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8/25/20  3:12 pm
Commenter: DraftKings

DraftKings Comments on 11 VAC 5-70 – Sports Betting (Sections 90-130)

DraftKings Comments on 11 VAC 5-70 – Sports Betting (Sections 90-130)

PLEASE NOTE text in underlined bold denotes an insertion and text between [brackets] denotes a deletion.

11 VAC 5-70-90           Sports betting employee applications

A. Any individual not holding a valid sports betting employee license issued by the Director may not be employed by a permit holder or sports betting supplier to work within the borders of the Commonwealth as a sports betting employee.

DraftKings respectfully suggests adding language consistent with the definition of “sports betting employee” denoting that this requirement applies only to those workers “within the borders” of the Commonwealth.  As suggested in our comment the definition of “sports betting employee” in 11-VAC 5-70-10, DraftKings respectfully suggests that only those individuals in the Commonwealth with specific management responsibility over the sports wagering operation or the ability to deploy code and directly affect the outcome of sports betting should be licensed as sports betting employees.

            [B. 6. a. Obtained a bond if required under this chapter;] and

DraftKings respectfully requests the Lottery to remove all bonding provisions related to employee licensure.  This would be extremely burdensome for operators and results in no corresponding benefit to the Commonwealth.  Permit holders undergo extensive diligence to ensure they are financially sound, and are subject to insurance and bonding requirements by these regulations.  Additional bonds for individual employees achieve little added benefit, as it’s not clear what such a bond is intended to accomplish.  The unnecessary nature of this requirement is demonstrated by the fact that we are aware of no other sports betting state in the country that requires a bond for individual employees.

C. The application, backgrounding, and license fee for a sports betting employee license or renewal is $500.

Related to subsection A. of this section, further clarity regarding employee licensing requirements is needed to understand the scope of this provision.  While a $500 fee may be feasible for in-state employees with specific responsibilities related to the management or functionality of the sports betting platform, if the scope of employee licensing were to encompass a larger group that is not narrowly tailored by responsibility and location the employee licensing expense could grow quickly and become unwieldy.

F. 2. e. Pays the fees for licensure and backgrounding as described in this section.

DraftKings suggests that this provision be clarified to confirm that the employer may pay the employee’s fees.

11 VAC 5-70-100         Bonds

[A. The Director may require an applicant, permit holder, licensee, or registrant to obtain a bond before the Director issues or reissues a permit, license, or registration.]

[B. A sports betting employee may be exempted from obtaining a bond if the employee is involved in activities that the Director has determined do not require a bond to protect the public interest.]

DraftKings respectfully requests that these bonding sections be eliminated.  To impose an open-ended bond requirement on all types of licensees with no guidelines regarding implementation does little to inform the applicants and permit holders of their potential obligations and provides no guarantee that similarly situated permit holders will be treated equally. If the Department chooses to retain bonding requirements, which DraftKings respectfully suggests it should not, the requirements for such bonds and the conditions under which they would be required should be laid out with specificity in the regulations.

As to the employee bonding requirement, DraftKings strongly urges the Lottery to remove this requirement altogether based on being unnecessary, unbeneficial, and extremely burdensome on both operators and the Director.  The burden on permit holders to both produce job descriptions for every employee and to then obtain a bond—with no guidelines as to triggering responsibilities provided in the regulations—will result in great burden and expense both to the Department and to the permit holders

[F. As approved by the Director, the bond for a principal may be included in the bond submitted by the permit holder or sports betting supplier.

G. For a principal or sports betting employee not covered by a bond under subsection E of this regulation, the amount of the bond:

1.Shall be determined by the Director based on the employee’s level of responsibility and the Commonwealth’s risk of exposure to liability for the employee’s performance; and

2. May not exceed $150,000.]

DraftKings respectfully suggests striking these subsections in their entirety, and instead specifying in subsection D that a permit holder’s bond, if required, covers all of its principals and employees.

H. For a sports betting supplier licensee [or vendor registrant] that operates a sports wagering platform on behalf of a sports wagering operator, the amount of the bond:

1. Shall be determined by the Director based on the [employee’s level of responsibility and] the Commonwealth of Virginia’s risk of exposure to liability for the [employee’s] supplier’s performance; and

2. May not exceed $150,000.

DraftKings respectfully requests that the supplier bond be limited to those suppliers that operate a platform on behalf of a permit holder.  This ensures that the operators accountable for the platform are fully bonded without imposing unnecessary bonding requirements on ancillary suppliers or vendors that could discourage their participation in the market and make it difficult for operators to obtain the best available services.

11 VAC 5-70-130         Identification Cards

DraftKings respectfully suggests that this section be stricken from the mobile sports betting rules. While DraftKings recognizes and appreciates the need for licensing of certain employees, the nature of the mobile sports wagering is such that employees rarely, if ever, interact with customers in person. The requirement for identification cards is an additional burden on the Director that would slow down the licensing process and create one more hurdle to opening the sports betting market in the Commonwealth. The licensing requirements of the rules are sufficient to ensure integrity in the sports betting market in Virginia and allow the Director to have line of sight into the employees with access to sensitive consumer data.

Should the Director feel that identification cards are necessary proof that principals and employees have complied with all licensing requirements, DraftKings respectfully suggests that identification cards be restricted to those employees in a retail setting, as they are most likely to interact with the betting public.

CommentID: 84229