Unidentified Committee Member (Speaker 3)]: Newer things, which I've never seen them, and maybe just haven't followed along with the with the development of of these. So yep. Okay. Thanks.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Okay. Oh, great. Sure.

[Unidentified Committee Member (Speaker 2)]: There's one in Montgomery, in the store Puffer store in Montgomery.

[Unidentified Committee Member (Speaker 3)]: Is that

[Robin Scheu (Chair)]: That's not a kiosk model.

[Unidentified Committee Member (Speaker 2)]: That's that's the regular Victor store model because it's like a gated up

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yes. Yeah. They have to have a separate space, usually, to register. We are introducing a $30 ticket this year on the Vermont lottery side, replacing with $25 ticket. On the sports wagering side, we don't run this business. We're just purely regulators here, and we talked about the revenue projection. We're actually projecting a little bit down for f y twenty six, and that's because what we've been seeing this past season, the NFL season, is that the bettors were betting on the favorites. And up until this weekend, the favorites were winning. And when the favorites win, the winning payouts is larger. And when the winning payouts is larger, the adjusted gross sports wagering revenue to split is less. So because this fall across the country, the people that are engaged in sports wagering, the wagers, the bettors, were betting on the favorites, the favorites were winning.

[Robin Scheu (Chair)]: Rep Harrison has a question. Jim?

[Jim Harrison (Vice Chair)]: Yeah, Commissioner, so this current BAA, and it's understandable because it was the first year, we budgeted for a little bit more than we actually expect to have, so we made an adjustment in the budget adjustment. However, going to fiscal year twenty six

[Robin Scheu (Chair)]: Yes.

[Jim Harrison (Vice Chair)]: From what I understand, you're going for an in you're estimating an increase over and above what we will get this current fiscal year, and I'm curious as to why you think it will increase by, I think it's close to a million dollars over what we expect to do this year?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: So the estimate for the net revenue from the Liquor Control Fund in FY twenty six is $14,800,000

[Jim Harrison (Vice Chair)]: Okay, no, I'm talking about sports betting.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: You're talking about sports betting? Okay. Yes.

[Unidentified Committee Member (Speaker 2)]: Yeah.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: So we projected yes. We projected

[Jim Harrison (Vice Chair)]: during the BAA Correct. To something and I'm gonna get the numbers wrong. We initially

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: tell you what it is. Okay. That k. Yeah. We originally had 10,000,000, and then we downgraded to well, that was our initial projected. 7,600,000.0 is what's projected in the f y twenty six budget.

[Robin Scheu (Chair)]: 7,600,000.0?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: 7,600,000.0.

[Jim Harrison (Vice Chair)]: Okay. But we we are you expected to generate about a million less than that in the current year?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yes. We downgraded the f y twenty five to 6,100,000.0.

[Jim Harrison (Vice Chair)]: Okay. So a million and a half dollars. And why are you expecting it to increase by a million and a half?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Because normally increase in the sports wagering revenue as the market matures.

[Jim Harrison (Vice Chair)]: So you feel comfortable that the million and a half increase over the current fiscal year is a realistic number?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I do.

[Unidentified Committee Member (Speaker 3)]: Okay, thank you.

[Robin Scheu (Chair)]: Welcome. So I am curious, since you brought it up, yes, the line on the Super Bowl was a bit off. So the people who so there were probably fewer winners. Do you get information about that, on how much it was, and then what was the payout if you were Yes.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: So what we get is a total. So we ask to look at for events. So we've been tracking, and we'll get from the operators, what was the activity on the Super Bowl? So we'll be able to understand from a composite perspective how much was wagered on the Super Bowl, how much was paid out into the winning payouts, and then what's the revenue share from that. We'll be able to see how much of that was in state versus out of state. So we'll have a report on the Super Bowl.

[Robin Scheu (Chair)]: Okay. How long does it take to get that report? I don't know.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: It's maybe ten days, fifteen days. Yeah, usually. I mean, we normally for the monthly reports that we put on the website, it's the fifteenth of the following month. So we would be, in February 15, putting the January figures up there. And then whenever we have a special event or, like, we did the NCAA Basketball Championship, we did the Solar Eclipse, things like that, we'll put that as a special report on the website.

[Robin Scheu (Chair)]: Reps to you if it's a question.

[Unidentified Committee Member (Speaker 3)]: So I've looked at the monthly reports, and they show, of course, that's the handle and then the winnings. They show the out of state and state counts or sort Scasers. You get a chance see and and then you've talked about how betters have been doing better in their winnings. So and, you know and but do you have the number of winners? No. Can you get the number of winners? There's a distraction to say that if $100 was bet and 80 of that goes back out in winnings and then there's profit to the companies that are running the games. And then we see our vigorous is from the profits from the companies. So it's like, okay, so this money goes out and then this money comes back to the veterans. But I'm curious to know how many winners there are. We know how many players there are, but we don't if we don't know how many winners there are

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Well, we don't actually know how many players they are because it's actually done by user accounts. So I people usually have multiple accounts, right? So the number you see is probably inflated because it's counting me. If I had multiple users' accounts, so I had a user account with FanDuel, I had a user account with DraftKings those are our three operators I'm going to show up and then tally of user accounts as three when it's really just one person. And so the other issue with winners is they're not they're tracking the bets. So there are multiple bets that are taking place. So for example, a parlay bet, I could place a parlay bet. If this happens and if this happens and this happens, so there might be six six bets within a bet. So it's they the way they're tracking it isn't by a person. It's

[Unidentified Committee Member (Speaker 3)]: So I guess I would be interested in knowing more of that information. In other ways of calculating like in the lottery, it's always been an estimate that 80% of the winnings are made by 20% of the players. There's of an assumption that or when there was sports, when there was fantasy sports that 95% of the winnings were made by 5% of the players. And so wondering how can we get an idea of how many winners or losers or winning bets and losing bets there were just to get an idea of saying, to get an idea of who the winners and losers are, maybe not who, but the percentage of bets are winning. Because if I put down $5 on a parlay, I could win $500 or something like that. But do you follow what I'm saying? I'm

[Unidentified Committee Member (Speaker 2)]: wondering if the data

[Unidentified Committee Member (Speaker 3)]: can be broken down so that we can see at least on the Vermonter side, how many of the betters or how many of the bets are winning something that gives us an idea of, I guess, my idea, how many losers there are? How many people are not succeeding at their gambling?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I can certainly find out if we have that information. What we're trying to track right now are the key metrics of how many people are signing up for the self exclusion list, how many people are taking advantage of the one eight hundred number for problem gambling resources, and then what is the revenue to the state. And so those are the metrics that we're looking at for sports wagering.

[Unidentified Committee Member (Speaker 3)]: Okay. That's fine. And and one last question. Do you control at all what people can bet on outside of I mean, I think college sports, I think most sports within the state are excluded. Can't vote. Can't

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. The department has the authority to approve the sports wagering catalog. So we get the requests from the operators, and then we, looking at the contracts and looking at the enhanced procedures and looking at the law, determine whether or not that's a legitimate event to bet on, to have wagered in the category. So there was a number of requests that came through for the Super Bowl. We look through it with those lenses, and then we say, yes. This meets the criteria, and we allow the operators to put that in there.

[Unidentified Committee Member (Speaker 3)]: Notice in the monthly reports that table tennis was was Yeah.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Apparently. Wow.

[Unidentified Committee Member (Speaker 3)]: That that that's lots well, not as much yet in Vermont. But Oregon, we, you know, reported that they had over $9,000,000 in business. Table tennis.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. So we had table tennis at one point was in one of the top five sporting events. Apparently, there's a very competitive table tennis series out there.

[Unidentified Committee Member (Speaker 2)]: So do you have a like, you're the house. So does the house have a percentage that it would like to get?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: It doesn't work that way in sports wagering. The contract that we've negotiated so a house is a term for a casino, and we don't have casinos in Vermont. So basically, what we do is we allow three operators to operate their apps in Vermont, and we get a revenue share from that. And it's 33% for FanDuel, 31% for Fanatics, and 31% for DraftKings.

[Unidentified Committee Member (Speaker 2)]: And so the reason why I asked is, obviously, if you're not making enough money, there's a certain point in time where it could cost more than what you're getting. That's why

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: It's not costing us more than what we're receiving. I understand that.

[Unidentified Committee Member (Speaker 2)]: Do you have does the state have a preconceived notion in terms of how much they would like to make out of this?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: We do in terms of the projection. So that's what I put forward in the FY '26, for example. We're expecting to Our revenue from the contracts is $7,600,000 That's what we're expecting to make. Goals. So we are focusing on a couple of initiatives. One is to expand the Educate and Innovate program that we have. It's a direct expenditure. We do this in concert with the Agency of Education. And so we fund schools that apply for this program, and they get direct funding for STEAM initiatives. And so the last couple of years, we've done it's a $15,000 award, and we've done two schools. It's really quite impressive, and it's really impactful. For example, in Franklin Northeast School this year, there's a lot of families there that are below the poverty level. And so one of the initiatives that the school put forward was a really technology centric education program. And so they received a $15,000 award from us. The other was in Charleston Elementary School, and they did a really cool initiative where they're using technology to help with the flood damage and the repairing of that. So they were able to buy a laser cutter, and they're using that to make signs and materials to help people understand some of the recovery work that's happening. So we're looking to double that from two $15,000 awards to, four. A lot of the, strategic goals we have focus on the employee engagement survey. So last year, we launched our first ever customer satisfaction survey. This is our second year. We've seen all of the customer groups, the satisfaction increase from year to year, which is great. That's what you want to see in a customer satisfaction trending up. And so we're looking to improve that again in the third year. So we're looking to go from 68% overall satisfaction to 75%. And then we have a couple of scores that we're looking at for our employee engagement. We spend a lot of time on the employee engagement retention, and we're looking at a couple of very focused scores to improve, and that would be inclusive workplace and operational efficiency. We think those are two really important. It's really important that people feel welcome and included, not just the employees that work at the department, but of course the businesses that we work with. We work with all kinds of businesses across the state, and so we definitely value that ethos of making people feel that they're valued and respected and included. And then operational excellence, because we run businesses, we are constantly focusing every day on how to do things better, how to be more efficient, how to save taxpayers money, right? If you're running a business and the profits I'm sorry, if the revenues are looking like they're slowing down, which is what's happening, we try to figure out how we can contain cost, which I think you'll see partly in this budget as an effort to really reduce costs. Wendy, I know that you're supposed to

[Robin Scheu (Chair)]: put a certain percent or a certain dollar amount into supporting people that might have gambling issues or, like, a problem gambling problem, drinking, things like that. Are you do you have any way of tracking the usage of that, or do you just hand over money to the Department of Health? How does

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: that work for There's people who have nothing related to alcohol, right? So we don't give money to the Department of Health for that. Their money for alcohol's public health comes from somewhere else, not us. And so in our budget, we take $250,000 from the Vermont Lottery Fund, and we take $250,000 from the Sports Wagering Enterprise Fund, and $500,000 is through an MOU with the Department of Mental Health. And that's for gaming, responsible gaming, problem gambling. And the health of the Department of Mental Health sets up the program for the players. That one-eight hundred number that I referenced, there's a website, they're training providers, and they're doing public awareness campaigns to let people know where they can find resources. And the Department of Mental Health tracks those metrics, how many people are calling in, how many people they've referred for service.

[Unidentified Committee Member (Speaker 2)]: Okay,

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. Great. Thank you. You're welcome. Would you like me to go through the ups and downs?

[Robin Scheu (Chair)]: Just the highlights would be good. Know about salaries that sort of stuff. Correct. Certainly don't need to. So, this is all on our committee page. So, I'm looking at

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah, I mean, I can I'm looking at the ups and downs, and I'm going to direct you to the last column, basically, the total column. Right? Because the special fund is our surplus property. We own you know, we're able to manage the fleets, and when we the vehicles come up, we can sell them, and that goes to the surplus property. We have the interdepartmental transfers. We have some MOUs in place with the Cannabis Control Board, the Vermont Department of Health, and the Agency of Transportation. All the three enterprise funds, as well as the Tobacco Litigation Fund, are in this all other. So we'll we're gonna just I'm gonna just walk you down here. The major things that are happening, and that goes to the one question, are what are the major challenges, is we have a great example of innovation. It's called the B2B website. It allows the bars and restaurants to go online and to make their alcohol orders in a much more efficient way. Right now, they literally have to walk into an eight zero two Spirit store if they have to call. And so this will allow them, like shopping on Amazon, they go in, they can create a cart. If there's something they want that's out of stock, it will show what other three comparable products are available. It will allow them to create their order, and then they can either have it delivered, if that's what their store does, or pick it up at a store. So a much more efficient way of doing business, which will help out a lot of our licensees. That launches in the spring. It was supposed to launch over a year ago. And one of the reasons it got delayed and one of the reasons why you see an increase in this is because our inventory for the alcohol is on a platform of D365. That allows us to have all of the inventory in all of the stores to be able to understand what's available, and that's the point of sale system. That has not been upgraded in seven years. And once we sign the contract with ProVee to do the B2B website, to allow the bars and restaurants to purchase in that manner, well, the Pro V system needs to connect to the D365 system. And once we signed the contract and started going through the process of working with Pro V, the department's working with ADS. ADS made us aware that the Pro V platform wasn't going to work with the existing D365 platform, so we need to upgrade the D365 platform. Those costs were not known until recently, which is why you're seeing they weren't known a year ago when we put our FY '25 budget together. They're only known now. So that's why you see the uptick in that.

[Robin Scheu (Chair)]: The 1,820,000.00? Correct.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: That's correct. Then the next line

[Jim Harrison (Vice Chair)]: You have

[Robin Scheu (Chair)]: a question about that?

[Unidentified Committee Member (Speaker 3)]: Yeah. Can you you mentioned delivery. I know that's been a long standing desire for restaurants in particular. Can you tell me we have a policy change that allows stores to just automatically deliver?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: No. They can contract with if they want to contract with a delivery service. So it's it's it's so like Burlington Bay, they have a lot of licensee accounts, and then they contract with a I'm sorry. It's the bars and the restaurants that are contracting to have their liquor delivered.

[Unidentified Committee Member (Speaker 3)]: So, like, Vietnam messenger can pick it up and deliver it, or it has to be somebody who's licensed to to

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. I'd have to find out what the delivery is. Most of these bars and restaurants are physically going in and picking them up, and they would still need to do that. The ordering system makes it a lot more efficient.

[Unidentified Committee Member (Speaker 3)]: Right, no, I just heard the word delivery, so I didn't I think I was know that's been a long, long desire, long standing desire of of the restaurants and bars.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. Some of them contract for it to do that.

[Unidentified Committee Member (Speaker 3)]: We have a limited I I can't remember which license. There's a limit there's already a limited way of delivery, but not

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I can follow-up on the delivery question.

[Unidentified Committee Member (Speaker 3)]: That'll be great. I mean, it's it's something that stood out because I know Yeah. Know I know I know that they've wanted it for a long time.

[Robin Scheu (Chair)]: Oh, and Brett Harrison has a question too. He's hiding behind the live space. Yeah.

[Unidentified Committee Member (Speaker 2)]: Jim?

[Jim Harrison (Vice Chair)]: Yeah, Commissioner, I know you covered the software change and a need for it with Representative Boyden and I when we met last week, but could you refresh us? Is that 1,800,000 a one time expense, or is that an ongoing expense?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: That isn't one time expense. That will not be the ongoing expense for the B2B program. The ongoing expense for the b to b program, I think, is I can get you that. 300,000 maybe? I'd have to find that out.

[Jim Harrison (Vice Chair)]: Okay. But so so next year, if if we go with this number, there'll be a significant decline in this Yes.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. This 1,800,000.0 is to upgrade the d three sixty five. It's not it doesn't represent the ongoing program of the Pro V b two b website.

[Jim Harrison (Vice Chair)]: Okay, and this is all coming out of the enterprise fund, so next year, everything else being equal, then the enterprise fund will generate a little bit more revenue to the state than it will this fiscal year 'twenty six. Is that fair to say?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yes, we're projecting almost $15,000,000 plus the $5,000,000 excise tax.

[Jim Harrison (Vice Chair)]: Right. But but if you take the 14,000,000 next year, it would be,

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: you know I mean, y 27. Or more.

[Unidentified Committee Member (Speaker 3)]: Yep. Yep.

[Robin Scheu (Chair)]: Yep. Alright. Just

[Jim Harrison (Vice Chair)]: wanna make sure

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I understand. Yes. Yep. This is a onetime expense.

[Jim Harrison (Vice Chair)]: Thank you.

[Robin Scheu (Chair)]: Replicate.

[Unidentified Committee Member (Speaker 2)]: So once this is done, you'll have a maintenance contract? Correct.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: With ProBee. We will have no more upgrade d three sixty five expenses. No more surprises.

[Robin Scheu (Chair)]: Great.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Then we have the next increase, 167,000, and that's because Salesforce is the platform we use for our online licensing portal that we launched a couple of years ago. This was also a portal that a lot of the other state agencies and departments were using during COVID. And what has happened is, apparently, departments this is what I've been told by ADS, is that the other departments are using Salesforce less. So the enterprise wide usage of Salesforce is down. Therefore, our individual login fees are more expensive because we're the ones that are left holding funding for Salesforce. So that explains that. The other one is the support ADS contract. Historically, we had one contract that ADS used for the D365 software and hardware that posed problems because as the department is managing the relationships with the agents, we needed to manage that contract. So we put those contracts apart, we put them out the bid, we had one vendor reply for the hardware and one vendor reply for the software, and we've seen a little bit of an uptick in the price

[Robin Scheu (Chair)]: of the software. There an ongoing cost of $445 $444 It

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: will be I have to ask you that. I have to ask Lisa that. Is Lisa Yeah. Hi, James.

[Unidentified Committee Member (Speaker 3)]: Yeah. Okay.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: I don't know that it'll be $440,000 per year. I think it's truing up, then I'll get you that. This is Lisa. Yes, that would be ongoing costs. It is.

[Lisa (Finance Director, Department of Liquor and Lottery)]: Okay.

[Robin Scheu (Chair)]: Thank you, Lisa. Lots of people on it. If your screen is off, we don't know you're on.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Thanks, Lisa.

[Unidentified Committee Member (Speaker 2)]: So your B2B project, you own the code when you're done. This is not a system that you're like the other system you get where you're going incur more price, more cost because other people are not using it so much. Buying a license there. In the case of the B2B, you're actually owning the software? We

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: have a contract with Provy that operates the website. So we have a contract in place with Provy, and they're going to operate. They do that right now with wholesalers, so a lot of states use them and a lot of people use them to buy their beer and wine insider.

[Unidentified Committee Member (Speaker 2)]: So the $1,800,000 is that for coding, for writing code for the for a new program, this program, B2B system?

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Or No. The 1.8 is to upgrade the d three sixty five inventory. It's really to get the D three sixty five inventory

[Unidentified Committee Member (Speaker 2)]: To change

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: upgraded so that we can

[Unidentified Committee Member (Speaker 2)]: The code the coding the upgrading they're doing coding in there to do that. I was just curious, you own that system, you don't have licensing names. So going forward, in time, as long as you have programs, they'll be able to maintain that. So you get that maintenance contract for that, which is good, I think.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: Yeah. So the difference with Salesforce and ProBee is the department has a contract in place with ProBee. So it says, this is what you're to do for us, when you're supposed to do it, and this is how much we're gonna pay for you. The Salesforce contract is a contract that ADS holds. So I don't have control over that. This one here, Frobee, I have control over that, because it's the department's contract. So that's generally what I have for you.

[Robin Scheu (Chair)]: Okay. And you're no longer leasing certain space, so that's going down. So that's Yes.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: There's a few things that have gone down because I have an amazing finance director, Lisa, who's retiring at the March. Oh. Sad to say, Tracy Badeau is our new finance director in waiting, and she's on there somewhere. Great. She will be officially the only finance director as of March 23.

[Robin Scheu (Chair)]: So does this include the sports wagering? Because I saw somewhere you have two positions.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: That's that was last year. That's looking at the counts. Oh, that was past No. It was FY '24. No new positions, Our no new goal is to continue to decrease our cost and to make sure that we are operating our businesses so that people are participating in them safely and responsibly. Thank you.

[Robin Scheu (Chair)]: Is The Weeknd's Budget. As you know, Jim, you're all set for what you need for right now. Okay. And we know we can final questions through Jim. Wendy, thank you very much.

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: My pleasure. Nice to see you all. Nice to see you.

[Robin Scheu (Chair)]: Erin's having some interesting streaming challenges, so we're going go off live, take a little break,

[Wendy Knight (Commissioner, Department of Liquor and Lottery)]: and then we'll have the

[Robin Scheu (Chair)]: cannabis control board at the Exito for 02:30