Regulation Number

Concern/Clarification

11VAC5-90-10 - Definitions

Request clarification as to whether the definition of “Adjusted gross receipts” includes free play. We would suggest that free play be exempted from the definition.

11VAC5-90-40.B.1 - Licenses and permits generally (Changes in application)

We suggest that the current language be revised to require applicants to submit changes to an application only if “material information” changes.  Requiring the submission of changes to any information by an Applicant would essentially require a continuous series of updates by Applicants.

11 VAC 5-90-40.E - Licenses and permits generally (Bonds)

The current regulation requires the operator to obtain a bond and submit the bond to the director for review.  The amount of the bond may not exceed $50,000,000.  We would suggest a cap of $5,000,000.  Licensees have a variety of financial controls and solvency tests in place to ensure sufficient liquidity to protect Virginia residents.  A $50,000,000 bond could reasonably incur between $.5mm and $7.5mm in annual expense.  Virginia regulations can protect Virginia taxpayers through licensing reviews and ongoing liquidity reviews rather than requiring a bond of that magnitude that ensures a significant, recurring expense for operators while providing a control that could be duplicated through other more cost-effective means.

11VAC5-90-40.H.2 - Licenses and permits generally (Continuing obligations)

The current language requires applicants to immediately submit to the department notice in writing of any changes in information for an applicant.  Similar to the note above, we suggest only requiring updates for “material changes” in information.

11VAC5-90-40.I.7 - Licenses and permits generally (Identification cards)

The current language requires licensees to provide notice if an identification card is “temporarily unavailable” to the licensee.  Cards may be temporarily unavailable in a variety of circumstances (such as when a licensee is off-duty or away from the premises) but would only be problematic if the licensee is unable to display the identification card as required for a defined purpose. 

11VAC5-90-50.F.4 - Investigations (Administrative costs of background investigations)

The current regulation requires a nonrefundable application fee of $50,000.  We would suggest an application fee more similar to those found in other jurisdictions - $5,000 - $10,000.

11VAC5-90-60.F.6 - Applications for and issuance of facility operator’s license (Issuance term and conditions)

The current regulation provides for a nonrefundable issuance fee of $15 million before the operation license is issued and upon any approved transfer the license.  Confirming that the allocation of that fee from a seller or a buyer can be contractually distributed such that the payment could be provided by an acquiring party if so agreed upon.

11VAC5-90-60.H.1 - Applications for and issuance of facility operator’s license (Suspension, civil penalties, revocation and nonrenewal)

The current regulation allows the director to impose a civil penalty or suspend, revoke or refuse to renew a facility operator’s license for a variety of issues, including failure to comply with, or violation of, any provision of the casino gaming law, this chapter, any other law, regulation or condition.  We acknowledge that casino gaming is a privilege and that licensees should be held to a high standard.  However, we would suggest that suspension or revocation of a license be reserved for material violations of law and be subject to prior due process.

11VAC5-90-90 A.1 - Enforcement (Inspections)

The current regulation subjects licensees or permit holders to unannounced inspections by the department.  While we acknowledge that the department has the right to regulate operations in real time and without prior approval, we suggest that audits be coordinated so licensees can provide the requisite information in a reasonable manner and time frame.

11VAC5-90-100.D.2 - General facility operator requirements (Facility operator requirements)

The current regulation requires a facility operator to submit to the department any updates or revisions to capital investment plan provided with the initial license application.  Generally, operators review and approve capital plans on an annual basis and have discretion to apply capital within prescribed amounts throughout the year in order to respond to changing business plans.  We suggest that an operator’s capital investment plan be available to the Lottery at its request rather than require submissions for any deviation from the initially approved plan.

11 VAC 5-90-100.D.11 - General facility operator requirements (Facility operator requirements)

The current regulation requires that the contract between an eligible host city and its preferred casino gaming operator shall require the operator to agree to hire contractors that meet a series of requirements.  We would suggest that these restrictions be eliminated and instead replaced with requirements to hire local and M/WBE certified vendors.  The requirements contained within this subsection will limit the number of qualified vendors with which the preferred casino gaming operator can contract.  Many small businesses cannot meet this requirement, and this could limit the intended economic impact of the project.

11VAC5-90-100.J - General facility operator requirements (Voluntary exclusion; responsible gaming)

We recommend that regulation of the voluntary exclusion program include the following components, which are common in state-administered exclusion programs across the U.S.:

-Explicit regulator responsibility to establish and maintain the exclusion program and associated lists;
-Requirement for excluded patrons to agree that, during any period of voluntary exclusion, they will neither gamble nor collect any winnings or recover any losses resulting from any gaming activity at Virginia casinos;
-Establishment of procedures for placements on, and removals from, the list of excluded persons;
-Procedures for the transmittal to all Virginia casinos of identifying information concerning excluded persons;
-Requirements that all Virginia casinos establish a system that, to the extent practicable, refuses wagers and denies gaming privileges to excluded persons;
-Requirements that all Virginia casinos establish procedures designed, at a minimum, to remove self-excluded persons from targeted mailings or other forms of advertising or promotions and deny self-excluded persons access to complimentaries and check-cashing privileges;
-Establish a “willful violation” standard for any sanctions on casino operators for failing to exclude individuals on the state’s exclusion list; and
-Requirement for a waiver and release which holds harmless the Commonwealth, the Commission, casino licenses, and their employees from any liability for various acts regarding the good faith execution of the voluntary exclusion program.

11VAC5-90-100.M - General facility operator requirements (Facility exclusion plan)

We would suggest that this section be revised to follow procedures more similar to other jurisdictions and allow for the creation of a state-wide voluntary exclusion list with controls that apply checks against that list during certain interactions (such as jackpot payouts).

11VAC5-90-110.I - Casino gaming facility internal control standards (Surveillance system design standards)

Section I.2.a.3.e. requires that surveillance monitor the movement of cash and cash storage boxes within the facility.  We request confirmation that by following the cash and cash storage boxes with PTZ cameras that the operator would meet this requirement.

Section I.2.a.3.g notes that surveillance must monitor all “restricted areas.”  Request clarification as to the definition of “restricted areas.”

Section I.2.c.2 and Section J.3.c.2.g requires that surveillance be able to identify and locate, through the use of a meter, counter or other device or method, a particular event that was recorded.  Request confirmation that use of the surveillance monitoring system logs suffices this requirement.

11VAC5-90-110.L - Casino gaming facility internal control standards (Security department operating procedures)

The regulation currently requires security to immediately remove intoxicated individuals from the facility.  We would suggest that this requirement be limited to require removal from the gaming floor such than an intoxicated individual could be sent to a hotel room rather than be removed from the facility entirely.

11VAC5-90-110.U.2.a - Casino gaming facility internal control standards (Player accounts)

The current regulation requires a substantial amount of information in order to create an on-premises player account.  We would suggest that the requirement to provide an email address and SSN be limited to transactions such as jackpot payouts.

11VAC5-90-110.U.2.c. - Casino gaming facility internal control standards (Player accounts)

Section 8 requires the operator to take a series of actions if the operator determines that the information provided by a player to make a deposit or process a withdrawal is inaccurate or incapable of verification.  We suggest that such requirements are in excess of similar requirements pertaining to other financial institutions and that customers can provide information outside of the 21 day period after which operators must suspend and/or deactivate accounts.

11VAC5-90-110.U.9 - Casino gaming facility internal control standards (Player accounts)

The current regulation requires operators to review all adjustments to a player account for individuals amounts of $500 or less.  We believe this language may be inadvertent and that the requirement should be $500 or more. 

11VAC5-90-110.Z.2.a - Casino gaming facility internal control standards (Gaming ticket)

The current regulations require a facility operator to maintain a record of all unredeemed gaming tickets for a minimum of two years from the date of issuance.  We would suggest a time period of 6 months to a year is reasonable.

11VAC5-90-110.CC.5.b - Casino gaming facility internal control standards (Jackpot payout)

The current regulation requires a security or gaming operations department employee to verify jackpots of $1,200 or more but less than $15,000.  We suggest that a second verifier be included to verify jackpots between $5,000 or more but less than $15,000.  Given surveillance coverage and slot machine logs, we believe this is a reasonable protection.

11VAC5-90-110.HH.5.b.3 – Casino gaming facility internal control standards (Collection of cash storage and table game drop boxes)

The current language requires an accounting team member to verify various aspects of the drop process prior to moving the cash storage boxes into the count room.  We suggest that accounting perform post-count verification procedures through the accounting and audit procedures as the drop is also handled by drop and count team members, security and is monitored by surveillance.

11VAC5-90-110.JJ.9 - Casino gaming facility internal control standards (Accounting controls for a count room)

The current language requires a facility operator to report variances within 72 hours of the count.  We would suggest a week, which would allow variances to be compared to subsequent drops, which can often identify cash count variances.

11VAC5-90-110.KK – Casino gaming facility internal control standards (Player complaints)

The current language requires a facility operator to report when it is unable to “satisfactorily resolve” a dispute with a player within three days of notice.  We suggest eliminating the word “satisfactorily” as the operator cannot attest to the guest’s satisfaction.

11VAC5-90-140.G.1 - Transportation and testing of casino gaming machines and equipment (Request for authorization)

The current regulation requires facility operators to obtain prior written authorization from the department before taking a number of actions regarding optioning games.  We would suggest that this section focus on placing games into operations and game moves rather than address all variations of game optioning.

The current regulation also requires the operator to obtain prior written approval for numerous functions relating to slot machine placement and operations.  We would suggest eliminating the subjective requirements such as “performing a substantial replacement of parts” and “any other action that materially alters or interrupts the operation of a slot machine” as we believe the objective controls adequately ensure the regulator is aware of and provides prior approval for game changes.

11VAC5-90-150 K.2 - Slot machines (Average payout percentage)

The current regulation requires a slot machine to have a theoretical payout percentage that is between 84% and 100%.  We want to confirm that so long the manufacturer and ITL tested payout percentages noted in the game option comply with this payout percentage that a particular game will comply with this requirement.  Actual payout can vary but over time will meet this requirement so long as it is correctly optioned.

11VAC5-90-150.K.3.a - Slot machines (Average payout percentage)

The current language requires periodic reviews to ensure the average payout percentages, on an average annual basis, comply with the requirements of this subsection that a slot machine shall have a theoretical payout percentage between 84% and 100%.  We would suggest that this section be eliminated as specific game actual payout can vary from the theoretical pay out, but so long as the game’s theo is correctly set to the manufacturer’s specifications the game, over the lifetime of the game, will comply with the payout percentages.

11VAC5-90-150.K.5.b. - Slot machines (Average payout percentage)

The current language requires that games shall be designed to ensure that all possible combinations in the game cycle are independent of each other, unless disclosed to the player.  We request clarification on how the disclosure must be provided.  Would a sticker on the game meet this requirement?

11VAC5-90-160.H.2 – Mechanical casino games (Minimum and maximum bet)

The current language requires that a mechanical casino game may not accept a maximum bet on a single game event in excess of $50 without the written approval of the department.  Can an operator submit a blanket request to offer maximum bets on a single game event in excess of $50 for all games on a property?

11VAC5-90-170.U – Table games definitions and equipment (Dealer controlled electronic table game system procedures)

The current language requires that “A player shall participate in wagering at a dealer controlled electronic table game by presenting a gaming voucher or value chips to the dealer or boxperson.”  We suggest that this language be altered to allow the guest to insert cash or a ticket into the EGD itself, which is typically how these games function.

11VAC5-90-180.J - Table Games Procedures (Table inventory counts)

The current regulation requires the use of a three-compartment drop box.  We should suggest a single compartment drop box as typically used in other jurisdictions.  We believe that traditional drop box procedures provide sufficient guest protection and prevent errors involving the use of multiple drop boxes.

11VAC5-90-180.T.5 - Table games procedures (Game rules; notice; wagers)

The current language requires that a facility operator may not accept a bet at a table game in an amount less than $5.00 or more than $50,000.  We would suggest that bets under $5.00 be allowed as often side bets are made in increments under $5.00.

11VAC5-90-180.BB.1.a – Table games procedures (Procedure for dealing cards from the hand)

The current langue notes that an automated shuffling device shall be used to shuffle the cards if cards are dealt from a dealer’s hand.  We would request approval to allow hand shuffling as that option is generally available and requested for high-limit games.  Table Games Supervision and surveillance provide complimentary controls to ensure game integrity.