Dear Members of the Board:

I wanted to bring to your attention that one of the incorporated documents in this regulation is Robert's Rules of Poker (see 11VAC15-50-80, etc.) In Section 2 - House Policies of Robert's Rules of Poker, procedure number 28 prohibits "speaking a foreign language during a deal...." I believe this provision should not be incorporated into state regulation, whereby operators are required to enforce this rule. Enforcement of this rule would ostracize the sizeable non-native English speaking population in Virginia who would like to play Texas Hold 'Em, and may have constitutional implications. I believe this rule of "etiquette" is a holdover from a more jingoistic era from the gold rush frontier expansion era when anti-immigrant sentiment was high, and it should not be perpetuated by the Board with this incorporated rule.

What, for example, about American Sign Language for players who are hard of hearing/deaf? This raises significant issues under the ADA. What about a charitable poker game held at a community center or church serving what this rule would deem a "foreign" community? Some sources indicate that poker was actually derivative of a Persian game called "As Nas" and then popularized in the Western world and brought to America sometime in the mid-19th Century. Some sources suggest the very word "poker" is an English ization of the German game called "Pochen" or the French game "Poque."

The rules do not require that players whispering to each other in English speak loud enough that they can be heard -- but they would forbid two deaf players from signing to each other while cards are being dealt.

These regulations should not give the archaic, antiquated, and wrong-mided rule require operators to implement procedure 28, barring "foreign languages" during a deal, the force of law.

Thank you for your service to the Commonwealth,

Alex W. West, Newport News

The proposal itself has common-sense intentions in that gambling of any sort that occurs in the Commonwealth should be regulated to a certain degree. However, it fails to address the most dangerous aspect of gambling that is promoted by organizations--private bets. Although many of these tournaments may take place to further the benefit of charitable causes, it is nearly impossible to regulate individuals who seek to place private bets with one another. What if the debts that result from these agreements are not paid? Could that not increase animosity among employees, leading to unfair practices in the workplace?  Having an administrator that oversees these tournaments would not prevent this from occurring. The "administrator" would likely be an individual from within the organization itself. This person could likely have placed their own wagers on the winners and losers of the games carried out in these tournaments. If this were not enough, there is no mention of "administrators" not being permitted to be participants in the tournament(s). This could lead to even more bias and conflict within the organization that decides to host one of these events.

**My solution: The state should fully-legalize gambling. Through this new legislation, an agency would have to be established to regulate gambling (in all forms) throughout the Commonwealth. This would ensure that "administrators" are unbiased and fair, and most importantly, not employees of the organization conducting these events.

Bonding Requirement in 11VAC 15-50-140.B.14 should be redefined.  Surety Bonds are legally binding contracts entered into by 3 parties--the principal, the obligee, and the surety. The obligee, a government entity, requires the principal, typically a business owner or contractor, to obtain a surety bond as a guarantee against future work performance.

The way the regulation is currently written, the government agency (VDACS) is not the obligee, instead the regulation has the charitable organization the obligee.  Having an operator obtain a separate surety or surety bond for each qualified organization they provide their services is redundant and would be very costly for operators.  All other states that allow for charitable Texas Holdem Poker tournaments that have the requirement for the operator to obtain a surety bond, does so with the state agency being the obligee.  See charitable gaming laws of Michigan, New Hampshire, and Washington DC.

The suggested solution is to modify the regulation so the operator is bonded with VDACS as part of the operator registration process.

The Virginia Department of Agriculture and Consumer Services (Department) offers the following comments on the proposed Texas Hold’em Poker Tournament Regulations (11VAC15-50 et seq.).

The Department believes that certain provisions of the proposed regulations (i) will allow the Charitable Gaming Board (Board) to take actions that are not in compliance with the Virginia Administrative Process Act (APA) and (ii) are insufficient to carry out provisions of the Charitable Gaming Statute (Va. Code § 18.2-340.15 et seq.) to ensure the integrity of charitable gaming in Virginia. 

Compliance with Provisions of the Administrative Process Act

In subsection B of 11VAC15-50-20 of the proposed regulations, the Board has given itself authority to adjust, outside of the APA, the amount of operator compensation that may be counted towards a qualified organization’s minimum use of proceeds for its lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized.  The Department questions whether the Board has authority to adjust the amount of operator compensation that may be counted towards a qualified organization’s minimum use of proceeds, unless such adjustment is made in accordance with the APA.  The Department recommends that subsection B of 11VAC15-50-20 be amended as follows:

B. In accordance with § 18.2-340.19 A 1 of the Code of Virginia, as a condition of receiving a poker tournament permit, a qualified organization shall use a minimum of 2.5% of gross receipts from its poker tournaments for (i) those lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized; (ii) those expenses relating to the acquisition, construction, maintenance, or repair of any interest in real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes; or (iii) the cost of compensating an operator who is contracted by the qualified organization to administer its poker tournament. However, the amount from this compensation that may be counted towards the minimum use of proceeds shall not exceed .25% of the gross receipts generated from the poker tournament, and it may be adjusted by the board at its discretion on an annual basis.

Compliance with Provisions of the Charitable Gaming Statute to Ensure Integrity of Charitable Gaming

In addition to the comments above regarding compliance with the Administrative Process Act, the Department is concerned that the proposed regulations will allow a conflict of interest to exist between the charity and a Texas Hold’em poker tournament operator, as defined in Section 10 of the proposed regulations.  The Department expressed this concern regarding the potential conflict of interest to the Board at the Board’s meeting on October 13, 2020.  The proposed regulations allow a charity or any person affiliated with the charity to negotiate a contract with itself and an operator to administer the charity’s Texas Hold’em poker tournament.  The Department believes that the operator of a Texas Hold'em poker tournament should be independent of the charity to ensure a contract is negotiated in good faith by both parties.  In addition, the proposed regulations do not prohibit any person affiliated with the charity to be employed by the operator of the Texas Hold'em poker tournament.  As such, an operator may compensate any person affiliated with the charity in order to secure the contract with that charity.  By allowing of this type of compensation, the proposed regulations are allowing a quid pro quo and, therefore, not promoting the highest level of integrity within charitable gaming.  This type of compensation is not allowed in other forms of charitable gaming in Virginia.  The Department provided draft regulations to the Board, on October 13, 2020, that addressed the potential conflict of interest between the charity and the Texas Hold’em poker tournament operator. 

The Department recommends that the Board revise 11VAC15-50-30 to include the following provisions:

No qualified organization or its members or any person affiliated or associated with the qualified organization, their immediate family member, or person residing in their household shall directly or indirectly have any interest or ownership in an operator that is contracted by the qualified organization to administer its poker tournament.

Notwithstanding 11VAC15-50-140 B 16, no qualified organization or its members or any person affiliated or associated with the qualified organization, their immediate family member, or persons residing in their household shall directly or indirectly receive any remuneration or payments related to the administration of its poker tournament from the operator who is contracted by the qualified organization to administer its poker tournament.

No qualified organization, its members, any person affiliated or associated with the qualified organization, their immediate family, or persons residing in their household shall be employed, contracted, or otherwise compensated by an operator that is contracted by the qualified organization to administer its poker tournament.

The Department further recommends that the Board revise 11VAC15-50-140 to include the following provision:

Require the operator to prohibit its directors, officers, owners, partners, tournament managers, employees, independent contractors, or agents from employing, contracting, or otherwise compensating any person affiliated or associated with a qualified organization, their immediate family, or persons residing in their household for which the operator is contracted to administer the qualified organization’s poker tournament.

NOTE #1

SECTION:

11VAC15-50-140. Requirements regarding contracts.

sub-section: B.18

ORIGINAL:

18. Require the operator to prohibit its directors, officers, owners, partners, tournament managers, employees, independent contractors, and agents from participating in or otherwise playing in any poker tournaments it administers for the qualified organization.

COMMENT:

In many casinos and card rooms, the dealers/employees ARE allowed to play at the casino/cardroom on their days off, and in some cases they are allowed to play at a “dealers/employees only” table even on days that they work.

PROPOSED CHANGE:

18. Require the operator to prohibit its directors, officers, owners, partners, tournament managers, employees, independent contractors, and agents from participating in or otherwise playing in any poker tournaments it administers for the qualified organization

on any day that they are working at the location.

NOTE #2

SECTION:

11VAC15-50-60. Operation and conduct of Texas Hold'em poker tournaments.

sub-section: C.1.d and C.1.e

ORIGINAL:

d. The qualified organization's game managers, volunteer game workers, volunteer dealers, charitable host representatives, their immediate family members, or persons residing in their household shall not participate in or otherwise play in any of the qualified organization's poker tournaments.

e. The operator's directors, officers, owners, partners, tournament managers, employees, independent contractors, agents, their immediate family members, or persons residing in their household shall not participate in or otherwise play in any poker tournaments administered by the operator.

COMMENT:

Why can family members or persons residing in their household not be allowed to play.  This is very strict and not necessary as these people are in no way involved in the games administratively.

PROPOSED CHANGE:

Could be changed to:

d. The qualified organization's game managers, volunteer game workers, volunteer dealers, charitable host representatives,

 their immediate family members, or persons residing in their household

shall not participate in or otherwise play in any of the qualified organization's poker tournaments

on any day that they are working at the location.

e. The operator's directors, officers, owners, partners, tournament managers, employees, independent contractors, agents,

their immediate family members, or persons residing in their household

shall not participate in or otherwise play in any poker tournaments administered by the operator

on any day that they are working at the location.

NOTE #3

SECTION:

11VAC15-50-140. Requirements regarding contracts.

sub-section: B.7

ORIGINAL:

7. Require the operator to purchase any mechanical card shuffler or other mechanical equipment approved pursuant to 11VAC15-50-70 from a charitable gaming supplier permitted pursuant to § 18.2-340.34 of the Code of Virginia and require any purchase of playing cards or poker chips from a nonpermitted charitable gaming supplier to be reported to the department.

COMMENT:

I can see where the charity would perhaps need to also be able to purchase a shuffler not just an operator.

PROPOSED CHANGE:

7. Require the operator

or qualified organization

 to purchase any mechanical card shuffler or other mechanical equipment approved pursuant to 11VAC15-50-70 from a charitable gaming supplier permitted pursuant to § 18.2-340.34 of the Code of Virginia and require any purchase of playing cards or poker chips from a nonpermitted charitable gaming supplier to be reported to the department.

NOTE #4

SECTION:

11VAC15-50-40. Operator registration.

sub-section: H (main section)

ORIGINAL:

H. Operators shall ensure that a copy of a detailed invoice is provided to the qualified organization for each poker tournament it administers on behalf of the qualified organization. The invoice shall reflect the following:

COMMENT:

The issue that I take here is that an invoice needs to be created for each poker tournament.  There may be several tournaments daily at any given location.  I suggest a “daily” summary of tournaments or list of tournaments with the subsequent information listed for each tournament but NOT several invoices, only a single invoice for each day.

PROPOSED CHANGE:

H. Operators shall ensure that a copy of a detailed invoice is provided to the qualified organization for each

day of poker tournaments

poker tournament

it administers on behalf of the qualified organization. The invoice shall reflect the following:

NOTE #5

SECTION:

11VAC15-50-60. Operation and conduct of Texas Hold'em poker tournaments.

sub-section: C.2

ORIGINAL:

a. During a poker tournament, if the qualified organization is managing, operating, and conducting its own poker tournament, then a game manager must be physically present during the entire duration of the poker tournament. If an operator is administering the poker tournament, then the operator's tournament manager and charitable host representative must be physically present during the entire duration of the poker tournament.

COMMENT:

Tournaments often go for many hours at a time.  It is unreasonable to demand that a charitable host representative (a volunteer) would be present for the duration of the entire tournament.  I suggest that they are present for the wrap up of the paperwork for the tournament and provide a form of consistent oversight of the operations of the tournament, but not to, by regulation, be physically present the entire time.  Even the tournament director will most likely be a few different operations company representatives that will be present during the during of the company, effectively sharing this responsibility. This would be similar to a home owner being required to sit on site for the duration of time that the contractor is building his or her house.

PROPOSED CHANGE:

a. During a poker tournament, if the qualified organization is managing, operating, and conducting its own poker tournament, then a game manager must be physically present during the entire duration of the poker tournament. If an operator is administering the poker tournament, then the operator's tournament manager

 and charitable host representative

or alternative operations manager or supervisor

must be physically present during the entire duration of the poker tournament.

NOTE #6

SECTION:

11VAC15-50-140. Requirements regarding contracts.

sub-section: B.24

ORIGINAL:

24. If the operator leases a facility for the purposes of administering the qualified organization's poker tournament, then the written contract shall prohibit the landlord from serving as an operator and meets the conditions set forth in 11VAC15-50-90.

COMMENT:

There is no reason to prohibit this overlap between landlord and operator, however, if the overlap exists, it should be disclosed.

PROPOSED CHANGE:

24. If the operator leases a facility for the purposes of administering the qualified organization's poker tournament, then the written contract shall

prohibit

allow

the landlord

from serving

to serve

as an operator and meets the conditions set forth in 11VAC15-50-90

Provided that the landlord/operator properly disclose this overlap in roles.

Re:       Proposed Texas Hold’em Poker Regulations

Dear Chairman Lesson and Members of the Charitable Gaming Board:

I am writing today on behalf of the Virginia Charitable Gaming Council (“VCGC”) to ask that the Charitable Gaming Board amend its proposed regulations to allow for the use of electronic Texas Hold’em poker tables.  The VCGC represents charitable organizations such as the Veterans of Foreign Wars, the American Legion, the Fraternal Order of Police, the Elks, the Moose, and other local charitable and civic organizations that use charitable gaming to provide valuable services to their members and their communities.  We believe charitable Texas Hold’em will be an important new tool in helping us provide charitable service to our various communities

The Commonwealth’s existing charitable gaming statute clearly allows the Commonwealth to approve and regulate electronic poker tables.  Section 18.2-340.19 of the charitable gaming statute provides that the Board shall adopt regulations that define electronic and mechanical equipment used in the conduct of charitable gaming. § 18.2-340.19.A.5. emphasis added. This grant of authority includes the power to regulate electronic equipment used in the conduct of Texas Hold’em poker games.

Electronic Texas Hold’em poker tables are quite common in the gaming industry and they should be allowed in Virginia’s charitable gaming environment.  Electronic poker tables are physical tables that electronically shuffle and deal electronic cards.  These “cards” are dealt to the players at a monitor placed at the player’s spot at the table.  These monitors, which also include the player’s electronic chips, allow players to view their cards and to place bets.  The table also keeps track of the bets placed and determines which players win individual hands. 

These tables offer three key advantages over traditional poker tables with human dealers and physical cards and chips.  First, in this era of COVID-19, and the new normal of disease prevention and avoidance, the electronic features of these tables help eliminate the spread of viruses and diseases.  Players do not touch cards or chips handled by other players.  The elimination of the dealer also means one less point of physical contact.

Second, the use of electronic tables allows the Commonwealth access to electronic records of all charitable gaming occurring on the table.  These records can be used to determine the dollar values of chips purchased, the bets that were placed, etc., which will ease in preparing and verifying the statutory reports required under the law.  These records can also be used to determine the amount of fees payable under the statute.

Finally, electronic tables can help ensure the integrity of charitable Texas Hold’em in Virginia.  These tables severely limit the possibility of human interference in the play of charitable poker.  Every time a player touches a card or their chips it creates the possibility, albeit small, that the player could try to illegally alter the outcome of a hand.  The same possibility also exists whenever a dealer handles the cards.  Electronic poker tables minimize, if not eliminate, these risks.

As set forth above, public policy considerations suggest that electronic Texas Hold’em tables should be encouraged by regulation, not prohibited.  As also noted, the statute grants the Board the authority to regulate electronic equipment; regulating electronic Texas Hold’em tables falls within this authority.  The VCGC strongly encourages the Charitable Gaming Board to permit these tables in its regulation. 

Thank you for considering our comments.  Please reach out to me at (757) 287-8364 or to our consultant, Chris Petersen of Arbor Strategies, LLC at 202-247-0316 or cpetersen@arborstrategies.com, if you have any questions regarding our comments.

                                                                        Sincerely,

                                                                       Marty Williams