TITLE 11. GAMING

VIRGINIA LOTTERY BOARD

Fast-Track Regulation

Title of Regulation: 11VAC5-20. Administration Regulations (amending 11VAC5-20-10, 11VAC5-20-150 through 11VAC5-20-180).

Statutory Authority: § 58.1-4007 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: January 28, 2026.

Effective Date: February 12, 2026.

Agency Contact: Amy Roper, Regulatory Coordinator, Virginia Lottery, 600 East Main Street, First Floor, Richmond, VA 23219, telephone (804) 692-7133, FAX (804) 692-7325, or email aroper@valottery.com.

Basis: Pursuant to § 58.1-4007 of the Code of Virginia, the powers of the Virginia Lottery Board include that the board shall adopt regulations governing the establishment and operation of a lottery, which shall be promulgated by the board after consultation with the Director of the Virginia Lottery.

Purpose: This action is essential to protect the health, safety, or welfare of citizens because it (i) ensures player understanding of the terminologies used for lottery play and allows for seamless transition between the regulations, the Lottery game and promotion rules, and the agency website and (ii) documents the more automated processes now in place and being used by the public.

Rationale for Using Fast-Track Rulemaking Process: This action is expected to be noncontroversial and therefore appropriate for the fast-track rulemaking process because it (i) provides clarifying language, which eliminates any potential confusion; and (ii) synchronizes the terminologies between the regulation, the Lottery game and promotion rules, and the agency website.

Substance: This action changes all instances of "agent" and "sales agent" to the currently used and more familiar term "retailer"; documents the automation of license actions responses and conferencing platforms; clarifies the requirements of the license appeal process; and broadens the methods for delivering hearing notices.

Issues: The advantage of the amendments for the public and Commonwealth is that they will provide for all matters necessary or desirable for the efficient, honest, and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares. There are no disadvantages to the Commonwealth or the public.

Department of Planning and Budget Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia and Executive Order 19. The analysis presented represents DPB's best estimate of the potential economic impacts as of the date of this analysis.¹

Summary of the Proposed Amendments to Regulation. The Virginia Lottery Board (board) proposes to amend the Administration Regulations (11VAC5-20) to implement changes resulting from a 2024 periodic review.²

Background. As a result of a 2024 periodic review, the board seeks to (i) update this regulation to include the use of document-signing software and video conferencing, (ii) clarify acceptable signature-required mailing options, and (iii) correct certain definitions. The most substantive changes are summarized.

11VAC5-20-160: currently states that (i) a notice of licensing action is sent via the U.S. Postal Service and is presumed to have been received by the third day following the day of mailing, and (ii) a written notice of appeal must be postmarked within 30 days following the date of presumed receipt of the notice of action. This section would be amended to state that (i) a notice of licensing action is sent via email through document signing software as the primary notification and via signature-required common carrier as a secondary notification, and (ii) a written notice of appeal must be received within 30 days of the date of the email notification or bear a date stamp that is within 30 days of the date on the secondary mailed notice. The amended language would also specify that the email is sent to the address provided on the license application and the hard-copy notification is sent to the last known address of the license applicant or licensed retailer.

11VAC5-20-170: currently states that an informal conference may be conducted by telephone at the option of the appellant; this would be amended to add video conferencing as an option.

In addition, signature-required common carrier would be added to certified mail, return receipt requested as allowable means for the agency to send notices; these changes would be made in 11VAC5-20-160, 11VAC5-20-170, and 11VAC5-20-180.

Estimated Benefits and Costs. The proposed changes are intended to update and clarify the regulation, and to ensure that the terminology matches the language used on the agency website. Applicants for a license or licensees appealing a license decision would benefit from the convenience of receiving email notifications and may potentially benefit from the option to conduct an informal fact-finding conference via video conferencing. However, the agency reports it is already transitioning to Docu-sign and video conferencing. Therefore, the extent to which such benefits will accrue from this regulatory change depends on the extent to which these options have already been implemented in practice.

Businesses and Other Entities Affected. This regulation applies to applicants for a lottery retail license whose applications are denied, as well as current retail license holders whose license may be suspended or revoked. The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.³ An adverse impact is indicated if there is any increase in net cost or reduction in net benefit for any entity, even if the benefits exceed the costs for all entities combined.⁴ The proposed amendments would not increase costs or reduce benefits. Thus, no adverse impact is indicated.

Small Businesses⁵ Affected.⁶ The proposed amendments do not adversely affect small businesses.

Localities⁷ Affected.⁸ The proposed amendments do not affect any locality in particular and do not appear to increase costs for local governments.

Projected Impact on Employment. The proposed amendments are not expected to have an impact on employment.

Effects on the Use and Value of Private Property. The proposed amendments do not appear to affect the use and value of private property nor real estate development costs.

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¹ Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

² See https://townhall.virginia.gov/L/ViewPReview.cfm?PRid=2560.

³ Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

⁴ Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation. As a result, DPB has adopted a definition of adverse impact that assesses changes in net costs and benefits for each affected Virginia entity that directly results from discretionary changes to the regulation.

⁵ Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁶ If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

⁷ "Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

⁸ Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency Response to Economic Impact Analysis: Having reviewed the economic impact analysis prepared by the Department of Planning and Budget, the Virginia Lottery finds it satisfactory and has no additional comments.

Summary:

The amendments (i) change all instances of "agent" and "sales agent" to the currently used and more familiar term "retailer"; (ii) document the automation of license actions responses and conferencing platforms; (iii) clarify the requirements of the license appeal process; and (iv) broaden the methods for delivering hearing notices.

11VAC5-20-10. Definitions.

The following words and terms when used in any of the agency's regulations shall have the following meanings unless the context clearly indicates otherwise:

"Administrative Process Act" or "APA" means Chapter 40 (§ 2.2-4000 et seq.) of Title 2.2 of the Code of Virginia.

"Agency" means the Virginia Lottery created by the Virginia Lottery Law, Sports Betting (Chapter 40 (§ 58.1-4000 et seq.) of Title 58.1 of the Code of Virginia).

"Appeal" means a proceeding initiated by a retailer, bidder, or offeror (for a contract negotiated on a sole source basis), contractor or individual for an informal conference or formal hearing contesting the director's decision (i) to refuse to issue or renew, to suspend or to revoke a lottery license; or (ii) regarding a procurement action.

"Bank" means any commercial bank, savings bank, savings and loan association, credit union, trust company, and any other type or form of banking institution organized under the authority of the Commonwealth of Virginia or of the United States of America that is designated by the State Treasurer to perform functions, activities, or services in connection with the operations of the lottery for the deposit, handling and safekeeping of lottery funds, accounting for those funds, and the safekeeping of records.

"Board" means the Virginia Lottery Board established by the Virginia Lottery Law.

"Conference" or "consultation" means a type of appeal in the nature of an informational or factual proceeding of an informal nature provided for in § 2.2-4019 of the Administrative Process Act.

"Conference officer" means the director, or a person appointed by the director, who is empowered to preside at informal conferences or consultations and to provide a recommendation, conclusion, or decision in such matter.

"Consideration" means something of value given for a promise to make the promise binding. It is one of the essentials of a legal contract.

"Contract" means a binding agreement, enforceable by law, between two or more parties for the supply of goods or services.

"Depository" means any person, including a bonded courier service, armored car service, bank, central or regional offices of the agency, or any state agency that performs any or all of the following activities or services for the lottery:

1. The safekeeping and distribution of tickets to retailers;

2. The handling of lottery funds;

3. The deposit of lottery funds; or

4. The accounting for lottery funds.

"Director" means the Executive Director of the Virginia Lottery or his the director's designee.

"Electronic funds transfer" or "EFT" means a computerized transaction that withdraws or deposits money from or to a bank account.

"Goods" means all material, equipment, supplies, printing, and automated data processing hardware and software.

"Hearing" means agency processes other than those informational or factual inquiries of an informal nature provided in §§ 2.2-4007 and 2.2-4019 of the Code of Virginia and includes only (i) opportunity for private parties to submit factual proofs in formal proceedings as provided in § 2.2-4009 of the Code of Virginia in connection with the making of regulations or (ii) a similar right of private parties or requirement of public agencies as provided in § 2.2-4020 of the Code of Virginia in connection with case decisions.

"Household" means members of a group who reside at the same address.

"Immediate family" means (i) a spouse and (ii) any other person residing in the same household as the officer or employee, who is a dependent of the officer or employee or of whom the officer or employee is a dependent.

"Inspection" means the close and critical examination of goods and services delivered to determine compliance with applicable contract requirements or specifications. It is the basis for acceptance or rejection.

"Legal entity" means an entity, other than a natural person, which has sufficient existence in legal contemplation that it can function legally, sue or be sued and make decisions through agents, as in the case of a corporation.

"Lottery" or "state lottery" means the lottery or lotteries established and operated pursuant to Chapter 40 (§ 58.1-4000 et seq.) of Title 58.1 of the Code of Virginia.

"Person" means a natural person and may extend and be applied to groups of persons, as well as a corporation, company, partnership, association, club, trust, estate, society, joint stock company, receiver, trustee, assignee, referee, or any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, and any combination of individuals, as well as all departments, commissions, agencies, and instrumentalities of the Commonwealth, including counties, cities, municipalities, political subdivisions, agencies, and instrumentalities thereof.

"Procurement" means the process for obtaining goods or services, including all activities from planning and preparation to processing of a request through the processing of a final invoice for payment.

"Retailer and sales agent" means a person or business licensed by the agency as an agent to sell lottery tickets or shares.

"Sales," "gross sales," "annual sales," and similar terms mean total ticket sales including any discount allowed to a retailer for his compensation.

"Services" means any work performed by an independent contractor where the service rendered does not consist primarily of acquisition of equipment or materials, or the rental of equipment, materials, and supplies.

"Sole source" means that only one source is practicably available to furnish a product or service.

"Surety bond" means an insurance agreement in which a third party agrees to be liable to pay a specified amount of money to the agency in the event the retailer fails to meet his obligations to the agency.

"Transaction" means any matter considered by any governmental or advisory agency, whether in a committee, subcommittee, or other entity of that agency or before the agency itself, on which official action is taken or contemplated.

"Vendor" means one who provides goods or services to the agency.

"Virginia Lottery Law" means Chapter 40 (§ 58.1-4000 et seq.) of Title 58.1 of the Code of Virginia.

11VAC5-20-150. Conferences on denial, suspension, or revocation of a retailer's license.

The conduct of license appeal conferences will conform to the provisions of Article 3 (§ 2.2-4018 et seq.) of Chapter 40 of Title 2.2 of the Code of Virginia relating to case decisions.

1. An initial conference consisting of an informal fact finding fact-finding process will be conducted by the conference officer to attempt to resolve the issue to the satisfaction of the parties involved.

2. If an appeal is not resolved through the informal fact finding fact-finding process, at the request of the appellant, a formal hearing will be conducted by the board in public. Following the close of the evidence, the board may consider its decision in closed session. The board will then issue its decision on the case.

3. Upon receipt of the board's decision on the case, the appellant may elect to pursue court action in accordance with the provisions of the Administrative Process Act relating to court review.

11VAC5-20-160. Procedure for appealing a licensing decision.

A. Upon receiving a notice that (i) an application for a license or the renewal of a license has been denied by the director, or (ii) the director intends to or has already taken action to suspend or revoke a current license, the applicant or licensed retailer may appeal by filing a written notice of appeal requesting a conference on the licensing action. The notice of appeal shall be submitted within 30 days of receipt of the notice of the licensing action.

1. Receipt of a notice Notice of the licensing action that is mailed in an envelope bearing a United States Postal Service postmark is presumed to have taken place not later than the third day following the day of mailing sent via email through document-signing software as the primary notification to the email provided on the application. Secondary notification is sent via signature-required common carrier to the last known address of the applicant or licensed retailer. If the third day falls upon a day on which mail is not delivered by the United States Postal Service, the notice is presumed to have been received on the next business day. The "last known address" means the address shown on the application of an applicant or licensed retailer unless a more current address has been provided to the agency by the applicant or licensed retailer.

2. The notice of appeal will be timely if it is received within 30 days of the date of the email notification or bears a United States Postal Service postmark showing mailing on or before the 30th day signature-required common carrier date stamp that is within 30 days of the date of the secondary mailed notice prescribed in subdivision 1 of this subsection.

B. A notice of appeal may be mailed or hand delivered to the director at the Virginia Lottery headquarters office.

1. A notice of appeal delivered by hand will be timely only if received at the headquarters of the Virginia Lottery within the time allowed by subsection A of this section.

2. Delivery to any other Virginia Lottery office or to lottery sales personnel by hand or by mail is not sufficient.

3. The appellant assumes full responsibility for the method chosen to file the notice of appeal.

C. The notice of appeal shall state:

1. The decision of the director that is being appealed;

2. The legal and factual basis for the appeal;

3. The retailer's license number or sufficient information identifying the denied applicant; and

4. Any additional information the appellant may wish to include concerning the appeal.

11VAC5-20-170. Procedures for conducting informal fact-finding licensing conferences.

A. The conference officer will conduct an informal fact-finding conference with the appellant for the purpose of resolving the licensing action at issue.

B. The conference officer will hold the conference as soon as possible but not later than 30 days after the notice of appeal is filed, unless an alternate date is designated by the conference officer or his the conference officer's designee and accepted by the appellant. A notice setting out the conference date, time, and location will be sent to the appellant, by certified mail, return receipt requested, or signature-required common carrier at least 10 days before the day set for the conference, unless a shorter time is agreed to by the appellant.

C. A conference may be conducted by telephone, or video conferencing platform at the option of the appellant.

D. The conferences shall be informal.

1. The conferences will be electronically recorded. The recordings will be kept until the time limit for any subsequent appeal has expired.

2. A court reporter may be used. The court reporter shall be paid by the person who requested him. If the appellant elects to have a court reporter, a transcript shall be provided to the agency. The transcript shall become part of the agency's records.

3. The appellant may appear in person represent himself or may be represented by counsel to present his facts, argument, or proof in the matter to be heard and may request other parties to appear to present testimony.

4. The agency will present its facts in the case and may request other parties to appear to present testimony.

5. Questions may be asked by any of the parties at any time during the presentation of information subject to the conference officer's prerogative to regulate the order of presentation in a manner that, in his the conference officer's sole discretion, best serves the interest of fairly developing the facts.

6. The conference officer may exclude information at any time that he the conference officer believes, in his the conference officer's sole discretion, is not germane or that repeats information already received.

7. The conference officer shall declare the conference completed when the time established by the conference officer has expired.

E. Normally, the conference officer shall issue his a decision within 15 days after the conclusion of an informal conference. However, for a conference with a court reporter, the conference officer shall issue his decision within 15 days after receipt of the transcript of the conference. In all cases the agency shall comply with the APA. The decision will be in the form of a letter to the appellant summarizing the case and setting out his the conference officer's decision on the matter. The decision will be sent to the appellant by certified mail, return receipt requested, or signature-required common carrier.

F. After receiving the conference officer's decision on the informal conference, the appellant may elect to appeal to the board for a formal hearing on the licensing action. The request for appeal shall:

1. Be submitted in writing within 15 days of receipt of the conference officer's decision on the informal conference.

2. Be mailed or hand delivered to the chairman of the board at the headquarters of the Virginia Lottery.

3. Be governed by the same procedures in 11VAC5-20-160 B for filing the original notice of appeal.

4. State:

a. The decision of the conference officer that is being appealed;

b. The legal and factual basis for the appeal;

c. The retailer's license number or sufficient information identifying the denied applicant; and

d. Any additional information the appellant may wish to include concerning the appeal.

11VAC5-20-180. Procedures for conducting formal licensing hearings.

A. The board will conduct a formal hearing at its next regularly scheduled meeting following the receipt of a notice of appeal on a licensing action if the date of the scheduled meeting permits the required 10 days of notice to the appellant or at a date to be determined by the chairman of the board and accepted by the appellant.

B. A majority of members of the board is required to hear an appeal. If the chairman and vice chairman of the board are not present, the members present shall choose one from among them to preside over the hearing.

C. The board chairman, at his the board chairman's discretion, may designate a committee of the board to hear licensing appeals and act on its behalf. Such committee shall have at least three members who will hear the appeal on behalf of the board. If the chairman of the board is not present, the members of the committee shall choose one from among them to preside over the hearing.

D. A notice setting the hearing date, time, and location will be sent to the appellant by certified mail, return receipt requested, or signature-required common carrier at least 10 days before the day set for the hearing, unless a shorter time is agreed to by the appellant.

E. The hearing shall be conducted in accordance with the provisions of Article 3 (§ 2.2-4018 et seq.) of the APA and shall be open to the public.

1. The hearing will be electronically recorded and the recording will be kept until any time limits for any subsequent court appeals have expired.

2. A court reporter may be used. The court reporter shall be paid by the person who requested him the court reporter. If the appellant elects to have a court reporter, a transcript shall be provided to the agency. The transcript shall become part of the agency's records.

3. The provisions of §§ 2.2-4020 through 2.2-4023 of the APA shall apply with respect to the rights and responsibilities of the appellant and of the agency.

F. Normally, the board will issue its written decision within 21 days of the conclusion of the hearing. However, for a hearing with a court reporter, the board will issue its written decision within 21 days of receipt of the transcript of the hearing. In all cases the agency shall comply with the APA.

1. A copy of the board's written decision will be sent to the appellant by certified mail, return receipt requested, or signature-required common carrier. The original written decision shall be retained by the agency and become a part of the case file.

2. The written decision will contain:

a. A statement of the facts to be called "Findings of Facts";

b. A statement of conclusions to be called "Conclusions" and to include as much detail as the board feels is necessary to set out the reasons and basis for its decision; and

c. A statement, to be called "Decision and Order," which sets out the board's decision and order in the case.

G. After receiving the board's decision on the case, the appellant may elect to pursue court review as provided for in the APA.