My name is Barry Rutherford and I work for Primero Games one of the nation's largest manufacturers and distributors of legal skill games. I have had the privilege of speaking with John Daniel and other ABC agents prior to the regulations being published yesterday. 

Thank you for the opportunity to comment on the proposed regulations regarding video skill games in Virginia.  We have only one comment.  Section 3VAC5-80-80 allows the relocation of skill games from one location to another, but such relocations may not exceed 10% of the total number of skill games initially registered.  We request that this proposed regulation be deleted for the following reasons: 

It inhibits competition
If a 10% cap on relocation is implemented distributors will be unwilling to place skill games in new locations because it will be too risky.  Because new locations do not have a history of skill game revenue, distributors primarily will place skill games in established locations that will be able to support the new tax.  If the relocation restriction was removed, distributors would be more willing to try new locations and, if it does not work financially, then transfer the skill game to another location.  Also, some locations (such as bars and restaurants) are still closed or are operating at reduced capacity due to COVID-19.  Those locations will be closed out of the skill game market because the limited number of game relocations may be used up by the time such locations are ready to participate in the market.       

It will provide an unfair advantage to certain market participants
Incumbent distributors who have a large market share, and therefore have games in established locations with a history of game revenue, will have an unfair advantage.  Because such distributors know which locations are viable under the new tax, they can simply keep the good locations and will have few reasons to relocate any games.  Newer or smaller distributors will be forced to take the risk of finding new locations and therefore will need to perform more relocations.

It will decrease tax revenue
If the number of relocations are limited as currently proposed, a large number of skill games will leave the Virginia market. This will result in businesses to leave the state, employees to be let go, and inevitably cause tax revenues to be lower. 

Legislative Intent
This bill was passed to help businesses survive and keep their employees during the COVID crisis. The 10% cap on relocation of machines will have the opposite result. Distributors will put less machines in the market causing them to let go of any marginal employees. Additionally, ABC retailers that have machines but the distributor decides to remove the machines will result in a loss of income for the store and possibly letting marginal employees go.

Finally, in the alternative, if the proposed regulation cannot be deleted, we suggest that the regulation allow unlimited relocations without prior notice, subject to a transfer fee to compensate the Authority for the administrative inconvenience associated with such relocations.

I'd be happy to discuss this issue further with you and anyone else as I think it is imperative that this section is removed from the regulations. I look forward to your response and consideration on this issue.

Barry