Thank you for the opportunity to comment on the proposed regulations governing charitable gaming at social quarters.  Arrow International submits the following comments  and suggested modifications for your consideration.

11VAC 20-20-20. 

Subpart D(2):  This provision requires organizations to expend at least 40% of their adjusted gross receipts from electronic gaming on eligible Use of Proceeds activities.  At the public hearing on the proposed regulations, many organizations expressed concerns about meeting this requirement.  Please consider the negative consequences a 40% Use of Proceeds requirement may have on many social organizations, including negative effects on their long-term sustainability.

11VAC 20-20-60.

Subpart L(2) . This provision requires an organization to pay for all gaming supplies, including electronic gaming supplies, by "a check drawn on the charitable gaming account of the organization."  it is our understanding that VDACS has interpreted this provision to allow an organization to pay for gaming supplies with an electronic check.  11VACS 20-20-80 (B) allows payments to Network Bingo Providers to be made by electronic fund transfers provided the arrangement is contained in a written agreement between the parties.  We propose amending this subpart, as well as 11VACS 20-20-80, to permit manufacturers of distributed pull tab devices and systems to enter into agreements for similar EFT payments. Accordingly, we propose the following:

11VAC 20-20-60, subsection L(2):  Pay for all charitable gaming supplies and electronic gaming supplies, including the use of the electronic gaming device, by check drawn on the charitable gaming account of the organization, or in the case of electronic gaming supplies, by electronic fund transfer to a licensed manufacturer, provided that the electronic fund transfer is agreed to in writing between the qualified or social organization and the licensed manufacturer.

11VAC 20-20-80, subsection (B):  Disbutrsements for expenses other than prizes and reimbursement of meal expenses shall be made by check directly from a charitable gaming bank account or bank account authorized pursuant to subsection A of this section.  However. expenses related to a network bingo game, or a distributed pull tab system may be disbursed through an electronic fund transfer to the network bingo provider or the licensed manufacturer providing the distributed pull tab system, provided that such an arrangement is agreed upon by both the qualified or social organization and the network bingo provider or licensed manufacturer, as applicable.  A written agreement specifying the terms of this arrangement shall be required prior to any electronic fund transfer occurring between the parties.

11VACS 20-20-70.

We encourage VDACS to reconcile various regulatory provisions to clarify when an electronic pull tab voucher must be redeemed and when it expires. 11VACS 20-20-60, subsection (T) requires all electronic gaming sales, redemption, and play to occur within the time specified on the charitable gaming permit or the authorization to conduct electronic gaming. 

11VACS20-20-70, subsection (B) requires that with the exception of network bingo and certain seal card games, "all prizes must be claimed on the game date."  Game date is not defined, but may refer to the date the prize was won.

11VACS 20-20-260, subsection (B)(4) requires a liability report that summarizes outstanding funds that carry over from business day to business day.  This includes the "amount of prizes or vouchers that were awarded in dollars and cents, but have not yet been claimed that have not expired."  This language suggests that vouchers may carry over beyond the "game date."

Clarifying the time of voucher expiration is important as 11VACS 20-20-300  and 11VACS 20-20-420 require the manufacturer to print on each voucher the "date and time the voucher will expire."  Because social organizations have not been subject to the general VDACS regulations, it appears that house rules have determined the expiration date and time of the vouchers (i.e. 48 hours).  We encourage VDACS to reconcile these regulations and clarify when a voucher for an electronic pull tab device expires, or make it clear that a social organization may establish the expiration date and time by house rule.

11VACS 20-20-130, subsection (H) and 11VACS 20-20-170, subsection (H).

These subsections detail the information required to be contained on a sales invoice. The subsections apply to both consumable (paper) products and electronic gaming supplies.  While the regulation as proposed makes sense for consumable products, it is not consistent with the way electronic games are distributed and invoiced.  Nor is the proposed regulation consistent with what VDACS has indicated it wants to see on an electronic gaming invoice.  Electronic gaming invoices do not (and cannot) contain the name and serial number of each deal, the quantity of deals sold or the cost per deal.  Electronic invoices reflect the gross receipts, prizes paid, adjusted gross receipts, and the amount due to the manufacturer.   We encourage VDACS to amend this regulation to both clarify the invoice requirements for electronic gaming and to make the regulation consistent with current practice as required by the agency.

11VACS 20-20-130, subsection N and 11VACS 20-20-170, subsection M

These subsections relate to rebate, discounts, and refunds to organizations and require that all such incentives be recorded on the supplier's or manufacturer's "account books."  It is our understanding that VDACS has taken the position that any discount, rebate or refund must also be detailed on the sales invoice provided to the organization, although this is not expressly stated in the regulations.  We encourage VDACS to use the opportunity presented by these regulations to clarify how and where rebates, discounts and refunds are to be recorded.

Again, thank you for the opportunity to comment on the proposed regulations.  Please do not hesitate to contact me with any questions.