March 31, 2008
 
Mr. Michael Menefee
Inspection and Training Manager
VirginiaDepartment of Charitable Gaming
101 North 14th Street
17th Floor
Richmond, VA  23219

Dear Mr. Menefee:

I am responding to the Charitable Gaming Board’s Notice of Intended Regulatory Action that appeared in the Virginia Register of Regulations earlier this month.  On behalf of Oasis Gaming, a division of International Gamco, Inc., I would like to provide our input for consideration by the Virginia Charitable Gaming Board and Department as they contemplate changes to the Charitable Gaming Rules and Regulations (11VAC15-22).

As you are aware, Oasis Gaming has been actively working with Virginia state lawmakers and department officials over the past several years to permit electronic versions of pull-tab tickets for charitable purposes. Our goal has been to allow the charities in Virginia the opportunity to provide new technology to their players. This technology is necessary to keep up with other forms of entertainment with which charities must compete as they strive to sustain their fundraising goals.  Although this process has taken a considerable amount of time to get started, I am pleased that the rule promulgation process has finally begun.

International Gamco has been a licensed manufacturer of paper pull-tab and related tickets for the lottery and charitable gaming industries since 1983.  Oasis Gaming was created to develop new technologies for paper pull-tab and scratch tickets games. Oasis Gaming was one of the first companies to offer electronic pre-determined and finite pull-tab games to the charitable and lottery industries.  Based on this breadth of experience, I trust the information provided today will better prepare the Department for its rule promulgation for electronic pull-tabs.

If you have any questions, please contact me.

Very truly yours,
Scott Henneman

Vice President and General Manager

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Suggested Fundamental Electronic Pull-Tab Game Requirements – It is important that the Department consider the types of games allowed when writing its rules.  During the 2007 General Assembly when the bill was passed to allow for electronic pull-tabs, our lobbyist explained to legislators that electronic pull-tabs would be no different than what is allowed in paper. With this intent in mind, we recommend the following:

• Finite number of tickets in each deal
• Pre-determined number of winners and losers
• No internal random number generators used on the MVM Terminals
• Serialized deals
• Ticket dispensed sequentially once downloaded
• No spinning symbols
• Player vs. Player or networked play
• Inventory tracked by serial number from Distributor/Operator to a specific licensee
• No regeneration of pull-tab games, each game shall have a beginning and end
• All serialized deals must be sold on site, not in multiple locations

MVM Manufacturer Supplied Central Systems – Oasis Gaming strongly recommends that the Department require each MVM manufacturer to provide and operate, at their own expense, a system to manage and report on the operations of the manufacturer’s MVM Terminals.  This approach provides a number of advantages over the alternatives.

First, it will eliminate a significant start-up cost for the State.  If the Department of Charitable Gaming chooses to license or build its own Central System for the electronic pull-tab program, a number of detailed and time-consuming tasks relating to documenting the requirements and reviewing proposals will need to be completed by state employees or consultants.  Then, there will be the actual licensing or development costs, along with ongoing costs to maintain and operate the system, not to mention the investment the Department and State will have to make for actual hardware and facilities to run this system.

Second, it will save time at the beginning of the electronic pull-tab program.  Allowing existing systems would clearly be quicker than developing criteria from scratch.  Also, the specification/bid/review process would take a considerable amount of time.  In addition, some level of customization and/or configuration would invariably be necessary for any existing product the Department of Charitable Gaming chose to license.

Forcing each MVM manufacturer to integrate its terminals with a 3rd party Central System would likely require product changes and extensive testing, delaying those products’ entry into the Virginia charitable gaming market.

Third, licensing a Central System from one MVM manufacturer has the potential to give that manufacturer a competitive advantage over other manufacturers.  It may be possible for the provider of the Central System to diminish competition by making it overly difficult for another manufacturer to integrate their terminals.  Such behavior might be very difficult to prove or disprove.

If the Department of Charitable Gaming chooses to leave the responsibility for maintaining a Central System with each MVM manufacturer, it only needs to specify such things as:

• Standardized Reporting for each manufacture to provide to the Department
• The frequency and format of the periodic reports to be submitted to the Department
• The minimum requirements for any web-based reporting capabilities
• The minimum frequency of communication between each terminal (or group of terminals) and the Central System
• The process for the Department to request the suspension or re-activation of terminals in the field

Standardized Approval Process for MVM Manufacturers & Central Systems, MVM Terminals, and Electronic Pull-tab Games – A consistent and thorough approval process will help to promote healthy competition between electronic pull-tab suppliers and a high level of integrity for the State’s electronic pull-tab program overall.

Limiting the Number of MVM Terminals per Site – Unless specifically limited, a site may choose to install a large number of MVM Terminals.  This could lead some observers to describe the site as a “mini casino”. Such an occurrence would almost certainly be to the detriment of the Virginia electronic pull-tab program.  Setting a reasonable cap on the number of MVM Terminals that can be placed in a site will eliminate that problem before it comes up.

Networked MVM Terminals – Within an approved electronic pull-tab retail site, if more than one MVM Terminal is selling the same type of electronic pull-tab tickets, those tickets should be sold sequentially from the same pack or deal.  This will maintain the player vs. player dynamic of paper pull-tabs and retain a fundamental characteristic of the game.

Communicating with MVM Terminals – The MVM Terminals (either individually or in groups) should be capable of communicating with a Central System.  This will allow for the timely reporting of ticket sales and will facilitate remote management of the terminals in the field.  Specific capabilities include:

• Capable of receiving or initiating communication with the Central System
• Ability to download approved ticket inventory to the MVM Terminals
• Ability to suspend the sale of electronic pull-tab tickets on a request from the Central System
• Ability to retrieve audit trail and all security information from each terminal as required by the Department
• Ability to shut down any terminal or network at the request of the Department
• Ability to suspend the sale of electronic pull-tabs if communications with the Central System have not taken place within a preset amount of time or another unrecoverable error or malfunction has been encountered
• Ability to report any internal errors or malfunctions
• Ability to detect and report any actual or attempted tampering

Site-Manageable MVM Terminals – To facilitate the resolution of any player issues, all approved MVM Terminals should have a “Management” mode.  This mode of operation should only be able to be initiated through a secure means, such as the use of a physical key or PIN access.  When the MVM Terminal is in this mode, it should be possible for an authorized site staff-member to perform the following operations:

• Review the outcomes of at least the last 15 electronic pull-tabs purchased
• Reprint the most recent Cash Voucher in the case of a jam (this should clearly be marked as a reprint)
• Clear jams in the printer or bill acceptor
• Adjust the volume for game and system sounds

Other Electronic Pull-Tab MVM Considerations – All approved MVM Terminals should have the following characteristics:

• Capable of accepting U.S. currency for the purchase or electronic pull-tab tickets (incapable of accepting credit cards)
• Capable of tracking a player’s accumulated credit balance across multiple electronic pull-tab ticket purchases (this is necessary for multi-game MVMs)
• Capable of printing out a Cash Voucher
• Capable of tracking cash in, ticket sales, winning tickets and cash vouchers issued using both soft and non-resettable hard-meters
• Cabinet design and material that provides a secure environment for enclosed components, ticket stock, and cash
• Separate keys and locks for cash box and ticket stock
• Capable of supporting more than one player selectable game (multi-game format)
• Terminals shall not have a handle or “arm” used to initiate play
• For each type of electronic pull-tab ticket available for sale through the MVM, the player should be able to see the overall odds of winning and prizes available on screen before making a purchase