Delaware State Lottery Office
Order
Definition of Technology Provider, Reg. 2.0
Pursuant to 29 Del. C. §4805(a), the Delaware State Lottery Office hereby issues this Order regarding proposed amendments to the Video Lottery Regulations. Following notice and a request for public comments, the Lottery makes the following findings and conclusions:
Summary of Evidence and Information Submitted
1. The Lottery posted public notice of the proposed amendments in the Register of Regulations on December 1, 1999 and in the News-Journal and Delaware State News. The Lottery proposed to amend several provisions of the existing Video Lottery Regulations. Regulation 2.0 as amended would amend the definition of “technology provider” to include vendors providing services to the video lottery agents or the Lottery. Regulations 4.1 and 4.2 as amended would clarify the licensing process for technology providers to be consistent with the proposed amendment to Regulation 2.0. Regulation 5.1 would be amended to reference the applicable section of the procurement law in title 29, chapter 69. Regulation 5.2 would be amended to include new Regulations 5.2.1 and 5.2.2. The proposed amendments would reorder the existing Regulation to clarify the contractual provisions for technology providers who do or do not manufacture video lottery machines. Regulation 5.11 regarding technology provider duties would be amended to require: i)supervision of employees in compliance with Lottery rules; ii)prompt reporting of violations of laws to the Lottery; and iii)compliance with all other requirements specified by the Director. Regulation 6.35 would be amended to require video lottery agents to file with the Director copies of all video lottery related contracts in excess of $1,000 and to notify the Director of any contract with a vendor subject to the Lottery’s licensure requirements. Regulation 8.2 would be amended to add new Regulations 8.2.1 through 8.2.5. Regulation 8.2.1 and 8.2.2 would require video lottery agents to file financial reports as required by the Lottery. Regulation 8.2.3 would require video lottery agents to prepare annual financial statements. Regulation 8.2.4 would allow the Lottery to prescribe the reporting forms to be used by the video lottery agents for reporting purposes. Regulation 8.2.5 would specify that the video lottery agents must meet the minimum requirements of the Lottery’s internal control procedures.
2. On December 15, 1999, the Lottery received a letter from Laura J. Waterland, Esquire of the Disabilities Law Program of Community Legal Aid Society, Inc. commenting on the proposed amendments. The Disabilities Law Program suggested an amendment to Regulation 5.1 to add language requiring that a technology provider’s video lottery machines be accessible to people with disabilities. As an alternative, the submission suggested language that the machines supplied under contract meet current industry designs as required by state and federal law. Ms. Waterland also proposed amendment of Regulation 5.2.1(6) to provide that the Director shall not certify machines that are not accessible by people with disabilities or that video lottery machines meet current industry designs for accessibility.
3. On December 22, 1999, the Lottery conducted a public hearing at the Lottery Office. The Lottery received no public comments at that hearing. On December 29, 1999, the Lottery received a letter from Robert Osgood, the Chairperson of the Delaware State Council for Persons with Disabilities. Mr. Osgood recommended further amendment of the definition of “technology provider” to require the Lottery assess video lottery machines to certify accessibility. Mr. Osgood recommended the addition of a sentence to the end of Regulation 5.1 or Regulation 5.2.1(6) to essentially provide that video lottery machines be accessible to persons with disabilities, or in the alternative, accessible as permitted by current industry design.
On December 29, 1999, the Lottery received a letter from Michael Vautrin and Anthony Casdia of Midway Slot and Simulcast, Harrington, DE. The submission stated that the proposed Regulation 6.35 did not specify if the Lottery had to approve the vendor for suitability prior to the exchange of goods or services. The submission also commented that the $1,000 notification level was too low and should be raised to $50,000, with a possible narrowing of the scope of the definition of goods and services. The submission also proposed that with regard to Regulation 8.2.5, the Lottery’s “internal controls should be included in detail as part of the regulations and made available for public comment.”
Findings of Fact
4. The public was given notice and an opportunity to provide the Lottery with comments on the proposed Regulations. The evidence received by the Lottery is summarized in paragraphs #2-3.
5. The Lottery received no comments or objections to the proposed amendments to Regulations 2.0, 4.1, 4.2, 5.11, 6.35, 8.2.1, 8.2.2., 8.2.3, or 8.2.4. The Lottery finds the proposed amendments necessary and desirable for the operation of the Lottery and will adopt the Regulations as proposed.
6. The Lottery has considered the written comments from the Disabilities Law Program and the Delaware State Council for Persons with Disabilities concerning the proposed amendments to the Regulation 5.1 and 5.2. The Lottery proposed an amendment to Regulation 5.1 to simply amend the Regulation to reference the most recent statutory change to the State procurement laws in 29 Del. C. chapter 69. The proposed amendment to Regulation 5.2 simply reordered the Regulation to distinguish the contractual duties for technology providers and video lottery machine manufacturers. Neither of the proposed amendments to Regulations 5.1 or 5.2 are substantive in nature. The proposed written comments from Mr. Osgood and Ms. Waterland basically requested that the technology provider regulations be amended to provide that video lottery machines be accessible or accessible as permitted by current industry design. As proposed, these written comments go beyond the scope of the original proposal to amend Regulations 5.1 and 5.2. The written comments do not object to the proposed amendments to Regulations 5.1 and 5.2 and the Lottery concludes that the Regulations should be adopted as proposed.
The proposal suggested by the written submissions would require the Lottery to renotice a proposed change and conduct another public hearing. The Lottery believes this issue requires further study in order to determine if additional regulations are necessary. The Lottery will determine the status of current industry design standards for accessibility of video lottery machines and further consider the proposed amendments on this subject.
Conclusions
9. The proposed amendments were promulgated by the Lottery Office in accord with its statutory duties and authority as set forth in 29 Del. C. §4805(a). The Lottery concludes the proposed amendments are necessary for the effective enforcement of 29 Del. C. §4805 and for the full and efficient performance of the Lottery’s duties thereunder. The Lottery concludes that the proposed amendments are consistent with the overall purpose of the Lottery’s Video Lottery Regulations. The Lottery concludes that the proposed amendments are necessary to provide for a complete and workable set of Regulations in this area. The Lottery concludes that the adoption of the proposed amendments to the Regulations would be in the best interests of the citizens of the State of Delaware and consonant with the dignity of the State and general welfare of the people under §4805(a).
10. The Lottery will adopt the proposed Amended Regulations pursuant to 29 Del. C. §4805 and 29 Del. C. §10118. On proposed Regulation 8.2.5, the proposed Regulation contains a typographical error and the Lottery will insert the word “meet” in place of the word “met.” The Lottery has considered the written comments of the public prior to issuance of this Order. A copy of the adopted amendments to the Regulations is attached as exhibit #1 and incorporated as part of this Order.
11. The effective date of this Order shall be ten (10) days from the date of publication of the Order in the Register of Regulations on February 1, 2000.
IT IS SO ORDERED this 10th day of January, 2000
Wayne Lemons, Director
Delaware State Lottery Office
Final Amendments to Video Lottery Regulations
2.0 Definitions
“technology provider” – any person or entity, including video lottery manufacturers, who propose seeks to contract with a video lottery agent or the agency for the provision of goods or services, including management services, related to video lottery operations, the provision of which require a license pursuant to 29 Del. C. chapter 48.
4.0 Licensing of Technology Providers
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4.1 As deemed necessary, the Director shall give public notice of the agency’s intent to select technology providers of video lottery machines through a request for proposal and qualifications by advertising in a newspaper of general circulation in Delaware and in a prominent trade publication requesting expressions of interest to serve as a technology provider. The licensing of a technology provider shall not serve as the basis of requiring the Director to select the technology provider under the procurement procedures set forth in chapter 69 of title 29 of the Delaware Code.
4.2 Each person desiring to obtain a license from the agency as a technology provider for video lottery games shall submit a license application on a form specified and supplied by the agency. The license application shall, among other things:
(1) Give notice that the applicant may be required to submit to a background investigation, the cost of which must be borne by the applicant…
5.0 Technology Providers: Contracts; Requirements; Duties
5.1 The Director shall, pursuant to the procedures set forth in chapter 69 of title 29 of the Delaware Code, enter into contracts with licensed technology providers as he or she shall determine to be appropriate, pursuant to which the technology providers shall furnish by sale or lease to the State video lottery machines in such numbers and for such video games as the Director shall approve from time to time as necessary for the efficient and economical operation of the Lottery, or convenience of the players, and in accordance with the agents’ business plans as approved and amended by the Director. No single technology provider shall provide more than 65% of the total number of video lottery machines at the premises of any agent. No more than 1,000 video lottery machines shall be located within the confines of an agent’s premises unless the Director approves up to an additional 1,000 machines or other number approved by the Director as permitted by law.
5.2.1 All contracts with technology providers who are video lottery machine manufacturers shall include without limitation, provisions to the following effect:
(1) The technology provider shall furnish a person to work with the agency and its consultants to provide assistance as needed in establishing, planning and executing acceptance tests on the video lottery machines provided by such technology provider. Technology provider assistance shall be provided as requested by the agency in troubleshooting communication and technical problems that are discovered when video lottery machines are initially placed at the agent’s site;
(2) The technology provider shall submit video lottery machine illustrations, schematics, block diagrams, circuit analysis, technical and operation manuals, program source code and object code and any other information requested by the Director for purposes of analyzing and testing the video lottery machines. A maximum of Twenty Five Dollars ($25) shall be permitted for wagering on a single play of any video game;
(3) For testing, examination and analysis purposes, the technology provider shall furnish working models of video lottery machines, associated equipment, and documentation at locations designated by the Director. The technology provider shall pay all costs of any testing, examination, analysis and transportation of the video lottery machines, which may include the entire dismantling of the machines and some tests that may result in damage or destruction to one or more electronic components of the machines. The agency and its agents shall have no liability for any such damage or destruction. The agency may require that the technology provider provide specialized equipment or the agency may employ the services of an independent technical laboratory expert to test the video lottery machine at the technology provider’s expense;
(4) Technology providers shall submit all hardware, software, and test equipment necessary for testing of their video lottery machines, and shall provide the Director with keys and locks subject to the Director’s specifications for each approved video lottery machine;
(5) The EPROMs of each video lottery machine shall be certified to be in compliance with published specifications;
(6) No video lottery machine shall be put into use prior to certification of its model by the Director.
5.2.2 All contracts with technology providers shall include without limitation, provisions to the following effect:
(1) Technology providers shall agree to promptly report any violation or any facts or circumstances that may result in a violation of these rules; provide immediate access to all its records and its physical premises for inspection at the request of the Director; attend all trade shows or conferences as required by the Director.; provide the Director with keys and locks subject to the Director’s specifications for each approved video lottery machine.
(2) Technology providers shall agree to modify their hardware and software as necessary to accommodate video game changes directed by the agency from time to time.
(3) Technology providers shall provide such bonds and provide evidence of such insurance as the Director shall require from time to time and in such amounts and issued by such companies as the Director shall approve.
(4) Technology providers shall have a valid license to conduct business in the State of Delaware, shall comply with all applicable tax provisions, and shall in all other respects be qualified to conduct business in Delaware.
5.11 The following duties are required of all licensed technology providers, without limitation:
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(15) Supervise its employees and their activities to ensure compliance with these rules.
(16) Promptly report to the Lottery any violation or any facts or circumstances that may result in a violation of State or Federal law and/or any rules or regulations pursuant thereto, excluding violations concerning motor vehicle laws.
(17) Comply with such other requirements as shall be specified by the Director.