August 28, 2020

Mr. Kevin Hall

Executive Director

Virginia Lottery Board

600 E Main Street

Richmond, Virginia

Re: Virginia Lottery Board Comment on SB 384 Sports Betting Rules

Dear Executive Director Hall:

Penn National Gaming, Inc., and Penn Interactive Ventures, LLC, a wholly owned subsidiary of Penn National Gaming, Inc., and the digital arm of Penn National Gaming, Inc. (collectively, “Penn”), appreciate the opportunity to provide comments to the Draft Sports Betting Regulations promulgated by the Virginia Lottery Board (“VA Lottery”). Penn owns, operates or has ownership interests in 41 gaming and racing properties in 19 jurisdictions and video gaming terminal operations with a focus on slot machine entertainment. Penn currently has 16 retail sportsbooks in eight states. In addition, in 2019, Penn opened the first interactive (online) casino in the Commonwealth of Pennsylvania.

We would like to thank the staff for promulgating a comprehensive set of draft rules and for soliciting comments from interested parties. Penn has extensive experience in the online gaming and sports wagering space and, having been involved in the rulemaking process in multiple states legalizing sports wagering, we appreciate the opportunity to provide input on the draft regulations. In addition, we have separately submitted a version of red-lined rules for your further consideration and welcome any further conversation that may be desired. Penn appreciates the partnership with the VA Lottery Board and look forward to sports betting in the Commonwealth of Virginia.

Summary of Rule Comments:

• Employee Licensing: The current definition of “Principal” includes anyone “employed in a Managerial Capacity”, however “Managerial Capacity” is not defined by the rules, which leaves open the possibility of an excessive number of individuals being considered principals when there is no regulatory purpose served by doing so. Strictly construed, this could include a large number of middle level management employees. Considering the associated fee of $50,000 for each Principal License, this could potentially create a barrier to entry into the Commonwealth. In addition, licensing any employee with managerial capacity with fees associated with principal employees does not exist in any other jurisdiction with sports wagering. We respectfully propose defining “Managerial Capacity” in a manner to include only those managerial employees acting as officers or directors, which we believe is the legislative intent of the statutory provision.  Furthermore, employees in strict “managerial capacity”, including middle level management, could alternatively be subject to more reasonable licensing and associated fees.

• Self-Exclusion Process: Penn is supportive of a process whereby users can self-exclude directly with the VA Lottery and the Lottery then sharing the excluded list with all permit holders. We believe this carries out the intent to its fullest, which is to ensure the user is not able to establish another account with a different permit holder, and all other existing accounts are closed. We did, however, have a few additional suggestions in this process. The rules currently require a permit holder to provide a link within the player’s Internet gaming account directly to an Internet self-exclusion application form, an electronic signature and waiver acknowledgement. We recommend that the self-exclusion application form, signature, and waiver request all be located on the VA Lottery website. Permit Holders could provide a Self-Exclusion Page on their online or mobile application which provides information and links the patron to the VA Lottery website within the interactive platform. By permit holders providing a direct access to the VA Lottery’s dedicated website, it is easier for the user to understand they are excluding through the VA Lottery’s program, and to instill confidence that they are doing so through a credible source. This self-exclusion process is used in other jurisdictions such as Pennsylvania, where it has proven effective.  Additionally, to encourage patrons who would like to self-exclude, we recommend amending the rules requiring permit holders remit any balance back to the newly self-excluded patron, rather than remit the funds to the state as currently drafted in rules. The rule as written could act as a deterrent to those patrons wanting to self-exclude and a deterrent to a strong responsible gaming program in the Commonwealth of Virginia.

• Online Lottery Practices Applied to Sports Wagering: There are several rule sections which appears to be a carryover of current practices surrounding online lottery sales. While these are best practices for online lottery sales, they are not practical to apply to online sports wagering and create unclear requirements for Permit Holders and challenges in enforcing for the VA Lottery. In our specific comments to the  rules, we where we indicate where these occur and create challenges, which include, but are not limited to, some of the items required in the “Sports Bettors Bill of Rights”, the lack of ability to fund an account with cash and how accounts are registered.

• Definitions for Supplier and Vendor Licenses: We have proposed suggestions to assist in classifying licensing of certain common providers in the online sports wagering industry. Suppliers should be limited to those entities providing services to register players, and those specific to the data and risk management components of sports wagering. Vendors should be limited to ancillary services such as payment service providers and affiliate marketers. These licensing levels are consistent with other major sports wagering jurisdictions an creates consistency across states and clear expectations on expected to obtain licensing.

Again, Penn appreciates the opportunity to provide the above input to the Lottery Board as they consider the final substance of sports betting rules. We look forward to discussing the above items for final rulemaking in the coming weeks. In the interim, please do not hesitate to reach out to us if there is any support we can provide.

Best Regards,

Rhea P. Loney
             Director of Compliance

Penn Interactive Ventures, LLC