Delaware State Lottery Office
Order
Requirement for Video Lottery Agent to File Financial Reports, Regulation 8.2
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
8.0 Accounting and Distribution Procedures
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8.2 Each agent and technology provider shall submit to the Director such financial and operating information as the Director shall require from time to time at such times and in such format as the Director shall specify. For purposes of this and other information, each agent shall have a computer on the premises which is suitable for the purpose.
8.2.1 Each agent, unless specifically exempted by the Agency, shall file weekly, monthly, quarterly and annual reports of financial reports and statistical data in a format specified by the Director. The data may be used by the Agency to evaluate the financial position and operating performance of individual video lottery agents and to compile information regarding the performance and trends of the video lottery industry in the State of Delaware.
8.2.2 Each agent, unless specifically exempted by the Agency, shall at its own expense, cause its annual financial statements to be audited in accordance with generally accepted auditing standards by an independent certified public accountant licensed to practice in the State of Delaware.
8.2.3 The annual financial statement shall be prepared on a comparative basis for the current and prior fiscal year, and shall present the video lottery agent’s present financial position and results of operations in conformity with generally accepted principles.
8.2.4 The Agency may periodically prescribe a set of standard reporting forms and instructions to be used by each video lottery agent for filing the weekly, monthly, and quarterly reports.
8.2.5 Each video lottery agent and technology provider, unless specifically exempted by the Agency, shall conduct its video lottery operations to met the minimum requirements set forth in the Agency’s Video Lottery Internal Control Procedures.