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Virginia Lottery
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Virginia Lottery Board
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9/9/20  11:49 pm
Commenter: elizabeth tranchina, Rush Street Interactive, LP

RSI PGH Comments to Draft Rules Part 2
 

 

1.      Request for self-exclusion

Regulation:  The proposed rules require an individual requesting to be placed on the self-exclusion list, for a period other than for life, to do so through their Internet gaming account.  (11 VAC 5-60-20(B))

 

Comment:  We respectfully suggest that the Department provide alternative methods of self-exclusion, preferably thru its website or other method.  Asking the individual to access the site from which they are seeking to be banned seems counter -productive. 

 

  1. Self-exclusion list

 

    Regulation:  The proposed regulation sets forth the procedure for maintaining the official self-exclusion list and transmission of same. (11VAC 5-60-30)

 

Comment:  We respectfully request the Department consider allowing for a more streamlined process such as having a list that can be downloaded and imported into the permit holder and/or supplier’s system.  

 

  1.  Definitions (11VAC5-70-10)

 

 

Regulation:    The proposed rules do not provide a definition for “Affiliate” 

 

Comment:      We respectfully request that the following definition of “Affiliate” be added to the proposed rules:

“Affiliate” means a person that directly, or indirectly through one or more intermediaries, owns, controls, is controlled by, or is under common ownership or control with, the other person.

 

Regulation:    The proposed definition for Adjusted Gross Revenue includes a deduction for “uncollectible gaming receivables”.

 

Comment:      We respectfully request clarification regarding what is included in “Uncollectible gaming receivables”

 

Regulation:    The proposed draft rules define “principal” to include “an individual who is employed in a managerial capacity for a sports betting platform on behalf of a permit holder.” (11VAC5-70-10)

 

Comment:      We respectfully request defining the term “managerial capacity” in the regulations.    We recommend defining managerial capacity as an employee serving in the role of an officer or director.

 

Regulation:    The proposed draft rules definition of “Sports betting” does not allow placing a wager on a college sports event in which a Virginia public or private institution of higher education is a participant …

Comment:      The term “college sports event” may lead to confusion and may be read to include tournaments involving Virginia college sports teams.  The sports betting law prohibits wagers on “a single game or match in which a … Virginia college sports team is a participant,” but that  prohibition “shall not be construed to prohibit betting on other games in a tournament or multigame event in which a … Virginia college sports team participates, so long as such other games do not have a participant that is a … Virginia college sports team.  See §58.1-4039.C.  The phrase “single game or match” instead of “college sports event” is consistent with the with the sports betting law, and better captures the distinction and avoids any potential confusion. 

 

 

  1. Sports Betting Permit Applications

 

Regulation:    The proposed draft rules require that if during the initial application period, more applications for permits are received than authorized under the Sports Betting Law the Director shall the Director receives more applications for permits than are authorized under the Sports Betting Law, the Director shall do the following: 

1.    Evaluate whether any of the applications are so deficient that they should be rejected immediately;

2.    Qualitatively compare the remaining applications and award permits only to the top two-thirds of the remaining applicants who meet all the qualifications of a permit holder and are not otherwise disqualified from holding a permit; and

3.    Conduct further investigation and comparison before determining which, if any, of the remaining one-third of the applicants should be awarded a permit. (11 VAC5-70-50.U)

 

Comment:      The Fourth Enactment Clause of House Bill 4 provides that, if certain conditions are met, casino permit licensees shall be granted a sports betting permit regardless of the number of permit applicants.  We suggest adding the following fourth criteria   Award permits consistent with the requirements of the Fourth Enactment Clause of House Bill 4 authorizing casino gaming and signed by the Governor in April 2020

 

  1. Reserve and Insurance Requirements

Regulation:    The proposed rules require a permit holder to maintain a reserve amount of at least $500,000 in the form of cash, cash equivalents, irrevocable letter of credit, or bond, or a combination thereof.  (11VAC5-70-140)

Comment:      We respectfully request that rule be revised to remove the minimum requirement of $500,000 and to provide that the amount of the reserve fund shall be equal to the sum of 1, 2, and 3 above. 

Regulation:   The proposed rules require a permit holder to maintain certain types and levels of insurance including but not limited to Errors and Omissions insurance in the amount of $15,000,000. (11VAC5-70-140D.(2))

Comment:      We respectfully request the amount of errors and omissions insurance be changed to $5,000,000.

 

  1. Audit, Financial, Recordkeeping, and Banking Requirements

Regulation:    The proposed rules require a permit holder to maintain a separate escrow account designating the Department as its sole beneficiary.  (11VAC5-70-160(K))

 

      Comment:      We respectfully request that the Section K be revised as follows:

 A permit holder shall maintain a separate account,  with a financial institution federally insured by the FDIC and licensed to transact business in the Commonwealth of Virginia. to ensure the security of funds due to the Commonwealth of Virginia. A permit holder may not remove, release, or withdraw funds from this account without the written approval of the Director. 

 

  1.  System Integrity and Security Assessment

 

Regulation:    The regulation requires a permit holder, before beginning operations and annually thereafter, to engage an independent professional approved by the Director to perform a system integrity and security assessment of its sports betting operations. 11VAC5-70-200A.             

Comment:      We respectfully request that permit holders/suppliers be allowed 90 days from the “go live date” to complete system integrity and security assessments/testing.  This is consistent with other jurisdictions.

 

  1. Review of advertising materials

 

Regulation:    The proposed rules require a permit holder to provide all marketing and promotional materials to the Director in advance of dissemination for review and approval. (p. 46 11VAC5-70-240(A)).

 

Comment:      We respectfully note that a requirement for prior review of marketing materials may not reflect standard commercial and marketing practices, especially in a fast-paced industry such as mobile sports betting.  In addition, such a requirement also is no longer part of regulatory standards in the casino gaming context.  At minimum, we recommend adding a timeframe within which the Director shall review and approve marketing materials prior to dissemination.  We suggest a time period no longer than seven days, and the prior review requirement should only apply to new promotions.  We request that materials be deemed approved if no response from the Director is received within a given timeframe.

 

9.      Sports bettors’ bill of rights

 

Regulation:   The proposed rules require a permit holder’s platform to provide substantial and readily available information to enable players to make informed gambling decisions including the odds of winning the bet and the information used to calculate those odds (11 VAC 5-80-20(C)(1)(b))

 

Comment:      We respectfully request that C(1)(b) be deleted as we do not have access to the information.

 

10.  Underage betting

Regulation:  The proposed rules require that a permit holder implement age-verification procedures to verify that no sports bet is placed by or on behalf of an individual under the age of 21. (11 VAC 5-80-50(A))

 

Comment:   Most, if not all, operators utilize a third-party Know Your Customer (KYC) vendor to verify a customer’s identification including age.  This process does not seem to provide for the use of a more automated KYC process. We respectfully request that permit holders/suppliers be allowed to utilize the automated process provided by third-party KYC vendors.

 

11.  Underage betting

 

Regulation:  The proposed rules require that a permit holder make available parental control procedures to allow parents to exclude minor from accessing a sports betting

platform. (11 VAC 5-80-50(C))

 

Comment:  We respectfully request clarification as to what is being required.  Additionally, with KYC verification in place, an underage person would not be able to register for an account unless they did so fraudulently using a person over 21’s information (SSN, DOB, etc.)

 

 

12.  Protections for at-risk or problem bettors

 

Regulation:  The proposed rules require that a permit holder establish procedures for honoring third party requests to exclude and set limits for problem gamblers. 11 VAC 5-80-120(G)

 

Comment:  We respectfully request this provision be deleted.  RSI supports responsible gaming practices and is aware that problem gambling often impacts those beyond the problem gambler themselves; however, allowing third parties to restrict or set other limitations can be easily abused by those third parties. A possible solution may be for those concerns to be submitted to the Department for evaluation.  We are not aware of any other jurisdiction that allows third parties to request such restrictions for another individual.

 

13. In addition to the comments listed above, we respectfully request “or sports betting supplier operating the permit holder’s sports betting platform” be inserted after “permit holder” throughout the draft rules.  In instances where a permit holder contracts with a third party to provide/operate its sports wagering platform, it will be the “sports betting supplier” performing the required tasks. 

 

CommentID: 84662