| Action | Promulgate new regulation governing casino gaming |
| Stage | Emergency/NOIRA |
| Comment Period | Ended on 4/29/2021 |
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6 comments
I fully support the 89% minimum on slots. That's better than Maryland and Deleware and will draw serious gamblers to visit Virginia.
Also, can we have some sort of regulation the blackjack odds and on roulette? 6-5 blackjack and triple 0 roulette are complete ripoffs. Having solid odds (3-2 blackjack and even a single zero roulette wheel) with low table minimums on these games will attract more gamblers to visit the state.
Virginia Lottery
Emergency Regulation and Notice of Intended Regulatory Action
Casino Gaming
11 VAC 5-90
Preferred Casino Gaming Operators’ Comments
The undersigned, representing the currently certified Preferred Casino Gaming Operators in Virginia (“PCGO Group”), respectfully submit the attached comments regarding the Notice of Intended Regulatory Action (NOIRA) to promulgate 11 VAC 5-90, Casino Gaming. For the purposes of commenting on the NOIRA, our comments are based on the Emergency Regulations that are currently in place. The PCGO Group has worked diligently to provide consolidated comments on issues of importance in making Virginia a competitive gaming state. Individual PCGOs may have additional comments which will be submitted separately from the consolidated comments contained herein.
The issues we have raised and the suggested fixes we are submitting are rooted in regulatory research regarding best practices across other gaming states, particularly those states that Virginia will ultimately compete with for gaming market share. The PCGO Group believes that the suggested regulatory changes will improve Virginia’s competitiveness and thus increase state revenue as our facilities go into service in the Commonwealth.
Thank you in advance for your consideration,
Pamunkey Gaming Authority Rivers Casino Portsmouth
Caesars Entertainment Hard Rock Hotel & Casino Bristol
Virginia Lottery Permanent Casino Regulations
Concerns and Recommendations
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Page Number of Emergency Regs |
Regulation Number |
Concern/Clarification |
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29 (and repeated apparently by mistake at p. 33) |
Applications for and issuance of facility operator’s licenses
11 VAC 5-90-60
2. The preferred casino gaming operator may not deviate substantively from the plan it submitted to the host city and the department during the certification process set out in §58.1-4107F and §58.1-4109 of the Code of Virginia.
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Operators should be able to respond to changing market conditions as well as improved understanding of both customer and host city preferences. The language as proposed sets in stone project plans, and would not permit operators to make changes such as expanding hotels, adding amenities, changing amenity mix, etc.
Recommendation: that language should be added to the end of the sentence as follows: “…of the Code of Virginia, unless the deviations have been approved by the eligible host city and are otherwise consistent with all requirements of chapter 41 of this Act.” |
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43
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Vendor-major and Vendor-minor are listed as 2 of the 4 categories of “service permits” under 11VAC5-90-80. 90-80(E)
E. The fee for each service applicant shall be a: 1. Nonrefundable $500 application fee for the service permit applicant, plus any applicable fingerprinting fees; and 2. $50,000 background investigation fee for any principal not the holder of, or applicant for, a supplier permit, including any applicable key manager. |
Reduce $500.00 Fee Amount
Fees in other states:
New Jersey - $95 + $66.05 fingerprinting/ NJ Key Employee $750 plus investigation expense Pennsylvania - $350/ principal $2500 + any cost that exceed this amount. Ohio - $250
IL Level 2 - $200/ Key Person - $5,000
IN Level 2 - $200/ Level 1 Key Person -$1,000 + investigation fees
Maryland – Occupational - $250 app fee + 77.25 Fingerprint + $150 issuance = $437.50 total
Recommendation: that the fee be revised to be $300.00 for the application fee plus any applicable fingerprinting fees….”
Clarify who has to pay the $50,000 background investigation fee to be consistent with the statutory provisions
Recommendation:
E. The fee for each service applicant shall be a nonrefundable $300 application fee plus any applicable fingerprinting fees. F. The fee for any principal not the holder of, or applicant for, a supplier permit, including any applicable key manager, shall be a nonrefundable $50,000 background investigation fee.
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75 |
Use of Cash
The statute (58.1-4122) states “Casino gaming wagers shall be conducted only with tokens, chips, or electronic cards purchased from a licensed casino gaming operator.” The draft regulations repeat the same language in 90-110(Y):
90-110(Y):
Y. Prohibition on the use of cash, credit cards and debit cards 1. A casino game may not be played or activated in any way by insertion, directly or indirectly, or use of: a: Cash; b. Credit card; c. Debit card; or d. Electronic transfer of funds from a credit card or debit card. 2. A casino game may be played only with tokens, chips, or electronic cards purchased from the facility operator.
Slot machine section (90-150(P)(3)a.(1)(a).
Slot machines are required to have… a. A coin-in meter that: (1) Accumulates the total number of credits wagered whether the wager involves: (a) Currency; (b) A gaming ticket; (c) A promotional play instrument; (d) Downloaded credits; or (e) Credits won; and (2) Does not accumulate subsequent double-up wagers or other wagers of intermediate winnings accumulated during a game event;
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Use of Cash at Table Games:
The emergency regulations appear to indicate that a player may use cash to purchase chips or tokens from a dealer at a table game.
Recommendation: Clarify the regulations regarding the ability to use cash at a table game to convert to chips or tokens.
Use of Cash at Gaming Machines:
Recommendation:
90-110(Y):
Y. Prohibition on 1. A casino a: Cash; b. Credit card; c. Debit card; or d. Electronic transfer of funds from a credit card or debit card. 2. A casino game may be played only with tokens, chips, or electronic cards purchased from the facility operator. 3. Neither the purchase of casino chips nor the conversion of cash, promotional play instrument, or gaming tickets to electronic tokens or credits at a slot machine shall constitute playing a game or placing a wager.
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151
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Slot machine payout percentages
11 VAC 5-90-150 Slot Machines
Subsections K.2. through K.6
2. A slot machine shall have an average payout percentage that: a. Is 89 percent or more; and b. Does not exceed 94 percent. 3. Notwithstanding the requirements of subdivision K 2, in no event may a slot machine have a theoretical payout percentage of less than 85 percent. 4. A facility may not make available for play a slot machine with an average payout percentage that exceeds 95 percent without the written approval of the department. 5. A facility’s gaming floor shall be configured to collectively achieve, at all times, an average payout percentage that exceeds 89 percent and does not exceed 94 percent. 6. A facility operator shall, in selecting slot machines and configuring a facility’s gaming floor, rely on the slot machine’s theoretical payout percentage. |
The slot machine payout percentage requirements are confusing, anti-competitive, and will not maximize revenue to the Commonwealth.
The distinction between “average payout percentage” and “theoretical payout percentage” is unclear.
Hold percentage requirements should provide economic and competitive parity with other commercial casinos in the eastern U.S. They should give operators the flexibility to implement innovative slot machine offerings with widely varying payouts, and they should provide opportunities for operators to maximize tax revenue for the Commonwealth.
Virginia’s 89 percent minimum return percentage requirement is the highest in the region, exceeding the rate in Maryland (85%, per legislation which passed the Maryland General Assembly this year), West Virginia (80%), Ohio (85%), Pennsylvania (85%), New Jersey (83%), Delaware (87%), and New York (85%).
Recommendation: revise Virginia’s minimum payout percentage to 84%. |
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168
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11 VAC 5-90-150 (K) (2) (B) 11 VAC 5-90-150 (K) (4) 11 VAC 5-90-150 (K) (5) |
The regulations set a maximum payout percentage for each slot machine of 94% and a maximum gaming floor average slot payout of 94%. The casino operators ask that the individual slot machine maximum payout percentage and the maximum gaming floor percentage be eliminated. Higher payout percentages directly benefit the consumer and allow the casino operators to attract customers and adjust to market conditions in other competitive states. By including a maximum payout percentage, Virginia may receive less tax revenue and unnecessarily limit payouts to gaming customers. Please see the attached report from Eilers & Krejcik Gaming, LLC, a global gaming research and analytics company.
Recommendation: Given the maximum percentages that exist in competitive states in the Eastern United States, revise the regulations to provide for a maximum payout percentage of 100%.
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CommentID: 97736 4/27/21 9:37 am
Commenter:
Preferred Casino Gaming Operators
Comments and Recommendations of the Four Preferred Casino Gaming Operators, Part 2 Please accept the below recommendation as part of the previously submitted (4/26/21) comments and recommendations of the four Preferred Casino Gaming Operators. Due to technical difficulties, this recommendation did not appear in the previous submission. Thank you again for your consideration, Pamunkey Gaming Authority Rivers Casino Portsmouth
Recommendation on revisions to Minimum and Maximum regulation as separately addressed above.
11 VAC 5-90-150 Slot Machines
Subsections K.2. through K.6
2. A slot machine shall have
CommentID: 97738
4/28/21 3:19 pm
Commenter:
Mike Hankin, Aristocrat Technologies, Inc.
11VAC5-90. Casino Gaming
CommentID: 97751
4/29/21 2:51 pm
Commenter:
Robert Wood, IGT
Virginia Lottery Casino Gaming 11 VAC 5-90 emergency regulations comments
On behalf of IGT, thank you for the opportunity to provide feedback regarding the “Virginia Lottery Casino Gaming 11 VAC 5-90 emergency regulations” as published in The Virginia Register of Regulations March 29, 2021. We seek confirmation of our understanding as well as consideration for the language changes below:
11VAC5-90-50. Investigations AA. Approval of institutional investors. Based on our understanding the responsibility to seek a waiver as well as follow up actions are with each respective institutional investor and not the associated supplier or operator licensee.
11VAC5-90-70. Applications for and issuance of supplier permits. I. Portability. Identifies that each supplier permit is assigned to a property and outlines a transfer request process to support other properties. We suggest that once a supplier permit is issued that it will authorize the provisions of goods and services it requires to any casino licensee within the Commonwealth of Virginia.
11VAC5-90-150. Slot machines. K. Average payout percentage. 9. a. (1) restricts offering an award where the odds exceed 50 million to one. As this limitation is not common across the industry, suggest the following language change to align with odds requirements which apply the odds to advertised awards and allows for disclosing odds of prizes which exceed the limit 11VAC5-90-150 Slot Machines. K. Average payout percentage. 9.
a. May not:
(1) Offer an winning combination advertised award where the odds exceed 50100 million to one, unless disclosed to the player; and
11VAC5-90-150. Slot machines. K. Average payout percentage 9. b. to be consistent with other jurisdictions and to allow for a wider offering of game types we suggest the addition of verbiage to allow game rules to disclose relevant details of outcome conditions.
11VAC5-90-150 K 9b. Shall be designed to ensure that all possible combinations in the game cycle are independent of each other, unless otherwise disclosed to the player.
Thank you again for the opportunity to comment and please contact me directly should you wish to discuss.
CommentID: 97760
4/29/21 11:22 pm
Commenter:
Anonymous
Impact on Small Virginia-based Businesses As it is currently written, 11VAC5-90 creates massive barriers to entry that prevents small Virginia-based businesses from entering Virginia’s new gaming market.
The following comments and recommendations, if implemented, would level the playing field and give small Virginian businesses a chance to compete.
1. Bonds
Regulation Language:
11VAC5-90-40 Licenses and permits generally
E. Bonds.
2. The department may require an applicant for or holder of a permit to obtain a bond and submit the original to the director before the license or permit is issued.
5. The amount of the bond shall be in an amount determined by the director to be sufficient to cover any loss or indebtedness to the Commonwealth incurred by the licensee or permit holder.
6. For a facility operator or supplier, the amount of the bond may not exceed $50 million.
7. For a service permit holder, the amount of the bond may not exceed $100,000.
Comment:
Currently 11VAC5-90-40 of these emergency regulations gives the director the discretion to require a supplier permit applicant to post a $50 million bond and a service permit applicant to post a $100,000 bond.
It is unreasonable for the director to have the discretion to require a small supplier to post a $50 million bond in order to place a single slot machine at a casino in Virginia or require such supplier’s employee to post a $100,000 bond in order to work on that machine. This language will likely prevent small Virginian businesses from being able to compete with large multi-national institutions in the Commonwealth.
While it is appropriate for large casino operators building $300 million casinos to post a large bond, a local service technician cannot afford to post a bond higher than his annual pre-tax income.
Recommendation:
Either remove the bond requirements for permit applicants or create clear bond requirements that scale according to the size of the applicant’s business similar to the Virginia Alcoholic Beverage Control Authority’s skill games regulations (3VAC5-80-100).
2. Service Permit - Conflict between 11VAC5-90-50 and 11VAC5-90-80
Comment:
11VAC5-90-80 requires certain employees of supplier permit holders to receive service permits. As part of the application process detailed in 11VAC5-90-80, these employees must pay a $50,000 background investigation fee. Even if a portion of this background investigation fee is ultimately refunded to the applicant, this upfront payment will prevent employees of small business from being able to receive a service permit.
Strangely, 11VAC5-90-50 does not require these employees pay a $50,000 background investigation fee and merely states that service permit applicants must pay “$500 as a nonrefundable fee to cover the administrative costs of conducting the personal and background check and issuing the permit.” (11VAC5-90-50(F)(6)).
Employee background checks do not cost $50,000. For reference, New Jersey only charges (a) $95 for a typical casino employee license application and background investigation fee; and (b) between $750 and $4,750 (depending on the complexity of the background check) for a “key employee” license application and background investigation fee.
Recommendation:
Either remove the requirement that service permit holders pay an additional $50,000 background investigation fee from 11VAC5-90-80 or reduce the service permit background investigation fee to a maximum of $5,000.
3. Supplier Permit - Background investigation fee is unreasonable.
Comment:
It is unreasonable that 11VAC5-90-80 requires a supplier permit applicant to pay a $50,000 background fee for any principal or key manager. It does not cost anywhere near $50,000 to perform a detailed background check and a small business owned by four people should not be required to pay the Commonwealth $200,000 for a chance to compete with large multi-national conglomerates.
Recommendation:
Lower the supplier permit background investigation fee to $5,000.
4. Facility operator preference - Promote Virginian businesses
Regulation Language:
11VAC5-90-100 General facility operator requirement
D. Facility operator requirement
11. Consistent with requirements of the Casino Gaming Law and the contract between a host city and its preferred casino gaming operator, a facility operator shall submit to the department evidence that:
b. The facility operator has:
(2) Established preferences for hiring residents of the host city and adjacent localities, veterans, women, and minorities for work performed at the facility in compliance with any applicable federal law;
(4) Required that any contract for services performed at the facility, other than construction, with projected annual services fees exceeding $500,000, meet the requirements of subdivisions 11 b (1), 11 b (2), and 11 b (3) of this subsection with regard to full-time personnel of the subcontractor who performed services at the facility.
Comment:
While 11VAC5-90-100(D)(11)(b)(4) attempts to encourage large casino suppliers to hire Virginians, the current language is vague and easily exploitable. For example, a slot machine supplier, as part of its sale of tens of millions of dollars’ worth of slot machines, may only charge the facility operator a nominal fee to maintain such machines, despite the actual fair market value of such services exceeding the amount specified in 11VAC5-90-100(D)(11)(b)(4).
Recommendation:
5. Waivers
Comment:
11VAC5-90-30(E) provides various factors the Board may consider when determining whether to grant a waiver request. Currently, the impact such waiver would have on Virginian business is not one of these factors.
Recommendation:
Amend 11VAC5-90-30(E) to allow the Board to evaluate the impact each waiver request would have on local Virginian businesses.
6. Transporting Games
Regulation Language:
11VAC5-90-10 Definitions
"Transport" or "transportation" means any shipping, transfer, delivery, or other movement of a slot machine, mechanical casino gaming device, or table game equipment into or out of the state, or between facilities within the state. "Transport" or "transportation" does not include the movement of a slot machine, mechanical gaming device, or table game equipment within a casino gaming facility.
11VAC5-90-140 Transportation and testing of casino gaming machines and equipment B. Transportation. 1. Unless otherwise directed by the director, a person shall submit written notice to the department prior to transporting a slot machine, mechanical casino gaming device, or table game equipment.
E. A slot machine, mechanical casino gaming device, or gaming table may not be transported out of the Commonwealth unless the director: 1. Approves the action; and 2. If the slot machine, mechanical casino gaming device, or table gaming equipment is being permanently removed from Virginia, removes the registration tag.
Comment:
Currently, 11VAC5-90-140 requires everyone (a) to submit written notice to the Department before transporting any casino games; and (b) to receive the director’s approval before transporting any casino game out of the Commonwealth.
This language is overboard. As written, any person shipping a slot machine on a truck from North Carolina to Maryland would have to (a) provide advanced notice to the Department before the truck enters Virginia; and (b) wait for the director’s approval before the truck would be allowed to cross the border into Maryland. Additionally, this language discourages businesses from manufacturing their casino games in Virginia, as they would be required to jump through these regulatory hoops before shipping a game to another state.
Recommendation:
Amened 11VAC5-90-140 to make it clear written notice is only required to transport casino games to a casino gaming facility located in Virginia and the director is only required to approve the transportation of casino games out of the Commonwealth if such casino games were previously provided for play within the Commonwealth.
CommentID: 97762
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