Title of Regulation: 4VAC20-620. Pertaining to Summer Flounder (amending 4VAC20-620-20, 4VAC20-620-30, 4VAC20-620-40).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: November 1, 2011.

Agency Contact: Jane Warren, Agency Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248, FAX (757) 247-2002, or email betty.warren@mrc.virginia.gov.

Summary:

The amendments (i) open the fall directed fishery the second Monday in November, (ii) allow vessels to land up to 10,000 pounds of Summer Flounder for commercial purposes every 15 days, and (iii) redefine "Chesapeake Bay and its tributaries" as all tidal waters of Virginia, excluding the Potomac River tributaries and the coastal area as defined in 4VAC20-620-20.

4VAC20-620-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context indicates otherwise:

"Chesapeake Bay and its tributaries" means all tidal waters of Virginia, including excluding the Potomac River tributaries but excluding and the coastal area as defined in this section.

"Coastal area" means the area that includes Virginia's portion of the Territorial Sea and all of the creeks, bays, inlets, and tributaries on the seaside of Accomack County, Northampton County, including areas east of the causeway from Fisherman Island to the mainland and the City of Virginia Beach, including federal areas and state parks fronting on the Atlantic Ocean and east and south of the point where the shoreward boundary of the Territorial Sea joins the mainland at Cape Henry.

"Land" or "landing" means to (i) enter port with finfish, shellfish, crustaceans, or other marine seafood on board any boat or vessel; (ii) begin offloading finfish, shellfish, crustaceans, or other marine seafood; or (iii) offload finfish, shellfish, crustaceans, or other marine seafood.

"Potomac River tributaries" means all the tributaries of the Potomac River that are within Virginia's jurisdiction beginning with, and including, Flag Pond, thence upstream to the District of Columbia boundary.

"Safe harbor" means that a vessel has been authorized by the commissioner to enter Virginia waters from federal waters solely to either dock temporarily at a Virginia seafood buyer's place of business or traverse the Intracoastal Waterway from Virginia to North Carolina.

4VAC20-620-30. Commercial harvest quota and allowable landings.

A. During each calendar year, allowable commercial landings of Summer Flounder shall be limited to a quota in total pounds calculated pursuant to the joint Mid-Atlantic Fishery Management Council/Atlantic States Marine Fisheries Commission Summer Flounder Fishery Management Plan, as approved by the National Marine Fisheries Service on August 6, 1992 (50 CFR Part 625); and shall be distributed as described in subsections B through G of this section.

B. The commercial harvest of Summer Flounder from Virginia tidal waters for each calendar year shall be limited to 300,000 pounds of the annual quota described in subsection A of this section. Of this amount, 142,114 pounds shall be set aside for Chesapeake Bay-wide harvest.

C. From the first Monday in January through the day preceding the last second Monday in November allowable landings of Summer Flounder harvested outside of Virginia shall be limited to an amount of pounds equal to 70.7% of the quota described in subsection A of this section after deducting the amount specified in subsection B of this section.

D. From the last second Monday in November through December 31, allowable landings of Summer Flounder harvested outside of Virginia shall be limited to an amount of pounds equal to 29.3% of the quota, as described in subsection A of this section, after deducting the amount specified in subsection B of this section, and as may be further modified by subsection E.

E. Should landings from the first Monday in January through the day preceding the last second Monday in November exceed or fall short of 70.7% of the quota described in subsection A of this section, any such excess shall be deducted from allowable landings described in subsection D of this section, and any such shortage shall be added to the allowable landings as described in subsection D of this section. Should the commercial harvest specified in subsection B of this section be projected as less than 300,000 pounds, any such shortage shall be added to the allowable landings described in subsection D of this section.

F. The Marine Resources Commission will give timely notice to the industry of the calculated poundages and any adjustments to any allowable landings described in subsections C and D of this section. It shall be unlawful for any person to harvest or to land Summer Flounder for commercial purposes after the commercial harvest or any allowable landings as described in this section have been attained and announced as such. If any person lands Summer Flounder after the commercial harvest or any allowable landing have been attained and announced as such, the entire amount of Summer Flounder in that person's possession shall be confiscated.

G. It shall be unlawful for any buyer of seafood to receive any Summer Flounder after any commercial harvest or landing quota as described in this section has been attained and announced as such.

4VAC20-620-40. Commercial vessel possession and landing limitations.

A. It shall be unlawful for any person harvesting Summer Flounder outside of Virginia's waters to do any of the following, except as described in subsections B, C, and D of this section:

1. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of 10% by weight of Atlantic croaker or the combined landings, on board a vessel, of black sea bass, scup, squid, scallops and Atlantic mackerel.

2. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of 1,500 pounds landed in combination with Atlantic croaker.

3. Fail to sell the vessel's entire harvest of all species at the point of landing.

B. From the first Monday in March through the day preceding the last second Monday in November, or until it has been projected and announced that 85% of the allowable landings have been taken, it shall be unlawful for any person harvesting Summer Flounder outside of Virginia waters to do any of the following:

1. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of 20,000 pounds.

2. Land Summer Flounder in Virginia for commercial purposes more than twice during each consecutive 15-day period, with the first 15-day period beginning on the first Monday in March.

3. Land in Virginia more than 10,000 pounds of Summer Flounder during each consecutive 15-day period, with the first 15-day period beginning on the first Monday in March.

4. Land in Virginia any amount of Summer Flounder more than once in any consecutive five-day period.

C. From the last second Monday in November through December 31 of each year, or until it has been projected and announced that 85% of the allowable landings have been taken, it shall be unlawful for any person harvesting Summer Flounder outside of Virginia waters to do any of the following:

1. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of 15,000 20,000 pounds.

2. Land Summer Flounder in Virginia for commercial purposes more than twice during each consecutive 12-day 15-day period, with the first 12-day 15-day period beginning on the last second Monday in November.

3. Land in Virginia more than a total of 7,500 10,000 pounds of Summer Flounder during each consecutive 12-day 15-day period, with the first 12-day 15-day period beginning on the last second Monday in November.

4. Land in Virginia any amount of Summer Flounder more than once in any consecutive five-day period.

D. From January 1 through December 31 of each year, any boat or vessel issued a valid federal Summer Flounder moratorium permit and owned and operated by a legal Virginia Commercial Hook-and-Line Licensee that possesses a Restricted Summer Flounder Endorsement shall be restricted to a possession and landing limit of 200 pounds of Summer Flounder, except as described in 4VAC20-620-30 F.

E. Upon request by a marine police officer, the seafood buyer or processor shall offload and accurately determine the total weight of all Summer Flounder aboard any vessel landing Summer Flounder in Virginia.

F. Any possession limit described in this section shall be determined by the weight in pounds of Summer Flounder as customarily packed, boxed and weighed by the seafood buyer or processor. The weight of any Summer Flounder in pounds found in excess of any possession limit described in this section shall be prima facie evidence of violation of this chapter. Persons in possession of Summer Flounder aboard any vessel in excess of the possession limit shall be in violation of this chapter unless that vessel has requested and been granted safe harbor. Any buyer or processor offloading or accepting any quantity of Summer Flounder from any vessel in excess of the possession limit shall be in violation of this chapter, except as described by subsection I of this section. A buyer or processor may accept or buy Summer Flounder from a vessel that has secured safe harbor, provided that vessel has satisfied the requirements described in subsection I of this section.

G. If a person violates the possession limits described in this section, the entire amount of Summer Flounder in that person's possession shall be confiscated. Any confiscated Summer Flounder shall be considered as a removal from the appropriate commercial harvest or landings quota. Upon confiscation, the marine police officer shall inventory the confiscated Summer Flounder and, at a minimum, secure two bids for purchase of the confiscated Summer Flounder from approved and licensed seafood buyers. The confiscated fish will be sold to the highest bidder and all funds derived from such sale shall be deposited for the Commonwealth pending court resolution of the charge of violating the possession limits established by this chapter. All of the collected funds will be returned to the accused upon a finding of innocence or forfeited to the Commonwealth upon a finding of guilty.

H. It shall be unlawful for a licensed seafood buyer or federally permitted seafood buyer to fail to contact the Marine Resources Commission Operation Station prior to a vessel offloading Summer Flounder harvested outside of Virginia. The buyer shall provide to the Marine Resources Commission the name of the vessel, its captain, an estimate of the amount in pounds of Summer Flounder on board that vessel, and the anticipated or approximate offloading time. Once offloading of any vessel is complete and the weight of the landed Summer Flounder has been determined, the buyer shall contact the Marine Resources Commission Operations Station and report the vessel name and corresponding weight of Summer Flounder landed. It shall be unlawful for any person to offload from a boat or vessel for commercial purposes any Summer Flounder during the period of 9 p.m. to 7 a.m.

I. Any boat or vessel that has entered Virginia waters for safe harbor shall only offload Summer Flounder when the state that licenses that vessel requests to transfer quota to Virginia, in the amount that corresponds to that vessel's possession limit, and the commissioner agrees to accept that transfer of quota.

J. After any commercial harvest or landing quota as described in 4VAC20-620-30 has been attained and announced as such, any boat or vessel possessing Summer Flounder on board may enter Virginia waters for safe harbor but shall contact the Marine Resources Commission Operation Center in advance of such entry into Virginia waters.

K. It shall be unlawful for any person harvesting Summer Flounder outside of Virginia waters to possess aboard any vessel, in Virginia, any amount of Summer Flounder, once it has been projected and announced that 100% of the quota described in 4VAC20-620-30 A has been taken.

Title of Regulation: 4VAC20-720. Pertaining to Restrictions on Oyster Harvest (adding 4VAC20-720-85, 4VAC20-720-91).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: November 1, 2011.

Agency Contact: Jane Warren, Agency Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248, FAX (757) 247-2002, or email betty.warren@mrc.virginia.gov.

Summary:

The amendments (i) establish an oyster seed harvest quota of 120,000 bushels of seed for the James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area, for the 2011/2012 harvest season; (ii) establish that 40,000 bushels of the quota may be harvested from October 1, 2011, through December 31, 2011; and (iii) require a seed oyster harvest permit monthly report on forms provided by the Virginia Marine Resources Commission and daily report through the Interactive-Voice-Response (IVR) system.

4VAC20-720-85. James River seed quota and monitoring.

A. An oyster seed harvest quota of 120,000 bushels of seed is established for the James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area, for the 2011/2012 harvest season. Once it has been projected and announced that the quota of seed has been attained, it shall be unlawful for any person to harvest seed oysters from these areas.

B. Of the 120,000-bushel seed quota described in subsection A of this section no more than 40,000 bushels of this quota may be harvested from October 1, 2011, through December 31, 2011. However, if it is projected and announced that 40,000 bushels of seed have been harvested before December 31, 2011, it shall be unlawful for any person to harvest seed oysters from that date forward until January 1, 2012.

C. Any person harvesting or landing oyster seed from the James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area, shall report monthly on forms provided by the Virginia Marine Resources Commission all harvest of seed oysters. Reporting requirements shall consist of that person's Commercial Fisherman Registration License number, daily number of bushels of seed oysters harvested, harvest rock location, planting location (any lease numbers), and buyer name.

D. It shall be unlawful for any person harvesting seed oysters from the James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area, to fail to contact the Virginia Marine Resources Commission Interactive-Voice-Response (IVR) System within 24 hours of harvest or landing and provide that person's name, Commercial Fisherman Registration License number, time, date, daily number of bushels of seed oysters harvested, harvest rock location, planting location (any lease numbers), and buyer name.

4VAC20-720-91. Harvest permit shall be required for the James River Seed Area, including the Deep Water Shoal State Replenishment Area.

A harvest permit shall be required for the James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area, for the harvesting of seed oysters. It shall be unlawful for any person to harvest or attempt to harvest seed oysters from the James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area, without first obtaining and having on board a harvest permit.

FORMS (4VAC20-720)

Daily Harvest Information For James River Seed Area, Including The Deep Water Shoal State Replenishment Seed Area (eff. 11/11).

Title of Regulation: 4VAC20-910. Pertaining to Scup (Porgy) (amending 4VAC20-910-45).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: November 1, 2011.

Agency Contact: Jane Warren, Agency Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248, FAX (757) 247-2002, or email betty.warren@mrc.virginia.gov.

Summary:

The amendments (i) increase the November 1 through December 31, 2011, commercial scup landing limit quota from 2,000 pounds to 8,000 pounds per trip, (ii) adjust the Winter I landing period from 14 days to 7 days, and (iii) increase the Virginia summer period commercial scup quota from 6,861 pounds to 13,085 pounds.

4VAC20-910-45. Possession limits and harvest quotas.

A. During the period January 1 through April 30 of each year, it shall be unlawful for any person to do any of the following:

1. Possess aboard any vessel in Virginia more than 30,000 pounds of scup.

2. Land in Virginia more than a total of 30,000 pounds of scup during each consecutive 14-day 7-day landing period, with the first 14-day 7-day period beginning on January 2 1.

B. When it is projected and announced that 80% of the coastwide quota for this period has been attained, it shall be unlawful for any person to possess aboard any vessel or to land in Virginia more than a total of 1,000 pounds of scup.

C. During the period November 1 through December 31 of each year, it shall be unlawful for any person to possess aboard any vessel or to land in Virginia more than 2,000 8,000 pounds of scup.

D. During the period May 1 through October 31 of each year, the commercial harvest and landing of scup in Virginia shall be limited to 6,861 13,085 pounds.

E. For each of the time periods set forth in this section, the Marine Resources Commission will give timely notice to the industry of calculated poundage possession limits and quotas and any adjustments thereto. It shall be unlawful for any person to possess or to land any scup for commercial purposes after any winter period coastwide quota or summer period Virginia quota has been attained and announced as such.

F. It shall be unlawful for any buyer of seafood to receive any scup after any commercial harvest or landing quota has been attained and announced as such.

G. It shall be unlawful for any person fishing with hook and line, rod and reel, spear, gig, or other recreational gear to possess more than 50 scup. When fishing is from a boat or vessel where the entire catch is held in a common hold or container, the possession limit shall be for the boat or vessel and shall be equal to the number of persons on board legally eligible to fish multiplied by 50. The captain or operator of the boat or vessel shall be responsible for any boat or vessel possession limit. Any scup taken after the possession limit has been reached shall be returned to the water immediately.

Title of Regulation: 4VAC50-20. Impounding Structure Regulations (amending 4VAC50-20-125).

Statutory Authority: § 10.1-604 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: December 7, 2011.

Effective Date: December 22, 2011.

Agency Contact: David C. Dowling, Policy, Planning, and Budget Director, Department of Conservation and Recreation, 203 Governor Street, Suite 302, Richmond, VA 23219, telephone (804) 786-2291, FAX (804) 786-6141, or email david.dowling@dcr.virginia.gov.

Basis: The Virginia Dam Safety Act (§§ 10.1-604 through 10.1-613 of the Code of Virginia) ensures public safety through the proper and safe design, construction, operation, and maintenance of impounding structures in the Commonwealth. This is accomplished through the effective administration of the Virginia Dam Safety Program. Authority for the program rests with the Virginia Soil and Water Conservation Board and it is administered on behalf of the board by the Department of Conservation and Recreations, Division of Dam Safety and Floodplain Management. The program focuses on enhancing public safety through bringing all impounding structures of regulated size under Regular Operation and Maintenance Certificates. Pursuant to § 10.1-605 of the Code of Virginia, the board is directed to promulgate regulations for impounding structures.

Purpose: This amendment to 4VAC50-20-125 is necessary to allow additional time for compliance for certain dam owners who were issued valid Construction or Alteration Permits by the board under the requirements of the regulations as they existed prior to September 26, 2008. These dam owners have invested significant sums of money in pursuit of the conditions of these permits and have proceeded to upgrade their dams in order to achieve compliance with their requirements. Now, due to changes to the regulations effective September 26, 2008, these dams are no longer fully compliant with all regulatory requirements of the Virginia Dam Safety Program despite their full compliance with all permits and conditions issued by the board.

This regulatory change would allow these dam owners to be considered compliant with the regulations for the first full permit cycle following the completion of their upgrades, and would then require them to meet the same standards that are applicable to all other regulated dams following this time. This will provide an extended timeframe for compliance for these owners to have additional necessary work completed to fully meet the current regulations and continue to protect the health, safety, and welfare of citizens of the Commonwealth. In some cases, this may involve a need for dam break inundation zone mapping and other engineering work; in others, additional spillway upgrades may be needed. Requiring all of these conditions to be met immediately would impose a very significant financial burden on these dam owners at a time when they have just completed a very significant investment in their dams.

Rationale for Using Fast-Track Process: This rulemaking is expected to be noncontroversial as it simply provides an extended timeframe for compliance with additional requirements of the regulations that became effective on September 26, 2008. This extended timeframe will apply only to a very select number of dams, believed to be approximately 14 across the Commonwealth. These dams still meet all requirements of the regulations that were effective prior to that time, and will be brought into full compliance with all amendments to the regulations following the completion of one permit cycle. This amendment is intended to prevent an unreasonable burden from being placed upon these dam owners, who have recently completed significant investments in their dams in a good faith effort to comply with the past requirements imposed by the board.

Substance: Existing 4VAC50-20-125 provides an extended timeframe for compliance with spillway design flood requirements of the regulations for dams that were compliant with the requirements of a previous version of the regulations and were under Regular Operation and Maintenance Certificate as of September 26, 2008. The section contains no provision allowing for any extended compliance timeframe for dams that were under construction or alteration permits as of September 26, 2008.

The proposed amended section would include a new subsection E, which would allow dams that were issued construction or alteration permits by the board under the regulations that were effective prior to September 26, 2008, to be considered compliant with the regulations for one permit cycle following their completion of all conditions of these permits and any accompanying Conditional Operation and Maintenance Certificates. This will allow these dam owners additional time to come into compliance with new regulatory requirements.

Issues: The primary advantage of this regulatory action for owners of affected dams is the provision of an extended timeframe for compliance with the amendments made to the regulations in 2008. This will allow for increased flexibility in preparing for upgrades and will avoid a situation where a second upgrade is needed immediately following an upgrade also undertaken pursuant to direction from the board. The primary disadvantage of this regulatory action will be to downstream property owners, roadway users, and residents, in that these dams will not be fully upgraded to meet all regulatory requirements until following the completion of one six-year permit cycle. However, even in the absence of this regulatory action, it is likely that the affected dams would fall under Conditional Operation and Maintenance Certificates, in which case a compliance schedule would likewise be set and further upgrades would take place over a determined period of time.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Virginia Soil and Water Conservation Board (Board) proposes to grandfather certain dams from requirements of the Boards Virginia Impounding Structure Regulations (Regulations) that first came into effect in 2008 for one six-year permit cycle. These dams had been issued Construction Permits (permits to build a new dam) or Alteration Permits (permits to make repairs and upgrades to existing dams) under a previous version of the Regulations that was effective prior to September 26, 2008. In some cases, these dams later completed construction fully in compliance with the conditions of their permits, only for it to be found that they may not be fully compliant with all changes made to the Regulations effective September 26, 2008. Under the current regulations, there is no provision for grandfathering these dams or providing an extended timeframe for compliance. The proposed regulation would specify that these dams will be issued Regular Operation and Maintenance Certificates, and thus be found in compliance with the Regulations, for one full six year permit cycle. This is contingent on the owner completing all requirements of the permit and any applicable Conditional Operation and Maintenance Certificate by September 26, 2011. Once the full six year permit cycle is complete, the owner would need to meet the standards applied to other dams throughout the Commonwealth.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. Historically dams in Virginia have largely been kept safe under the Regulations that were in effect prior to September 26, 2008 and under which the dams that would be affected by the Boards proposal received their permits. The Regulations that came into effect in 2008 further increase the assurance of safety.

As the Board and Department of Conservation and Recreation point out, the affected dam owners have invested significant sums of money in pursuit of the conditions of their permits and have proceeded to upgrade their dams in order to achieve compliance with their requirements. Now, due to changes to the regulations effective September 26, 2008, these dams are now no longer fully compliant with all regulatory requirements of the Virginia Dam Safety Program despite their full compliance with all permits and conditions issued by the Board.

The proposed regulatory change (grandfathering) would allow these dam owners to be considered compliant with the Regulations for the first full permit cycle following the completion of their upgrades, and would then require them to meet the same standards that are applicable to all other regulated dams following this time. This will provide an extended timeframe for compliance for these owners to have additional necessary work completed to fully meet the current regulations. In some cases, this may involve a need for dam break inundation zone mapping and other engineering work; in others, additional spillway upgrades may be needed.

Requiring all of these conditions to be met immediately would impose a significant financial burden on these dam owners at a time when they have just completed a very significant investment in their dams. The proposed grandfathering allows the affected owners to delay their next significant expenditure on dam safety, while still maintaining safe dams, and still eventually meeting the more stringent requirements of the 2008 Regulations. The benefit of permitting these affected dam owners who have maintained safe dams some additional time to meet the new requirements likely outweighs the cost of a short period of time of small additional safety risk.

Businesses and Entities Affected. Approximately 14 dams across the Commonwealth would be affected by this amendment. Several of the dam owners may be small businesses. Small businesses that are located downstream of these dams may also be impacted should one of these dams fail.

Localities Particularly Affected. The affected dams are located in the following counties: Albemarle 2, Gloucester 1, Hanover 1, King William 1, Lancaster 1, Louisa 1, New Kent 3, Powhatan 2, and Spotsylvania 2.

Projected Impact on Employment. The proposal amendments are unlikely to significantly affect employment.

Effects on the Use and Value of Private Property. The proposed grandfathering will allow owners of the approximately 14 dams to defer required work for up to six years.

Small Businesses: Costs and Other Effects. The proposed grandfathering will allow small business owners of the affected dams to defer required work for up to six years.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments do not adversely impact small businesses.

Real Estate Development Costs. The proposed grandfathering may delay some development costs, but will not significantly reduce costs in the long run.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPBs best estimate of these economic impacts.

Agency's Response to Economic Impact Analysis: The Department of Conservation and Recreation concurs with the economic impact analysis prepared by the Department of Planning and Budget regarding the Impounding Structure Regulations (4VAC50-20).

Summary:

The proposed amendments grandfather certain dams from requirements of the regulation that first came into effect in 2008 for one six-year permit cycle. These dams had been issued Construction Permits (permits to build a new dam) or Alteration Permits (permits to make repairs and upgrades to existing dams) under a previous version of the regulations that was effective prior to September 26, 2008. In some cases, these dams later completed construction fully in compliance with the conditions of their permits, only for it to be found that they may not be fully compliant with all changes made to the regulations effective September 26, 2008. Under the current regulations, there is no provision for grandfathering these dams or providing an extended timeframe for compliance. The proposed amendments specify that these dams will be issued Regular Operation and Maintenance Certificates, and thus be found in compliance with the regulations, for one full six-year permit cycle. After this time, they would need to meet the standards applied to other dams throughout the Commonwealth.

4VAC50-20-125. Delayed effective date for Spillway Design Flood requirements for impounding structures.

A. If an impounding structure has been determined to have an adequate spillway capacity prior to September 26, 2008, and is currently operating under a Regular Operation and Maintenance Certificate, but will now require spillway modifications due to changes in these regulations, the owner shall submit to the board an Alteration Permit Application in accordance with 4VAC50-20-80 to address spillway capacity at the time of the expiration of their Regular Operation and Maintenance Certificate or by September 26, 2011, whichever is later. The Alteration Permit Application shall contain a construction sequence with milestones for completing the necessary improvements within five years of Alteration Permit issuance. The board may approve an extension of the prescribed time frame for good cause. Should the owner be able to demonstrate that no spillway capacity change is necessary, the impounding structure may be found to be in compliance with this chapter.

B. In accordance with 4VAC50-20-105, the owner shall submit the Operation and Maintenance Certificate Application (Operation and Maintenance Certificate Application for Virginia Regulated Impounding Structures), the Emergency Action Plan or Emergency Preparedness Plan, and the Inspection Report (Annual Inspection Report for Virginia Regulated Impounding Structures) 90 days prior to the expiration of the Regular Operation and Maintenance Certificate.

C. If circumstances warrant more immediate repairs to the impounding structure, the board may direct alterations to the spillway to be completed sooner.

D. During this delay period, owners are required to address other deficiencies that may exist that are not related to the spillway design flood.

E. Any impounding structure owner who, as of September 26, 2008, held an Alteration Permit or Construction Permit under the requirements of this chapter that were effective prior to that date, who has maintained this permit as valid, and who completes all requirements of such permit and any applicable Conditional Operation and Maintenance Certificate by September 26, 2011, shall not be required to meet new requirements of this chapter that became effective on September 26, 2008, until the completion of the first six-year certificate cycle following completion of all requirements of his permit and any applicable certificates. During this six-year period, the owner may be issued a Regular Operation and Maintenance Certificate should the impounding structure otherwise be eligible for such certificate.

Titles of Regulations: 11VAC5-10. Guidelines for Public Participation in Regulation Development and Promulgation (repealing 11VAC5-10-10 through 11VAC5-10-80).

11VAC5-11. Public Participation Guidelines (adding 11VAC5-11-10 through 11VAC5-11-110).

Statutory Authority: §§ 2.2-4007.02 and 58.1-4007 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: December 7, 2011.

Effective Date: December 22, 2011.

Agency Contact: Mitch Belton, Contract and Project Coordinator, State Lottery Department, 900 East Main Street, 9th Floor, Richmond, VA 23219, telephone (804) 692-7136, FAX (804) 692-7325, or email mbelton@valottery.com.

Basis: Under § 2.2-4007.02 of the Code of Virginia, every rulemaking body in Virginia is required to adopt public participation guidelines and to use those guidelines in the development of its regulations. Chapter 321 of the 2008 Acts of Assembly requires agencies to adopt model public participation guidelines issued by the Department of Planning and Budget, or adopt the model guidelines with necessary amendments.

Purpose: The purpose of this regulatory action is to adopt model public participation guidelines as required by the Virginia General Assembly.

Rationale for Using Fast Track Process: Utilization of the fast track regulatory process is warranted due to the fact that (i) the proposed regulation is required by the General Assembly, and (ii) the proposed regulation uses the model public participation guidelines developed by the Department of Planning and Budget as its basis. Accordingly, this action is not expected to be controversial.

Substance: This action creates a new chapter within the existing regulation and uses text verbatim, except applicable agency references and dates, etc., from the applicable text of the model public participation guidelines developed by the Department of Planning and Budget.

Issues: The advantage to the Virginia Lottery Board is that the new public participation guidelines will provide more consistent regulatory participation for affected citizens, stakeholders, and customers. The Lottery Department sees no disadvantages to the public, agency, or Commonwealth in adopting this regulation.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The State Lottery Department (Lottery) proposes to adopt the model public participation guidelines developed by the Department of Planning and Budget in consultation with the Office of the Attorney General (as required by Chapter 321 of the 2008 Acts of Assembly).

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. Pursuant to Chapter 321 of the 2008 Acts of Assembly, the Department of Planning and Budget, in consultation with the Office of the Attorney General, (i) developed model public participation guidelines (PPGs) and (ii) provided these model PPGs to each agency that has the authority to promulgate regulations. The purpose of the model PPG legislation is threefold: first, to ensure that each agency or board has a current set of PPGs in place.¹ Second, to ensure that each agency or boards PPGs incorporate the use of technology such as the Virginia Regulatory Town Hall, email to the extent possible, and the use of electronic mailing lists. Last, but perhaps most importantly, to have uniform guidelines in place to facilitate citizen participation in rulemaking and to make those guidelines consistent, to the extent possible, among boards and agencies.

As described above, promulgating the model PPGs will be beneficial in that the Lottery PPGs will: 1) reflect current information, 2) incorporate the use of technology such as the Virginia Regulatory Town Hall, email to the extent possible, and the use of electronic mailing lists, and 3) be largely consistent with other agency PPGs which will facilitate citizen participation in rulemaking.

Businesses and Entities Affected. All businesses, other entities, or individuals interested in participating in the regulatory process as it relates to Lotterys regulations are potentially affected by the agencys public participation guidelines.

Localities Particularly Affected. The proposed regulations do not disproportionately affect particular localities.

Projected Impact on Employment. The proposal amendments do not directly affect employment.

Effects on the Use and Value of Private Property. The proposal amendments do not directly affect the use and value of private property.

Small Businesses: Costs and Other Effects. The proposed amendments do not directly affect small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments do not adversely affect small businesses.

Real Estate Development Costs. The proposed amendments do not directly affect real estate development costs.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

_____________________________

¹Some agencies and boards have not updated their PPGs since the mid-late 1980s.

Agency's Response to Economic Impact Analysis: The State Lottery Department concurs with the Department of Planning and Budget's economic impact analysis.

Summary:

The regulations repeal existing regulations on regulation development and public participation and incorporate the model public participation guidelines developed by the Department of Planning and Budget pursuant to Chapter 321 of the 2008 Acts of Assembly. Highlights of the model public participation guidelines include the addition of negotiated rulemaking panels and regulatory advisory panels and instructions for notification.

CHAPTER 11
PUBLIC PARTICIPATION GUIDELINES

Part I
Purpose and Definitions

11VAC5-11-10. Purpose.

The purpose of this chapter is to promote public involvement in the development, amendment, or repeal of the regulations of the State Lottery Department. This chapter does not apply to regulations, guidelines, or other documents exempted or excluded from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

11VAC5-11-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

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

"Agency" means the State Lottery Department, which is the unit of state government empowered by the agency's basic law to make regulations or decide cases. Actions specified in this chapter may be fulfilled by state employees as delegated by the agency.

"Basic law" means provisions in the Code of Virginia that delineate the basic authority and responsibilities of an agency.

"Commonwealth Calendar" means the electronic calendar for official government meetings open to the public as required by § 2.2-3707 C of the Freedom of Information Act.

''Negotiated rulemaking panel'' or ''NRP'' means an ad hoc advisory panel of interested parties established by an agency to consider issues that are controversial with the assistance of a facilitator or mediator, for the purpose of reaching a consensus in the development of a proposed regulatory action.

"Notification list" means a list used to notify persons pursuant to this chapter. Such a list may include an electronic list maintained through the Virginia Regulatory Town Hall or other list maintained by the agency.

"Open meeting" means any scheduled gathering of a unit of state government empowered by an agency's basic law to make regulations or decide cases, which is related to promulgating, amending or repealing a regulation.

"Person" means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof.

"Public hearing" means a scheduled time at which members or staff of the agency will meet for the purpose of receiving public comment on a regulatory action.

"Regulation" means any statement of general application having the force of law, affecting the rights or conduct of any person, adopted by the agency in accordance with the authority conferred on it by applicable laws.

"Regulatory action" means the promulgation, amendment, or repeal of a regulation by the agency.

"Regulatory advisory panel" or "RAP" means a standing or ad hoc advisory panel of interested parties established by the agency for the purpose of assisting in regulatory actions.

"Town Hall" means the Virginia Regulatory Town Hall, the website operated by the Virginia Department of Planning and Budget at www.townhall.virginia.gov, which has online public comment forums and displays information about regulatory meetings and regulatory actions under consideration in Virginia and sends this information to registered public users.

"Virginia Register" means the Virginia Register of Regulations, the publication that provides official legal notice of new, amended, and repealed regulations of state agencies, which is published under the provisions of Article 6 (§ 2.2-4031 et seq.) of the Administrative Process Act.

Part II
Notification of Interested Persons

11VAC5-11-30. Notification list.

A. The agency shall maintain a list of persons who have requested to be notified of regulatory actions being pursued by the agency.

B. Any person may request to be placed on a notification list by registering as a public user on the Town Hall or by making a request to the agency. Any person who requests to be placed on a notification list shall elect to be notified either by electronic means or through a postal carrier.

C. The agency may maintain additional lists for persons who have requested to be informed of specific regulatory issues, proposals, or actions.

D. When electronic mail is returned as undeliverable on multiple occasions at least 24 hours apart, that person may be deleted from the list. A single undeliverable message is insufficient cause to delete the person from the list.

E. When mail delivered by a postal carrier is returned as undeliverable on multiple occasions, that person may be deleted from the list.

F. The agency may periodically request those persons on the notification list to indicate their desire to either continue to be notified electronically, receive documents through a postal carrier, or be deleted from the list.

11VAC5-11-40. Information to be sent to persons on the notification list.

A. To persons electing to receive electronic notification or notification through a postal carrier as described in 11VAC5-11-30, the agency shall send the following information:

1. A notice of intended regulatory action (NOIRA).

2. A notice of the comment period on a proposed, a reproposed, or a fast-track regulation and hyperlinks to, or instructions on how to obtain, a copy of the regulation and any supporting documents.

3. A notice soliciting comment on a final regulation when the regulatory process has been extended pursuant to § 2.2-4007.06 or 2.2-4013 C of the Code of Virginia.

B. The failure of any person to receive any notice or copies of any documents shall not affect the validity of any regulation or regulatory action.

Part III
Public Participation Procedures

11VAC5-11-50. Public comment.

A. In considering any nonemergency, nonexempt regulatory action, the agency shall afford interested persons an opportunity to submit data, views, and arguments, either orally or in writing, to the agency. Such opportunity to comment shall include an online public comment forum on the Town Hall.

1. To any requesting person, the agency shall provide copies of the statement of basis, purpose, substance, and issues; the economic impact analysis of the proposed or fast-track regulatory action; and the agency's response to public comments received.

2. The agency may begin crafting a regulatory action prior to or during any opportunities it provides to the public to submit comments.

B. The agency shall accept public comments in writing after the publication of a regulatory action in the Virginia Register as follows:

1. For a minimum of 30 calendar days following the publication of the notice of intended regulatory action (NOIRA).

2. For a minimum of 60 calendar days following the publication of a proposed regulation.

3. For a minimum of 30 calendar days following the publication of a reproposed regulation.

4. For a minimum of 30 calendar days following the publication of a final adopted regulation.

5. For a minimum of 30 calendar days following the publication of a fast-track regulation.

6. For a minimum of 21 calendar days following the publication of a notice of periodic review.

7. Not later than 21 calendar days following the publication of a petition for rulemaking.

C. The agency may determine if any of the comment periods listed in subsection B of this section shall be extended.

D. If the Governor finds that one or more changes with substantial impact have been made to a proposed regulation, he may require the agency to provide an additional 30 calendar days to solicit additional public comment on the changes in accordance with § 2.2-4013 C of the Code of Virginia.

E. The agency shall send a draft of the agency's summary description of public comment to all public commenters on the proposed regulation at least five days before final adoption of the regulation pursuant to § 2.2-4012 E of the Code of Virginia.

11VAC5-11-60. Petition for rulemaking.

A. As provided in § 2.2-4007 of the Code of Virginia, any person may petition the agency to consider a regulatory action.

B. A petition shall include but is not limited to the following information:

1. The petitioner's name and contact information;

2. The substance and purpose of the rulemaking that is requested, including reference to any applicable Virginia Administrative Code sections; and

3. Reference to the legal authority of the agency to take the action requested.

C. The agency shall receive, consider and respond to a petition pursuant to § 2.2-4007 and shall have the sole authority to dispose of the petition.

D. The petition shall be posted on the Town Hall and published in the Virginia Register.

E. Nothing in this chapter shall prohibit the agency from receiving information or from proceeding on its own motion for rulemaking.

11VAC5-11-70. Appointment of regulatory advisory panel.

A. The agency may appoint a regulatory advisory panel (RAP) to provide professional specialization or technical assistance when the agency determines that such expertise is necessary to address a specific regulatory issue or action or when individuals indicate an interest in working with the agency on a specific regulatory issue or action.

B. Any person may request the appointment of a RAP and request to participate in its activities. The agency shall determine when a RAP shall be appointed and the composition of the RAP.

C. A RAP may be dissolved by the agency if:

1. The proposed text of the regulation is posted on the Town Hall, published in the Virginia Register, or such other time as the agency determines is appropriate; or

2. The agency determines that the regulatory action is either exempt or excluded from the requirements of the Administrative Process Act.

11VAC5-11-80. Appointment of negotiated rulemaking panel.

A. The agency may appoint a negotiated rulemaking panel (NRP) if a regulatory action is expected to be controversial.

B. An NRP that has been appointed by the agency may be dissolved by the agency when:

1. There is no longer controversy associated with the development of the regulation;

2. The agency determines that the regulatory action is either exempt or excluded from the requirements of the Administrative Process Act; or

3. The agency determines that resolution of a controversy is unlikely.

11VAC5-11-90. Meetings.

Notice of any open meeting, including meetings of a RAP or NRP, shall be posted on the Virginia Regulatory Town Hall and Commonwealth Calendar at least seven working days prior to the date of the meeting. The exception to this requirement is any meeting held in accordance with § 2.2-3707 D of the Code of Virginia allowing for contemporaneous notice to be provided to participants and the public.

11VAC5-11-100. Public hearings on regulations.

A. The agency shall indicate in its notice of intended regulatory action whether it plans to hold a public hearing following the publication of the proposed stage of the regulatory action.

B. The agency may conduct one or more public hearings during the comment period following the publication of a proposed regulatory action.

C. An agency is required to hold a public hearing following the publication of the proposed regulatory action when:

1. The agency's basic law requires the agency to hold a public hearing;

2. The Governor directs the agency to hold a public hearing; or

3. The agency receives requests for a public hearing from at least 25 persons during the public comment period following the publication of the notice of intended regulatory action.

D. Notice of any public hearing shall be posted on the Town Hall and Commonwealth Calendar at least seven working days prior to the date of the hearing. The agency shall also notify those persons who requested a hearing under subdivision C 3 of this section.

11VAC5-11-110. Periodic review of regulations.

A. The agency shall conduct a periodic review of its regulations consistent with:

1. An executive order issued by the Governor pursuant to § 2.2-4017 of the Administrative Process Act to receive comment on all existing regulations as to their effectiveness, efficiency, necessity, clarity, and cost of compliance; and

2. The requirements in § 2.2-4007.1 of the Administrative Process Act regarding regulatory flexibility for small businesses.

B. A periodic review may be conducted separately or in conjunction with other regulatory actions.

C. Notice of a periodic review shall be posted on the Town Hall and published in the Virginia Register.

Titles of Regulations: 11VAC5-10. Guidelines for Public Participation in Regulation Development and Promulgation (repealing 11VAC5-10-10 through 11VAC5-10-80).

11VAC5-11. Public Participation Guidelines (adding 11VAC5-11-10 through 11VAC5-11-110).

Statutory Authority: §§ 2.2-4007.02 and 58.1-4007 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: December 7, 2011.

Effective Date: December 22, 2011.

Agency Contact: Mitch Belton, Contract and Project Coordinator, State Lottery Department, 900 East Main Street, 9th Floor, Richmond, VA 23219, telephone (804) 692-7136, FAX (804) 692-7325, or email mbelton@valottery.com.

Basis: Under § 2.2-4007.02 of the Code of Virginia, every rulemaking body in Virginia is required to adopt public participation guidelines and to use those guidelines in the development of its regulations. Chapter 321 of the 2008 Acts of Assembly requires agencies to adopt model public participation guidelines issued by the Department of Planning and Budget, or adopt the model guidelines with necessary amendments.

Purpose: The purpose of this regulatory action is to adopt model public participation guidelines as required by the Virginia General Assembly.

Rationale for Using Fast Track Process: Utilization of the fast track regulatory process is warranted due to the fact that (i) the proposed regulation is required by the General Assembly, and (ii) the proposed regulation uses the model public participation guidelines developed by the Department of Planning and Budget as its basis. Accordingly, this action is not expected to be controversial.

Substance: This action creates a new chapter within the existing regulation and uses text verbatim, except applicable agency references and dates, etc., from the applicable text of the model public participation guidelines developed by the Department of Planning and Budget.

Issues: The advantage to the Virginia Lottery Board is that the new public participation guidelines will provide more consistent regulatory participation for affected citizens, stakeholders, and customers. The Lottery Department sees no disadvantages to the public, agency, or Commonwealth in adopting this regulation.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The State Lottery Department (Lottery) proposes to adopt the model public participation guidelines developed by the Department of Planning and Budget in consultation with the Office of the Attorney General (as required by Chapter 321 of the 2008 Acts of Assembly).

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. Pursuant to Chapter 321 of the 2008 Acts of Assembly, the Department of Planning and Budget, in consultation with the Office of the Attorney General, (i) developed model public participation guidelines (PPGs) and (ii) provided these model PPGs to each agency that has the authority to promulgate regulations. The purpose of the model PPG legislation is threefold: first, to ensure that each agency or board has a current set of PPGs in place.¹ Second, to ensure that each agency or boards PPGs incorporate the use of technology such as the Virginia Regulatory Town Hall, email to the extent possible, and the use of electronic mailing lists. Last, but perhaps most importantly, to have uniform guidelines in place to facilitate citizen participation in rulemaking and to make those guidelines consistent, to the extent possible, among boards and agencies.

As described above, promulgating the model PPGs will be beneficial in that the Lottery PPGs will: 1) reflect current information, 2) incorporate the use of technology such as the Virginia Regulatory Town Hall, email to the extent possible, and the use of electronic mailing lists, and 3) be largely consistent with other agency PPGs which will facilitate citizen participation in rulemaking.

Businesses and Entities Affected. All businesses, other entities, or individuals interested in participating in the regulatory process as it relates to Lotterys regulations are potentially affected by the agencys public participation guidelines.

Localities Particularly Affected. The proposed regulations do not disproportionately affect particular localities.

Projected Impact on Employment. The proposal amendments do not directly affect employment.

Effects on the Use and Value of Private Property. The proposal amendments do not directly affect the use and value of private property.

Small Businesses: Costs and Other Effects. The proposed amendments do not directly affect small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments do not adversely affect small businesses.

Real Estate Development Costs. The proposed amendments do not directly affect real estate development costs.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

_____________________________

¹Some agencies and boards have not updated their PPGs since the mid-late 1980s.

Agency's Response to Economic Impact Analysis: The State Lottery Department concurs with the Department of Planning and Budget's economic impact analysis.

Summary:

The regulations repeal existing regulations on regulation development and public participation and incorporate the model public participation guidelines developed by the Department of Planning and Budget pursuant to Chapter 321 of the 2008 Acts of Assembly. Highlights of the model public participation guidelines include the addition of negotiated rulemaking panels and regulatory advisory panels and instructions for notification.

CHAPTER 11
PUBLIC PARTICIPATION GUIDELINES

Part I
Purpose and Definitions

11VAC5-11-10. Purpose.

The purpose of this chapter is to promote public involvement in the development, amendment, or repeal of the regulations of the State Lottery Department. This chapter does not apply to regulations, guidelines, or other documents exempted or excluded from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

11VAC5-11-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

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

"Agency" means the State Lottery Department, which is the unit of state government empowered by the agency's basic law to make regulations or decide cases. Actions specified in this chapter may be fulfilled by state employees as delegated by the agency.

"Basic law" means provisions in the Code of Virginia that delineate the basic authority and responsibilities of an agency.

"Commonwealth Calendar" means the electronic calendar for official government meetings open to the public as required by § 2.2-3707 C of the Freedom of Information Act.

''Negotiated rulemaking panel'' or ''NRP'' means an ad hoc advisory panel of interested parties established by an agency to consider issues that are controversial with the assistance of a facilitator or mediator, for the purpose of reaching a consensus in the development of a proposed regulatory action.

"Notification list" means a list used to notify persons pursuant to this chapter. Such a list may include an electronic list maintained through the Virginia Regulatory Town Hall or other list maintained by the agency.

"Open meeting" means any scheduled gathering of a unit of state government empowered by an agency's basic law to make regulations or decide cases, which is related to promulgating, amending or repealing a regulation.

"Person" means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof.

"Public hearing" means a scheduled time at which members or staff of the agency will meet for the purpose of receiving public comment on a regulatory action.

"Regulation" means any statement of general application having the force of law, affecting the rights or conduct of any person, adopted by the agency in accordance with the authority conferred on it by applicable laws.

"Regulatory action" means the promulgation, amendment, or repeal of a regulation by the agency.

"Regulatory advisory panel" or "RAP" means a standing or ad hoc advisory panel of interested parties established by the agency for the purpose of assisting in regulatory actions.

"Town Hall" means the Virginia Regulatory Town Hall, the website operated by the Virginia Department of Planning and Budget at www.townhall.virginia.gov, which has online public comment forums and displays information about regulatory meetings and regulatory actions under consideration in Virginia and sends this information to registered public users.

"Virginia Register" means the Virginia Register of Regulations, the publication that provides official legal notice of new, amended, and repealed regulations of state agencies, which is published under the provisions of Article 6 (§ 2.2-4031 et seq.) of the Administrative Process Act.

Part II
Notification of Interested Persons

11VAC5-11-30. Notification list.

A. The agency shall maintain a list of persons who have requested to be notified of regulatory actions being pursued by the agency.

B. Any person may request to be placed on a notification list by registering as a public user on the Town Hall or by making a request to the agency. Any person who requests to be placed on a notification list shall elect to be notified either by electronic means or through a postal carrier.

C. The agency may maintain additional lists for persons who have requested to be informed of specific regulatory issues, proposals, or actions.

D. When electronic mail is returned as undeliverable on multiple occasions at least 24 hours apart, that person may be deleted from the list. A single undeliverable message is insufficient cause to delete the person from the list.

E. When mail delivered by a postal carrier is returned as undeliverable on multiple occasions, that person may be deleted from the list.

F. The agency may periodically request those persons on the notification list to indicate their desire to either continue to be notified electronically, receive documents through a postal carrier, or be deleted from the list.

11VAC5-11-40. Information to be sent to persons on the notification list.

A. To persons electing to receive electronic notification or notification through a postal carrier as described in 11VAC5-11-30, the agency shall send the following information:

1. A notice of intended regulatory action (NOIRA).

2. A notice of the comment period on a proposed, a reproposed, or a fast-track regulation and hyperlinks to, or instructions on how to obtain, a copy of the regulation and any supporting documents.

3. A notice soliciting comment on a final regulation when the regulatory process has been extended pursuant to § 2.2-4007.06 or 2.2-4013 C of the Code of Virginia.

B. The failure of any person to receive any notice or copies of any documents shall not affect the validity of any regulation or regulatory action.

Part III
Public Participation Procedures

11VAC5-11-50. Public comment.

A. In considering any nonemergency, nonexempt regulatory action, the agency shall afford interested persons an opportunity to submit data, views, and arguments, either orally or in writing, to the agency. Such opportunity to comment shall include an online public comment forum on the Town Hall.

1. To any requesting person, the agency shall provide copies of the statement of basis, purpose, substance, and issues; the economic impact analysis of the proposed or fast-track regulatory action; and the agency's response to public comments received.

2. The agency may begin crafting a regulatory action prior to or during any opportunities it provides to the public to submit comments.

B. The agency shall accept public comments in writing after the publication of a regulatory action in the Virginia Register as follows:

1. For a minimum of 30 calendar days following the publication of the notice of intended regulatory action (NOIRA).

2. For a minimum of 60 calendar days following the publication of a proposed regulation.

3. For a minimum of 30 calendar days following the publication of a reproposed regulation.

4. For a minimum of 30 calendar days following the publication of a final adopted regulation.

5. For a minimum of 30 calendar days following the publication of a fast-track regulation.

6. For a minimum of 21 calendar days following the publication of a notice of periodic review.

7. Not later than 21 calendar days following the publication of a petition for rulemaking.

C. The agency may determine if any of the comment periods listed in subsection B of this section shall be extended.

D. If the Governor finds that one or more changes with substantial impact have been made to a proposed regulation, he may require the agency to provide an additional 30 calendar days to solicit additional public comment on the changes in accordance with § 2.2-4013 C of the Code of Virginia.

E. The agency shall send a draft of the agency's summary description of public comment to all public commenters on the proposed regulation at least five days before final adoption of the regulation pursuant to § 2.2-4012 E of the Code of Virginia.

11VAC5-11-60. Petition for rulemaking.

A. As provided in § 2.2-4007 of the Code of Virginia, any person may petition the agency to consider a regulatory action.

B. A petition shall include but is not limited to the following information:

1. The petitioner's name and contact information;

2. The substance and purpose of the rulemaking that is requested, including reference to any applicable Virginia Administrative Code sections; and

3. Reference to the legal authority of the agency to take the action requested.

C. The agency shall receive, consider and respond to a petition pursuant to § 2.2-4007 and shall have the sole authority to dispose of the petition.

D. The petition shall be posted on the Town Hall and published in the Virginia Register.

E. Nothing in this chapter shall prohibit the agency from receiving information or from proceeding on its own motion for rulemaking.

11VAC5-11-70. Appointment of regulatory advisory panel.

A. The agency may appoint a regulatory advisory panel (RAP) to provide professional specialization or technical assistance when the agency determines that such expertise is necessary to address a specific regulatory issue or action or when individuals indicate an interest in working with the agency on a specific regulatory issue or action.

B. Any person may request the appointment of a RAP and request to participate in its activities. The agency shall determine when a RAP shall be appointed and the composition of the RAP.

C. A RAP may be dissolved by the agency if:

1. The proposed text of the regulation is posted on the Town Hall, published in the Virginia Register, or such other time as the agency determines is appropriate; or

2. The agency determines that the regulatory action is either exempt or excluded from the requirements of the Administrative Process Act.

11VAC5-11-80. Appointment of negotiated rulemaking panel.

A. The agency may appoint a negotiated rulemaking panel (NRP) if a regulatory action is expected to be controversial.

B. An NRP that has been appointed by the agency may be dissolved by the agency when:

1. There is no longer controversy associated with the development of the regulation;

2. The agency determines that the regulatory action is either exempt or excluded from the requirements of the Administrative Process Act; or

3. The agency determines that resolution of a controversy is unlikely.

11VAC5-11-90. Meetings.

Notice of any open meeting, including meetings of a RAP or NRP, shall be posted on the Virginia Regulatory Town Hall and Commonwealth Calendar at least seven working days prior to the date of the meeting. The exception to this requirement is any meeting held in accordance with § 2.2-3707 D of the Code of Virginia allowing for contemporaneous notice to be provided to participants and the public.

11VAC5-11-100. Public hearings on regulations.

A. The agency shall indicate in its notice of intended regulatory action whether it plans to hold a public hearing following the publication of the proposed stage of the regulatory action.

B. The agency may conduct one or more public hearings during the comment period following the publication of a proposed regulatory action.

C. An agency is required to hold a public hearing following the publication of the proposed regulatory action when:

1. The agency's basic law requires the agency to hold a public hearing;

2. The Governor directs the agency to hold a public hearing; or

3. The agency receives requests for a public hearing from at least 25 persons during the public comment period following the publication of the notice of intended regulatory action.

D. Notice of any public hearing shall be posted on the Town Hall and Commonwealth Calendar at least seven working days prior to the date of the hearing. The agency shall also notify those persons who requested a hearing under subdivision C 3 of this section.

11VAC5-11-110. Periodic review of regulations.

A. The agency shall conduct a periodic review of its regulations consistent with:

1. An executive order issued by the Governor pursuant to § 2.2-4017 of the Administrative Process Act to receive comment on all existing regulations as to their effectiveness, efficiency, necessity, clarity, and cost of compliance; and

2. The requirements in § 2.2-4007.1 of the Administrative Process Act regarding regulatory flexibility for small businesses.

B. A periodic review may be conducted separately or in conjunction with other regulatory actions.

C. Notice of a periodic review shall be posted on the Town Hall and published in the Virginia Register.

Titles of Regulations: 11VAC15-22. Charitable Gaming Rules and Regulations (repealing 11VAC15-22-10 through 11VAC15-22-120).

11VAC15-31. Supplier Regulations (repealing 11VAC15-31-10 through  11VAC15-31-60).

11VAC15-40. Charitable Gaming Regulations (adding 11VAC15-40-10 through 11VAC15-40-430).

Statutory Authority: § 18.2-340.15 of the Code of Virginia.

Public Hearing Information:

December 13, 2011 - 10:15 a.m. - Oliver Hill Building, 102 Governor Street, 2nd Floor Board Room, Richmond, VA

Public Comment Deadline: January 6, 2012.

Agency Contact: Erin Williams, Policy and Planning Coordinator, Department of Agriculture and Consumer Services, P.O. Box 1163, Richmond, VA 23218, telephone (804) 786-1308, FAX (804) 371-7479, TTY (800) 828-1120, or email erin.williams@vdacs.virginia.gov.

Basis: Section 18.2-340.15 of the Code of Virginia authorizes the Charitable Gaming Board to prescribe regulations and conditions under which charitable gaming is conducted in Virginia to ensure consistency with the purpose for which such gaming is permitted. Additionally, Chapter 264 of the 2007 Acts of Assembly amended the statute by requiring changes to the charitable gaming regulations in order to implement electronic games of chance systems. The Charitable Gaming Board approved the promulgation of a single regulation that will consolidate the two current regulations and provide for the implementation of regulations regarding electronic games of chance systems.

Purpose: The existence of two separate but closely interrelated regulations governing charitable gaming has resulted in duplicative, burdensome, and unnecessarily lengthy efforts in those instances when the agency has had to amend both regulations in response to a single change in the statute, as was the case with the passage of HB 1998 (Chapter 264 of the 2007 Acts of Assembly). The promulgation of a single, consolidated regulation will greatly facilitate the agency's administration of the charitable gaming program.

Proponents of the legislation that resulted in the authorization of electronic games of chance systems in the Commonwealth have indicated that charitable gaming organizations will see significant increases in both attendance and revenues through the offering of electronic pull-tabs at their gaming events. Attendance at charitable gaming events has dropped considerably in the last few years, in some cases by as much as 40%, on account of changing demographics, as well as the economic downturn. The ability to offer electronic pull-tabs is expected to attract younger players to bingo halls across Virginia, to lower the gaming organizations overhead costs through reduced expenses for paper supplies, and to improve the organizations ability to meet the 10% use of proceeds required by the Charitable Gaming Board.

Substance: The proposed regulation consolidates the substance of the current regulation titled Charitable Gaming Rules and Regulations, 11VAC15-22, as well as the substance of the current regulation titled Supplier Regulations, 11VAC15-31. Substantive changes include the addition of provisions regarding full automatic daubing of bingo numbers and progressive bingo games, both of which were authorized by Chapter 429 of the 2010 Acts of Assembly. The proposed regulations reduce the time required between gaming activities from one hour to 30 minutes. The existing regulations pertaining to electronic bingo devices (which are devices that support conventional bingo games and should not be confused with devices that support electronic pull-tabs) were modified to permit the use of electronic bingo device systems that do not identify at the point of sale the number of the electronic bingo device issued to the player.

The section pertaining to electronic games of chance systems includes rules for the conduct of electronic games of chance, requirements for manufacturers and suppliers of electronic games of chance systems, and construction and other standards for electronic games of chance systems.

Issues: The inclusion of provisions pertaining to electronic games of chance systems will provide charitable gaming organizations a new option to promote greater attendance at their gaming events. Greater attendance should increase the revenue organizations generate from their charitable gaming activities, which, in turn, should facilitate compliance with applicable requirements regarding the charitable use of organizations proceeds.

The promulgation of a single, consolidated regulation will greatly facilitate the agency's administration of the charitable gaming program by eliminating the need for duplicative regulatory actions due to the existence of two interrelated regulations.

Special interest groups are monitoring the progress of this regulation to ensure that it does not lead to casino-style gambling or expand the type of gaming that is allowed in the Commonwealth. The agency has involved these stakeholders during relevant discussions; the agency is not aware of specific concerns with the proposed regulations.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Virginia Charitable Gaming Board (Board) proposes to consolidate two separate regulations, Charitable Gaming Rules and Regulations, 11VAC15-22, and Supplier Regulations, 11VAC15-31, into one regulation that will also establish rules regarding electronic games of chance systems for charitable gaming.

Result of Analysis. The benefits likely exceed the costs for one or more proposed changes. There is insufficient data to accurately compare the magnitude of the benefits versus the costs for other changes.

Estimated Economic Impact. Chapter 264 of the 2007 Virginia Acts of Assembly authorized the use of electronic games of chance, also known as electronic pull tabs, by charitable gaming organizations. The chapter also specifies that no person shall offer to sell, sell or otherwise provide charitable gaming supplies to any qualified organization and no manufacturer shall distribute electronic games of chance systems for charitable gaming in the Commonwealth unless and until such person has made application for and has been issued a permit by the Department (of Agriculture and Consumer Services). In practice electronic games of chance have not yet been available for charitable gaming since the Board has not yet promulgated regulations that would enable the issuing of a permit for the distribution of electronic games of chance. In the current action the Board proposes rules that would enable the distribution and use of electronic games of chance to go forward.

In calendar year 2009, the most recent year data is available, there were $279 million in gross receipts for charitable gaming in Virginia.¹ Based on the experiences of other states which introduced electronic pull tabs, the Virginia Department of Agriculture and Consumer Services (Department) expects gross receipts from charitable gaming to at least triple with the advent of electronic pull tabs. Manufacturers and suppliers of electronic games of chance will certainly benefit with increased business. Purchasing and using electronic games of chance for fundraising is of course optional for charitable organizations; so the charitable organizations will only purchase and use them if they believe they will provide a net benefit through increased revenue available for their charitable purposes. A significant portion of Virginians believe that there is a negative impact on morality associated with gambling. The introduction and use of electronic pull tabs will very likely increase at least the dollar value of gambling in Virginia. It is beyond the scope of this analysis to compare the benefits of increased business for manufacturers and suppliers of electronic games of chance and the benefits of increased revenue for charitable organizations to use for their charitable purposes to the potential negative moral impact of increased gambling. That is intrinsically a subjective value judgment.

The Board proposes several other changes that will have some impact. The fee for a permit change would be eliminated. This is obviously beneficial for permit holders. The Board believes funds for operation are sufficient without charging this fee. The Department would use compliance agreements rather than consent orders and remedial business plans rather than corrective action plans. This would be less heavy handed and would likely create a more cooperative relationship between the Department and charitable organizations. The required break between charitable gaming activities would be reduced from one hour to 30 minutes. This would enable more time to be devoted to fundraising while still allotting sufficient transition time between charitable organizations. All of these changes provide benefit without significant cost.

Specific dollar amounts included in the current regulations that are prescribed by the Code of Virginia would be replaced by references to sections of the Code that prescribe these amounts. This is beneficial since when and if these dollar amounts are changed in the Code the dollar amounts currently listed in the regulations would then be in conflict with the Code. When the Code and regulations conflict, the Code prevails. Thus, persons who read the regulations would be misled under these circumstances. Amending regulations can take a significant amount of time. Thus, replacing specified dollar amounts included in the current regulations that are prescribed by the Code with references to sections of the Code that prescribe these amounts would enable the regulations to always be accurate concerning the effective legal dollar figures. Thus this proposed change clearly provides a net benefit.

The current regulations state that volunteer game workers may not play bingo at any session they have worked or purchase instant bingo, pull-tab, or seal card products from organizations they assist on the day they have volunteered or from any deal they have helped sell, whichever is later. Under the proposed regulations, no one involved in the conduct of bingo may play bingo at any session they have worked or intend to work. No one involved in the sale or redemption of any instant bingo, pull-tabs, seal cards, or electronic game cards may purchase directly or through others instant bingo, pull-tab, seal card, or electronic game card products from organizations they assist on the day they have worked or from any deal they have helped sell or redeem, whichever occurs later. Thus paid workers as well as volunteers are prohibited from gambling in games in which they work on the days they work as well as deals they have helped sell or redeem. Paid workers and volunteers could still gamble on other days provided that the games are not deals they have helped sell or redeem. This proposed change does introduce a new limitation on paid workers, but it seems a reasonable change to help ensure fairness while still permitting paid workers the opportunity to participate in games in which they are not directly involved.

Businesses and Entities Affected. The proposed regulations will potentially affect the approximate 400 qualified charitable gaming organizations and 19 charitable gaming suppliers in the Commonwealth as well as manufacturers of electronic games of chance systems. The Virginia Department of Agriculture and Consumer Services estimates that the majority of the charitable gaming suppliers are small businesses.

Localities Particularly Affected. The proposed amendments do not disproportionately affect particular localities.

Projected Impact on Employment. The proposal to establish rules for electronic games of chance systems will enable the distribution and use of electronic games of chance to go forward. This will likely significantly increase business for manufacturers and suppliers of electronic games of chance. Employment at some of these firms will likely moderately increase.

Effects on the Use and Value of Private Property. The proposal to establish rules for electronic games of chance systems will enable the distribution and use of electronic games of chance to go forward. This will likely significantly increase business for manufacturers and suppliers of electronic games of chance. The net value of these firms will likely increase.

Small Businesses: Costs and Other Effects. The proposed amendments are unlikely to increase costs for small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments are unlikely to significantly adversely affect small businesses.

Real Estate Development Costs. The proposed amendments are unlikely to significantly affect real estate development costs.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

____________________________

¹Data source: Virginia Department of Agriculture and Consumer Services

Agency's Response to Economic Impact Analysis: The Department of Agriculture and Consumer Services concurs with the analysis of the Department of Planning and Budget.

Summary:

The proposed regulation consists of five parts pertaining to (i) definitions, (ii) charitable gaming organizations and the conduct of charitable gaming, (iii) charitable gaming suppliers, (iv) electronic games of chance systems, and (v) administrative process.

The section pertaining to charitable gaming organizations and the conduct of charitable gaming reflects the substance of the current regulation titled Charitable Gaming Rules and Regulations, 11VAC15-22. The section pertaining to charitable gaming suppliers reflects the substance of the current regulation titled Supplier Regulations, 11VAC15-31. The section pertaining to electronic games of chance systems includes rules for the conduct of electronic games of chance, requirements for manufacturers and suppliers of electronic games of chance systems, and construction and other standards for electronic games of chance systems. The sections pertaining to definitions and the administrative process consolidate the definitions and administrative process sections found in the current regulations, 11VAC15-22 and 11VAC15-31.

CHAPTER 40
CHARITABLE GAMING REGULATIONS

Part 1
Definitions

11VAC15-40-10. Definitions.

In addition to the definitions contained in § 18.2-340.16 of the Code of Virginia, the words and terms below when used in this regulation shall have the following meanings unless the context clearly indicates otherwise:

"Agent" means any person authorized by a supplier to act for or in place of such supplier.

"Board" means the Virginia Charitable Gaming Board.

"Board of directors" means the board of directors, managing committee, or other supervisory body of a qualified organization.

"Calendar day" means the period of 24 consecutive hours commencing at 12:01 a.m. and concluding at midnight.

"Calendar week" means the period of seven consecutive calendar days commencing at 12:01 a.m. on Sunday and ending at midnight the following Saturday.

"Cash" means United States currency or coinage.

"Commissioner" means the Commissioner of the Virginia Department of Agriculture and Consumer Services.

"Concealed face bingo card" means a nonreusable bingo card constructed to conceal the card face.

"Conduct" means the actions associated with the provision of a gaming operation during and immediately before or after the permitted activity, which may include, but not be limited to (i) selling bingo cards or packs, electronic devices, instant bingo or pull-tab cards, or raffle tickets; (ii) calling bingo games; (iii) distributing prizes; and (iv) any other services provided by volunteer workers.

"Control program" means software involved in any critical game function.

"Daubing" means covering a square containing a number called with indelible ink or otherwise marking a number called on a card or an electronic facsimile of a card.

"Deal" means each separate package or series of packages consisting of one game of instant bingo, pull-tabs, or seal cards with the same serial number.

"Decision bingo" means a bingo game where the cost to a player to play is dependent on the number of bingo numbers called and the prize payout is in direct relationship to the number of participants and the number of bingo numbers called, but shall not exceed statutory prize limits for a regular bingo game.

"Department" means the Virginia Department of Agriculture and Consumer Services, Division of Consumer Protection, Office of Charitable Gaming.

"Designator" means an object used in the number selection process, such as a ping-pong ball, upon which bingo letters and numbers are imprinted.

"Discount" means any reduction in cost of admission or game packs or any other purchases through use of coupons, free packs, or other similar methods.

"Disinterested player" means a player who is unbiased.

"Disposable paper card" means a nonreusable, paper bingo card manufactured with preprinted numbers.

"Distributed pull-tab system" means a computer system consisting of a computer or computers and associated equipment for the use of distributing a finite number of electronic instant bingo and/or pull-tab outcomes (i.e., electronic game cards), a certain number of which entitle a player to prize awards at various levels.

"Door prize" means any prize awarded by the random drawing or random selection of a name or number based solely on attendance at a gaming session.

"Electronic bingo device" means an electronic device that uses proprietary software or hardware or, in conjunction with commonly available software and computers, displays facsimiles of bingo cards and allows a player to daub such cards or allows for the automatic daubing of such cards.

"Electronic game card" means an electronic version of a single instant bingo card or pull-tab. An electronic game card is a predetermined game outcome in electronic form, distributed on-demand from a finite number of game outcomes by a distributed pull-tab system.

"Equipment and video systems" means equipment that facilitates the conduct of charitable gaming such as ball blowers, flashboards, electronic verifiers, and replacement parts for such equipment.

"Event game" means a bingo game that is played using instant bingo cards or pull-tabs in which the winners include both instant winners and winners who are determined by the random draw of a bingo ball, the random call of a bingo number, or the use of a seal card, and that is sold and played to completion during a single bingo session.

"Fiscal year" or "annual reporting period" means the 12-month period beginning January 1 and ending December 31 of any given year.

"Flare" means a piece of paper, cardboard, or similar material that bears printed information relating to the name of the manufacturer or logo, name of the game, card count, cost per play, serial number, the number of prizes to be awarded, and the specific prize amounts in a deal of instant bingo, pull-tab, or seal cards.

"Free space number," "perm number," "center number," "card number," or "face number" means the number generally printed in the center space of a bingo card that identifies the unique pattern of numbers printed on that card.

"Game program" means a written list of all games to be played including, but not limited to, the sales price of all bingo paper and electronic bingo devices, pack configuration, prize amounts to be paid during a session for each game, and an indication whether prize amounts are fixed or are based on attendance.

"Game set" means the entire pool of electronic game cards that contains predefined and randomized game results assigned under a unique serial number. This term is equivalent to "deal" or "deck."

"Game subset" means a division of a game set into equal sizes.

"Gaming activity" means one bingo session and the sale and redemption of instant bingo, pull-tabs, seal cards, or electronic game cards done in conjunction with that bingo session and in accordance with the provisions of this chapter.

"Immediate family" means one's spouse, parent, child, sibling, grandchild, grandparent, mother or father-in-law, or stepchild.

"Interested persons" means the president, an officer, or a bingo manager of any qualified organization that is exempt or is a permit applicant or holds a permit to conduct charitable gaming; or the owner, director, officer or partner of an entity engaged in supplying charitable gaming supplies to organizations.

"IRS" means the United States Internal Revenue Service.

"Management" means the provision of oversight of a gaming operation, which may include, but is not limited to, the responsibilities of applying for and maintaining a permit or authorization; compiling, submitting, and maintaining required records and financial reports; and ensuring that all aspects of the operation are in compliance with all applicable statutes and regulations.

"Manufacturer" means a person who or entity that assembles from raw materials or subparts a completed piece of bingo or other charitable gaming equipment or supplies. "Manufacturer" also means a person who or entity that modifies, converts, adds, or removes parts to or from bingo or other charitable gaming equipment or supplies to further their promotion or sale for the conduct of charitable gaming.

"OCG number" means a unique identification number issued by the department.

"Operation" means the activities associated with production of a charitable gaming activity, which may include, but is not limited to, (i) the direct on-site supervision of the conduct of charitable gaming; (ii) coordination of volunteers; and (iii) all responsibilities of charitable gaming designated by the organization's management.

"Owner" means any individual with financial interest of 10% or more in a supplier.

"Pack" means sheets of bingo paper or electronic facsimiles assembled in the order of games to be played. This shall not include any raffle.

"Player device" means an electronic unit that may take the form of an upright cabinet or a handheld device or may be of any other composition as approved by the department used to facilitate the play of electronic instant bingo or pull-tab games.

"Prize" means cash, merchandise, certificate, or other item of value awarded to a winning player.

"Progressive bingo" means a bingo game in which the prize is carried forward to the next game if a predetermined pattern is not completed within a specified number of bingo numbers called.

"Progressive seal card" means a seal card game in which a prize is carried forward to the next deal if not won when a deal is completed.

"Remuneration" means payment in cash or the provision of anything of value for goods provided or services rendered.

"Seal card" means a board or placard used in conjunction with a deal of the same serial number that contains one or more concealed areas that, when removed or opened, reveal a predesignated winning number, letter, or symbol located on that board or placard.

"Selection device" means a manually or mechanically operated device to randomly select bingo numbers.

"Serial number" means a unique number printed by the manufacturer on each bingo card in a set; each instant bingo, pull-tab, or seal card in a deal; each electronic bingo device; or each door prize ticket.

"Series number" means the number of unique card faces contained in a set of disposable bingo paper cards or bingo hard cards. A 9000 series, for example, has 9000 unique faces.

"Session" means a period of time during which one or more bingo games are conducted that begins with the selection of the first ball for the first game and ends with the selection of the last ball for the last game.

"Treasure chest" means a raffle including a locked treasure chest containing a prize that a participant, selected through some other authorized charitable game, is afforded the chance to select from a series of keys a predetermined key that will open the locked treasure chest to win a prize.

"Use of proceeds" means the use of funds derived by an organization from its charitable gaming activities, which are disbursed for those lawful religious, charitable, community, or educational purposes. This includes expenses relating to the acquisition, construction, maintenance, or repair of any interest in the real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes.

"Voucher" means a printed ticket tendered to the player, upon request, for any unused game plays and/or winnings that remain on the player device.

"WINGO" means a variation of a traditional bingo game that uses visual devices rather than a verbal caller and is intended for play by hearing impaired persons.

Part II
Charitable Gaming Organizations

Article 1
Permits

11VAC15-40-20. Eligibility for permit to conduct charitable gaming; when valid; permit requirements.

A. The conduct of charitable gaming is a privilege that may be granted or denied by the department. Except as provided in § 18.2-340.23 of the Code of Virginia, every eligible organization, volunteer fire department, and rescue squad with anticipated gross gaming receipts that exceed the amount set forth in § 18.2-340.23 of the Code of Virginia in any 12-month period shall obtain a permit from the department prior to the commencement of charitable gaming activities. To be eligible for a permit an organization must meet all of the requirements of § 18.2-340.24 of the Code of Virginia.

B. Pursuant to § 18.2-340.24 B of the Code of Virginia, the department shall review a tax exempt request submitted to the IRS for a tax exempt status determination and may issue an interim certification of tax-exempt status solely for the purpose of charitable gaming, conditioned upon a determination by the IRS. The department shall charge the fee set forth in § 18.2-340.24 B of the Code of Virginia for this review. The fee shall be payable to the Treasurer of Virginia.

C. A permit shall be valid only for activities, locations, days, dates, and times as listed on the permit.

D. In accordance with § 18.2-340.19 A 1 of the Code of Virginia, as a condition of receiving a permit, a minimum of 10% of charitable gaming gross receipts shall be used for (i) those lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized or (ii) those expenses relating to the acquisition, construction, maintenance, or repair of any interest in real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes.

E. If an organization fails to meet the minimum use of proceeds requirement, its permit may be suspended or revoked. However, the department shall not suspend or revoke the permit of any organization solely because of its failure to meet the required percentage without having first provided the organization with an opportunity to implement a corrective action plan.

F. An organization may request a temporary reduction in the predetermined percentage specified in subsection D of this section from the department. In reviewing such a request, the department shall consider such factors appropriate to and consistent with the purpose of charitable gaming, which may include, but not be limited to, (i) the organization's overall financial condition; (ii) the length of time the organization has been involved in charitable gaming; (iii) the extent of the deficiency; and (iv) the progress that the organization has made in attaining the minimum percentage in accordance with a corrective action plan pursuant to subsection E of this section.

G. An organization whose permit is revoked for failure to comply with provisions set forth in subsection D of this section shall be eligible to reapply for a permit at the end of one year from the date of revocation. The department, at its discretion, may issue the permit if it is satisfied that the organization has made substantial efforts towards meeting its corrective action plan.

11VAC15-40-30. Permit application process.

A. Any organization anticipating gross gaming receipts that exceed the amount set forth in § 18.2-340.23 of the Code of Virginia shall complete a department-prescribed application to request issuance or renewal of an annual permit to conduct charitable gaming. Organizations shall submit a nonrefundable fee payable to the Treasurer of Virginia in the amount of $200 with the application, unless the organization is exempt from such fee pursuant to § 18.2-340.23 of the Code of Virginia.

B. The department may initiate action against any organization exempt from permit requirements when it reasonably believes the organization is not in compliance with the provisions of charitable gaming laws or applicable regulations, or both, of the board.

C. Permit holders requiring a special permit pursuant to § 18.2-340.27 E of the Code of Virginia shall convey their request on a form prescribed by the department. Organizations shall submit a fee payable to the Treasurer of Virginia in the amount of $50 with the request for a special permit, unless the organization is exempt from such fee pursuant to § 18.2-340.23 of the Code of Virginia.

D. Permits shall be valid for a period of one year from the date of issuance or for a period specified on the permit. The department may issue permits for periods of less than one year.

E. Permits shall be granted only after a background investigation of an organization or interested persons, or both, to ensure public safety and welfare as required by § 18.2-340.25 of the Code of Virginia. Investigations shall consider the nature, the age and severity, and the potential harm to public safety and welfare of any criminal offenses. The investigation may include, but shall not be limited to, the following:

1. A search of Virginia criminal history records for the chief executive officer and chief financial officer of the organization. Information and authorization to conduct these records checks shall be provided in the permit application. In addition, the department shall require that the organization provides assurances that all other members involved in the management, operation, or conduct of charitable gaming meet the requirements of subdivision 13 of § 18.2-340.33 of the Code of Virginia. Applications may be denied if:

a. Any person participating in the management of any charitable gaming has ever been:

(1) Convicted of a felony; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

b. Any person participating in the conduct of charitable gaming has been:

(1) Convicted of any felony in the preceding 10 years; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years;

2. An inquiry as to whether the organization has been granted tax-exempt status pursuant to § 501(c) by the Internal Revenue Service and is in compliance with IRS annual filing requirements;

3. An inquiry as to whether the organization has entered into any contract with, or has otherwise employed for compensation, any persons for the purpose of organizing or managing, operating, or conducting any charitable gaming activity;

4. Inquiries into the finances and activities of the organization and the sources and uses of funds; and

5. Inquiries into the level of community or financial support to the organization and the level of community involvement in the membership and management of the organization.

F. The permit application for an organization that has not previously held a permit shall include:

1. A list of members participating in the management or operation of charitable gaming. For any organization that is not composed of members, a person who is not a bona fide member may volunteer in the conduct of a charitable game as long as that person is directly supervised by a bona fide official member of the organization;

2. A copy of the articles of incorporation, bylaws, charter, constitution, or other appropriate organizing document;

3. A copy of the determination letter issued by the IRS under § 501(c) of the Internal Revenue Code, if appropriate, or a letter from the national office of an organization indicating the applicant organization is in good standing and is currently covered by a group exemption ruling. A letter of good standing is not required if the applicable national or state office has furnished the department with a listing of member organizations in good standing in the Commonwealth as of January 1 of each year and has agreed to promptly provide the department any changes to the listing as they occur;

4. A copy of the organization's most recent annual financial statement and balance sheet or most recent Form 990 that has been filed with the IRS;

5. A copy of the written lease or proposed written lease agreement and all other agreements if the organization rents or intends to rent a facility where bingo is or will be conducted. Information on the lease shall include name, address, and phone number of the landlord; maximum occupancy of the building; and the rental amount per session; and

6. An authorization by an officer or other appropriate official of the organization to permit the department to determine whether the organization has been investigated or examined by the IRS in connection with charitable gaming activities during the previous three years.

G. Copies of minutes of meetings of the organization and any contracts with landlords or suppliers to which the organization is or may be a party may be requested by the department prior to rendering a permitting decision.

H. Organizations applying to renew a permit previously issued by the department shall submit articles of incorporation, bylaws, charter, constitution, or other organizing document, and IRS determination letter only if there are any amendments or changes to these documents that are directly related to the management, operation, or conduct of charitable gaming.

I. Organizations may request permits to conduct joint bingo games as provided in § 18.2-340.29 of the Code of Virginia.

1. In the case of a joint game, all the organizations shall file a permit application.

2. The nonrefundable permit fee for joint games shall be a total of $200. Volunteer fire departments or rescue squads or auxiliary units thereof that have been recognized in accordance with § 15.2-955 of the Code of Virginia shall be exempt from the payment of applications fees.

3. A single permit shall be issued in the names of all the organizations conducting a joint game. All restrictions and prohibitions applying to single organizations shall apply to qualified organizations jointly conducting bingo games pursuant to § 18.2-340.29 of the Code of Virginia.

4. No charitable gaming shall be conducted prior to the issuance of a joint permit.

5. Applications for joint games shall include an explanation of the division of manpower, costs, and proceeds for the joint game.

J. An organization wishing to change dates, times, or locations of its charitable gaming shall request a change in the permit. Change requests shall be made in writing on a form prescribed by the department at least 30 days in advance of the proposed effective date.

K. Changes in dates, times, or locations due to inclement weather, disasters, or other circumstances outside the organization's control may be made without a change in the permit. The organization shall request such a change on a form prescribed by the department as soon as the necessity for the change is known.

L. An organization may sell raffle tickets for a drawing to be held outside of the Commonwealth of Virginia in the United States provided:

1. The raffle is conducted by the organization in conjunction with a meeting outside the Commonwealth of Virginia or with another organization that is licensed to conduct raffles outside the Commonwealth of Virginia;

2. The raffle is conducted in accordance with these regulations and the laws and regulations of the state where the drawing is to be held; and

3. The portion of the proceeds derived from the sale of raffle tickets in the Commonwealth is reported to the department.

M. Any permitted organization that ceases to conduct charitable gaming shall immediately notify the department in writing and provide the department a report as to the disposition of all unused gaming supplies on a form prescribed by the department.

11VAC15-40-40. Suspension, revocation, or denial of permit.

A. Pursuant to § 18.2-340.20 of the Code of Virginia, the department may suspend, revoke, or deny the permit to conduct charitable gaming of any organization for cause including, but not limited to, any of the following reasons:

1. The organization is found to be in violation of or has failed to meet any of the requirements of the statutes or regulations governing the operation, management, and conduct of charitable gaming in the Commonwealth.

2. The organization is found to be not in good standing with its state or national organization.

3. The IRS revokes or suspends the organization's tax-exempt status.

4. The organization willfully and knowingly provides false information in its application for a permit to conduct charitable gaming.

5. The organization is found to have a member involved in the management, operation, or conduct of its charitable gaming who has been convicted of any felony or any misdemeanor as follows:

a. For any person participating in the management or operation of any charitable gaming:

(1) Convicted of a felony; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

b. For any person participating in the conduct of charitable gaming:

(1) Convicted of any felony within the preceding 10 years; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

B. The failure to meet any of the requirements of § 18.2-340.24 of the Code of Virginia shall cause the denial of the permit, and no organization shall conduct any charitable gaming until the requirements are met and a permit is obtained.

C. Except when an organization fails to meet any of the requirements of § 18.2-340.24 of the Code of Virginia, in lieu of suspending, revoking, or denying a permit to conduct charitable gaming, the department may afford an organization an opportunity to enter into a compliance agreement specifying additional conditions or requirements as it may deem necessary to ensure an organization's compliance with the statute and regulations governing the conduct of charitable gaming activities and may require that an organization participates in such training as is offered by the department.

D. If a permit is suspended, the department shall set the terms of the suspension, which shall include the length of the suspension and a requirement that, prior to reinstatement of the permit, the organization shall submit a remedial business plan to address the conditions that resulted in the suspension.

Article 2
Conduct of Games, Rules of Play, Electronic Bingo

11VAC15-40-50. Conduct of bingo, instant bingo, pull-tabs, seal cards, event games, and raffles.

A. Organizations subject to this chapter shall post their permit at all times on the premises where charitable gaming is conducted.

B. No individual shall provide any information or engage in any conduct that alters or is intended to alter the outcome of any charitable game.

C. Individuals under 18 years of age may play bingo provided such persons are accompanied by a parent or legal guardian. It shall be the responsibility of the organization to ensure that such individuals are eligible to play. An organization's house rules may further limit the play of bingo or purchase raffle tickets by minors.

D. Individuals under the age of 18 may sell raffle tickets for a qualified organization raising funds for activities in which they are active participants.

E. No individual under the age of 18 may participate in the management or operation of bingo games. Individuals 14 through 17 years of age may participate in the conduct of a bingo game provided the organization permitted for charitable gaming obtains and keeps on file written parental consent from the parent or legal guardian and verifies the date of birth of such youth. An organization's house rules may further limit the involvement of minors in the conduct of bingo games.

F. No qualified organization shall sell any instant bingo, pull-tab, seal card, event game card, or electronic game card to any individual under 18 years of age. No individual under 18 years of age shall play or redeem any instant bingo, pull-tab, seal card, event game card, or electronic game card.

G. Unless otherwise prohibited by the Code of Virginia or this chapter, nonmembers who are under the direct supervision of a bona fide member may participate in the conduct of bingo.

H. All volunteer game workers shall have in their possession a picture identification, such as a driver's license or other government-issued identification, and shall make the picture identification available for inspection upon request by a department agent while participating in the management, operation, or conduct of a bingo game.

I. A game manager who is a bona fide member of the organization and is designated by the organization's management as the person responsible for the operation of the bingo game during a particular session shall be present any time a bingo game is conducted.

J. Organizations shall ensure that all charitable gaming equipment is in working order before charitable gaming activities commence.

K. Any organization selling bingo, instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards shall:

1. Maintain a supplier's invoice or a legible copy thereof at the location where the gaming is taking place and cards are sold. The original invoice or legible copy shall be stored in the same storage space as the gaming supplies. All gaming supplies shall be stored in a secure area that has access limited only to bona fide members of the organization; and

2. Pay for all gaming supplies only by a check drawn on the charitable gaming account of the organization.

A complete inventory of all such gaming supplies shall be maintained by the organization on the premises where the gaming is being conducted.

L. A volunteer working a bingo session may receive complimentary food and nonalcoholic beverages provided on premises, as long as the retail value of such food and beverages does not exceed $15 for each session.

M. Permitted organizations shall not commingle records, supplies, or funds from permitted activities with those from instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards sold in social quarters in accordance with § 18.2-340.26:1 of the Code of Virginia.

N. Individuals who are not members of an organization or are members who do not participate in any charitable gaming activities may be paid reasonable fees for preparation of quarterly and annual financial reports.

O. No free packs, free electronic bingo devices, discounts, or remuneration in any other form shall be provided directly or indirectly to volunteers, members of their family, or individuals residing in their household. The reduction of tuition, dues, or any fees or payments due as a result of a member or shareholder, or anyone in their household, working bingo games or raffles is prohibited.

P. Individuals providing security for an organization's charitable gaming activity shall not participate in the charitable gaming activity and shall not be compensated with charitable gaming supplies or with rentals of electronic bingo devices.

Q. No organization shall award any prize money or any merchandise valued in excess of the amounts specified by the Code of Virginia.

R. Multiple bingo sessions shall be permitted in a single premise as long as the sessions are distinct from one another and are not used to advertise or do not result in the awarding of more in prizes than is permitted for a single qualified organization. All leases for organizations to conduct charitable gaming in a single premise shall ensure gaming activity is separated by an interval of at least 30 minutes. Bingo sales for the subsequent session may take place during the 30-minute break once the building is cleared of all patrons and workers from the previous session.

S. All bingo and instant bingo, pull-tabs, seal card, event game card, or electronic game card sales, play, and redemption must occur within the time specified on the charitable gaming permit.

T. Instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards shall only be sold in conjunction with a bingo session, except as authorized by § 18.2-340.26:2 of the Code of Virginia. No instant bingo, pull-tabs, seal card, event game card, or electronic game card sales shall take place more than two hours before or after a session. If multiple sessions are held at the same location, no instant bingo, pull-tab, seal card, event game card, or electronic game card sales shall be conducted during the required 30-minute break between gaming activities. The department may take action if it believes that a bingo session is not legitimate or is being conducted in a manner such that instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards are not being sold in conjunction with a bingo session.

U. Only a volunteer game worker of qualified organizations may rent, exchange, or otherwise provide electronic bingo devices to players.

V. A qualified organization shall conduct only bingo games and raffles listed on a game program for that session. The program shall list all prize amounts. If the prize amounts are determined by attendance or at the end of a game, the game program shall list the attendance required for the prize amount or disclose that prizes shall be determined at the end of a game and the method for determining the prize amount. In such case, the organization shall announce the prize amount at the end of the game.

W. A qualified organization selling instant bingo, pull-tabs, seal cards, or electronic game cards shall post a flare provided by the manufacturer at the location where such cards are sold. All such sales and prize payouts shall be in accordance with the flare for that deal.

X. Only qualified organizations, facilities in which qualified organizations play bingo, and suppliers permitted by the department shall advertise a bingo game. Providing players with information about bingo games through printed advertising is permitted, provided the name of the qualified organization shall be in a type size equal to or larger than the name of the premises, the hall, or the word "bingo." Printed advertisements shall identify the use of proceeds percentage reported in the past quarter or fiscal year.

Y. Raffles that award prizes based on a percentage of gross receipts shall use prenumbered tickets.

Z. The following rules shall apply to instant bingo, pull-tab, seal card, or event game card dispensing devices:

1. A dispensing device shall only be used at a location and time during which a qualified organization holds a permit to conduct charitable gaming. Only cards purchased by an organization to be used during the organization's charitable gaming activity shall be in the dispensing device.

2. Keys to the dispensing area and coin/cash box shall be in the possession and control of the game manager or designee of the organization's board of directors at all times. Keys shall at all times be available at the location where the dispensing device is being used.

3. The game manager or designee shall provide access to the dispensing device to a department agent for inspection upon request.

4. Only a volunteer game worker of an organization may stock the dispensing device, remove cash, or pay winners' prizes.

AA. Organizations shall only purchase gaming supplies from a supplier who has a current permit issued by the department.

BB. An organization shall not tamper with bingo paper received from a supplier.

CC. The total amount of all discounts given by any organization during any fiscal year shall not exceed 1.0% of the organization's gross receipts.

11VAC15-40-60. Rules of play.

A. Each organization shall adopt "house rules" regarding conduct of the game. Such rules shall be consistent with the provisions of the law and this chapter. "House rules" shall be conspicuously posted or, at an organization's option, printed on the game program.

B. All players shall be physically present at the location where the bingo numbers for a bingo game are drawn to play the game or to claim a prize. Seal card prizes that can only be determined after a seal is removed or opened must be claimed within 30 days of the close of a deal. All other prizes must be claimed on the game date.

C. The following rules of play shall govern the sale of instant bingo, pull-tabs, and seal cards:

1. No cards that have been marked, defaced, altered, tampered with, or otherwise constructed in a manner that tends to deceive the public or affect the chances of winning or losing shall be placed into play.

2. Winning cards shall have the winning symbol or number defaced or punched immediately after redemption by the organization's authorized representative.

3. An organization may commingle unsold instant bingo cards and pull-tabs with no more than one additional deal. The practice of commingling deals shall be disclosed to the public via house rules or in a similar manner. Seal card deals shall not be commingled.

4. If a deal is not played to completion and unsold cards remain, the remaining cards shall be sold at the next session the same type of ticket is scheduled to be sold. If no future date is anticipated, the organization shall, after making diligent efforts to sell the entire deal, consider the deal closed or completed. The unsold cards shall be retained for three years following the close of the fiscal year and shall not be opened.

5. All seal card games purchased shall contain the sign-up sheet, the seals, and the cards packaged together in each deal.

6. Progressive seal card prizes not claimed within 30 days shall be carried forward to the next progressive game in progress and paid to the next progressive game prize winner.

D. No one involved in the conduct of bingo may play bingo at any session they have worked or intend to work. No one involved in the sale or redemption of any instant bingo, pull-tabs, seal cards, or electronic game cards may purchase directly or through others instant bingo, pull-tab, seal card, or electronic game card products from organizations they assist on the day they have worked or from any deal they have helped sell or redeem, whichever occurs later.

E. Electronic bingo.

1. Electronic bingo devices may be used by bingo players in the following manner:

a. Players may input into the device each number called or the device may automatically daub each number as the number is called;

b. Players must notify the game operator or caller of a winning pattern of bingo by a means other than use of the electronic device;

c. Players are limited to playing a maximum of 54 card faces per device per game;

d. Electronic bingo devices shall not be reserved for players. Each player shall have an equal opportunity to use the available devices on a first come, first served basis;

e. Each electronic bingo device shall produce a player receipt with the organization name, date, time, location, sequential transaction or receipt number, number of electronic bingo cards loaded, cost of electronic bingo cards loaded, and date and time of the transaction. Images of cards or faces stored in an electronic device must be exact duplicates of the printed faces if faces are printed;

f. Department agents may examine and inspect any electronic bingo device and related system. Such examination and inspection shall include immediate access to the device and unlimited inspection of all parts and associated systems and may involve the removal of equipment from the game premises for further testing;

g. All electronic bingo devices must be loaded or enabled for play on the premises where the game will be played;

h. All electronic bingo devices shall be rented or otherwise provided to a player only by an organization and no part of the proceeds of the rental of such devices shall be paid to a landlord, or his employee, agent, or member of his immediate family; and

i. If a player's call of a bingo is disputed by another player, or if a department agent makes a request, one or more cards stored on an electronic bingo device shall be printed by the organization.

2. Players may exchange a defective electronic bingo device for another device provided a disinterested player verifies that the device is not functioning. A disinterested player shall also verify that no numbers called for the game in progress have been keyed into the replacement device prior to the exchange.

F. The following rules of play shall govern the conduct of raffles:

1. Before a prize drawing, each stub or other detachable section of each ticket sold shall be placed into a receptacle from which the winning tickets shall be drawn. The receptacle shall be designed so that each ticket placed in it has an equal chance to be drawn.

2. All prizes shall be valued at fair market value.

G. The following rules shall apply to "decision bingo" games:

1. Decision bingo shall be played on bingo cards in the conventional manner.

2. Players shall enter a game by paying a predetermined amount for each card face in play.

3. Players shall pay a predetermined fee for each set of three bingo numbers called for each card in play.

4. The prize amount shall be the total of all fees not to exceed the prize limit set forth for regular bingo in § 18.2-340.33 of the Code of Virginia. Any excess funds shall be retained by the organization.

5. The predetermined amounts in subdivisions 2 and 3 of this subsection shall be printed in the game program. The prize amount for a game shall be announced before the prize is paid to the winner.

H. The following rules shall apply to "treasure chest" games:

1. The organization shall list the treasure chest game on the bingo game program as a "Treasure Chest Raffle."

2. The organization shall have house rules posted that describe how the game is to be played.

3. The treasure chest participant shall only be selected through some other authorized charitable game at the same bingo session.

4. The organization shall account for all funds as treasure chest/raffle sales on the session reconciliation form.

5. If the player does not open the lock on the treasure chest, the game manager or his designee shall proceed to try every key until the correct key opens the treasure chest lock to show all players that one of the keys will open the lock.

I. The following rules shall apply to progressive bingo games:

1. Bingo paper sold for use in progressive bingo games shall conform to the standards set forth in 11VAC15-40-130.

2. Organizations shall not include in admission packs the bingo paper intended for use in progressive bingo games.

3. Any progressive bingo game, its prize, and the number of bingo numbers to be called shall be clearly announced before the progressive bingo game is played and shall be posted on the premises where the progressive bingo game is played during each session that a progressive bingo game is played.

4. Pricing for a progressive bingo game card or sheet shall be listed on the game program.

5. If the predetermined pattern is not covered within the predetermined number of bingo numbers to be called, then the number of bingo numbers called will increase by one number for each subsequent session the progressive game is played.

6. If the predetermined pattern is not covered within the predetermined number of bingo numbers to be called for that progressive bingo game, then the game will continue as a regular bingo game until the predetermined pattern is covered and a regular bingo prize is awarded.

7. The prize for any progressive bingo game shall be in accordance with the provisions of § 18.2-340.33 of the Code of Virginia.

J. The following rules shall apply to "WINGO":

1. "WINGO" shall be played only for the hearing-impaired players.

2. "WINGO" shall utilize a visual device such as an oversized deck of cards in place of balls selected from a blower.

3. A caller must be in an area visible to all players and shall randomly select cards or other visual devices one at a time and display them so that all players can see them.

4. The organization must have house rules for "WINGO" and the rules shall identify how players indicate that they have won.

5. All financial reporting shall be consistent with reporting for a traditional bingo game.

K. The following rules of play shall apply to event games:

1. No instant bingo cards or pull-tabs that have been marked, defaced, altered, tampered with, or otherwise constructed in a manner that tends to deceive the public or affect the chances of winning or losing shall be placed into play.

2. Instant bingo cards and pull-tabs used in an event game shall not be offered for sale or sold at a purchase price other than the purchase price indicated on the flare for that particular deal.

3. The maximum prize amount for event games shall not exceed the amount set forth in § 18.2-340.33 (9) of the Code of Virginia for instant bingo, pull-tab, or seal card.

4. A sign-up sheet is not required for event games in which the winner or winners are determined using a seal card.

5. Organizations shall determine the winner or winners of event games during the same bingo session in which the instant bingo cards or pull-tabs are sold.

6. An authorized representative of the organization shall deface or punch the winning instant bingo cards or winning pull-tabs immediately after redemption.

7. If unsold bingo cards or unsold pull-tabs remain, the unsold cards shall be retained for three years following the close of the fiscal year and shall not be opened.

Article 3
Bank Accounts, Recordkeeping, Financial Reporting, Audits, Fees

11VAC15-40-70. Bank accounts.

A. A qualified organization shall maintain a charitable gaming bank account that is separate from any other bank account and all gaming receipts shall be deposited into the charitable gaming bank account.

B. Disbursements for expenses other than prizes and reimbursement of meal expenses shall be made by check directly from a charitable gaming account.

C. All charitable gaming bank account records, including but not limited to monthly bank statements, canceled checks or facsimiles thereof, and reconciliations, shall be maintained for three years following the close of a fiscal year.

D. All receipts from each session of bingo games and instant bingo, pull-tabs, or seal cards shall be deposited by the second business day following the session at which they were received.

E. Raffle proceeds shall be deposited into the qualified organization's charitable gaming bank account no later than the end of the calendar week following the week during which the organization received the proceeds.

11VAC15-40-80. Recordkeeping.

A. In addition to the records required by § 18.2-340.30 D of the Code of Virginia, qualified organizations conducting bingo shall maintain a system of records for a minimum of three years, unless otherwise specified for each gaming session on forms prescribed by the department, or reasonable facsimiles of those forms approved by the department, that include:

1. Charitable gaming supplies purchased and used;

2. A session reconciliation form and an instant bingo, pull-tab, seal card, or electronic game card reconciliation form completed and signed within 48 hours of the end of the session by the bingo manager;

3. All discounts provided;

4. A reconciliation to account for cash received from floor workers for the sale of extra bingo sheets for any game;

5. Number of electronic bingo devices rented, unique serial numbers of such devices, number of faces sold by each unit, and a summary report for each session to include date, time, location, and detailed information on income and expenses;

6. An admissions control system that provides a cross-check on the number of players in attendance and admission sales. This may include a ticket control system, cash register, or any similar system;

7. All operating expenses including rent, advertising, and security. Copies of invoices for all such expenses shall also be maintained;

8. Expected and actual receipts from games played on hard cards and number of games played on hard cards;

9. A record of the name and address of each winner for all seal cards; in addition, the winning ticket and seal card shall be maintained for a minimum of 90 days after the session;

10. A record of all door prizes awarded; and

11. For any prize or jackpot of a value that meets or exceeds the reporting requirements in the Internal Revenue Service's Publication 3079, the name and address of each individual to whom any such prize or jackpot is awarded and the amount of the award.

B. Qualified organizations conducting raffles shall have a recordkeeping system to account for cash receipts, cash disbursements, raffle tickets purchased or sold, and prizes awarded. All records shall be maintained for three years from the close of the fiscal year. The recordkeeping system shall include:

1. Invoices for the purchase of raffle tickets, which shall reflect the following information:

a. Name and address of supplier;

b. Name of purchaser;

c. Date of purchase;

d. Number of tickets printed;

e. Ticket number sequence for tickets printed; and

f. Sales price of individual ticket;

2. A record of cash receipts from raffle ticket sales by tracking the total number of tickets available for sale, the number issued to sellers, the number returned, the number sold, and reconciliation of all raffle sales to receipts;

3. Serial numbers of tickets for raffle sales initiated and concluded at a bingo game or sequentially numbered tickets, which shall state the name, address, and telephone number of the organization, the prize or prizes to be awarded, the date of the prize drawing or selection, the selling price of the raffle ticket, and the charitable gaming permit number;

4. For any raffle prize of a value that meets or exceeds the reporting requirements in the Internal Revenue Service's Publication 3079, receipts on which prize winners must provide printed name, residence address, and the amount and description of the prize received; and

5. Deposit records of the required weekly deposits of raffle receipts.

C. All raffle tickets shall have a detachable section; be consecutively numbered with the detachable section having the same number; provide space for the purchaser's name, complete address, and telephone number; and state (i) the name and address of the organization; (ii) the prize or prizes to be awarded; (iii) the date, time and location of the prize drawing; (iv) the selling price of the ticket; and (v) the charitable gaming permit number. Winning tickets and unsold tickets shall be maintained for three years from the close of the fiscal year.

D. All unused charitable gaming supplies shall either be returned for refund to the original supplier in unopened original packaging in resalable condition as determined by the supplier or turned in to the department for destruction. The organization shall maintain a receipt for all such supplies returned to the supplier or turned in to the department.

11VAC15-40-90. Financial reporting, penalties, inspections, and audits.

A. Each charitable gaming permit holder shall file an annual report of receipts and disbursements by March 15 of each year on a form prescribed by the department. The annual report shall cover the activity for the fiscal year.

B. The annual report shall be accompanied by the audit and administration fee as established by the department for the fiscal year unless the fee has been remitted with quarterly reports or the organization is exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia.

C. An organization desiring an extension to file its annual report for good cause shall request the extension in writing on a form prescribed by the department and shall pay the projected audit and administration fee, unless exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. The extension request and payment of projected fees shall be made in accordance with the provisions of § 18.2-340.30 of the Code of Virginia.

D. Unless exempted by § 18.2-340.23 of the Code of Virginia, qualified organizations realizing any gross gaming receipts in any calendar quarter shall file a quarterly report of receipts and disbursements on a form prescribed by the department as follows:

Quarter Ending	Date Due
March 31	June 1
June 30	September 1
September 30	December 1
December 31	March 1

Qualified organizations shall submit quarterly reports with the appropriate audit and administration fee unless the organization is exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. An annual financial report may substitute for a quarterly report if the organization has no further charitable gaming income during the remainder of the reporting period and the annual report is filed by the due date for the applicable calendar quarter.

E. An organization desiring an extension to file its quarterly report for good cause shall request the extension in writing on a form prescribed by the department and shall pay the projected audit and administration fee unless exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. The extension request and payment of projected fees shall be made in accordance with the provisions of § 18.2-340.30 of the Code of Virginia.

F. Organizations failing to file required reports, request an extension, or make fee payments when due shall be charged a penalty of $25 per day from the due date until such time as the required report is filed.

G. Any qualified organization in possession of funds derived from charitable gaming (including those who have ceased operations), regardless of when such funds may have been received or whether it has a valid permit from the department, shall file an annual financial report on a form prescribed by the department on or before March 15 of each year until such funds are depleted. If an organization ceases the conduct of charitable gaming, it shall provide the department with the name of an individual who shall be responsible for filing financial reports. If no such information is provided, the president of an organization shall be responsible for filing reports until all charitable gaming proceeds are depleted.

H. If an organization has been identified through inspection, audit, or other means as having deficiencies in complying with statutory or regulatory requirements or having ineffective internal controls, the department may impose restrictions or additional recordkeeping and financial reporting requirements.

I. Any records deemed necessary to complete an inspection, audit, or investigation may be collected by the department, its employees, or its agents from the premises of an organization or any location where charitable gaming is conducted. The department shall provide a written receipt of such records at the time of collection.

11VAC15-40-100. Use of proceeds.

A. All payments by an organization intended as use of proceeds must be made by check written from the organization's charitable gaming account.

B. Use of proceeds payments may be made for scholarship funds or the future acquisition, construction, remodeling, or improvement of real property or the acquisition of other equipment or vehicles to be used for religious, charitable, educational, or community purposes. In addition, an organization may obtain department approval to establish a special fund account or an irrevocable trust fund for special circumstances. Transfers to such an account or an irrevocable trust fund from the organization's charitable gaming account may be included as a use of proceeds if the payment is authorized by an organization's board of directors.

No payments made to such a special fund account shall be withdrawn for other than the specified purpose unless prior notification is made to the department.

C. Expenditures of charitable gaming funds for social or recreational activities or for events, activities, or programs that are open primarily to an organization's members and their families shall not qualify as use of proceeds unless substantial benefit to the community is demonstrated.

D. Payments made to or on behalf of indigent, sick, or deceased members or their immediate families shall be allowed as use of proceeds provided they are approved by the organization's board of directors and the need is documented.

E. Payments made directly for the benefit of an individual member, member of his family, or person residing in his household shall not be allowed as a use of proceeds unless authorized by law or elsewhere in this chapter.

F. Use of proceeds payments by an organization shall not be made for any activity that is not permitted by federal, state, or local laws or for any activity that attempts to influence or finance directly or indirectly political persons or committees or the election or reelection of any person who is or has been a candidate for public office.

G. Organizations shall maintain details of all use of proceeds disbursements for a minimum of three years and shall make this information available to the department upon request.

H. The department may disallow a use of proceeds payment to be counted against the minimum percentage referred to in 11VAC15-40-20 D. If any payment claimed as use of proceeds is subsequently disallowed, an organization may be allowed additional time as specified by the department to meet minimum use of proceeds requirements.

Article 4
Rent

11VAC15-40-110. Requirements regarding renting premises, agreements, and landlord participation.

A. No organization shall rent or use any leased premises to conduct charitable gaming unless all terms for rental or use are set forth in a written agreement and signed by the parties thereto prior to the issuance of a permit to conduct charitable gaming. A qualified organization that leases a building or other premises that is utilized in whole or in part for the purpose of conducting charitable gaming more frequently than two calendar days in one calendar week shall only lease such premises directly from (i) a qualified organization that is exempt from taxation pursuant to § 501 (c) of the Internal Revenue Code or (ii) any county, city, or town.

B. Organizations shall not make payments to a landlord except by check drawn on the organization's charitable gaming account.

C. No landlord, his agent or employee, member of his immediate family, or person residing in his household shall make directly or indirectly a loan to any officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of an organization in Virginia that leases its charitable gaming facility from the landlord.

D. No landlord, his agent or employee, member of his immediate family, or person residing in his household shall make any direct or indirect payment to any officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming conducted at a facility rented from the landlord in Virginia unless the payment is authorized by the lease agreement and is in accordance with the law.

E. No landlord, his agent or employee, member of his immediate family, or person residing in the same household shall at charitable games conducted on the landlord's premises:

1. Participate in the management, operation, or conduct of any charitable games;

2. Sell, lease, or otherwise provide any bingo supplies including, but not limited to, bingo cards, pull-tab cards, electronic game cards, or other game pieces; or

3. Require as a condition of the lease or contract that a particular manufacturer, distributor, or supplier of bingo supplies is used by the organization.

"Bingo supplies" as used in this chapter shall not include glue, markers, or tape sold from concession stands or from a location physically separated from the location where bingo supplies are normally sold.

F. No member of an organization involved in the management, operation, or conduct of charitable gaming shall provide any services to a landlord or be remunerated in any manner by the landlord of the facility where an organization is conducting its charitable gaming.

Part III
Suppliers

11VAC15-40-120. Suppliers of charitable gaming supplies: application, qualifications, suspension, revocation or refusal to renew permit, maintenance, and production of records.

A. Prior to providing any charitable gaming supplies, a supplier shall submit an application on a form prescribed by the department and receive a permit. A $1,000 application fee payable to the Treasurer of Virginia is required. In addition, a supplier must be authorized to conduct business in the Commonwealth of Virginia, which may include, but not be limited to, registration with the State Corporation Commission, the Department of Taxation, and the Virginia Employment Commission. The actual cost of background investigations for a permit may be billed by the department to an applicant. The department shall act on an application within 90 days of receipt of the application.

B. The department may refuse to issue a permit or may suspend or revoke a permit if an officer, director, employee, agent, or owner:

1. Is operating without a valid license, permit, or certificate as a supplier or manufacturer in any state in the United States;

2. Fails or refuses to recall a product as directed by the department;

3. Conducts business with unauthorized entities or is not authorized to conduct business in the Commonwealth of Virginia;

4. Has been convicted of or pleaded nolo contendere to any crime as specified by § 18.2-340.34 B of the Code of Virginia; has had any license, permit, certificate, or other authority related to activities defined as charitable gaming in the Commonwealth suspended or revoked in the Commonwealth or in any other jurisdiction; has failed to file or has been delinquent in excess of one year in the filing of any tax returns or the payment of any taxes due the Commonwealth; or has failed to establish a registered office or registered agent in the Commonwealth if so required by § 13.1-634 or 13.1-763 of the Code of Virginia. As this provision relates to employees or agents, it shall only apply to individuals involved in sales to or solicitations of customers in the Commonwealth of Virginia;

5. Fails to notify the department within 20 days of the occurrence, knowledge, or receipt of the filing of any administrative or legal action relating to charitable gaming or the distribution of charitable gaming supplies involving or concerning the supplier, any officers or directors, employees, agent, or owner during the term of its permit;

6. Fails to provide to the department upon request a current Letter for Company Registration on file with the U.S. Department of Justice-Gambling Devices Registration Unit, if required in accordance with The Gambling Devices Act of 1962, 15 USC §§ 1171-1178, for any device that it sells, distributes, services, or maintains in the Commonwealth of Virginia; or

7. Has been engaged in conduct that would compromise the department's objective of maintaining the highest level of integrity in charitable gaming.

C. A supplier shall not sell, offer to sell, or otherwise provide charitable gaming supplies for use by anyone in the Commonwealth of Virginia other than to an organization with a permit from the department or another permitted supplier. However, a supplier may:

1. Sell charitable gaming supplies to an organization that expects to gross the amount set forth in § 18.2-340.23 of the Code of Virginia or less in any 12-month period, providing that the amount of such purchase would not be reasonably expected to produce more than the amount set forth in § 18.2-340.23 of the Code of Virginia in gross sales. For each such organization, the supplier shall maintain the name, address, and telephone number. The supplier shall also obtain a written and signed statement from an officer or game manager of such organization confirming that gross receipts are expected to be the amount set forth in § 18.2-340.23 of the Code of Virginia or less. Such statement shall be dated and kept on file for three years from the end of a fiscal year.

2. Sell bingo cards and paper to persons or entities other than qualified organizations provided such supplies shall not be sold or otherwise provided for use in charitable gaming activities regulated by the department or in unlawful gambling activities. For each such sale, the supplier shall maintain the name, address, and telephone number of the purchaser. The supplier shall also obtain a written statement from the purchaser verifying that such supplies will not be used in charitable gaming or any unlawful gambling activity. Such statement shall be dated and kept on file for three years from the end of a fiscal year. Payment for such sales in excess of $50 shall be accepted in the form of a check.

3. Sell pull-tabs, seal cards, event game cards, and electronic game cards to organizations for use only upon the premises owned or exclusively leased by the organization and at such times as the portion of the premises in which the pull-tabs, seal cards, event game cards, or electronic game cards are sold is open only to members and their guests as authorized by § 18.2-340.26:1 of the Code of Virginia. Each such sale shall be accounted for separately and the accompanying invoice shall be clearly marked: "For Use in Social Quarters Only."

All such sales shall be documented pursuant to subsection H of this section and reported to the department pursuant to subsection J of this section. This provision shall not apply to the sale to landlords of equipment and video systems as defined in this chapter. Equipment and video systems shall not include dispensing devices, electronic bingo devices, and player devices.

D. A supplier shall not sell, offer to sell, or otherwise provide charitable gaming supplies to any individual or organization in the Commonwealth of Virginia unless the charitable gaming supplies are purchased or obtained from a manufacturer or another permitted supplier. Suppliers may take back for credit and resell supplies received from an organization with a permit that has ceased charitable gaming or is returning supplies not needed.

E. No supplier, supplier's agent, or employee may be involved in the management, operation, or conduct of charitable gaming in the Commonwealth of Virginia. No member of a supplier's immediate family or person residing in the same household as a supplier may be involved in the management, operation, or conduct of charitable gaming of any customer of the supplier in the Commonwealth of Virginia. No supplier, supplier's agent, or employee may participate in any charitable gaming of any customer of the supplier in the Commonwealth of Virginia. For the purposes of this regulation, servicing of electronic devices shall not be considered conduct or participation.

F. The department shall conduct a background investigation prior to the issuance of a permit to any supplier. The investigation may include, but shall not be limited to, the following:

1. A search of the Virginia Central Criminal Records Exchange (CCRE) on all officers, directors, and owners; and

2. Verification of current compliance with Commonwealth of Virginia tax laws.

If the officers, directors, or owners are domiciled outside of the Commonwealth of Virginia, or have resided in the Commonwealth of Virginia for fewer than five years, a criminal history search conducted by the appropriate authority in any state in which they have resided during the previous five years shall be provided by the applicant.

G. Appropriate information and authorizations shall be provided to the department to verify information cited in subsection F of this section.

H. Suppliers shall document each sale or rental of charitable gaming supplies to an organization in the Commonwealth of Virginia on an invoice, which reflects the following:

1. Name, address, and OCG number of the organization;

2. Date of sale or rental and location where bingo supplies are shipped if different from the billing address;

3. Name, form number, and serial number of each deal of instant bingo, pull-tabs, seal cards, electronic game cards, or bundles and the number of cards in each deal;

4. Quantity of deals sold, the cost per deal, the selling price per card, the cash take-in per deal, and the cash payout per deal;

5. Serial number of the top sheet in each pack of disposable bingo paper, the number of sheets in each pack or pad, the cut and color, and the number of packs or pads sold;

6. Serial number for each series of uncollated bingo paper and the number of sheets sold;

7. Detailed information concerning the type, quantity, and individual price of any other charitable gaming supplies or related items including, but not limited to, concealed face bingo cards, hard cards, markers or daubers and refills, or any other merchandise. For concealed face bingo cards, the number of sets, price per set, and the serial number of each set shall be included;

8. Serial number of each player device, the form of the player device, the number of player devices sold or rented, and the physical address to which each player device is shipped;

9. Serial number and description of any other equipment sold or rented that is used to facilitate the distribution, play, and redemption of electronic game cards and the physical address to which the equipment is shipped; and

10. Any type of equipment, device, or product manufactured for or intended to be used in the conduct of charitable games including, but not limited to, designators, designator receptacles, number display boards, selection devices, dispensing machines, and verification devices.

I. Suppliers shall ensure that two copies of the detailed invoice are provided to the customer for each sale of charitable gaming supplies.

J. Each supplier shall provide a report to the department by March 1 of each year on sales of charitable gaming supplies for the fiscal year ending December 31 of the previous year to each organization in the Commonwealth of Virginia. This report shall be provided to the department on computer disk or other department-approved media. The report shall include the name and address of each organization and the following information for each sale or transaction:

1. Bingo paper sales including purchase price, description of paper to include number of sheets in pack and number of faces on sheet, and quantity of single sheets or packs shipped;

2. Deals of instant bingo, pull-tabs, seal cards, electronic game cards, or any other raffle sales including purchase price, deal name, deal form number, number of tickets in deal, ticket price, cash take-in per deal, cash payout per deal, and number of deals;

3. Electronic bingo device sales including purchase or rental price and number of units;

4. Equipment used to facilitate the distribution, play, and redemption of electronic game cards including purchase or rental price, description of equipment, number of units of each type of equipment, and the physical address to which the equipment is shipped; and

5. Sales of miscellaneous items such as daubers, markers, and other merchandise including purchase price, description of product, and number of units.

K. The department shall set manufacturing and testing criteria for all electronic bingo devices and other equipment used in the conduct of charitable gaming. An electronic bingo device shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use in the conduct of charitable gaming until an identical sample device containing identical proprietary software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the device conforms, at a minimum, to the restrictions and conditions set forth in these regulations. Once the testing facility reports the test results to the department, the department will either approve or disapprove the submission and inform the manufacturer of the results within 10 business days. If any such equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the manufacturer of such equipment.

L. Department employees shall have the right to inspect all electronic and mechanical equipment used in the conduct of charitable gaming.

M. Suppliers, their agents and employees, members of the supplier's immediate family, or persons residing in their household shall not make any loan directly or indirectly to any organization or officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of a supplier's customer located in the Commonwealth of Virginia.

N. No supplier, supplier's agent, or employee shall directly or indirectly provide a rebate, discount, or refund to any person other than an organization that purchases supplies or leases or purchases equipment from the supplier. All such transactions shall be recorded on the supplier's account books.

O. A supplier shall not rent, sell, or otherwise provide electronic bingo devices or equipment used to distribute, play, or redeem electronic game cards unless the supplier possesses a valid permit in the Commonwealth of Virginia.

P. A written agreement specifying the terms of lease or rental shall be required for any electronic bingo devices or equipment used to distribute, play, or redeem electronic game cards provided to an organization.

11VAC15-40-130. Construction and other standards for bingo, instant bingo, pull-tabs, seal cards, event games, raffles, electronic bingo devices, and instant bingo, pull-tab, and seal card dispensers.

A. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use bingo supplies unless they conform to the following construction standards:

1. Disposable paper sold shall be of sufficient weight and quality to allow for clearly readable numbers and to prevent ink from spreading, bleeding, or otherwise obscuring other numbers or cards.

2. Each sheet of disposable bingo paper shall be comprised of cards bearing a serial number. No serial number shall be repeated on or in the same style, series, and color of cards within a three-year period.

3. Disposable bingo paper assembled in books or packs shall not be separated except for single-sheet specials. This provision does not apply to two-part cards on which numbers are filled by players and one part is separated and provided to an organization for verification purposes.

4. Each unit of disposable bingo paper shall have an exterior label listing the following information:

a. Description of product;

b. Number of packs or loose sheets;

c. Series numbers;

d. Serial number of the top sheet;

e. Number of cases;

f. Cut of paper; and

g. Color of paper.

5. "Lucky Seven" bingo cards or electronic facsimiles thereof shall have a single face where seven numbers shall be chosen. "Lucky Seven" sheets or electronic facsimiles thereof shall have multiple faces where seven numbers shall be chosen per face.

B. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use instant bingo, pull-tab, seal cards, or event game cards unless they conform to the following construction standards:

1. Cards shall be constructed so that concealed numbers, symbols, or winner protection features cannot be viewed or determined from the outside of the card by using a high intensity lamp of 500 watts, with or without utilizing a focusing lens.

2. Deals shall be designed, constructed, glued, and assembled in a manner to prevent determination of a winning or losing ticket without removing the tabs or otherwise uncovering the symbols or numbers as intended.

3. Each card in a deal shall bear the same serial number. Only one serial number shall be used in a deal. No serial number used in a deal shall be repeated by the same manufacturer on that same manufacturer's form within a three-year period. The flare of each deal shall accompany the deal and shall have affixed to it the same serial number as the tickets in such deal.

4. Numbers or symbols on cards shall be fully visible in the window and shall be placed so that no part of a number or symbol remains covered when the tab is removed.

5. Cards shall be glued on all edges and around each window. Glue shall be of sufficient strength and type to prevent the undetectable separation or delamination of the card. For banded tickets, the glue must be of sufficient strength and quality to prevent the separation of the band from the ticket.

6. The following minimum information shall be printed on a card:

a. Break open pull-tab, instant bingo cards, and event game cards:

(1) Name of the manufacturer or its distinctive logo;

(2) Name of the game;

(3) Manufacturer's form number;

(4) Price per individual card or bundle;

(5) Unique minimum five-digit game serial number printed on the game information side of the card; and

(6) Number of winners and respective winning number or symbols and specific prize amounts unless accompanied by a manufacturer's preprinted publicly posted flare with that information.

b. Banded pull-tabs:

(1) Manufacturer;

(2) Serial number;

(3) Price per individual card or bundle unless accompanied by a manufacturer's preprinted publicly posted flare with that information; and

(4) Number of winners and respective winning numbers or symbols and prize amounts or a manufacturer's preprinted publicly posted flare giving that information.

7. All seal card games sold to organizations shall contain the sign-up sheet, seals, and cards packaged together in each deal.

C. Raffle tickets used independent of a bingo game must conform to the following construction standards:

1. Each ticket shall have a detachable section and shall be consecutively numbered.

2. Each section of a ticket shall bear the same number. The section retained by the organization shall provide space for the purchaser's name, complete address, and telephone number.

3. The following information shall be printed on the purchaser's section of each ticket:

a. Dates and times of drawings;

b. Locations of the drawings;

c. Name of the charitable organization conducting the raffle;

d. Price of the ticket;

e. Charitable gaming permit number; and

f. Prizes.

Exceptions to these construction standards are allowed only with prior written approval from the department.

D. Electronic bingo.

1. The department, at its discretion, may require additional testing of electronic bingo devices at any time. Such additional testing shall be at the manufacturer's expense and shall be a condition of the continued use of such device.

2. All electronic bingo devices shall use proprietary software and hardware or commonly available software and computers and shall be enabled for play on the premises where the game is to be played.

3. Each electronic bingo device shall have a unique identification number permanently coded into the software of such device. Manufacturers of electronic bingo devices shall employ sufficient security safeguards in designing and manufacturing the devices such that it may be verified that all proprietary software components are authentic copies of the approved software components and all functioning components of the device are operating with identical copies of approved software programs. The device must also have sufficient security safeguards so that any restrictions or requirements authorized by the department or any approved proprietary software are protected from alteration by unauthorized personnel. The device shall not contain hard-coded or unchangeable passwords. Security measures that may be employed to comply with these provisions include, but are not limited to, the use of dongles, digital signature comparison hardware and software, secure boot loaders, encryption, and key and callback password systems.

4. Electronic bingo devices shall not allow a player to create a card by the input of specific numbers on each card. Manufacturers shall ensure that an electronic bingo device does not allow for the play of any bingo card faces other than those verifiably purchased by the patron.

5. Electronic bingo devices shall not accept cash, currency, or tokens for play.

6. Electronic bingo devices shall require the manual entry of numbers as they are called, the manual verification of numbers as they have been electronically transmitted to the device, or the full automatic daubing of numbers as each number is called. During the play of a bingo game, the transmission of data to electronic bingo devices shall be limited to one-way communication to the device and shall consist only of the number called.

7. A device shall not allow the play of more than 54 cards per device per game.

8. The electronic bingo device system shall record a sequential transaction number or audit tracking number for each transaction. The system shall not allow the manual resetting or changing of this number.

9. The system shall produce a receipt and a transaction log containing the following:

a. Organization name;

b. Location of bingo game;

c. Sequential transaction or receipt number;

d. Number of electronic bingo cards loaded;

e. Cost of electronic bingo cards loaded; and

f. Date and time of each transaction.

10. The system shall maintain and make available on demand a summary report for each session that includes the following:

a. Organization name;

b. Physical location of bingo game;

c. Date and time of each transaction;

d. Sequential transaction or receipt number;

e. Number of electronic bingo cards loaded;

f. Cost of electronic bingo cards loaded;

g. A transaction history correlating each electronic sale to the device identification number of the device on which the sale was played;

h. Sufficient information to identify voids, including the date and time of each voided transaction;

i. Sufficient information to identify device returns; and

j. Total gross receipts for each session.

11. Each device shall be programmed to automatically erase all stored electronic cards at the end of the last game of a session, within a set time from their rental to a player, or by some other clearance method approved by the department.

12. All devices shall be reloaded with another set of cards at the beginning of each session if the devices are to be reused at the same location.

E. In instances where a defect in packaging or in the construction of deals or electronic devices is discovered by or reported to the department, the department shall notify the manufacturer of the deals or devices containing the alleged defect. Should the department, in consultation with the manufacturer, determine that a defect exists, and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to deals or electronic devices for use still located within the Commonwealth of Virginia, require the supplier to:

1. Recall the deals or electronic devices affected that have not been sold or otherwise provided; or

2. Issue a total recall of all affected deals or electronic devices.

F. No instant bingo, pull-tab, or seal card dispenser may be sold, leased, or otherwise furnished to any person or organization in the Commonwealth of Virginia or used in the conduct of charitable gaming until an identical sample device containing identical proprietary software, if applicable, has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The cost of testing shall be borne by the manufacturer of such equipment. In addition, suppliers and manufacturers of such dispensers shall comply with the requirements of The Gambling Devices Act of 1962 (15 USC §§ 1171-1178).

G. All instant bingo, pull-tab, or seal card dispensing devices must meet the following standards:

1. Each dispenser shall be manufactured in a manner that ensures a pull-tab ticket is dispensed only after insertion of United States currency or coinage into the dispenser. Such ticket and any change due shall be the only items dispensed from the machine.

2. Each dispenser shall be manufactured in a manner that ensures the device neither displays nor has the capability of displaying or otherwise identifying an instant bingo, pull-tab, or seal card winning or nonwinning ticket.

3. Each dispenser shall be manufactured in such a manner that any visual animation does not simulate or display rolling or spinning reels or produce audible music or enhanced sound effects.

4. Each dispenser shall be equipped with separate locks for the instant bingo, pull-tab, or seal card supply modules and money boxes. Locks shall be configured so that no one key will operate both the supply modules and money boxes.

H. The department may require additional testing of a dispensing device at any time to ensure that it meets construction standards and allows for fair play. Such tests shall be conducted at the cost of the manufacturer of such devices.

I. The face value of cards being dispensed shall match the amount deposited in the currency/coin acceptor less change provided.

11VAC15-40-140. Instant bingo, pull-tabs, seal cards, or event game cards randomization standards.

All instant bingo, pull-tabs, seal cards, or event game cards shall meet the following randomization standards:

1. Deals shall be assembled so that winning tickets are placed throughout each deal.

2. Deals shall be assembled and packaged in a manner that prevents isolation of winning cards due to variations in printing, graphics, colors, sizes, appearances of cut edges, or other markings of cards.

3. Winning cards shall be distributed and mixed among all other cards in a deal so as to eliminate any pattern between deals or portions of deals from which the location or approximate location of any winning card may be determined.

Part IV
Electronic Games of Chance Systems

Article 1
General Requirements

11VAC15-40-150. Approval of distributed pull-tab systems, validation systems, point-of-sale stations, and redemption terminals.

A. The department shall set manufacturing and testing criteria for all distributed pull-tab systems, validation systems, point-of-sale stations, redemption terminals, and other equipment used in the conduct of charitable gaming. A distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use in the conduct of charitable gaming until an identical sample system or equipment containing identical software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the distributed pull-tab system and associated hardware and software conform, at a minimum, to the requirements set forth in this chapter. Once the testing facility reports the test results to the department, the department will either approve or disapprove the distributed pull-tab system or system components and inform the manufacturer of the results within 10 business days. If any such system or equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the manufacturer of such equipment.

B. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use a distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment used to conduct charitable gaming unless it conforms to the requirements set forth in this regulation.

C. If a defect in a distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment used to conduct charitable gaming is discovered by or reported to the department, the department shall notify the manufacturer of the system or equipment containing the alleged defect. Should the department, in consultation with the manufacturer, determine that a defect exists and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to any distributed pull-tab system, validation system, point of sale station, redemption terminal, or other equipment used to conduct charitable gaming still located within the Commonwealth of Virginia, require the supplier to issue a recall of all affected distributed pull-tab systems, validation systems, point-of-sale stations, redemption terminals, or other equipment.

Article 2
System Requirements

11VAC15-40-160. Distributed pull-tab system.

A distributed pull-tab system shall be dedicated primarily to electronic accounting, reporting, and the presentation, randomization, and transmission of electronic game cards to the player devices. It shall also be capable of generating the data necessary to provide the reports required within this article or otherwise specified by the department.

11VAC15-40-170. Dispensing of electronic game cards.

A distributed pull-tab system shall dispense, upon request, an electronic game card or cards. All games must be played without replacement, drawing from a single finite game set.

11VAC15-40-180. Game set requirements.

Each game set shall meet the following minimum requirements:

1. Each game set shall be made up of a finite number of electronic game cards;

2. The game set shall consist of a maximum of 25,000 electronic game cards;

3. All electronic game cards in a particular game set shall be of the same purchase price;

4. The maximum win amount awarded per any one electronic game card shall not exceed the value set forth for pull-tabs by § 18.2-340.33 of the Code of Virginia;

5. Each game set shall be assigned a unique serial number; and

6. After randomization, game sets may be broken into subsets of equal size. If game subsets are used, they shall each be assigned a unique serial number and be traceable to a parent game set.

11VAC15-40-190. Game set definition.

If the system has the capability to create a game set from a predefined set of criteria, the criteria must contain the following information:

1. Game ID;

2. Game set version;

3. Manufacturer;

4. Game name;

5. Paytable ID;

6. Purchase price per electronic game card;

7. Subset size;

8. Total number of subsets; and

9. Prize values with an associated index and frequency.

11VAC15-40-200. Data required to be available for each game set.

A. The following data shall be available prior to the opening of a game set for distribution and shall be maintained and be viewable both electronically and, if requested, by printed report, upon demand:

1. A unique serial number identifying each game set and/or subset;

2. A description of the game set sufficient to categorize the game set or subset relative to other game sets;

3. The total number of electronic game cards in the game set;

4. The number of game subsets to be created from the game set and the number of electronic game cards in each subset when applicable;

5. The payout percentage of the entire game set;

6. The purchase price per electronic game card assigned to the game set; and

7. Prize values with an associated index and frequency.

B. The following data shall be available subsequent to the completion of a game set and shall be maintained and viewable both electronically and, if requested, by printed report, upon demand:

1. A unique serial number identifying each game set and/or subset;

2. Description of the game set sufficient to categorize the game set relative to other game sets;

3. The total number of electronic game cards unsold;

4. The total number of electronic game cards purchased;

5. The time and date that the game set and/or each game subset became available for play;

6. The time and date that the game set and/or each game subset was completed or removed from play;

7. Location where game set and/or subset was played;

8. The final payout percentage of the game set when removed from play; and

9. The purchase price per electronic game card assigned to the game set.

C. In order to provide maximum game integrity, no audit or other determination of the status of any game set or any subset, including, but not limited to, a determination of the prizes won or prizes remaining to be won, shall be conducted by anyone while a game set or subset is in play without causing termination of the entire game set or subset. Only upon game set termination shall the details of the associated game set and subsets be revealed to the individual or individuals performing the audit.

D. Once terminated, a game set shall not be able to be reopened.

11VAC15-40-210. Security requirements.

A. A distributed pull-tab system computer must be in a locked, secure enclosure with key controls in place.

B. A distributed pull-tab system shall provide a means for terminating the game set if information about electronic game cards in an open game set has been accessed or at the discretion of the department. In such cases, traceability of unauthorized access including time and date, users involved, and any other relevant information shall be available.

C. A distributed pull-tab system shall not permit the alteration of any accounting or significant event information that was communicated from the player device without supervised access controls. In the event financial data is changed, an automated audit log must be capable of being produced to document the following:

1. Data element altered;

2. Data element value prior to alteration;

3. Data element value after alteration;

4. Time and date of alteration; and

5. Personnel that performed alteration.

D. A distributed pull-tab system must provide password security or other secure means of ensuring data integrity and enforcing user permissions for all system components through the following means:

1. All programs and data files must only be accessible via the entry of a password that will be known only to authorized personnel;

2. The distributed pull-tab system must have multiple security access levels to control and restrict different classes;

3. The distributed pull-tab system access accounts must be unique when assigned to the authorized personnel and shared accounts amongst authorized personnel must not be allowed;

4. The storage of passwords and PINs must be in an encrypted, nonreversible form; and

5. A program or report must be available that will list all registered users on the distributed pull-tab system including their privilege level.

E. All components of a distributed pull-tab system must have a password sign-on with two-level codes comprising the personal identification code and a personal password.

1. The personal identification code must have a length of at least six ASCII characters; and

2. The personal password must have a minimum length of six alphanumeric characters, which should include at least one nonalphabetic character.

F. A distributed pull-tab system must have the capability to control potential data corruption that can be created by multiple simultaneous log-ons by system management personnel.

1. A distributed pull-tab system shall specify which of the access levels allow for multiple simultaneous sign-ons by different users and which of the access levels do not allow for multiple sign-ons, and, if multiple sign-ons are possible, what restrictions, if any, exist; or

2. If a distributed pull-tab system does not provide adequate control, a comprehensive procedural control document must be drafted for the department's review and approval.

G. Distributed pull-tab system software components/modules shall be verifiable by a secure means at the system level. A distributed pull-tab system shall have the ability to allow for an independent integrity check of the components/modules from an outside source and is required for all control programs that may affect the integrity of the distributed pull-tab system. This must be accomplished by being authenticated by a third-party device, which may be embedded within the distributed pull-tab system software or having an interface or procedure for a third-party application to authenticate the component. This integrity check will provide a means for field verification of the distributed pull-tab system components.

H. A distributed pull-tab system may be used to configure and perform security checks on player devices, provided such functions do not affect the security, integrity, or outcome of any game and meets the requirements set forth in this regulation regarding program storage devices.

11VAC15-40-220. Backup and recovery.

A. A distributed pull-tab system computer shall have a separate physical medium for securely storing game sets or subsets on the computer, which shall be mirrored in real time by a backup medium.

B. All data required to be available or reported by this chapter must be retained for a period of not less than three years.

C. All storage of critical data shall utilize error checking and be stored on a nonvolatile physical medium.

D. The database shall be stored on redundant media so that no single failure of any portion of the system would result in the loss or corruption of data.

E. In the event of a catastrophic failure when the distributed pull-tab system cannot be restarted in any other way, it shall be possible to reload the distributed pull-tab system from the last viable backup point and fully recover the contents of that backup, to consist of at least the following information:

1. All significant events;

2. All accounting information;

3. Auditing information, including all open game sets and the summary of completed game sets; and

4. Employee files with access levels.

11VAC15-40-230. Electronic accounting and reporting.

A. One or more electronic accounting systems shall be required to perform reporting and other functions in support of distributed pull-tab system. The electronic accounting system shall not interfere with the outcome of any gaming function.

B. The following reporting capabilities must be provided by the electronic accounting system:

1. Electronic game card game set report – game sets in play. An electronic game card game set report must be available on demand for each game set currently in play. Game cards, outcomes, or prizes must not be revealed. The report must contain the following information:

a. A unique serial number identifying each game set and/or subsets;

b. A description of the game set sufficient to categorize the game set or subset relative to other game sets;

c. The total number of electronic game cards in the game set;

d. The number of game subsets to be created from the game set and the number of electronic game cards in each subset when applicable;

e. The theoretical payout percentage of the entire game set;

f. The purchase price per electronic game card assigned to the game set;

g. The time and date that the game set and/or each game subset became available for play; and

h. Location where the game set and/or subset is being played.

2. Electronic game card game set report – completed game set. An electronic game card game set report must be available on demand, for each completed game set. The report must contain the following information:

a. A unique serial number identifying each game set and/or subset;

b. Description of the game set sufficient to categorize the game set relative to other game sets;

c. The total number of electronic game cards unsold;

d. The total number of electronic game cards purchased;

e. The time and date that the game set and/or each game subset became available for play;

f. The time and date that the game set and/or each game subset was completed or removed from play;

g. Location where game set and/or subset was played;

h. The final payout percentage of the game set when removed from play; and

i. The purchase price per electronic game card assigned to the game set.

3. A report that shall indicate all prizes that exceed the threshold that triggers additional procedures to be followed for the purpose of compliance with federal tax reporting requirements. At a minimum, on a daily and monthly basis, the report shall provide the following information per player device:

a. The date and time won;

b. Location of prize award; and

c. Amount of each prize occurrence.

4. Liability report. A liability report shall provide a summary of the outstanding funds that carry from business day to business day. At a minimum, this report shall include:

a. Amount of prizes and/or vouchers that were awarded in dollars and cents, but have not yet been claimed that have not yet expired; and

b. Summary of all outstanding accounts.

5. Master reconciliation report. A master reconciliation report must be available on a per session basis, monthly basis, and quarterly basis at a minimum. A master reconciliation report shall include the following:

a. Total of all moneys used to purchase electronic game cards;

b. Total of all prizes, in dollars and cents, awarded from electronic game cards;

c. Total of all moneys inserted into a player device or provided to a cashier for the purchase of electronic game cards; and

d. Total of all moneys removed from a player device.

C. A distributed pull-tab system shall be capable of providing an electronic file in a format specified by the department on a periodic basis to a location specified by the department. The data to be reported will contain, at a minimum, the following items per session:

1. Organization identification;

2. Session date;

3. Total cash in;

4. Total cash out;

5. Total cash played;

6. Total cash won;

7. For all game sets on the system in play or in inventory:

a. Serial number;

b. Description;

c. Ticket price;

d. Number of subsets if applicable;

e. Number of tickets or number of tickets per subset;

f. Theoretical return percentage; and

g. Date game set was opened for play, when applicable; and

8. For all game sets completed or closed since the previous reporting date:

a. Serial number;

b. Description;

c. Ticket price;

d. Number of subsets, if applicable;

e. Number of tickets or number of tickets per subset;

f. Theoretical return percentage;

g. Date game set was opened;

h. Date game set was closed;

i. Total tickets sold;

j. Total dollars in;

k. Total prizes paid; and

l. Actual return percentage.

11VAC15-40-240. Randomization.

A. As used in this section, unless the context requires a different meaning:

"Card position" means the first card dealt, second card dealt in sequential order.

"Number position" means the first number drawn in sequential order.

B. A distributed pull-tab system shall utilize randomizing procedures in the creation of game sets for electronic game cards or externally generated randomized game sets that have been created using a method previously approved by the department.

C. Any random number generation, shuffling, or randomization of outcomes used in connection with a distributed pull-tab system must be by use of a random number generation application that has successfully passed standard tests for randomness and unpredictability including but not limited to:

1. Each card position or number position satisfies the 99% confidence limit using the standard chi-squared analysis. "Chi-squared analysis" is the sum of the ratio of the square difference between the expected result and the observed result to the expected result.

2. Each card position or number position does not produce a significant statistic with regard to producing patterns of occurrences. Each card position or number position will be considered random if it meets the 99% confidence level with regard to the "run test" or any similar pattern testing statistic. The "run test" is a mathematical statistic that determines the existence of recurring patterns within a set of data.

3. Each card position or number position is independently chosen without regard to any other card or number drawn within that game play. This test is the "correlation test." Each pair of card positions or number positions is considered random if it meets the 99% confidence level using standard correlation analysis.

4. Each card position or number position is independently chosen without reference to the same card position or number position in the previous game. This test is the "serial correlation test." Each card position or number position is considered random if it meets the 99% confidence level using standard serial correlation analysis.

11VAC15-40-250. Communications and network requirements.

A. Where the distributed pull-tab system components are linked with one another in a network, communication protocols shall be used that ensure that erroneous data or signals will not adversely affect the operations of any such system components.

B. All data communication shall incorporate an error detection and correction scheme to ensure the data is transmitted and received accurately.

C. Connections between all components of the distributed pull-tab system shall only be through the use of secure communication protocol(s) that are designed to prevent unauthorized access or tampering, employing Advanced Encryption Standard (AES), or equivalent encryption.

D. The minimum width (size) for encryption keys is 112 bits for symmetric algorithms and 1024 bits for public keys.

E. There must be a secure method implemented for changing the current encryption key set. It is not acceptable to only use the current key set to "encrypt" the next set.

F. There must be a secure method in place for the storage of any encryption keys. Encryption keys must not be stored without being encrypted themselves.

G. If a wireless network is used, wireless products used in conjunction with any gaming system or system component must meet the following minimum standards:

1. Employ a security process that complies with the Federal Information Processing Standard 140-2 (FIPS 140-2); or

2. Employ an alternative method, as approved by the department.

11VAC15-40-260. Significant events.

The following significant events, if applicable, shall be collected from the player device or point of sale and communicated to the system for storage and a report of the occurrence of the significant event must be made available upon request:

1. Power resets or power failure.

2. Communication loss between a player device and any component of the distributed pull-tab system.

3. Player device jackpot (any award in excess of the single win limit of the player device).

4. Door openings (any external door that accesses a critical area of the player device).

5. Bill validator errors:

a. Stacker full (if supported); and

b. Bill jam.

6. Printer errors:

a. Printer empty; and

b. Printer disconnect or failure.

7. Corruption of the player device RAM or program storage device.

8. Any other significant events as defined by the protocol employed by the distributed pull-tab system.

11VAC15-40-270. Validation system and redemption.

A distributed pull-tab system may utilize a voucher validation system to facilitate gaming transactions. The validation system may be entirely integrated into a distributed pull-tab system or exist as a separate entity.

1. Payment by voucher printer as a method of redeeming unused game plays and/or winnings on a player device is only permissible when the device is linked to an approved validation system or distributed pull-tab system that allows validation of the printed voucher.

a. A distributed pull-tab system may allow voucher out only; vouchers shall not be inserted, scanned, or used in any way at the player device for redemption.

b. The validation system must process voucher redemption correctly according to the secure communication protocol implemented.

2. The algorithm or method used by the validation system or distributed pull-tab system to generate the voucher validation numbers must guarantee an insignificant percentage of repetitive validation numbers.

3. The validation system must retrieve the voucher information correctly based on the secure communication protocol implemented and store the voucher information in a database. The voucher record on the host system must contain, at a minimum, the following voucher information:

a. Validation number;

b. Date and time the player device printed the voucher;

c. Value of voucher in dollars and cents;

d. Status of voucher;

e. Date and time the voucher will expire;

f. Serial number of player device; and

g. Location name or site identifier;

4. The validation system or distributed pull-tab system must have the ability to identify the following occurrences and notify the cashier when the following conditions exist:

a. Voucher cannot be found on file;

b. Voucher has already been paid; or

c. Amount of voucher differs from amount on file (requirement may be met by display of voucher amount for confirmation by cashier during the redemption process).

5. If the connection between the validation system and the distributed pull-tab system fails, an alternate method or procedure of payment must be available and shall include the ability to identify duplicate vouchers and prevent fraud by redeeming vouchers that were previously issued by the player device.

6. The following reports related to vouchers shall be generated on demand:

a. Voucher Issuance Report shall be available from the validation system that shows all vouchers generated by an electronic game card device; and

b. Voucher Redemption Report shall detail individual vouchers, the sum of the vouchers paid by the validation terminal or point of sale by session, and include the following information:

(1) The date and time of the transaction;

(2) The dollar value of the transaction;

(3) Validation number;

(4) A transaction number; and

(5) Point-of-sale identification number or name.

7. The validation system database must be encrypted and password-protected and should possess a nonalterable user audit trail to prevent unauthorized access.

8. The normal operation of any device that holds voucher information shall not have any options or method that may compromise voucher information. Any device that holds voucher information in its memory shall not allow removal of the information unless it has first transferred that information to the ticketing database or other secured component or components of the validation system.

11VAC15-40-280. Point of sale; validation terminal.

A. A distributed pull-tab system may utilize a point-of-sale and/or validation terminal that is capable of facilitating the sale of the organization's pull tab outcomes or used for the redemption of credits from player accounts or vouchers. The point of sale may be entirely integrated into a distributed pull-tab system or exist as a separate entity.

B. Point-of-sale use is only permissible when the device is linked to an approved validation system or distributed pull-tab system.

C. If a distributed pull-tab system utilizes a point of sale, it shall be capable of printing a receipt for each sale, void, or redemption.

1. The receipt shall contain the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Validation number, if applicable;

d. Quantity of associated products, if applicable;

e. Transaction number;

f. Account number, if applicable; and

g. Point-of-sale identification number or name.

D. The following point-of-sale or validation terminal reports shall be generated on demand:

1. Sales Transaction History Report shall show all sales and voids by session and include the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Quantity of associated products;

d. Transaction number; and

e. Point of sale identification number or name;

2. Voucher Redemption Report shall detail individual voucher redemptions paid by the validation terminal or point of sale by session and include the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Validation number;

d. Transaction number; and

e. Point of sale identification number or name.

11VAC15-40-290. Location of equipment.

All equipment used to facilitate the distribution, play, or redemption of electronic pull-tab or instant bingo games must be physically located within the boundaries of the Commonwealth of Virginia. This includes but is not limited to the distributed pull-tab system, player devices, redemption terminals, and point-of-sale stations.

Article 2
Player Devices

11VAC15-40-300. Player device general requirements.

A. Each player device shall bear a seal approved by the commissioner and affixed by the department.

B. A player device shall not be capable of being used for the purposes of engaging in any game prohibited by the department.

C. In addition to a video monitor or touch screen, each player device may have one or more of the following: a bill acceptor, printer, and electromechanical buttons for activating the game and providing player input, including a means for the player to make selections and choices in games.

D. For each player device, there shall be located anywhere within the distributed pull-tab system, nonvolatile memory or its equivalent. The memory shall be maintained in a secure location for the purpose of storing and preserving a set of critical data that has been error checked in accordance with the critical memory requirements of this regulation.

E. A player device shall not have any switches, jumpers, wire posts, or other means of manipulation that could affect the operation or outcome of a game. The player device may not have any functions or parameters adjustable through any separate video display or input codes except for the adjustment of features that are wholly cosmetic.

F. A player device shall not have any of the following attributes: spinning or mechanical reels, pull handle, sounds other than an audio effect to simulate the opening of a paper pull-tab or instant bingo card, flashing lights, tower light, top box, coin tray, ticket acceptance, hopper, coin acceptor, enhanced animation, cabinet or payglass artwork, or any other attribute identified by the department.

G. A player device shall be robust enough to withstand forced illegal entry that would leave behind physical evidence of the attempted entry or such entry that causes an error code that is displayed and transmitted to the distributed pull-tab system. Any such entry attempt shall inhibit game play until cleared, and shall not affect the subsequent play or any other play, prize, or aspect of the game.

H. The number of player devices, other than those player devices that are handheld, present at any premise at which charitable gaming is conducted shall be limited to one device for every 50 permissible occupants under the maximum occupancy as determined pursuant to the Uniform Statewide Building Code. The department shall determine whether a player device is handheld.

11VAC15-40-310. Cabinet wiring.

A. Proof of UL or equivalent certification shall be required for all submitted electronic devices.

B. A player device shall be designed so that power and data cables into and out of the player device can be routed so that the cables are not accessible to the general public.

11VAC15-40-320. Player device identification.

A player device shall have a permanently affixed identification badge that cannot be removed without leaving evidence of tampering. This badge shall be affixed to the exterior of the player device and shall include the following information:

1. Manufacturer name;

2. A unique serial number;

3. The player device model number;

4. The date of manufacture; and

5. Any other information required by the department.

11VAC15-40-330. Doors; compartments.

A. If a player device possesses an external door that allows access to the interior of the machine the following rules shall apply:

1. Doors and their associated hinges shall be capable of withstanding determined illegal efforts to gain access to the inside of the player device and shall leave evidence of tampering if an illegal entry is made;

2. All external doors shall be locked and monitored by door access sensors that shall detect and report all external door openings by way of an audible alarm, on-screen display, or both;

3. The player device shall cease play when any external door is opened;

4. It shall not be possible to disable a door open sensor when the machine's door is closed without leaving evidence of tampering;

5. The sensor system shall register a door as being open when the door is moved from its fully closed and locked position; and

6. Door open conditions shall be recorded in an electronic log that includes a date/time stamp.

B. Player devices that contain control programs located within an accessible area shall have a separate internal locked logic compartment, that shall be keyed differently than the front door access lock. The logic compartment shall be a locked cabinet area with its own locked door, that houses critical electronic components that have the potential to significantly influence the operation of the player device. There may be more than one such logic area in a player device. Electronic component items that are required to be housed in one or more logic areas are:

1. CPUs and other electronic components involved in the operation and calculation or display of game play;

2. Communication controller electronics and components housing the communication program storage media or, the communication board for the on-line system may reside outside the player device; and

3. Logic compartment door open conditions shall be recorded in a log that includes a date/time stamp.

C. Player devices that do not contain a door shall have adequate security for any panels or entry points that allow access to the interior of the device.

11VAC15-40-340. Memory clear.

A. Following the initiation of a memory reset procedure utilizing a certified reset method, the program shall execute a routine that initializes the entire contents of memory to the default state. For player devices that allow for partial memory clears, the methodology in doing so must be accurate and the game application must validate the uncleared portions of memory. The player device display after a memory reset shall not be the top award.

B. It shall not be possible to change a configuration setting that causes an alteration or obstruction to the electronic accounting meters without a memory clear.

11VAC15-40-350. Critical memory.

A. Critical memory shall be used to store all data that is considered vital to the continued operation of the player device. Critical memory storage shall be maintained by a methodology that enables errors to be identified and corrected in most circumstances. This methodology may involve signatures, checksums, partial checksums, multiple copies, timestamps, and/or use of validity codes. This includes, but is not limited to:

1. All electronic meters required in 11VAC15-40-420 E;

2. Current unused credits;

3. Player device or game configuration data;

4. Recall of all wagers and other information necessary to fully reconstruct the game outcome associated with the last 10 plays;

5. Software state, which is the last state the player device software was in before interruption; and

6. Error conditions that may have occurred on the player device that may include:

a. Memory error or control program error;

b. Low memory battery, for batteries external to the memory itself or low power source;

c. Program error or authentication mismatch; and

d. Power reset.

B. Comprehensive checks of critical memory shall be made continually to test for possible corruption. In addition, all critical memory:

1. Shall have the ability to retain data for a minimum of 180 days after power is discontinued from the player device. If the method used is an off-chip battery source, it shall recharge itself to its full potential in a maximum of 24 hours. The shelf life shall be at least five years. Memory that uses an off-chip back-up power source to retain its contents when the main power is switched off shall have a detection system that will provide a method for software to interpret and act upon a low battery condition;

2. Shall only be cleared by a department certified memory clear method; and

3. Shall result in an error if the control program detects an unrecoverable memory error.

11VAC15-40-360. Program storage devices.

A. All program storage devices (writable/nonwritable), including Erasable Programmable Read Only Memory (EPROM), DVD, CD-ROM, compact flash, and any other type of program storage device shall be clearly marked with sufficient information to identify the software and revision level of the information stored in the devices.

B. Program storage devices shall meet the following requirements:

1. Program storage, including CD-ROM, shall meet the following rules:

a. The control program shall authenticate all critical files by employing a hashing algorithm that produces a "message digest" output of at least 128 bits at minimum, as certified by the recognized independent test laboratory and agreed upon by the department. Any message digest shall be stored on a read-only memory device within the player device. Any message digest that resides on any other medium shall be encrypted, using a public/private key algorithm with a minimum of a 512 bit key, or an equivalent encryption algorithm with similar security certified by the independent test laboratory and agreed upon by the department.

b. The player device shall authenticate all critical files against the stored message digests. In the event of a failed authentication, the player device should immediately enter an error condition with the appropriate indication such as an audible signal, on-screen display, or both. This error shall require operator intervention to clear. The player device shall display specific error information and shall not clear until the file authenticates properly and/or the player device's memory is cleared, the game is restarted, and all files authenticate correctly.

2. CD-ROM specific based program storage shall:

a. Not be a rewriteable disk; and

b. The "write session" shall be closed to prevent any further writing to the storage device.

C. Player devices where the control program is capable of being erased and reprogrammed without being removed from the player device, or other equipment or related peripheral devices shall meet the following requirements:

1. Reprogrammable program storage shall only write to alterable storage media containing data, files, and programs that are not critical to the basic operation of the game.

2. Notwithstanding the foregoing, data may be written to media containing critical data, files, and programs provided that:

a. A log of all information that is added, deleted, and modified be stored on the media;

b. The control program verifies the validity of all data, files, and programs that reside on the media using the methods required herein;

c. The player device's program contains appropriate security to prevent unauthorized modifications; and

d. The player device's program does not allow game play while the media containing the critical data, files, and programs is being modified.

D. The control program shall ensure the integrity of all critical program components during the execution of said components and the first time the files are loaded for use even if only partially loaded. Space that is not critical to machine security (e.g., video or sound) is not required to be validated, although the department recommends a method be in place for the files to be tested for corruption. If any of the video or sound files contain payout amounts or other information needed by the player, the files are to be considered critical.

11VAC15-40-370. Touch screens.

Any touch screen must meet the following rules:

1. A touch screen shall be accurate once calibrated;

2. A touch screen shall be able to be recalibrated; and

3. A touch screen shall have no hidden or undocumented buttons or touch points anywhere on the touch screen, except as provided for by the game rules that affect game play.

11VAC15-40-380. Bill acceptors.

A. A player device may have a mechanism that accepts U.S. currency and provides a method to enable the player device software to interpret and act appropriately upon a valid or invalid input.

B. An acceptance device shall be electronically based and be configured to ensure that it only accept valid bills and rejects all others in a highly accurate manner.

C. A bill input system shall be constructed in a manner that protects against vandalism, abuse, or fraudulent activity. In addition, a bill acceptance device shall only register credits when:

1. The bill has passed the point where it is accepted and stacked; and

2. The bill acceptor has sent the "irrevocably stacked" message to the machine.

D. A bill acceptor shall communicate to the player device using a bidirectional protocol.

E. A bill acceptor shall be designed to prevent the use of cheating methods such as stringing, the insertion of foreign objects, and any other manipulation that may be deemed as a cheating technique.

F. If a bill acceptor is designed to be factory set only, it shall not be possible to access or conduct maintenance or adjustments to that bill acceptor in the field, other than:

1. The selection of bills and their limits;

2. Changing of certified EPROMs or downloading of certified software;

3. The method for adjustment of the tolerance level for accepting bills of varying quality should not be accessible from the exterior of the player device. Adjustments of the tolerance level should only be allowed with adequate levels of security in place. This can be accomplished through lock and key, physical switch settings, or other accepted methods approved on a case-by-case basis;

4. Maintenance, adjustment, and repair per approved factory procedures; and

5. Options that set the direction or orientation of bill acceptance.

G. A player device equipped with a bill acceptor shall have the capability of detecting and displaying an error condition for the following events:

1. Stacker full (it is recommended that an explicit "stacker full" error message not be utilized since this may cause a security issue);

2. Bill jams;

3. Bill acceptor door open. If a bill acceptor door is a machine door, a door open signal is sufficient;

4. Stacker door open; and

5. Stacker removed.

H. A player device equipped with a bill acceptor shall maintain sufficient electronic metering to be able to report the following:

1. Total monetary value of all bills accepted;

2. Total number of all bills accepted;

3. A breakdown of the bills accepted for each denomination; and

4. The value of the last five items accepted by the bill acceptor.

11VAC15-40-390. Payment by voucher printers.

A. If the player device has a printer that is used to issue payment to the player by issuing a printed voucher for any unused game plays and/or winnings, the player device shall meet the following rules:

1. The printer shall be located in a secure area of the player device, but shall not be located in the logic area or any cash storage area. The bill acceptor stacker or logic areas containing critical electronic components shall not be accessed when the printer paper is changed;

2. The player device, in which the printer is housed, is linked to a voucher validation system, which records the voucher information; and

3. Data printed on a voucher shall be provided to the voucher validation system that records the following information regarding each voucher printed:

a. Value of unused game plays and/or winnings in U.S. currency, in numerical form;

b. Time the voucher was printed;

c. Date the voucher was printed;

d. Location name or site identifier;

e. Serial number of player device;

f. Unique validation number or barcode; and

g. Expiration date and time.

B. If the player device is capable of printing a duplicate voucher, the duplicate voucher shall clearly state the word "DUPLICATE" on its face.

C. The printer shall use printer paper containing security features such as a watermark as approved by the department.

D. A printer shall have mechanisms to allow the player device to interpret and act upon the following conditions that must disable the game, and produce an error condition that requires attendant intervention to resume play:

1. Out of paper;

2. Printer jam or failure; and

3. Printer disconnect. The player device may detect this error condition when the game tries to print.

E. A player device that uses a voucher printer shall maintain a minimum of the last 25 transactions in critical memory. All voucher transactions shall be logged with a date and time stamp.

11VAC15-40-400. Payment by account.

A. Credit may be added to a player account via a cashier or point of sale station. Credit may also be added by any supporting player device through credits won or bills.

B. Money may be removed from a player account either through downloading of credits to the player device or by cashing out at a cashier's or point-of-sale station.

C. All monetary transactions between a supporting player device and the distributed pull-tab system must be secured by means of a card insertion into a magnetic card reader and PIN entry or by other protected means.

Article 3
Game Requirements

11VAC15-40-410. Game play requirements.

A. A player receives an electronic game card in return for consideration. A player wins if the player's electronic game card contains a combination of symbols or numbers that was designated in advance of the game as a winning combination. There may be multiple winning combinations in each game. Electronic versions of instant bingo and pull-tabs, as authorized by the department, shall only utilize devices that allow players to play electronic game cards. A player device shall meet the following minimum requirements:

1. A player may purchase an opportunity to play an electronic game card by:

a. Insertion of U.S. currency (bills only);

b. Purchase made at a point of sale terminal; or

c. Withdrawing deposits available in a player account.

2. In addition to the available games, the rules of play shall be displayed on the player device's video screen. Rules of play shall include all winning combinations.

3. Any number of game themes may be selectable for play on any given player device. Only one of the game themes shall be playable at any given time.

4. A player device shall be clearly labeled so as to inform the public that no one under 18 years of age is allowed to play.

5. A player device shall not be capable of displaying any enticing animation while in an idle state. A player device may use simple display elements or screen savers to prevent monitor damage.

6. The results of the electronic game card shall be shown to the player using a video display. No rolling, flashing, or spinning animations are permitted. No rotating reels marked into horizontal segments by varying symbols are permitted. No entertaining sound or music is permitted other than an audio effect to simulate the opening of a paper pull-tab or instant bingo card. Any sounds present used to simulate the opening of a paper pull-tab must not be played at a level sufficient to disturb other players or patrons.

7. The player device shall have one or more buttons, electromechanical or touch screen, to facilitate the following functions:

a. Viewing of the game "help" screens;

b. Viewing of the game rules;

c. Initiating game play;

d. Cashout or logout; and

e. One or more buttons designated to reveal the pull-tab or instant bingo windows.

8. Following play on a player device, the result shall be clearly shown on the video display along with any prizes that may have been awarded. Prizes may be dispensed in the form of:

a. Voucher;

b. Added to the machine balance meter; or

c. Added to the player's account balance.

9. An available balance may be collected from the player device by the player pressing the "cashout" button or logging off of the player device at any time other than during:

a. A game being played;

b. While in an audit mode or screen;

c. Any door open;

d. Test mode;

e. A machine balance meter or win meter incrementation unless the entire amount is placed on the meter when the "cashout" button is pressed; or

f. An error condition.

10. The default player device display, upon entering game play mode, shall not be the top award.

B. A player device shall not have hardware or software that determines the outcome of any electronic game card, produce its own outcome, or affect the order of electronic game cards as dispensed from the distributed pull-tab system. The game outcome shall be determined by the distributed pull-tab system as outlined within these rules.

C. Game themes may not contain obscene or offensive graphics, animations, or references. All game themes will be subject to approval by the department.

D. Prior to approval for use, each player device must meet the following specifications with respect to its operation:

1. After accepting an allowable cash payment from the player, the player shall press a "play" button to initiate a game.

2. The player device shall not display in any manner, the number of electronic game cards of each finite category, or how many cards remain.

3. Awards of merchandise prizes in lieu of cash are prohibited.

4. The player must interact with the device to initiate a game and reveal a win or loss. This may involve a button press on the console or on the touch screen.

5. The electronic game card must be initially displayed with a cover and require player interaction to reveal the symbols and game outcome.

6. In no event may a player device simulate play of roulette, poker, keno, lotto or lottery, twenty-one, blackjack, or any other card game, or simulate play of any type of slot machine game, regardless of whether the machine has a payback feature or extra play awards. Card symbols such as ace, king, queen, or heart are acceptable, provided the aforementioned is abided by.

7. Games must not contain any elements of skill.

E. Each player device must meet the following specifications with respect to its metering system:

1. A player device shall contain electronic metering whereby meters record and display on the video screen the following information at a minimum:

a. Total cash in for the bill acceptor if equipped with a bill acceptor;

b. Total cash played;

c. Total cash won;

d. Total cash removed from player device;

e. Total count of electronic game cards played; and

f. Total count of electronic game cards won.

2. An electronic meter shall be capable of maintaining correct totals and be of no less than 10 digits in length.

3. A player device shall not be capable of displaying the number of electronic game cards that remain in the game set or the number of winners or losers that have been drawn or still remain in the game set while the game set is still being played.

4. An electronic meter shall not be capable of being automatically reset or cleared, whether due to an error in any aspect of the meter's or a game's operation or otherwise.

5. Currency meters shall be maintained in dollars and cents.

Part V
Administrative Process

11VAC15-40-420. Procedural rules for the conduct of fact-finding conferences and hearings.

A. Fact-finding conference; notification, appearance, and conduct.

1. Unless automatic revocation or immediate suspension is required by law, no permit to conduct charitable gaming or to sell charitable gaming supplies shall be denied, suspended, or revoked except after review and approval of such proposed denial, suspension, or revocation action by the board, and upon notice stating the basis for such proposed action and the time and place for a fact-finding conference as set forth in § 2.2-4019 of the Administrative Process Act.

2. If a basis exists for a refusal to renew, suspend, or a revoke a permit, the department shall notify by certified mail or by hand delivery the interested persons at the address of record maintained by the department.

3. Notification shall include the basis for the proposed action and afford interested persons the opportunity to present written and oral information to the department that may have a bearing on the proposed action at a fact-finding conference. If there is no withdrawal, a fact-finding conference shall be scheduled at the earliest mutually agreeable date, but no later than 60 days from the date of the notification. Organizations or suppliers who wish to waive their right to a conference shall notify the department at least 14 days before the scheduled conference.

4. If, after consideration of evidence presented during an informal fact-finding conference, a basis for action still exists, the interested persons shall be notified in writing within 60 days of the fact-finding conference via certified or hand-delivered mail of the decision and the right to a formal hearing. Parties to the conference may agree to extend the report deadline if more time is needed to consider relevant evidence.

B. Hearing; notification, appearance, and conduct.

1. If, after a fact-finding conference, a sufficient basis still exists to deny, suspend, or revoke a permit, interested persons shall be notified by certified or hand-delivered mail of the proposed action and of the opportunity for a hearing on the proposed action. If an organization or supplier desires to request a hearing, it shall notify the department within 14 days of receipt of a report on the conference. Parties may enter into a consent agreement to settle the issues at any time prior to, or subsequent to, an informal fact-finding conference.

2. If an interested party or representative fails to appear at a hearing, the hearing officer may proceed in his absence and make a recommendation.

3. Oral and written arguments may be submitted to and limited by the hearing officer. Oral arguments shall be recorded in an appropriate manner.

C. Hearing location. Hearings before a hearing officer shall be held, insofar as practicable, in the county or city in which the organization or supplier is located. If the parties agree, hearing officers may conduct hearings at locations convenient to the greatest number of persons or by telephone conference, video conference, or similar technology, in order to expedite the hearing process.

D. Hearing decisions.

1. Recommendations of the hearing officer shall be a part of the record and shall include a written statement of the hearing officer's findings of fact and recommendations as well as the reasons or basis for the recommendations. Recommendations shall be based upon all the material issues of fact, law, or discretion presented on the record.

2. The department shall review the recommendation of the hearing officer and render a decision on the recommendation within 30 days of receipt. The decision shall cite the appropriate rule, relief, or denial thereof as to each issue.

E. Agency representation. The commissioner's designee may represent the department in an informal conference or at a hearing.

11VAC15-40-430. Reporting violations.

A. Unless otherwise required by law, the identity of any individual who provides information to the department or its agents regarding alleged violations shall be held in strict confidence.

B. Any officer, director, or game manager of a qualified organization or any officer or director of a supplier shall immediately report to the department any information pertaining to the suspected misappropriation or theft of funds or any other violations of charitable gaming statutes or these regulations.

C. Failure to report the information required by subsection B of this section may result in the denial, suspension, or revocation of a permit.

D. Any officer, director, or game manager of a qualified organization involved in the management, operation, or conduct of charitable gaming shall immediately notify the department upon conviction of a felony or a crime involving fraud, theft, or financial crimes.

E. Any officer, director, partner, or owner of a supplier shall immediately notify the department upon conviction or plea of nolo contendere to a felony or a crime involving gambling or an action against any license or certificate held by the supplier in any state in the United States.

F. Failure to report information required by subsection D or E of this section by any officer, director, or game manager of a qualified organization or by any supplier may result in the denial, suspension, or revocation of a permit.

G. Any officer, director, or game manager of a qualified organization involved in charitable gaming shall immediately report to the department any change the Internal Revenue Service makes in the tax status of the organization, or if the organization is a chapter of a national organization covered by a group tax exempt determination, the tax status of the national organization.

H. All organizations regulated by the department shall display prominently a poster advising the public of a phone number where complaints relating to charitable gaming may be made. Such posters shall be provided by the department to organizations at no charge.

FORMS (11VAC15-40)

GAME MANAGEMENT FORMS

Bingo Session Reconciliation Summary, Form 103 (rev. 1/11).

Admission Sales Reconciliation - Paper, Form 104-A (rev. 1/11).

Floor Sales Reconciliation - Paper, Form 104-B (rev. 1/11).

Decision Bingo Reconciliation, Form 104-C (rev. 1/11).

Raffle/Treasure Chest Sales Reconciliation - Bingo Session, Form 104-D (rev. 1/11).

Instant Bingo/Seal Cards/Pull-Tabs Reconciliation, Form 105 (rev. 1/11) .

Storeroom Inventory Issue - Paper, Form 106-A (rev. 7/08).

Storeroom Inventory Issue - Instant Bingo/Seal Cards/Pull-Tabs, Form 106-B (rev. 7/08).

List of Volunteer Workers, Form 107 (rev. 7/08).

Prize Receipt, Form 108 (rev. 7/08).

Storeroom Inventory - Paper, Form 109-A (rev. 1/11).

Storeroom Inventory - Instant Bingo/Seal Cards/Pull-Tabs, Form 109-B (rev. 1/11) .

ORGANIZATION LICENSING FORMS

Charitable Gaming Permit Application - New Applicants Only, Form 201 - N (rev. 1/11).

Charitable Gaming Permit Application - Renewal Applicants Only, Form 201 - R (rev. 1/11).

Permit Amendment (rev. 1/11).

Gaming Personnel Information Update (rev. 7/08).

Report of Game Termination (rev. 7/08).

SUPPLIER LICENSING FORMS

Charitable Gaming Supplier Permit Application, Form 301 (rev. 1/11).

Annual Supplier Sales and Transaction Report, Form 302 (rev. 7/08).

BINGO MANAGER AND BINGO CALLER REGISTRATION FORMS

Charitable Gaming Bingo Caller Certificate of Registration Application, Form 401 (rev. 1/11).

Charitable Gaming Bingo Manager Certificate of Registration Application, Form 402 (rev. 1/11).

Amendment to Certificate of Registration – Registered Bingo Callers and Bingo Managers (rev. 1/11).

Personal Information Update – Registered Bingo Callers and Registered Bingo Managers, Form 404 (rev. 7/07).

Bona Fide Member Verification, Form 405 (rev. 5/11).

DOCUMENTS INCORPORATED BY REFERENCE (11VAC15-40)

IRS Publication 3079, Tax-Exempt Organizations and Gaming (rev. 6/10).

Security Requirements for Cryptographic Modules, Federal Information Processing Standard, FIPS Pub 140-2 (rev. 12/02).

Titles of Regulations: 11VAC15-22. Charitable Gaming Rules and Regulations (repealing 11VAC15-22-10 through 11VAC15-22-120).

11VAC15-31. Supplier Regulations (repealing 11VAC15-31-10 through  11VAC15-31-60).

11VAC15-40. Charitable Gaming Regulations (adding 11VAC15-40-10 through 11VAC15-40-430).

Statutory Authority: § 18.2-340.15 of the Code of Virginia.

Public Hearing Information:

December 13, 2011 - 10:15 a.m. - Oliver Hill Building, 102 Governor Street, 2nd Floor Board Room, Richmond, VA

Public Comment Deadline: January 6, 2012.

Agency Contact: Erin Williams, Policy and Planning Coordinator, Department of Agriculture and Consumer Services, P.O. Box 1163, Richmond, VA 23218, telephone (804) 786-1308, FAX (804) 371-7479, TTY (800) 828-1120, or email erin.williams@vdacs.virginia.gov.

Basis: Section 18.2-340.15 of the Code of Virginia authorizes the Charitable Gaming Board to prescribe regulations and conditions under which charitable gaming is conducted in Virginia to ensure consistency with the purpose for which such gaming is permitted. Additionally, Chapter 264 of the 2007 Acts of Assembly amended the statute by requiring changes to the charitable gaming regulations in order to implement electronic games of chance systems. The Charitable Gaming Board approved the promulgation of a single regulation that will consolidate the two current regulations and provide for the implementation of regulations regarding electronic games of chance systems.

Purpose: The existence of two separate but closely interrelated regulations governing charitable gaming has resulted in duplicative, burdensome, and unnecessarily lengthy efforts in those instances when the agency has had to amend both regulations in response to a single change in the statute, as was the case with the passage of HB 1998 (Chapter 264 of the 2007 Acts of Assembly). The promulgation of a single, consolidated regulation will greatly facilitate the agency's administration of the charitable gaming program.

Proponents of the legislation that resulted in the authorization of electronic games of chance systems in the Commonwealth have indicated that charitable gaming organizations will see significant increases in both attendance and revenues through the offering of electronic pull-tabs at their gaming events. Attendance at charitable gaming events has dropped considerably in the last few years, in some cases by as much as 40%, on account of changing demographics, as well as the economic downturn. The ability to offer electronic pull-tabs is expected to attract younger players to bingo halls across Virginia, to lower the gaming organizations overhead costs through reduced expenses for paper supplies, and to improve the organizations ability to meet the 10% use of proceeds required by the Charitable Gaming Board.

Substance: The proposed regulation consolidates the substance of the current regulation titled Charitable Gaming Rules and Regulations, 11VAC15-22, as well as the substance of the current regulation titled Supplier Regulations, 11VAC15-31. Substantive changes include the addition of provisions regarding full automatic daubing of bingo numbers and progressive bingo games, both of which were authorized by Chapter 429 of the 2010 Acts of Assembly. The proposed regulations reduce the time required between gaming activities from one hour to 30 minutes. The existing regulations pertaining to electronic bingo devices (which are devices that support conventional bingo games and should not be confused with devices that support electronic pull-tabs) were modified to permit the use of electronic bingo device systems that do not identify at the point of sale the number of the electronic bingo device issued to the player.

The section pertaining to electronic games of chance systems includes rules for the conduct of electronic games of chance, requirements for manufacturers and suppliers of electronic games of chance systems, and construction and other standards for electronic games of chance systems.

Issues: The inclusion of provisions pertaining to electronic games of chance systems will provide charitable gaming organizations a new option to promote greater attendance at their gaming events. Greater attendance should increase the revenue organizations generate from their charitable gaming activities, which, in turn, should facilitate compliance with applicable requirements regarding the charitable use of organizations proceeds.

The promulgation of a single, consolidated regulation will greatly facilitate the agency's administration of the charitable gaming program by eliminating the need for duplicative regulatory actions due to the existence of two interrelated regulations.

Special interest groups are monitoring the progress of this regulation to ensure that it does not lead to casino-style gambling or expand the type of gaming that is allowed in the Commonwealth. The agency has involved these stakeholders during relevant discussions; the agency is not aware of specific concerns with the proposed regulations.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Virginia Charitable Gaming Board (Board) proposes to consolidate two separate regulations, Charitable Gaming Rules and Regulations, 11VAC15-22, and Supplier Regulations, 11VAC15-31, into one regulation that will also establish rules regarding electronic games of chance systems for charitable gaming.

Result of Analysis. The benefits likely exceed the costs for one or more proposed changes. There is insufficient data to accurately compare the magnitude of the benefits versus the costs for other changes.

Estimated Economic Impact. Chapter 264 of the 2007 Virginia Acts of Assembly authorized the use of electronic games of chance, also known as electronic pull tabs, by charitable gaming organizations. The chapter also specifies that no person shall offer to sell, sell or otherwise provide charitable gaming supplies to any qualified organization and no manufacturer shall distribute electronic games of chance systems for charitable gaming in the Commonwealth unless and until such person has made application for and has been issued a permit by the Department (of Agriculture and Consumer Services). In practice electronic games of chance have not yet been available for charitable gaming since the Board has not yet promulgated regulations that would enable the issuing of a permit for the distribution of electronic games of chance. In the current action the Board proposes rules that would enable the distribution and use of electronic games of chance to go forward.

In calendar year 2009, the most recent year data is available, there were $279 million in gross receipts for charitable gaming in Virginia.¹ Based on the experiences of other states which introduced electronic pull tabs, the Virginia Department of Agriculture and Consumer Services (Department) expects gross receipts from charitable gaming to at least triple with the advent of electronic pull tabs. Manufacturers and suppliers of electronic games of chance will certainly benefit with increased business. Purchasing and using electronic games of chance for fundraising is of course optional for charitable organizations; so the charitable organizations will only purchase and use them if they believe they will provide a net benefit through increased revenue available for their charitable purposes. A significant portion of Virginians believe that there is a negative impact on morality associated with gambling. The introduction and use of electronic pull tabs will very likely increase at least the dollar value of gambling in Virginia. It is beyond the scope of this analysis to compare the benefits of increased business for manufacturers and suppliers of electronic games of chance and the benefits of increased revenue for charitable organizations to use for their charitable purposes to the potential negative moral impact of increased gambling. That is intrinsically a subjective value judgment.

The Board proposes several other changes that will have some impact. The fee for a permit change would be eliminated. This is obviously beneficial for permit holders. The Board believes funds for operation are sufficient without charging this fee. The Department would use compliance agreements rather than consent orders and remedial business plans rather than corrective action plans. This would be less heavy handed and would likely create a more cooperative relationship between the Department and charitable organizations. The required break between charitable gaming activities would be reduced from one hour to 30 minutes. This would enable more time to be devoted to fundraising while still allotting sufficient transition time between charitable organizations. All of these changes provide benefit without significant cost.

Specific dollar amounts included in the current regulations that are prescribed by the Code of Virginia would be replaced by references to sections of the Code that prescribe these amounts. This is beneficial since when and if these dollar amounts are changed in the Code the dollar amounts currently listed in the regulations would then be in conflict with the Code. When the Code and regulations conflict, the Code prevails. Thus, persons who read the regulations would be misled under these circumstances. Amending regulations can take a significant amount of time. Thus, replacing specified dollar amounts included in the current regulations that are prescribed by the Code with references to sections of the Code that prescribe these amounts would enable the regulations to always be accurate concerning the effective legal dollar figures. Thus this proposed change clearly provides a net benefit.

The current regulations state that volunteer game workers may not play bingo at any session they have worked or purchase instant bingo, pull-tab, or seal card products from organizations they assist on the day they have volunteered or from any deal they have helped sell, whichever is later. Under the proposed regulations, no one involved in the conduct of bingo may play bingo at any session they have worked or intend to work. No one involved in the sale or redemption of any instant bingo, pull-tabs, seal cards, or electronic game cards may purchase directly or through others instant bingo, pull-tab, seal card, or electronic game card products from organizations they assist on the day they have worked or from any deal they have helped sell or redeem, whichever occurs later. Thus paid workers as well as volunteers are prohibited from gambling in games in which they work on the days they work as well as deals they have helped sell or redeem. Paid workers and volunteers could still gamble on other days provided that the games are not deals they have helped sell or redeem. This proposed change does introduce a new limitation on paid workers, but it seems a reasonable change to help ensure fairness while still permitting paid workers the opportunity to participate in games in which they are not directly involved.

Businesses and Entities Affected. The proposed regulations will potentially affect the approximate 400 qualified charitable gaming organizations and 19 charitable gaming suppliers in the Commonwealth as well as manufacturers of electronic games of chance systems. The Virginia Department of Agriculture and Consumer Services estimates that the majority of the charitable gaming suppliers are small businesses.

Localities Particularly Affected. The proposed amendments do not disproportionately affect particular localities.

Projected Impact on Employment. The proposal to establish rules for electronic games of chance systems will enable the distribution and use of electronic games of chance to go forward. This will likely significantly increase business for manufacturers and suppliers of electronic games of chance. Employment at some of these firms will likely moderately increase.

Effects on the Use and Value of Private Property. The proposal to establish rules for electronic games of chance systems will enable the distribution and use of electronic games of chance to go forward. This will likely significantly increase business for manufacturers and suppliers of electronic games of chance. The net value of these firms will likely increase.

Small Businesses: Costs and Other Effects. The proposed amendments are unlikely to increase costs for small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments are unlikely to significantly adversely affect small businesses.

Real Estate Development Costs. The proposed amendments are unlikely to significantly affect real estate development costs.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

____________________________

¹Data source: Virginia Department of Agriculture and Consumer Services

Agency's Response to Economic Impact Analysis: The Department of Agriculture and Consumer Services concurs with the analysis of the Department of Planning and Budget.

Summary:

The proposed regulation consists of five parts pertaining to (i) definitions, (ii) charitable gaming organizations and the conduct of charitable gaming, (iii) charitable gaming suppliers, (iv) electronic games of chance systems, and (v) administrative process.

The section pertaining to charitable gaming organizations and the conduct of charitable gaming reflects the substance of the current regulation titled Charitable Gaming Rules and Regulations, 11VAC15-22. The section pertaining to charitable gaming suppliers reflects the substance of the current regulation titled Supplier Regulations, 11VAC15-31. The section pertaining to electronic games of chance systems includes rules for the conduct of electronic games of chance, requirements for manufacturers and suppliers of electronic games of chance systems, and construction and other standards for electronic games of chance systems. The sections pertaining to definitions and the administrative process consolidate the definitions and administrative process sections found in the current regulations, 11VAC15-22 and 11VAC15-31.

CHAPTER 40
CHARITABLE GAMING REGULATIONS

Part 1
Definitions

11VAC15-40-10. Definitions.

In addition to the definitions contained in § 18.2-340.16 of the Code of Virginia, the words and terms below when used in this regulation shall have the following meanings unless the context clearly indicates otherwise:

"Agent" means any person authorized by a supplier to act for or in place of such supplier.

"Board" means the Virginia Charitable Gaming Board.

"Board of directors" means the board of directors, managing committee, or other supervisory body of a qualified organization.

"Calendar day" means the period of 24 consecutive hours commencing at 12:01 a.m. and concluding at midnight.

"Calendar week" means the period of seven consecutive calendar days commencing at 12:01 a.m. on Sunday and ending at midnight the following Saturday.

"Cash" means United States currency or coinage.

"Commissioner" means the Commissioner of the Virginia Department of Agriculture and Consumer Services.

"Concealed face bingo card" means a nonreusable bingo card constructed to conceal the card face.

"Conduct" means the actions associated with the provision of a gaming operation during and immediately before or after the permitted activity, which may include, but not be limited to (i) selling bingo cards or packs, electronic devices, instant bingo or pull-tab cards, or raffle tickets; (ii) calling bingo games; (iii) distributing prizes; and (iv) any other services provided by volunteer workers.

"Control program" means software involved in any critical game function.

"Daubing" means covering a square containing a number called with indelible ink or otherwise marking a number called on a card or an electronic facsimile of a card.

"Deal" means each separate package or series of packages consisting of one game of instant bingo, pull-tabs, or seal cards with the same serial number.

"Decision bingo" means a bingo game where the cost to a player to play is dependent on the number of bingo numbers called and the prize payout is in direct relationship to the number of participants and the number of bingo numbers called, but shall not exceed statutory prize limits for a regular bingo game.

"Department" means the Virginia Department of Agriculture and Consumer Services, Division of Consumer Protection, Office of Charitable Gaming.

"Designator" means an object used in the number selection process, such as a ping-pong ball, upon which bingo letters and numbers are imprinted.

"Discount" means any reduction in cost of admission or game packs or any other purchases through use of coupons, free packs, or other similar methods.

"Disinterested player" means a player who is unbiased.

"Disposable paper card" means a nonreusable, paper bingo card manufactured with preprinted numbers.

"Distributed pull-tab system" means a computer system consisting of a computer or computers and associated equipment for the use of distributing a finite number of electronic instant bingo and/or pull-tab outcomes (i.e., electronic game cards), a certain number of which entitle a player to prize awards at various levels.

"Door prize" means any prize awarded by the random drawing or random selection of a name or number based solely on attendance at a gaming session.

"Electronic bingo device" means an electronic device that uses proprietary software or hardware or, in conjunction with commonly available software and computers, displays facsimiles of bingo cards and allows a player to daub such cards or allows for the automatic daubing of such cards.

"Electronic game card" means an electronic version of a single instant bingo card or pull-tab. An electronic game card is a predetermined game outcome in electronic form, distributed on-demand from a finite number of game outcomes by a distributed pull-tab system.

"Equipment and video systems" means equipment that facilitates the conduct of charitable gaming such as ball blowers, flashboards, electronic verifiers, and replacement parts for such equipment.

"Event game" means a bingo game that is played using instant bingo cards or pull-tabs in which the winners include both instant winners and winners who are determined by the random draw of a bingo ball, the random call of a bingo number, or the use of a seal card, and that is sold and played to completion during a single bingo session.

"Fiscal year" or "annual reporting period" means the 12-month period beginning January 1 and ending December 31 of any given year.

"Flare" means a piece of paper, cardboard, or similar material that bears printed information relating to the name of the manufacturer or logo, name of the game, card count, cost per play, serial number, the number of prizes to be awarded, and the specific prize amounts in a deal of instant bingo, pull-tab, or seal cards.

"Free space number," "perm number," "center number," "card number," or "face number" means the number generally printed in the center space of a bingo card that identifies the unique pattern of numbers printed on that card.

"Game program" means a written list of all games to be played including, but not limited to, the sales price of all bingo paper and electronic bingo devices, pack configuration, prize amounts to be paid during a session for each game, and an indication whether prize amounts are fixed or are based on attendance.

"Game set" means the entire pool of electronic game cards that contains predefined and randomized game results assigned under a unique serial number. This term is equivalent to "deal" or "deck."

"Game subset" means a division of a game set into equal sizes.

"Gaming activity" means one bingo session and the sale and redemption of instant bingo, pull-tabs, seal cards, or electronic game cards done in conjunction with that bingo session and in accordance with the provisions of this chapter.

"Immediate family" means one's spouse, parent, child, sibling, grandchild, grandparent, mother or father-in-law, or stepchild.

"Interested persons" means the president, an officer, or a bingo manager of any qualified organization that is exempt or is a permit applicant or holds a permit to conduct charitable gaming; or the owner, director, officer or partner of an entity engaged in supplying charitable gaming supplies to organizations.

"IRS" means the United States Internal Revenue Service.

"Management" means the provision of oversight of a gaming operation, which may include, but is not limited to, the responsibilities of applying for and maintaining a permit or authorization; compiling, submitting, and maintaining required records and financial reports; and ensuring that all aspects of the operation are in compliance with all applicable statutes and regulations.

"Manufacturer" means a person who or entity that assembles from raw materials or subparts a completed piece of bingo or other charitable gaming equipment or supplies. "Manufacturer" also means a person who or entity that modifies, converts, adds, or removes parts to or from bingo or other charitable gaming equipment or supplies to further their promotion or sale for the conduct of charitable gaming.

"OCG number" means a unique identification number issued by the department.

"Operation" means the activities associated with production of a charitable gaming activity, which may include, but is not limited to, (i) the direct on-site supervision of the conduct of charitable gaming; (ii) coordination of volunteers; and (iii) all responsibilities of charitable gaming designated by the organization's management.

"Owner" means any individual with financial interest of 10% or more in a supplier.

"Pack" means sheets of bingo paper or electronic facsimiles assembled in the order of games to be played. This shall not include any raffle.

"Player device" means an electronic unit that may take the form of an upright cabinet or a handheld device or may be of any other composition as approved by the department used to facilitate the play of electronic instant bingo or pull-tab games.

"Prize" means cash, merchandise, certificate, or other item of value awarded to a winning player.

"Progressive bingo" means a bingo game in which the prize is carried forward to the next game if a predetermined pattern is not completed within a specified number of bingo numbers called.

"Progressive seal card" means a seal card game in which a prize is carried forward to the next deal if not won when a deal is completed.

"Remuneration" means payment in cash or the provision of anything of value for goods provided or services rendered.

"Seal card" means a board or placard used in conjunction with a deal of the same serial number that contains one or more concealed areas that, when removed or opened, reveal a predesignated winning number, letter, or symbol located on that board or placard.

"Selection device" means a manually or mechanically operated device to randomly select bingo numbers.

"Serial number" means a unique number printed by the manufacturer on each bingo card in a set; each instant bingo, pull-tab, or seal card in a deal; each electronic bingo device; or each door prize ticket.

"Series number" means the number of unique card faces contained in a set of disposable bingo paper cards or bingo hard cards. A 9000 series, for example, has 9000 unique faces.

"Session" means a period of time during which one or more bingo games are conducted that begins with the selection of the first ball for the first game and ends with the selection of the last ball for the last game.

"Treasure chest" means a raffle including a locked treasure chest containing a prize that a participant, selected through some other authorized charitable game, is afforded the chance to select from a series of keys a predetermined key that will open the locked treasure chest to win a prize.

"Use of proceeds" means the use of funds derived by an organization from its charitable gaming activities, which are disbursed for those lawful religious, charitable, community, or educational purposes. This includes expenses relating to the acquisition, construction, maintenance, or repair of any interest in the real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes.

"Voucher" means a printed ticket tendered to the player, upon request, for any unused game plays and/or winnings that remain on the player device.

"WINGO" means a variation of a traditional bingo game that uses visual devices rather than a verbal caller and is intended for play by hearing impaired persons.

Part II
Charitable Gaming Organizations

Article 1
Permits

11VAC15-40-20. Eligibility for permit to conduct charitable gaming; when valid; permit requirements.

A. The conduct of charitable gaming is a privilege that may be granted or denied by the department. Except as provided in § 18.2-340.23 of the Code of Virginia, every eligible organization, volunteer fire department, and rescue squad with anticipated gross gaming receipts that exceed the amount set forth in § 18.2-340.23 of the Code of Virginia in any 12-month period shall obtain a permit from the department prior to the commencement of charitable gaming activities. To be eligible for a permit an organization must meet all of the requirements of § 18.2-340.24 of the Code of Virginia.

B. Pursuant to § 18.2-340.24 B of the Code of Virginia, the department shall review a tax exempt request submitted to the IRS for a tax exempt status determination and may issue an interim certification of tax-exempt status solely for the purpose of charitable gaming, conditioned upon a determination by the IRS. The department shall charge the fee set forth in § 18.2-340.24 B of the Code of Virginia for this review. The fee shall be payable to the Treasurer of Virginia.

C. A permit shall be valid only for activities, locations, days, dates, and times as listed on the permit.

D. In accordance with § 18.2-340.19 A 1 of the Code of Virginia, as a condition of receiving a permit, a minimum of 10% of charitable gaming gross receipts shall be used for (i) those lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized or (ii) those expenses relating to the acquisition, construction, maintenance, or repair of any interest in real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes.

E. If an organization fails to meet the minimum use of proceeds requirement, its permit may be suspended or revoked. However, the department shall not suspend or revoke the permit of any organization solely because of its failure to meet the required percentage without having first provided the organization with an opportunity to implement a corrective action plan.

F. An organization may request a temporary reduction in the predetermined percentage specified in subsection D of this section from the department. In reviewing such a request, the department shall consider such factors appropriate to and consistent with the purpose of charitable gaming, which may include, but not be limited to, (i) the organization's overall financial condition; (ii) the length of time the organization has been involved in charitable gaming; (iii) the extent of the deficiency; and (iv) the progress that the organization has made in attaining the minimum percentage in accordance with a corrective action plan pursuant to subsection E of this section.

G. An organization whose permit is revoked for failure to comply with provisions set forth in subsection D of this section shall be eligible to reapply for a permit at the end of one year from the date of revocation. The department, at its discretion, may issue the permit if it is satisfied that the organization has made substantial efforts towards meeting its corrective action plan.

11VAC15-40-30. Permit application process.

A. Any organization anticipating gross gaming receipts that exceed the amount set forth in § 18.2-340.23 of the Code of Virginia shall complete a department-prescribed application to request issuance or renewal of an annual permit to conduct charitable gaming. Organizations shall submit a nonrefundable fee payable to the Treasurer of Virginia in the amount of $200 with the application, unless the organization is exempt from such fee pursuant to § 18.2-340.23 of the Code of Virginia.

B. The department may initiate action against any organization exempt from permit requirements when it reasonably believes the organization is not in compliance with the provisions of charitable gaming laws or applicable regulations, or both, of the board.

C. Permit holders requiring a special permit pursuant to § 18.2-340.27 E of the Code of Virginia shall convey their request on a form prescribed by the department. Organizations shall submit a fee payable to the Treasurer of Virginia in the amount of $50 with the request for a special permit, unless the organization is exempt from such fee pursuant to § 18.2-340.23 of the Code of Virginia.

D. Permits shall be valid for a period of one year from the date of issuance or for a period specified on the permit. The department may issue permits for periods of less than one year.

E. Permits shall be granted only after a background investigation of an organization or interested persons, or both, to ensure public safety and welfare as required by § 18.2-340.25 of the Code of Virginia. Investigations shall consider the nature, the age and severity, and the potential harm to public safety and welfare of any criminal offenses. The investigation may include, but shall not be limited to, the following:

1. A search of Virginia criminal history records for the chief executive officer and chief financial officer of the organization. Information and authorization to conduct these records checks shall be provided in the permit application. In addition, the department shall require that the organization provides assurances that all other members involved in the management, operation, or conduct of charitable gaming meet the requirements of subdivision 13 of § 18.2-340.33 of the Code of Virginia. Applications may be denied if:

a. Any person participating in the management of any charitable gaming has ever been:

(1) Convicted of a felony; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

b. Any person participating in the conduct of charitable gaming has been:

(1) Convicted of any felony in the preceding 10 years; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years;

2. An inquiry as to whether the organization has been granted tax-exempt status pursuant to § 501(c) by the Internal Revenue Service and is in compliance with IRS annual filing requirements;

3. An inquiry as to whether the organization has entered into any contract with, or has otherwise employed for compensation, any persons for the purpose of organizing or managing, operating, or conducting any charitable gaming activity;

4. Inquiries into the finances and activities of the organization and the sources and uses of funds; and

5. Inquiries into the level of community or financial support to the organization and the level of community involvement in the membership and management of the organization.

F. The permit application for an organization that has not previously held a permit shall include:

1. A list of members participating in the management or operation of charitable gaming. For any organization that is not composed of members, a person who is not a bona fide member may volunteer in the conduct of a charitable game as long as that person is directly supervised by a bona fide official member of the organization;

2. A copy of the articles of incorporation, bylaws, charter, constitution, or other appropriate organizing document;

3. A copy of the determination letter issued by the IRS under § 501(c) of the Internal Revenue Code, if appropriate, or a letter from the national office of an organization indicating the applicant organization is in good standing and is currently covered by a group exemption ruling. A letter of good standing is not required if the applicable national or state office has furnished the department with a listing of member organizations in good standing in the Commonwealth as of January 1 of each year and has agreed to promptly provide the department any changes to the listing as they occur;

4. A copy of the organization's most recent annual financial statement and balance sheet or most recent Form 990 that has been filed with the IRS;

5. A copy of the written lease or proposed written lease agreement and all other agreements if the organization rents or intends to rent a facility where bingo is or will be conducted. Information on the lease shall include name, address, and phone number of the landlord; maximum occupancy of the building; and the rental amount per session; and

6. An authorization by an officer or other appropriate official of the organization to permit the department to determine whether the organization has been investigated or examined by the IRS in connection with charitable gaming activities during the previous three years.

G. Copies of minutes of meetings of the organization and any contracts with landlords or suppliers to which the organization is or may be a party may be requested by the department prior to rendering a permitting decision.

H. Organizations applying to renew a permit previously issued by the department shall submit articles of incorporation, bylaws, charter, constitution, or other organizing document, and IRS determination letter only if there are any amendments or changes to these documents that are directly related to the management, operation, or conduct of charitable gaming.

I. Organizations may request permits to conduct joint bingo games as provided in § 18.2-340.29 of the Code of Virginia.

1. In the case of a joint game, all the organizations shall file a permit application.

2. The nonrefundable permit fee for joint games shall be a total of $200. Volunteer fire departments or rescue squads or auxiliary units thereof that have been recognized in accordance with § 15.2-955 of the Code of Virginia shall be exempt from the payment of applications fees.

3. A single permit shall be issued in the names of all the organizations conducting a joint game. All restrictions and prohibitions applying to single organizations shall apply to qualified organizations jointly conducting bingo games pursuant to § 18.2-340.29 of the Code of Virginia.

4. No charitable gaming shall be conducted prior to the issuance of a joint permit.

5. Applications for joint games shall include an explanation of the division of manpower, costs, and proceeds for the joint game.

J. An organization wishing to change dates, times, or locations of its charitable gaming shall request a change in the permit. Change requests shall be made in writing on a form prescribed by the department at least 30 days in advance of the proposed effective date.

K. Changes in dates, times, or locations due to inclement weather, disasters, or other circumstances outside the organization's control may be made without a change in the permit. The organization shall request such a change on a form prescribed by the department as soon as the necessity for the change is known.

L. An organization may sell raffle tickets for a drawing to be held outside of the Commonwealth of Virginia in the United States provided:

1. The raffle is conducted by the organization in conjunction with a meeting outside the Commonwealth of Virginia or with another organization that is licensed to conduct raffles outside the Commonwealth of Virginia;

2. The raffle is conducted in accordance with these regulations and the laws and regulations of the state where the drawing is to be held; and

3. The portion of the proceeds derived from the sale of raffle tickets in the Commonwealth is reported to the department.

M. Any permitted organization that ceases to conduct charitable gaming shall immediately notify the department in writing and provide the department a report as to the disposition of all unused gaming supplies on a form prescribed by the department.

11VAC15-40-40. Suspension, revocation, or denial of permit.

A. Pursuant to § 18.2-340.20 of the Code of Virginia, the department may suspend, revoke, or deny the permit to conduct charitable gaming of any organization for cause including, but not limited to, any of the following reasons:

1. The organization is found to be in violation of or has failed to meet any of the requirements of the statutes or regulations governing the operation, management, and conduct of charitable gaming in the Commonwealth.

2. The organization is found to be not in good standing with its state or national organization.

3. The IRS revokes or suspends the organization's tax-exempt status.

4. The organization willfully and knowingly provides false information in its application for a permit to conduct charitable gaming.

5. The organization is found to have a member involved in the management, operation, or conduct of its charitable gaming who has been convicted of any felony or any misdemeanor as follows:

a. For any person participating in the management or operation of any charitable gaming:

(1) Convicted of a felony; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

b. For any person participating in the conduct of charitable gaming:

(1) Convicted of any felony within the preceding 10 years; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

B. The failure to meet any of the requirements of § 18.2-340.24 of the Code of Virginia shall cause the denial of the permit, and no organization shall conduct any charitable gaming until the requirements are met and a permit is obtained.

C. Except when an organization fails to meet any of the requirements of § 18.2-340.24 of the Code of Virginia, in lieu of suspending, revoking, or denying a permit to conduct charitable gaming, the department may afford an organization an opportunity to enter into a compliance agreement specifying additional conditions or requirements as it may deem necessary to ensure an organization's compliance with the statute and regulations governing the conduct of charitable gaming activities and may require that an organization participates in such training as is offered by the department.

D. If a permit is suspended, the department shall set the terms of the suspension, which shall include the length of the suspension and a requirement that, prior to reinstatement of the permit, the organization shall submit a remedial business plan to address the conditions that resulted in the suspension.

Article 2
Conduct of Games, Rules of Play, Electronic Bingo

11VAC15-40-50. Conduct of bingo, instant bingo, pull-tabs, seal cards, event games, and raffles.

A. Organizations subject to this chapter shall post their permit at all times on the premises where charitable gaming is conducted.

B. No individual shall provide any information or engage in any conduct that alters or is intended to alter the outcome of any charitable game.

C. Individuals under 18 years of age may play bingo provided such persons are accompanied by a parent or legal guardian. It shall be the responsibility of the organization to ensure that such individuals are eligible to play. An organization's house rules may further limit the play of bingo or purchase raffle tickets by minors.

D. Individuals under the age of 18 may sell raffle tickets for a qualified organization raising funds for activities in which they are active participants.

E. No individual under the age of 18 may participate in the management or operation of bingo games. Individuals 14 through 17 years of age may participate in the conduct of a bingo game provided the organization permitted for charitable gaming obtains and keeps on file written parental consent from the parent or legal guardian and verifies the date of birth of such youth. An organization's house rules may further limit the involvement of minors in the conduct of bingo games.

F. No qualified organization shall sell any instant bingo, pull-tab, seal card, event game card, or electronic game card to any individual under 18 years of age. No individual under 18 years of age shall play or redeem any instant bingo, pull-tab, seal card, event game card, or electronic game card.

G. Unless otherwise prohibited by the Code of Virginia or this chapter, nonmembers who are under the direct supervision of a bona fide member may participate in the conduct of bingo.

H. All volunteer game workers shall have in their possession a picture identification, such as a driver's license or other government-issued identification, and shall make the picture identification available for inspection upon request by a department agent while participating in the management, operation, or conduct of a bingo game.

I. A game manager who is a bona fide member of the organization and is designated by the organization's management as the person responsible for the operation of the bingo game during a particular session shall be present any time a bingo game is conducted.

J. Organizations shall ensure that all charitable gaming equipment is in working order before charitable gaming activities commence.

K. Any organization selling bingo, instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards shall:

1. Maintain a supplier's invoice or a legible copy thereof at the location where the gaming is taking place and cards are sold. The original invoice or legible copy shall be stored in the same storage space as the gaming supplies. All gaming supplies shall be stored in a secure area that has access limited only to bona fide members of the organization; and

2. Pay for all gaming supplies only by a check drawn on the charitable gaming account of the organization.

A complete inventory of all such gaming supplies shall be maintained by the organization on the premises where the gaming is being conducted.

L. A volunteer working a bingo session may receive complimentary food and nonalcoholic beverages provided on premises, as long as the retail value of such food and beverages does not exceed $15 for each session.

M. Permitted organizations shall not commingle records, supplies, or funds from permitted activities with those from instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards sold in social quarters in accordance with § 18.2-340.26:1 of the Code of Virginia.

N. Individuals who are not members of an organization or are members who do not participate in any charitable gaming activities may be paid reasonable fees for preparation of quarterly and annual financial reports.

O. No free packs, free electronic bingo devices, discounts, or remuneration in any other form shall be provided directly or indirectly to volunteers, members of their family, or individuals residing in their household. The reduction of tuition, dues, or any fees or payments due as a result of a member or shareholder, or anyone in their household, working bingo games or raffles is prohibited.

P. Individuals providing security for an organization's charitable gaming activity shall not participate in the charitable gaming activity and shall not be compensated with charitable gaming supplies or with rentals of electronic bingo devices.

Q. No organization shall award any prize money or any merchandise valued in excess of the amounts specified by the Code of Virginia.

R. Multiple bingo sessions shall be permitted in a single premise as long as the sessions are distinct from one another and are not used to advertise or do not result in the awarding of more in prizes than is permitted for a single qualified organization. All leases for organizations to conduct charitable gaming in a single premise shall ensure gaming activity is separated by an interval of at least 30 minutes. Bingo sales for the subsequent session may take place during the 30-minute break once the building is cleared of all patrons and workers from the previous session.

S. All bingo and instant bingo, pull-tabs, seal card, event game card, or electronic game card sales, play, and redemption must occur within the time specified on the charitable gaming permit.

T. Instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards shall only be sold in conjunction with a bingo session, except as authorized by § 18.2-340.26:2 of the Code of Virginia. No instant bingo, pull-tabs, seal card, event game card, or electronic game card sales shall take place more than two hours before or after a session. If multiple sessions are held at the same location, no instant bingo, pull-tab, seal card, event game card, or electronic game card sales shall be conducted during the required 30-minute break between gaming activities. The department may take action if it believes that a bingo session is not legitimate or is being conducted in a manner such that instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards are not being sold in conjunction with a bingo session.

U. Only a volunteer game worker of qualified organizations may rent, exchange, or otherwise provide electronic bingo devices to players.

V. A qualified organization shall conduct only bingo games and raffles listed on a game program for that session. The program shall list all prize amounts. If the prize amounts are determined by attendance or at the end of a game, the game program shall list the attendance required for the prize amount or disclose that prizes shall be determined at the end of a game and the method for determining the prize amount. In such case, the organization shall announce the prize amount at the end of the game.

W. A qualified organization selling instant bingo, pull-tabs, seal cards, or electronic game cards shall post a flare provided by the manufacturer at the location where such cards are sold. All such sales and prize payouts shall be in accordance with the flare for that deal.

X. Only qualified organizations, facilities in which qualified organizations play bingo, and suppliers permitted by the department shall advertise a bingo game. Providing players with information about bingo games through printed advertising is permitted, provided the name of the qualified organization shall be in a type size equal to or larger than the name of the premises, the hall, or the word "bingo." Printed advertisements shall identify the use of proceeds percentage reported in the past quarter or fiscal year.

Y. Raffles that award prizes based on a percentage of gross receipts shall use prenumbered tickets.

Z. The following rules shall apply to instant bingo, pull-tab, seal card, or event game card dispensing devices:

1. A dispensing device shall only be used at a location and time during which a qualified organization holds a permit to conduct charitable gaming. Only cards purchased by an organization to be used during the organization's charitable gaming activity shall be in the dispensing device.

2. Keys to the dispensing area and coin/cash box shall be in the possession and control of the game manager or designee of the organization's board of directors at all times. Keys shall at all times be available at the location where the dispensing device is being used.

3. The game manager or designee shall provide access to the dispensing device to a department agent for inspection upon request.

4. Only a volunteer game worker of an organization may stock the dispensing device, remove cash, or pay winners' prizes.

AA. Organizations shall only purchase gaming supplies from a supplier who has a current permit issued by the department.

BB. An organization shall not tamper with bingo paper received from a supplier.

CC. The total amount of all discounts given by any organization during any fiscal year shall not exceed 1.0% of the organization's gross receipts.

11VAC15-40-60. Rules of play.

A. Each organization shall adopt "house rules" regarding conduct of the game. Such rules shall be consistent with the provisions of the law and this chapter. "House rules" shall be conspicuously posted or, at an organization's option, printed on the game program.

B. All players shall be physically present at the location where the bingo numbers for a bingo game are drawn to play the game or to claim a prize. Seal card prizes that can only be determined after a seal is removed or opened must be claimed within 30 days of the close of a deal. All other prizes must be claimed on the game date.

C. The following rules of play shall govern the sale of instant bingo, pull-tabs, and seal cards:

1. No cards that have been marked, defaced, altered, tampered with, or otherwise constructed in a manner that tends to deceive the public or affect the chances of winning or losing shall be placed into play.

2. Winning cards shall have the winning symbol or number defaced or punched immediately after redemption by the organization's authorized representative.

3. An organization may commingle unsold instant bingo cards and pull-tabs with no more than one additional deal. The practice of commingling deals shall be disclosed to the public via house rules or in a similar manner. Seal card deals shall not be commingled.

4. If a deal is not played to completion and unsold cards remain, the remaining cards shall be sold at the next session the same type of ticket is scheduled to be sold. If no future date is anticipated, the organization shall, after making diligent efforts to sell the entire deal, consider the deal closed or completed. The unsold cards shall be retained for three years following the close of the fiscal year and shall not be opened.

5. All seal card games purchased shall contain the sign-up sheet, the seals, and the cards packaged together in each deal.

6. Progressive seal card prizes not claimed within 30 days shall be carried forward to the next progressive game in progress and paid to the next progressive game prize winner.

D. No one involved in the conduct of bingo may play bingo at any session they have worked or intend to work. No one involved in the sale or redemption of any instant bingo, pull-tabs, seal cards, or electronic game cards may purchase directly or through others instant bingo, pull-tab, seal card, or electronic game card products from organizations they assist on the day they have worked or from any deal they have helped sell or redeem, whichever occurs later.

E. Electronic bingo.

1. Electronic bingo devices may be used by bingo players in the following manner:

a. Players may input into the device each number called or the device may automatically daub each number as the number is called;

b. Players must notify the game operator or caller of a winning pattern of bingo by a means other than use of the electronic device;

c. Players are limited to playing a maximum of 54 card faces per device per game;

d. Electronic bingo devices shall not be reserved for players. Each player shall have an equal opportunity to use the available devices on a first come, first served basis;

e. Each electronic bingo device shall produce a player receipt with the organization name, date, time, location, sequential transaction or receipt number, number of electronic bingo cards loaded, cost of electronic bingo cards loaded, and date and time of the transaction. Images of cards or faces stored in an electronic device must be exact duplicates of the printed faces if faces are printed;

f. Department agents may examine and inspect any electronic bingo device and related system. Such examination and inspection shall include immediate access to the device and unlimited inspection of all parts and associated systems and may involve the removal of equipment from the game premises for further testing;

g. All electronic bingo devices must be loaded or enabled for play on the premises where the game will be played;

h. All electronic bingo devices shall be rented or otherwise provided to a player only by an organization and no part of the proceeds of the rental of such devices shall be paid to a landlord, or his employee, agent, or member of his immediate family; and

i. If a player's call of a bingo is disputed by another player, or if a department agent makes a request, one or more cards stored on an electronic bingo device shall be printed by the organization.

2. Players may exchange a defective electronic bingo device for another device provided a disinterested player verifies that the device is not functioning. A disinterested player shall also verify that no numbers called for the game in progress have been keyed into the replacement device prior to the exchange.

F. The following rules of play shall govern the conduct of raffles:

1. Before a prize drawing, each stub or other detachable section of each ticket sold shall be placed into a receptacle from which the winning tickets shall be drawn. The receptacle shall be designed so that each ticket placed in it has an equal chance to be drawn.

2. All prizes shall be valued at fair market value.

G. The following rules shall apply to "decision bingo" games:

1. Decision bingo shall be played on bingo cards in the conventional manner.

2. Players shall enter a game by paying a predetermined amount for each card face in play.

3. Players shall pay a predetermined fee for each set of three bingo numbers called for each card in play.

4. The prize amount shall be the total of all fees not to exceed the prize limit set forth for regular bingo in § 18.2-340.33 of the Code of Virginia. Any excess funds shall be retained by the organization.

5. The predetermined amounts in subdivisions 2 and 3 of this subsection shall be printed in the game program. The prize amount for a game shall be announced before the prize is paid to the winner.

H. The following rules shall apply to "treasure chest" games:

1. The organization shall list the treasure chest game on the bingo game program as a "Treasure Chest Raffle."

2. The organization shall have house rules posted that describe how the game is to be played.

3. The treasure chest participant shall only be selected through some other authorized charitable game at the same bingo session.

4. The organization shall account for all funds as treasure chest/raffle sales on the session reconciliation form.

5. If the player does not open the lock on the treasure chest, the game manager or his designee shall proceed to try every key until the correct key opens the treasure chest lock to show all players that one of the keys will open the lock.

I. The following rules shall apply to progressive bingo games:

1. Bingo paper sold for use in progressive bingo games shall conform to the standards set forth in 11VAC15-40-130.

2. Organizations shall not include in admission packs the bingo paper intended for use in progressive bingo games.

3. Any progressive bingo game, its prize, and the number of bingo numbers to be called shall be clearly announced before the progressive bingo game is played and shall be posted on the premises where the progressive bingo game is played during each session that a progressive bingo game is played.

4. Pricing for a progressive bingo game card or sheet shall be listed on the game program.

5. If the predetermined pattern is not covered within the predetermined number of bingo numbers to be called, then the number of bingo numbers called will increase by one number for each subsequent session the progressive game is played.

6. If the predetermined pattern is not covered within the predetermined number of bingo numbers to be called for that progressive bingo game, then the game will continue as a regular bingo game until the predetermined pattern is covered and a regular bingo prize is awarded.

7. The prize for any progressive bingo game shall be in accordance with the provisions of § 18.2-340.33 of the Code of Virginia.

J. The following rules shall apply to "WINGO":

1. "WINGO" shall be played only for the hearing-impaired players.

2. "WINGO" shall utilize a visual device such as an oversized deck of cards in place of balls selected from a blower.

3. A caller must be in an area visible to all players and shall randomly select cards or other visual devices one at a time and display them so that all players can see them.

4. The organization must have house rules for "WINGO" and the rules shall identify how players indicate that they have won.

5. All financial reporting shall be consistent with reporting for a traditional bingo game.

K. The following rules of play shall apply to event games:

1. No instant bingo cards or pull-tabs that have been marked, defaced, altered, tampered with, or otherwise constructed in a manner that tends to deceive the public or affect the chances of winning or losing shall be placed into play.

2. Instant bingo cards and pull-tabs used in an event game shall not be offered for sale or sold at a purchase price other than the purchase price indicated on the flare for that particular deal.

3. The maximum prize amount for event games shall not exceed the amount set forth in § 18.2-340.33 (9) of the Code of Virginia for instant bingo, pull-tab, or seal card.

4. A sign-up sheet is not required for event games in which the winner or winners are determined using a seal card.

5. Organizations shall determine the winner or winners of event games during the same bingo session in which the instant bingo cards or pull-tabs are sold.

6. An authorized representative of the organization shall deface or punch the winning instant bingo cards or winning pull-tabs immediately after redemption.

7. If unsold bingo cards or unsold pull-tabs remain, the unsold cards shall be retained for three years following the close of the fiscal year and shall not be opened.

Article 3
Bank Accounts, Recordkeeping, Financial Reporting, Audits, Fees

11VAC15-40-70. Bank accounts.

A. A qualified organization shall maintain a charitable gaming bank account that is separate from any other bank account and all gaming receipts shall be deposited into the charitable gaming bank account.

B. Disbursements for expenses other than prizes and reimbursement of meal expenses shall be made by check directly from a charitable gaming account.

C. All charitable gaming bank account records, including but not limited to monthly bank statements, canceled checks or facsimiles thereof, and reconciliations, shall be maintained for three years following the close of a fiscal year.

D. All receipts from each session of bingo games and instant bingo, pull-tabs, or seal cards shall be deposited by the second business day following the session at which they were received.

E. Raffle proceeds shall be deposited into the qualified organization's charitable gaming bank account no later than the end of the calendar week following the week during which the organization received the proceeds.

11VAC15-40-80. Recordkeeping.

A. In addition to the records required by § 18.2-340.30 D of the Code of Virginia, qualified organizations conducting bingo shall maintain a system of records for a minimum of three years, unless otherwise specified for each gaming session on forms prescribed by the department, or reasonable facsimiles of those forms approved by the department, that include:

1. Charitable gaming supplies purchased and used;

2. A session reconciliation form and an instant bingo, pull-tab, seal card, or electronic game card reconciliation form completed and signed within 48 hours of the end of the session by the bingo manager;

3. All discounts provided;

4. A reconciliation to account for cash received from floor workers for the sale of extra bingo sheets for any game;

5. Number of electronic bingo devices rented, unique serial numbers of such devices, number of faces sold by each unit, and a summary report for each session to include date, time, location, and detailed information on income and expenses;

6. An admissions control system that provides a cross-check on the number of players in attendance and admission sales. This may include a ticket control system, cash register, or any similar system;

7. All operating expenses including rent, advertising, and security. Copies of invoices for all such expenses shall also be maintained;

8. Expected and actual receipts from games played on hard cards and number of games played on hard cards;

9. A record of the name and address of each winner for all seal cards; in addition, the winning ticket and seal card shall be maintained for a minimum of 90 days after the session;

10. A record of all door prizes awarded; and

11. For any prize or jackpot of a value that meets or exceeds the reporting requirements in the Internal Revenue Service's Publication 3079, the name and address of each individual to whom any such prize or jackpot is awarded and the amount of the award.

B. Qualified organizations conducting raffles shall have a recordkeeping system to account for cash receipts, cash disbursements, raffle tickets purchased or sold, and prizes awarded. All records shall be maintained for three years from the close of the fiscal year. The recordkeeping system shall include:

1. Invoices for the purchase of raffle tickets, which shall reflect the following information:

a. Name and address of supplier;

b. Name of purchaser;

c. Date of purchase;

d. Number of tickets printed;

e. Ticket number sequence for tickets printed; and

f. Sales price of individual ticket;

2. A record of cash receipts from raffle ticket sales by tracking the total number of tickets available for sale, the number issued to sellers, the number returned, the number sold, and reconciliation of all raffle sales to receipts;

3. Serial numbers of tickets for raffle sales initiated and concluded at a bingo game or sequentially numbered tickets, which shall state the name, address, and telephone number of the organization, the prize or prizes to be awarded, the date of the prize drawing or selection, the selling price of the raffle ticket, and the charitable gaming permit number;

4. For any raffle prize of a value that meets or exceeds the reporting requirements in the Internal Revenue Service's Publication 3079, receipts on which prize winners must provide printed name, residence address, and the amount and description of the prize received; and

5. Deposit records of the required weekly deposits of raffle receipts.

C. All raffle tickets shall have a detachable section; be consecutively numbered with the detachable section having the same number; provide space for the purchaser's name, complete address, and telephone number; and state (i) the name and address of the organization; (ii) the prize or prizes to be awarded; (iii) the date, time and location of the prize drawing; (iv) the selling price of the ticket; and (v) the charitable gaming permit number. Winning tickets and unsold tickets shall be maintained for three years from the close of the fiscal year.

D. All unused charitable gaming supplies shall either be returned for refund to the original supplier in unopened original packaging in resalable condition as determined by the supplier or turned in to the department for destruction. The organization shall maintain a receipt for all such supplies returned to the supplier or turned in to the department.

11VAC15-40-90. Financial reporting, penalties, inspections, and audits.

A. Each charitable gaming permit holder shall file an annual report of receipts and disbursements by March 15 of each year on a form prescribed by the department. The annual report shall cover the activity for the fiscal year.

B. The annual report shall be accompanied by the audit and administration fee as established by the department for the fiscal year unless the fee has been remitted with quarterly reports or the organization is exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia.

C. An organization desiring an extension to file its annual report for good cause shall request the extension in writing on a form prescribed by the department and shall pay the projected audit and administration fee, unless exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. The extension request and payment of projected fees shall be made in accordance with the provisions of § 18.2-340.30 of the Code of Virginia.

D. Unless exempted by § 18.2-340.23 of the Code of Virginia, qualified organizations realizing any gross gaming receipts in any calendar quarter shall file a quarterly report of receipts and disbursements on a form prescribed by the department as follows:

Quarter Ending	Date Due
March 31	June 1
June 30	September 1
September 30	December 1
December 31	March 1

Qualified organizations shall submit quarterly reports with the appropriate audit and administration fee unless the organization is exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. An annual financial report may substitute for a quarterly report if the organization has no further charitable gaming income during the remainder of the reporting period and the annual report is filed by the due date for the applicable calendar quarter.

E. An organization desiring an extension to file its quarterly report for good cause shall request the extension in writing on a form prescribed by the department and shall pay the projected audit and administration fee unless exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. The extension request and payment of projected fees shall be made in accordance with the provisions of § 18.2-340.30 of the Code of Virginia.

F. Organizations failing to file required reports, request an extension, or make fee payments when due shall be charged a penalty of $25 per day from the due date until such time as the required report is filed.

G. Any qualified organization in possession of funds derived from charitable gaming (including those who have ceased operations), regardless of when such funds may have been received or whether it has a valid permit from the department, shall file an annual financial report on a form prescribed by the department on or before March 15 of each year until such funds are depleted. If an organization ceases the conduct of charitable gaming, it shall provide the department with the name of an individual who shall be responsible for filing financial reports. If no such information is provided, the president of an organization shall be responsible for filing reports until all charitable gaming proceeds are depleted.

H. If an organization has been identified through inspection, audit, or other means as having deficiencies in complying with statutory or regulatory requirements or having ineffective internal controls, the department may impose restrictions or additional recordkeeping and financial reporting requirements.

I. Any records deemed necessary to complete an inspection, audit, or investigation may be collected by the department, its employees, or its agents from the premises of an organization or any location where charitable gaming is conducted. The department shall provide a written receipt of such records at the time of collection.

11VAC15-40-100. Use of proceeds.

A. All payments by an organization intended as use of proceeds must be made by check written from the organization's charitable gaming account.

B. Use of proceeds payments may be made for scholarship funds or the future acquisition, construction, remodeling, or improvement of real property or the acquisition of other equipment or vehicles to be used for religious, charitable, educational, or community purposes. In addition, an organization may obtain department approval to establish a special fund account or an irrevocable trust fund for special circumstances. Transfers to such an account or an irrevocable trust fund from the organization's charitable gaming account may be included as a use of proceeds if the payment is authorized by an organization's board of directors.

No payments made to such a special fund account shall be withdrawn for other than the specified purpose unless prior notification is made to the department.

C. Expenditures of charitable gaming funds for social or recreational activities or for events, activities, or programs that are open primarily to an organization's members and their families shall not qualify as use of proceeds unless substantial benefit to the community is demonstrated.

D. Payments made to or on behalf of indigent, sick, or deceased members or their immediate families shall be allowed as use of proceeds provided they are approved by the organization's board of directors and the need is documented.

E. Payments made directly for the benefit of an individual member, member of his family, or person residing in his household shall not be allowed as a use of proceeds unless authorized by law or elsewhere in this chapter.

F. Use of proceeds payments by an organization shall not be made for any activity that is not permitted by federal, state, or local laws or for any activity that attempts to influence or finance directly or indirectly political persons or committees or the election or reelection of any person who is or has been a candidate for public office.

G. Organizations shall maintain details of all use of proceeds disbursements for a minimum of three years and shall make this information available to the department upon request.

H. The department may disallow a use of proceeds payment to be counted against the minimum percentage referred to in 11VAC15-40-20 D. If any payment claimed as use of proceeds is subsequently disallowed, an organization may be allowed additional time as specified by the department to meet minimum use of proceeds requirements.

Article 4
Rent

11VAC15-40-110. Requirements regarding renting premises, agreements, and landlord participation.

A. No organization shall rent or use any leased premises to conduct charitable gaming unless all terms for rental or use are set forth in a written agreement and signed by the parties thereto prior to the issuance of a permit to conduct charitable gaming. A qualified organization that leases a building or other premises that is utilized in whole or in part for the purpose of conducting charitable gaming more frequently than two calendar days in one calendar week shall only lease such premises directly from (i) a qualified organization that is exempt from taxation pursuant to § 501 (c) of the Internal Revenue Code or (ii) any county, city, or town.

B. Organizations shall not make payments to a landlord except by check drawn on the organization's charitable gaming account.

C. No landlord, his agent or employee, member of his immediate family, or person residing in his household shall make directly or indirectly a loan to any officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of an organization in Virginia that leases its charitable gaming facility from the landlord.

D. No landlord, his agent or employee, member of his immediate family, or person residing in his household shall make any direct or indirect payment to any officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming conducted at a facility rented from the landlord in Virginia unless the payment is authorized by the lease agreement and is in accordance with the law.

E. No landlord, his agent or employee, member of his immediate family, or person residing in the same household shall at charitable games conducted on the landlord's premises:

1. Participate in the management, operation, or conduct of any charitable games;

2. Sell, lease, or otherwise provide any bingo supplies including, but not limited to, bingo cards, pull-tab cards, electronic game cards, or other game pieces; or

3. Require as a condition of the lease or contract that a particular manufacturer, distributor, or supplier of bingo supplies is used by the organization.

"Bingo supplies" as used in this chapter shall not include glue, markers, or tape sold from concession stands or from a location physically separated from the location where bingo supplies are normally sold.

F. No member of an organization involved in the management, operation, or conduct of charitable gaming shall provide any services to a landlord or be remunerated in any manner by the landlord of the facility where an organization is conducting its charitable gaming.

Part III
Suppliers

11VAC15-40-120. Suppliers of charitable gaming supplies: application, qualifications, suspension, revocation or refusal to renew permit, maintenance, and production of records.

A. Prior to providing any charitable gaming supplies, a supplier shall submit an application on a form prescribed by the department and receive a permit. A $1,000 application fee payable to the Treasurer of Virginia is required. In addition, a supplier must be authorized to conduct business in the Commonwealth of Virginia, which may include, but not be limited to, registration with the State Corporation Commission, the Department of Taxation, and the Virginia Employment Commission. The actual cost of background investigations for a permit may be billed by the department to an applicant. The department shall act on an application within 90 days of receipt of the application.

B. The department may refuse to issue a permit or may suspend or revoke a permit if an officer, director, employee, agent, or owner:

1. Is operating without a valid license, permit, or certificate as a supplier or manufacturer in any state in the United States;

2. Fails or refuses to recall a product as directed by the department;

3. Conducts business with unauthorized entities or is not authorized to conduct business in the Commonwealth of Virginia;

4. Has been convicted of or pleaded nolo contendere to any crime as specified by § 18.2-340.34 B of the Code of Virginia; has had any license, permit, certificate, or other authority related to activities defined as charitable gaming in the Commonwealth suspended or revoked in the Commonwealth or in any other jurisdiction; has failed to file or has been delinquent in excess of one year in the filing of any tax returns or the payment of any taxes due the Commonwealth; or has failed to establish a registered office or registered agent in the Commonwealth if so required by § 13.1-634 or 13.1-763 of the Code of Virginia. As this provision relates to employees or agents, it shall only apply to individuals involved in sales to or solicitations of customers in the Commonwealth of Virginia;

5. Fails to notify the department within 20 days of the occurrence, knowledge, or receipt of the filing of any administrative or legal action relating to charitable gaming or the distribution of charitable gaming supplies involving or concerning the supplier, any officers or directors, employees, agent, or owner during the term of its permit;

6. Fails to provide to the department upon request a current Letter for Company Registration on file with the U.S. Department of Justice-Gambling Devices Registration Unit, if required in accordance with The Gambling Devices Act of 1962, 15 USC §§ 1171-1178, for any device that it sells, distributes, services, or maintains in the Commonwealth of Virginia; or

7. Has been engaged in conduct that would compromise the department's objective of maintaining the highest level of integrity in charitable gaming.

C. A supplier shall not sell, offer to sell, or otherwise provide charitable gaming supplies for use by anyone in the Commonwealth of Virginia other than to an organization with a permit from the department or another permitted supplier. However, a supplier may:

1. Sell charitable gaming supplies to an organization that expects to gross the amount set forth in § 18.2-340.23 of the Code of Virginia or less in any 12-month period, providing that the amount of such purchase would not be reasonably expected to produce more than the amount set forth in § 18.2-340.23 of the Code of Virginia in gross sales. For each such organization, the supplier shall maintain the name, address, and telephone number. The supplier shall also obtain a written and signed statement from an officer or game manager of such organization confirming that gross receipts are expected to be the amount set forth in § 18.2-340.23 of the Code of Virginia or less. Such statement shall be dated and kept on file for three years from the end of a fiscal year.

2. Sell bingo cards and paper to persons or entities other than qualified organizations provided such supplies shall not be sold or otherwise provided for use in charitable gaming activities regulated by the department or in unlawful gambling activities. For each such sale, the supplier shall maintain the name, address, and telephone number of the purchaser. The supplier shall also obtain a written statement from the purchaser verifying that such supplies will not be used in charitable gaming or any unlawful gambling activity. Such statement shall be dated and kept on file for three years from the end of a fiscal year. Payment for such sales in excess of $50 shall be accepted in the form of a check.

3. Sell pull-tabs, seal cards, event game cards, and electronic game cards to organizations for use only upon the premises owned or exclusively leased by the organization and at such times as the portion of the premises in which the pull-tabs, seal cards, event game cards, or electronic game cards are sold is open only to members and their guests as authorized by § 18.2-340.26:1 of the Code of Virginia. Each such sale shall be accounted for separately and the accompanying invoice shall be clearly marked: "For Use in Social Quarters Only."

All such sales shall be documented pursuant to subsection H of this section and reported to the department pursuant to subsection J of this section. This provision shall not apply to the sale to landlords of equipment and video systems as defined in this chapter. Equipment and video systems shall not include dispensing devices, electronic bingo devices, and player devices.

D. A supplier shall not sell, offer to sell, or otherwise provide charitable gaming supplies to any individual or organization in the Commonwealth of Virginia unless the charitable gaming supplies are purchased or obtained from a manufacturer or another permitted supplier. Suppliers may take back for credit and resell supplies received from an organization with a permit that has ceased charitable gaming or is returning supplies not needed.

E. No supplier, supplier's agent, or employee may be involved in the management, operation, or conduct of charitable gaming in the Commonwealth of Virginia. No member of a supplier's immediate family or person residing in the same household as a supplier may be involved in the management, operation, or conduct of charitable gaming of any customer of the supplier in the Commonwealth of Virginia. No supplier, supplier's agent, or employee may participate in any charitable gaming of any customer of the supplier in the Commonwealth of Virginia. For the purposes of this regulation, servicing of electronic devices shall not be considered conduct or participation.

F. The department shall conduct a background investigation prior to the issuance of a permit to any supplier. The investigation may include, but shall not be limited to, the following:

1. A search of the Virginia Central Criminal Records Exchange (CCRE) on all officers, directors, and owners; and

2. Verification of current compliance with Commonwealth of Virginia tax laws.

If the officers, directors, or owners are domiciled outside of the Commonwealth of Virginia, or have resided in the Commonwealth of Virginia for fewer than five years, a criminal history search conducted by the appropriate authority in any state in which they have resided during the previous five years shall be provided by the applicant.

G. Appropriate information and authorizations shall be provided to the department to verify information cited in subsection F of this section.

H. Suppliers shall document each sale or rental of charitable gaming supplies to an organization in the Commonwealth of Virginia on an invoice, which reflects the following:

1. Name, address, and OCG number of the organization;

2. Date of sale or rental and location where bingo supplies are shipped if different from the billing address;

3. Name, form number, and serial number of each deal of instant bingo, pull-tabs, seal cards, electronic game cards, or bundles and the number of cards in each deal;

4. Quantity of deals sold, the cost per deal, the selling price per card, the cash take-in per deal, and the cash payout per deal;

5. Serial number of the top sheet in each pack of disposable bingo paper, the number of sheets in each pack or pad, the cut and color, and the number of packs or pads sold;

6. Serial number for each series of uncollated bingo paper and the number of sheets sold;

7. Detailed information concerning the type, quantity, and individual price of any other charitable gaming supplies or related items including, but not limited to, concealed face bingo cards, hard cards, markers or daubers and refills, or any other merchandise. For concealed face bingo cards, the number of sets, price per set, and the serial number of each set shall be included;

8. Serial number of each player device, the form of the player device, the number of player devices sold or rented, and the physical address to which each player device is shipped;

9. Serial number and description of any other equipment sold or rented that is used to facilitate the distribution, play, and redemption of electronic game cards and the physical address to which the equipment is shipped; and

10. Any type of equipment, device, or product manufactured for or intended to be used in the conduct of charitable games including, but not limited to, designators, designator receptacles, number display boards, selection devices, dispensing machines, and verification devices.

I. Suppliers shall ensure that two copies of the detailed invoice are provided to the customer for each sale of charitable gaming supplies.

J. Each supplier shall provide a report to the department by March 1 of each year on sales of charitable gaming supplies for the fiscal year ending December 31 of the previous year to each organization in the Commonwealth of Virginia. This report shall be provided to the department on computer disk or other department-approved media. The report shall include the name and address of each organization and the following information for each sale or transaction:

1. Bingo paper sales including purchase price, description of paper to include number of sheets in pack and number of faces on sheet, and quantity of single sheets or packs shipped;

2. Deals of instant bingo, pull-tabs, seal cards, electronic game cards, or any other raffle sales including purchase price, deal name, deal form number, number of tickets in deal, ticket price, cash take-in per deal, cash payout per deal, and number of deals;

3. Electronic bingo device sales including purchase or rental price and number of units;

4. Equipment used to facilitate the distribution, play, and redemption of electronic game cards including purchase or rental price, description of equipment, number of units of each type of equipment, and the physical address to which the equipment is shipped; and

5. Sales of miscellaneous items such as daubers, markers, and other merchandise including purchase price, description of product, and number of units.

K. The department shall set manufacturing and testing criteria for all electronic bingo devices and other equipment used in the conduct of charitable gaming. An electronic bingo device shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use in the conduct of charitable gaming until an identical sample device containing identical proprietary software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the device conforms, at a minimum, to the restrictions and conditions set forth in these regulations. Once the testing facility reports the test results to the department, the department will either approve or disapprove the submission and inform the manufacturer of the results within 10 business days. If any such equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the manufacturer of such equipment.

L. Department employees shall have the right to inspect all electronic and mechanical equipment used in the conduct of charitable gaming.

M. Suppliers, their agents and employees, members of the supplier's immediate family, or persons residing in their household shall not make any loan directly or indirectly to any organization or officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of a supplier's customer located in the Commonwealth of Virginia.

N. No supplier, supplier's agent, or employee shall directly or indirectly provide a rebate, discount, or refund to any person other than an organization that purchases supplies or leases or purchases equipment from the supplier. All such transactions shall be recorded on the supplier's account books.

O. A supplier shall not rent, sell, or otherwise provide electronic bingo devices or equipment used to distribute, play, or redeem electronic game cards unless the supplier possesses a valid permit in the Commonwealth of Virginia.

P. A written agreement specifying the terms of lease or rental shall be required for any electronic bingo devices or equipment used to distribute, play, or redeem electronic game cards provided to an organization.

11VAC15-40-130. Construction and other standards for bingo, instant bingo, pull-tabs, seal cards, event games, raffles, electronic bingo devices, and instant bingo, pull-tab, and seal card dispensers.

A. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use bingo supplies unless they conform to the following construction standards:

1. Disposable paper sold shall be of sufficient weight and quality to allow for clearly readable numbers and to prevent ink from spreading, bleeding, or otherwise obscuring other numbers or cards.

2. Each sheet of disposable bingo paper shall be comprised of cards bearing a serial number. No serial number shall be repeated on or in the same style, series, and color of cards within a three-year period.

3. Disposable bingo paper assembled in books or packs shall not be separated except for single-sheet specials. This provision does not apply to two-part cards on which numbers are filled by players and one part is separated and provided to an organization for verification purposes.

4. Each unit of disposable bingo paper shall have an exterior label listing the following information:

a. Description of product;

b. Number of packs or loose sheets;

c. Series numbers;

d. Serial number of the top sheet;

e. Number of cases;

f. Cut of paper; and

g. Color of paper.

5. "Lucky Seven" bingo cards or electronic facsimiles thereof shall have a single face where seven numbers shall be chosen. "Lucky Seven" sheets or electronic facsimiles thereof shall have multiple faces where seven numbers shall be chosen per face.

B. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use instant bingo, pull-tab, seal cards, or event game cards unless they conform to the following construction standards:

1. Cards shall be constructed so that concealed numbers, symbols, or winner protection features cannot be viewed or determined from the outside of the card by using a high intensity lamp of 500 watts, with or without utilizing a focusing lens.

2. Deals shall be designed, constructed, glued, and assembled in a manner to prevent determination of a winning or losing ticket without removing the tabs or otherwise uncovering the symbols or numbers as intended.

3. Each card in a deal shall bear the same serial number. Only one serial number shall be used in a deal. No serial number used in a deal shall be repeated by the same manufacturer on that same manufacturer's form within a three-year period. The flare of each deal shall accompany the deal and shall have affixed to it the same serial number as the tickets in such deal.

4. Numbers or symbols on cards shall be fully visible in the window and shall be placed so that no part of a number or symbol remains covered when the tab is removed.

5. Cards shall be glued on all edges and around each window. Glue shall be of sufficient strength and type to prevent the undetectable separation or delamination of the card. For banded tickets, the glue must be of sufficient strength and quality to prevent the separation of the band from the ticket.

6. The following minimum information shall be printed on a card:

a. Break open pull-tab, instant bingo cards, and event game cards:

(1) Name of the manufacturer or its distinctive logo;

(2) Name of the game;

(3) Manufacturer's form number;

(4) Price per individual card or bundle;

(5) Unique minimum five-digit game serial number printed on the game information side of the card; and

(6) Number of winners and respective winning number or symbols and specific prize amounts unless accompanied by a manufacturer's preprinted publicly posted flare with that information.

b. Banded pull-tabs:

(1) Manufacturer;

(2) Serial number;

(3) Price per individual card or bundle unless accompanied by a manufacturer's preprinted publicly posted flare with that information; and

(4) Number of winners and respective winning numbers or symbols and prize amounts or a manufacturer's preprinted publicly posted flare giving that information.

7. All seal card games sold to organizations shall contain the sign-up sheet, seals, and cards packaged together in each deal.

C. Raffle tickets used independent of a bingo game must conform to the following construction standards:

1. Each ticket shall have a detachable section and shall be consecutively numbered.

2. Each section of a ticket shall bear the same number. The section retained by the organization shall provide space for the purchaser's name, complete address, and telephone number.

3. The following information shall be printed on the purchaser's section of each ticket:

a. Dates and times of drawings;

b. Locations of the drawings;

c. Name of the charitable organization conducting the raffle;

d. Price of the ticket;

e. Charitable gaming permit number; and

f. Prizes.

Exceptions to these construction standards are allowed only with prior written approval from the department.

D. Electronic bingo.

1. The department, at its discretion, may require additional testing of electronic bingo devices at any time. Such additional testing shall be at the manufacturer's expense and shall be a condition of the continued use of such device.

2. All electronic bingo devices shall use proprietary software and hardware or commonly available software and computers and shall be enabled for play on the premises where the game is to be played.

3. Each electronic bingo device shall have a unique identification number permanently coded into the software of such device. Manufacturers of electronic bingo devices shall employ sufficient security safeguards in designing and manufacturing the devices such that it may be verified that all proprietary software components are authentic copies of the approved software components and all functioning components of the device are operating with identical copies of approved software programs. The device must also have sufficient security safeguards so that any restrictions or requirements authorized by the department or any approved proprietary software are protected from alteration by unauthorized personnel. The device shall not contain hard-coded or unchangeable passwords. Security measures that may be employed to comply with these provisions include, but are not limited to, the use of dongles, digital signature comparison hardware and software, secure boot loaders, encryption, and key and callback password systems.

4. Electronic bingo devices shall not allow a player to create a card by the input of specific numbers on each card. Manufacturers shall ensure that an electronic bingo device does not allow for the play of any bingo card faces other than those verifiably purchased by the patron.

5. Electronic bingo devices shall not accept cash, currency, or tokens for play.

6. Electronic bingo devices shall require the manual entry of numbers as they are called, the manual verification of numbers as they have been electronically transmitted to the device, or the full automatic daubing of numbers as each number is called. During the play of a bingo game, the transmission of data to electronic bingo devices shall be limited to one-way communication to the device and shall consist only of the number called.

7. A device shall not allow the play of more than 54 cards per device per game.

8. The electronic bingo device system shall record a sequential transaction number or audit tracking number for each transaction. The system shall not allow the manual resetting or changing of this number.

9. The system shall produce a receipt and a transaction log containing the following:

a. Organization name;

b. Location of bingo game;

c. Sequential transaction or receipt number;

d. Number of electronic bingo cards loaded;

e. Cost of electronic bingo cards loaded; and

f. Date and time of each transaction.

10. The system shall maintain and make available on demand a summary report for each session that includes the following:

a. Organization name;

b. Physical location of bingo game;

c. Date and time of each transaction;

d. Sequential transaction or receipt number;

e. Number of electronic bingo cards loaded;

f. Cost of electronic bingo cards loaded;

g. A transaction history correlating each electronic sale to the device identification number of the device on which the sale was played;

h. Sufficient information to identify voids, including the date and time of each voided transaction;

i. Sufficient information to identify device returns; and

j. Total gross receipts for each session.

11. Each device shall be programmed to automatically erase all stored electronic cards at the end of the last game of a session, within a set time from their rental to a player, or by some other clearance method approved by the department.

12. All devices shall be reloaded with another set of cards at the beginning of each session if the devices are to be reused at the same location.

E. In instances where a defect in packaging or in the construction of deals or electronic devices is discovered by or reported to the department, the department shall notify the manufacturer of the deals or devices containing the alleged defect. Should the department, in consultation with the manufacturer, determine that a defect exists, and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to deals or electronic devices for use still located within the Commonwealth of Virginia, require the supplier to:

1. Recall the deals or electronic devices affected that have not been sold or otherwise provided; or

2. Issue a total recall of all affected deals or electronic devices.

F. No instant bingo, pull-tab, or seal card dispenser may be sold, leased, or otherwise furnished to any person or organization in the Commonwealth of Virginia or used in the conduct of charitable gaming until an identical sample device containing identical proprietary software, if applicable, has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The cost of testing shall be borne by the manufacturer of such equipment. In addition, suppliers and manufacturers of such dispensers shall comply with the requirements of The Gambling Devices Act of 1962 (15 USC §§ 1171-1178).

G. All instant bingo, pull-tab, or seal card dispensing devices must meet the following standards:

1. Each dispenser shall be manufactured in a manner that ensures a pull-tab ticket is dispensed only after insertion of United States currency or coinage into the dispenser. Such ticket and any change due shall be the only items dispensed from the machine.

2. Each dispenser shall be manufactured in a manner that ensures the device neither displays nor has the capability of displaying or otherwise identifying an instant bingo, pull-tab, or seal card winning or nonwinning ticket.

3. Each dispenser shall be manufactured in such a manner that any visual animation does not simulate or display rolling or spinning reels or produce audible music or enhanced sound effects.

4. Each dispenser shall be equipped with separate locks for the instant bingo, pull-tab, or seal card supply modules and money boxes. Locks shall be configured so that no one key will operate both the supply modules and money boxes.

H. The department may require additional testing of a dispensing device at any time to ensure that it meets construction standards and allows for fair play. Such tests shall be conducted at the cost of the manufacturer of such devices.

I. The face value of cards being dispensed shall match the amount deposited in the currency/coin acceptor less change provided.

11VAC15-40-140. Instant bingo, pull-tabs, seal cards, or event game cards randomization standards.

All instant bingo, pull-tabs, seal cards, or event game cards shall meet the following randomization standards:

1. Deals shall be assembled so that winning tickets are placed throughout each deal.

2. Deals shall be assembled and packaged in a manner that prevents isolation of winning cards due to variations in printing, graphics, colors, sizes, appearances of cut edges, or other markings of cards.

3. Winning cards shall be distributed and mixed among all other cards in a deal so as to eliminate any pattern between deals or portions of deals from which the location or approximate location of any winning card may be determined.

Part IV
Electronic Games of Chance Systems

Article 1
General Requirements

11VAC15-40-150. Approval of distributed pull-tab systems, validation systems, point-of-sale stations, and redemption terminals.

A. The department shall set manufacturing and testing criteria for all distributed pull-tab systems, validation systems, point-of-sale stations, redemption terminals, and other equipment used in the conduct of charitable gaming. A distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use in the conduct of charitable gaming until an identical sample system or equipment containing identical software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the distributed pull-tab system and associated hardware and software conform, at a minimum, to the requirements set forth in this chapter. Once the testing facility reports the test results to the department, the department will either approve or disapprove the distributed pull-tab system or system components and inform the manufacturer of the results within 10 business days. If any such system or equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the manufacturer of such equipment.

B. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use a distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment used to conduct charitable gaming unless it conforms to the requirements set forth in this regulation.

C. If a defect in a distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment used to conduct charitable gaming is discovered by or reported to the department, the department shall notify the manufacturer of the system or equipment containing the alleged defect. Should the department, in consultation with the manufacturer, determine that a defect exists and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to any distributed pull-tab system, validation system, point of sale station, redemption terminal, or other equipment used to conduct charitable gaming still located within the Commonwealth of Virginia, require the supplier to issue a recall of all affected distributed pull-tab systems, validation systems, point-of-sale stations, redemption terminals, or other equipment.

Article 2
System Requirements

11VAC15-40-160. Distributed pull-tab system.

A distributed pull-tab system shall be dedicated primarily to electronic accounting, reporting, and the presentation, randomization, and transmission of electronic game cards to the player devices. It shall also be capable of generating the data necessary to provide the reports required within this article or otherwise specified by the department.

11VAC15-40-170. Dispensing of electronic game cards.

A distributed pull-tab system shall dispense, upon request, an electronic game card or cards. All games must be played without replacement, drawing from a single finite game set.

11VAC15-40-180. Game set requirements.

Each game set shall meet the following minimum requirements:

1. Each game set shall be made up of a finite number of electronic game cards;

2. The game set shall consist of a maximum of 25,000 electronic game cards;

3. All electronic game cards in a particular game set shall be of the same purchase price;

4. The maximum win amount awarded per any one electronic game card shall not exceed the value set forth for pull-tabs by § 18.2-340.33 of the Code of Virginia;

5. Each game set shall be assigned a unique serial number; and

6. After randomization, game sets may be broken into subsets of equal size. If game subsets are used, they shall each be assigned a unique serial number and be traceable to a parent game set.

11VAC15-40-190. Game set definition.

If the system has the capability to create a game set from a predefined set of criteria, the criteria must contain the following information:

1. Game ID;

2. Game set version;

3. Manufacturer;

4. Game name;

5. Paytable ID;

6. Purchase price per electronic game card;

7. Subset size;

8. Total number of subsets; and

9. Prize values with an associated index and frequency.

11VAC15-40-200. Data required to be available for each game set.

A. The following data shall be available prior to the opening of a game set for distribution and shall be maintained and be viewable both electronically and, if requested, by printed report, upon demand:

1. A unique serial number identifying each game set and/or subset;

2. A description of the game set sufficient to categorize the game set or subset relative to other game sets;

3. The total number of electronic game cards in the game set;

4. The number of game subsets to be created from the game set and the number of electronic game cards in each subset when applicable;

5. The payout percentage of the entire game set;

6. The purchase price per electronic game card assigned to the game set; and

7. Prize values with an associated index and frequency.

B. The following data shall be available subsequent to the completion of a game set and shall be maintained and viewable both electronically and, if requested, by printed report, upon demand:

1. A unique serial number identifying each game set and/or subset;

2. Description of the game set sufficient to categorize the game set relative to other game sets;

3. The total number of electronic game cards unsold;

4. The total number of electronic game cards purchased;

5. The time and date that the game set and/or each game subset became available for play;

6. The time and date that the game set and/or each game subset was completed or removed from play;

7. Location where game set and/or subset was played;

8. The final payout percentage of the game set when removed from play; and

9. The purchase price per electronic game card assigned to the game set.

C. In order to provide maximum game integrity, no audit or other determination of the status of any game set or any subset, including, but not limited to, a determination of the prizes won or prizes remaining to be won, shall be conducted by anyone while a game set or subset is in play without causing termination of the entire game set or subset. Only upon game set termination shall the details of the associated game set and subsets be revealed to the individual or individuals performing the audit.

D. Once terminated, a game set shall not be able to be reopened.

11VAC15-40-210. Security requirements.

A. A distributed pull-tab system computer must be in a locked, secure enclosure with key controls in place.

B. A distributed pull-tab system shall provide a means for terminating the game set if information about electronic game cards in an open game set has been accessed or at the discretion of the department. In such cases, traceability of unauthorized access including time and date, users involved, and any other relevant information shall be available.

C. A distributed pull-tab system shall not permit the alteration of any accounting or significant event information that was communicated from the player device without supervised access controls. In the event financial data is changed, an automated audit log must be capable of being produced to document the following:

1. Data element altered;

2. Data element value prior to alteration;

3. Data element value after alteration;

4. Time and date of alteration; and

5. Personnel that performed alteration.

D. A distributed pull-tab system must provide password security or other secure means of ensuring data integrity and enforcing user permissions for all system components through the following means:

1. All programs and data files must only be accessible via the entry of a password that will be known only to authorized personnel;

2. The distributed pull-tab system must have multiple security access levels to control and restrict different classes;

3. The distributed pull-tab system access accounts must be unique when assigned to the authorized personnel and shared accounts amongst authorized personnel must not be allowed;

4. The storage of passwords and PINs must be in an encrypted, nonreversible form; and

5. A program or report must be available that will list all registered users on the distributed pull-tab system including their privilege level.

E. All components of a distributed pull-tab system must have a password sign-on with two-level codes comprising the personal identification code and a personal password.

1. The personal identification code must have a length of at least six ASCII characters; and

2. The personal password must have a minimum length of six alphanumeric characters, which should include at least one nonalphabetic character.

F. A distributed pull-tab system must have the capability to control potential data corruption that can be created by multiple simultaneous log-ons by system management personnel.

1. A distributed pull-tab system shall specify which of the access levels allow for multiple simultaneous sign-ons by different users and which of the access levels do not allow for multiple sign-ons, and, if multiple sign-ons are possible, what restrictions, if any, exist; or

2. If a distributed pull-tab system does not provide adequate control, a comprehensive procedural control document must be drafted for the department's review and approval.

G. Distributed pull-tab system software components/modules shall be verifiable by a secure means at the system level. A distributed pull-tab system shall have the ability to allow for an independent integrity check of the components/modules from an outside source and is required for all control programs that may affect the integrity of the distributed pull-tab system. This must be accomplished by being authenticated by a third-party device, which may be embedded within the distributed pull-tab system software or having an interface or procedure for a third-party application to authenticate the component. This integrity check will provide a means for field verification of the distributed pull-tab system components.

H. A distributed pull-tab system may be used to configure and perform security checks on player devices, provided such functions do not affect the security, integrity, or outcome of any game and meets the requirements set forth in this regulation regarding program storage devices.

11VAC15-40-220. Backup and recovery.

A. A distributed pull-tab system computer shall have a separate physical medium for securely storing game sets or subsets on the computer, which shall be mirrored in real time by a backup medium.

B. All data required to be available or reported by this chapter must be retained for a period of not less than three years.

C. All storage of critical data shall utilize error checking and be stored on a nonvolatile physical medium.

D. The database shall be stored on redundant media so that no single failure of any portion of the system would result in the loss or corruption of data.

E. In the event of a catastrophic failure when the distributed pull-tab system cannot be restarted in any other way, it shall be possible to reload the distributed pull-tab system from the last viable backup point and fully recover the contents of that backup, to consist of at least the following information:

1. All significant events;

2. All accounting information;

3. Auditing information, including all open game sets and the summary of completed game sets; and

4. Employee files with access levels.

11VAC15-40-230. Electronic accounting and reporting.

A. One or more electronic accounting systems shall be required to perform reporting and other functions in support of distributed pull-tab system. The electronic accounting system shall not interfere with the outcome of any gaming function.

B. The following reporting capabilities must be provided by the electronic accounting system:

1. Electronic game card game set report – game sets in play. An electronic game card game set report must be available on demand for each game set currently in play. Game cards, outcomes, or prizes must not be revealed. The report must contain the following information:

a. A unique serial number identifying each game set and/or subsets;

b. A description of the game set sufficient to categorize the game set or subset relative to other game sets;

c. The total number of electronic game cards in the game set;

d. The number of game subsets to be created from the game set and the number of electronic game cards in each subset when applicable;

e. The theoretical payout percentage of the entire game set;

f. The purchase price per electronic game card assigned to the game set;

g. The time and date that the game set and/or each game subset became available for play; and

h. Location where the game set and/or subset is being played.

2. Electronic game card game set report – completed game set. An electronic game card game set report must be available on demand, for each completed game set. The report must contain the following information:

a. A unique serial number identifying each game set and/or subset;

b. Description of the game set sufficient to categorize the game set relative to other game sets;

c. The total number of electronic game cards unsold;

d. The total number of electronic game cards purchased;

e. The time and date that the game set and/or each game subset became available for play;

f. The time and date that the game set and/or each game subset was completed or removed from play;

g. Location where game set and/or subset was played;

h. The final payout percentage of the game set when removed from play; and

i. The purchase price per electronic game card assigned to the game set.

3. A report that shall indicate all prizes that exceed the threshold that triggers additional procedures to be followed for the purpose of compliance with federal tax reporting requirements. At a minimum, on a daily and monthly basis, the report shall provide the following information per player device:

a. The date and time won;

b. Location of prize award; and

c. Amount of each prize occurrence.

4. Liability report. A liability report shall provide a summary of the outstanding funds that carry from business day to business day. At a minimum, this report shall include:

a. Amount of prizes and/or vouchers that were awarded in dollars and cents, but have not yet been claimed that have not yet expired; and

b. Summary of all outstanding accounts.

5. Master reconciliation report. A master reconciliation report must be available on a per session basis, monthly basis, and quarterly basis at a minimum. A master reconciliation report shall include the following:

a. Total of all moneys used to purchase electronic game cards;

b. Total of all prizes, in dollars and cents, awarded from electronic game cards;

c. Total of all moneys inserted into a player device or provided to a cashier for the purchase of electronic game cards; and

d. Total of all moneys removed from a player device.

C. A distributed pull-tab system shall be capable of providing an electronic file in a format specified by the department on a periodic basis to a location specified by the department. The data to be reported will contain, at a minimum, the following items per session:

1. Organization identification;

2. Session date;

3. Total cash in;

4. Total cash out;

5. Total cash played;

6. Total cash won;

7. For all game sets on the system in play or in inventory:

a. Serial number;

b. Description;

c. Ticket price;

d. Number of subsets if applicable;

e. Number of tickets or number of tickets per subset;

f. Theoretical return percentage; and

g. Date game set was opened for play, when applicable; and

8. For all game sets completed or closed since the previous reporting date:

a. Serial number;

b. Description;

c. Ticket price;

d. Number of subsets, if applicable;

e. Number of tickets or number of tickets per subset;

f. Theoretical return percentage;

g. Date game set was opened;

h. Date game set was closed;

i. Total tickets sold;

j. Total dollars in;

k. Total prizes paid; and

l. Actual return percentage.

11VAC15-40-240. Randomization.

A. As used in this section, unless the context requires a different meaning:

"Card position" means the first card dealt, second card dealt in sequential order.

"Number position" means the first number drawn in sequential order.

B. A distributed pull-tab system shall utilize randomizing procedures in the creation of game sets for electronic game cards or externally generated randomized game sets that have been created using a method previously approved by the department.

C. Any random number generation, shuffling, or randomization of outcomes used in connection with a distributed pull-tab system must be by use of a random number generation application that has successfully passed standard tests for randomness and unpredictability including but not limited to:

1. Each card position or number position satisfies the 99% confidence limit using the standard chi-squared analysis. "Chi-squared analysis" is the sum of the ratio of the square difference between the expected result and the observed result to the expected result.

2. Each card position or number position does not produce a significant statistic with regard to producing patterns of occurrences. Each card position or number position will be considered random if it meets the 99% confidence level with regard to the "run test" or any similar pattern testing statistic. The "run test" is a mathematical statistic that determines the existence of recurring patterns within a set of data.

3. Each card position or number position is independently chosen without regard to any other card or number drawn within that game play. This test is the "correlation test." Each pair of card positions or number positions is considered random if it meets the 99% confidence level using standard correlation analysis.

4. Each card position or number position is independently chosen without reference to the same card position or number position in the previous game. This test is the "serial correlation test." Each card position or number position is considered random if it meets the 99% confidence level using standard serial correlation analysis.

11VAC15-40-250. Communications and network requirements.

A. Where the distributed pull-tab system components are linked with one another in a network, communication protocols shall be used that ensure that erroneous data or signals will not adversely affect the operations of any such system components.

B. All data communication shall incorporate an error detection and correction scheme to ensure the data is transmitted and received accurately.

C. Connections between all components of the distributed pull-tab system shall only be through the use of secure communication protocol(s) that are designed to prevent unauthorized access or tampering, employing Advanced Encryption Standard (AES), or equivalent encryption.

D. The minimum width (size) for encryption keys is 112 bits for symmetric algorithms and 1024 bits for public keys.

E. There must be a secure method implemented for changing the current encryption key set. It is not acceptable to only use the current key set to "encrypt" the next set.

F. There must be a secure method in place for the storage of any encryption keys. Encryption keys must not be stored without being encrypted themselves.

G. If a wireless network is used, wireless products used in conjunction with any gaming system or system component must meet the following minimum standards:

1. Employ a security process that complies with the Federal Information Processing Standard 140-2 (FIPS 140-2); or

2. Employ an alternative method, as approved by the department.

11VAC15-40-260. Significant events.

The following significant events, if applicable, shall be collected from the player device or point of sale and communicated to the system for storage and a report of the occurrence of the significant event must be made available upon request:

1. Power resets or power failure.

2. Communication loss between a player device and any component of the distributed pull-tab system.

3. Player device jackpot (any award in excess of the single win limit of the player device).

4. Door openings (any external door that accesses a critical area of the player device).

5. Bill validator errors:

a. Stacker full (if supported); and

b. Bill jam.

6. Printer errors:

a. Printer empty; and

b. Printer disconnect or failure.

7. Corruption of the player device RAM or program storage device.

8. Any other significant events as defined by the protocol employed by the distributed pull-tab system.

11VAC15-40-270. Validation system and redemption.

A distributed pull-tab system may utilize a voucher validation system to facilitate gaming transactions. The validation system may be entirely integrated into a distributed pull-tab system or exist as a separate entity.

1. Payment by voucher printer as a method of redeeming unused game plays and/or winnings on a player device is only permissible when the device is linked to an approved validation system or distributed pull-tab system that allows validation of the printed voucher.

a. A distributed pull-tab system may allow voucher out only; vouchers shall not be inserted, scanned, or used in any way at the player device for redemption.

b. The validation system must process voucher redemption correctly according to the secure communication protocol implemented.

2. The algorithm or method used by the validation system or distributed pull-tab system to generate the voucher validation numbers must guarantee an insignificant percentage of repetitive validation numbers.

3. The validation system must retrieve the voucher information correctly based on the secure communication protocol implemented and store the voucher information in a database. The voucher record on the host system must contain, at a minimum, the following voucher information:

a. Validation number;

b. Date and time the player device printed the voucher;

c. Value of voucher in dollars and cents;

d. Status of voucher;

e. Date and time the voucher will expire;

f. Serial number of player device; and

g. Location name or site identifier;

4. The validation system or distributed pull-tab system must have the ability to identify the following occurrences and notify the cashier when the following conditions exist:

a. Voucher cannot be found on file;

b. Voucher has already been paid; or

c. Amount of voucher differs from amount on file (requirement may be met by display of voucher amount for confirmation by cashier during the redemption process).

5. If the connection between the validation system and the distributed pull-tab system fails, an alternate method or procedure of payment must be available and shall include the ability to identify duplicate vouchers and prevent fraud by redeeming vouchers that were previously issued by the player device.

6. The following reports related to vouchers shall be generated on demand:

a. Voucher Issuance Report shall be available from the validation system that shows all vouchers generated by an electronic game card device; and

b. Voucher Redemption Report shall detail individual vouchers, the sum of the vouchers paid by the validation terminal or point of sale by session, and include the following information:

(1) The date and time of the transaction;

(2) The dollar value of the transaction;

(3) Validation number;

(4) A transaction number; and

(5) Point-of-sale identification number or name.

7. The validation system database must be encrypted and password-protected and should possess a nonalterable user audit trail to prevent unauthorized access.

8. The normal operation of any device that holds voucher information shall not have any options or method that may compromise voucher information. Any device that holds voucher information in its memory shall not allow removal of the information unless it has first transferred that information to the ticketing database or other secured component or components of the validation system.

11VAC15-40-280. Point of sale; validation terminal.

A. A distributed pull-tab system may utilize a point-of-sale and/or validation terminal that is capable of facilitating the sale of the organization's pull tab outcomes or used for the redemption of credits from player accounts or vouchers. The point of sale may be entirely integrated into a distributed pull-tab system or exist as a separate entity.

B. Point-of-sale use is only permissible when the device is linked to an approved validation system or distributed pull-tab system.

C. If a distributed pull-tab system utilizes a point of sale, it shall be capable of printing a receipt for each sale, void, or redemption.

1. The receipt shall contain the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Validation number, if applicable;

d. Quantity of associated products, if applicable;

e. Transaction number;

f. Account number, if applicable; and

g. Point-of-sale identification number or name.

D. The following point-of-sale or validation terminal reports shall be generated on demand:

1. Sales Transaction History Report shall show all sales and voids by session and include the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Quantity of associated products;

d. Transaction number; and

e. Point of sale identification number or name;

2. Voucher Redemption Report shall detail individual voucher redemptions paid by the validation terminal or point of sale by session and include the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Validation number;

d. Transaction number; and

e. Point of sale identification number or name.

11VAC15-40-290. Location of equipment.

All equipment used to facilitate the distribution, play, or redemption of electronic pull-tab or instant bingo games must be physically located within the boundaries of the Commonwealth of Virginia. This includes but is not limited to the distributed pull-tab system, player devices, redemption terminals, and point-of-sale stations.

Article 2
Player Devices

11VAC15-40-300. Player device general requirements.

A. Each player device shall bear a seal approved by the commissioner and affixed by the department.

B. A player device shall not be capable of being used for the purposes of engaging in any game prohibited by the department.

C. In addition to a video monitor or touch screen, each player device may have one or more of the following: a bill acceptor, printer, and electromechanical buttons for activating the game and providing player input, including a means for the player to make selections and choices in games.

D. For each player device, there shall be located anywhere within the distributed pull-tab system, nonvolatile memory or its equivalent. The memory shall be maintained in a secure location for the purpose of storing and preserving a set of critical data that has been error checked in accordance with the critical memory requirements of this regulation.

E. A player device shall not have any switches, jumpers, wire posts, or other means of manipulation that could affect the operation or outcome of a game. The player device may not have any functions or parameters adjustable through any separate video display or input codes except for the adjustment of features that are wholly cosmetic.

F. A player device shall not have any of the following attributes: spinning or mechanical reels, pull handle, sounds other than an audio effect to simulate the opening of a paper pull-tab or instant bingo card, flashing lights, tower light, top box, coin tray, ticket acceptance, hopper, coin acceptor, enhanced animation, cabinet or payglass artwork, or any other attribute identified by the department.

G. A player device shall be robust enough to withstand forced illegal entry that would leave behind physical evidence of the attempted entry or such entry that causes an error code that is displayed and transmitted to the distributed pull-tab system. Any such entry attempt shall inhibit game play until cleared, and shall not affect the subsequent play or any other play, prize, or aspect of the game.

H. The number of player devices, other than those player devices that are handheld, present at any premise at which charitable gaming is conducted shall be limited to one device for every 50 permissible occupants under the maximum occupancy as determined pursuant to the Uniform Statewide Building Code. The department shall determine whether a player device is handheld.

11VAC15-40-310. Cabinet wiring.

A. Proof of UL or equivalent certification shall be required for all submitted electronic devices.

B. A player device shall be designed so that power and data cables into and out of the player device can be routed so that the cables are not accessible to the general public.

11VAC15-40-320. Player device identification.

A player device shall have a permanently affixed identification badge that cannot be removed without leaving evidence of tampering. This badge shall be affixed to the exterior of the player device and shall include the following information:

1. Manufacturer name;

2. A unique serial number;

3. The player device model number;

4. The date of manufacture; and

5. Any other information required by the department.

11VAC15-40-330. Doors; compartments.

A. If a player device possesses an external door that allows access to the interior of the machine the following rules shall apply:

1. Doors and their associated hinges shall be capable of withstanding determined illegal efforts to gain access to the inside of the player device and shall leave evidence of tampering if an illegal entry is made;

2. All external doors shall be locked and monitored by door access sensors that shall detect and report all external door openings by way of an audible alarm, on-screen display, or both;

3. The player device shall cease play when any external door is opened;

4. It shall not be possible to disable a door open sensor when the machine's door is closed without leaving evidence of tampering;

5. The sensor system shall register a door as being open when the door is moved from its fully closed and locked position; and

6. Door open conditions shall be recorded in an electronic log that includes a date/time stamp.

B. Player devices that contain control programs located within an accessible area shall have a separate internal locked logic compartment, that shall be keyed differently than the front door access lock. The logic compartment shall be a locked cabinet area with its own locked door, that houses critical electronic components that have the potential to significantly influence the operation of the player device. There may be more than one such logic area in a player device. Electronic component items that are required to be housed in one or more logic areas are:

1. CPUs and other electronic components involved in the operation and calculation or display of game play;

2. Communication controller electronics and components housing the communication program storage media or, the communication board for the on-line system may reside outside the player device; and

3. Logic compartment door open conditions shall be recorded in a log that includes a date/time stamp.

C. Player devices that do not contain a door shall have adequate security for any panels or entry points that allow access to the interior of the device.

11VAC15-40-340. Memory clear.

A. Following the initiation of a memory reset procedure utilizing a certified reset method, the program shall execute a routine that initializes the entire contents of memory to the default state. For player devices that allow for partial memory clears, the methodology in doing so must be accurate and the game application must validate the uncleared portions of memory. The player device display after a memory reset shall not be the top award.

B. It shall not be possible to change a configuration setting that causes an alteration or obstruction to the electronic accounting meters without a memory clear.

11VAC15-40-350. Critical memory.

A. Critical memory shall be used to store all data that is considered vital to the continued operation of the player device. Critical memory storage shall be maintained by a methodology that enables errors to be identified and corrected in most circumstances. This methodology may involve signatures, checksums, partial checksums, multiple copies, timestamps, and/or use of validity codes. This includes, but is not limited to:

1. All electronic meters required in 11VAC15-40-420 E;

2. Current unused credits;

3. Player device or game configuration data;

4. Recall of all wagers and other information necessary to fully reconstruct the game outcome associated with the last 10 plays;

5. Software state, which is the last state the player device software was in before interruption; and

6. Error conditions that may have occurred on the player device that may include:

a. Memory error or control program error;

b. Low memory battery, for batteries external to the memory itself or low power source;

c. Program error or authentication mismatch; and

d. Power reset.

B. Comprehensive checks of critical memory shall be made continually to test for possible corruption. In addition, all critical memory:

1. Shall have the ability to retain data for a minimum of 180 days after power is discontinued from the player device. If the method used is an off-chip battery source, it shall recharge itself to its full potential in a maximum of 24 hours. The shelf life shall be at least five years. Memory that uses an off-chip back-up power source to retain its contents when the main power is switched off shall have a detection system that will provide a method for software to interpret and act upon a low battery condition;

2. Shall only be cleared by a department certified memory clear method; and

3. Shall result in an error if the control program detects an unrecoverable memory error.

11VAC15-40-360. Program storage devices.

A. All program storage devices (writable/nonwritable), including Erasable Programmable Read Only Memory (EPROM), DVD, CD-ROM, compact flash, and any other type of program storage device shall be clearly marked with sufficient information to identify the software and revision level of the information stored in the devices.

B. Program storage devices shall meet the following requirements:

1. Program storage, including CD-ROM, shall meet the following rules:

a. The control program shall authenticate all critical files by employing a hashing algorithm that produces a "message digest" output of at least 128 bits at minimum, as certified by the recognized independent test laboratory and agreed upon by the department. Any message digest shall be stored on a read-only memory device within the player device. Any message digest that resides on any other medium shall be encrypted, using a public/private key algorithm with a minimum of a 512 bit key, or an equivalent encryption algorithm with similar security certified by the independent test laboratory and agreed upon by the department.

b. The player device shall authenticate all critical files against the stored message digests. In the event of a failed authentication, the player device should immediately enter an error condition with the appropriate indication such as an audible signal, on-screen display, or both. This error shall require operator intervention to clear. The player device shall display specific error information and shall not clear until the file authenticates properly and/or the player device's memory is cleared, the game is restarted, and all files authenticate correctly.

2. CD-ROM specific based program storage shall:

a. Not be a rewriteable disk; and

b. The "write session" shall be closed to prevent any further writing to the storage device.

C. Player devices where the control program is capable of being erased and reprogrammed without being removed from the player device, or other equipment or related peripheral devices shall meet the following requirements:

1. Reprogrammable program storage shall only write to alterable storage media containing data, files, and programs that are not critical to the basic operation of the game.

2. Notwithstanding the foregoing, data may be written to media containing critical data, files, and programs provided that:

a. A log of all information that is added, deleted, and modified be stored on the media;

b. The control program verifies the validity of all data, files, and programs that reside on the media using the methods required herein;

c. The player device's program contains appropriate security to prevent unauthorized modifications; and

d. The player device's program does not allow game play while the media containing the critical data, files, and programs is being modified.

D. The control program shall ensure the integrity of all critical program components during the execution of said components and the first time the files are loaded for use even if only partially loaded. Space that is not critical to machine security (e.g., video or sound) is not required to be validated, although the department recommends a method be in place for the files to be tested for corruption. If any of the video or sound files contain payout amounts or other information needed by the player, the files are to be considered critical.

11VAC15-40-370. Touch screens.

Any touch screen must meet the following rules:

1. A touch screen shall be accurate once calibrated;

2. A touch screen shall be able to be recalibrated; and

3. A touch screen shall have no hidden or undocumented buttons or touch points anywhere on the touch screen, except as provided for by the game rules that affect game play.

11VAC15-40-380. Bill acceptors.

A. A player device may have a mechanism that accepts U.S. currency and provides a method to enable the player device software to interpret and act appropriately upon a valid or invalid input.

B. An acceptance device shall be electronically based and be configured to ensure that it only accept valid bills and rejects all others in a highly accurate manner.

C. A bill input system shall be constructed in a manner that protects against vandalism, abuse, or fraudulent activity. In addition, a bill acceptance device shall only register credits when:

1. The bill has passed the point where it is accepted and stacked; and

2. The bill acceptor has sent the "irrevocably stacked" message to the machine.

D. A bill acceptor shall communicate to the player device using a bidirectional protocol.

E. A bill acceptor shall be designed to prevent the use of cheating methods such as stringing, the insertion of foreign objects, and any other manipulation that may be deemed as a cheating technique.

F. If a bill acceptor is designed to be factory set only, it shall not be possible to access or conduct maintenance or adjustments to that bill acceptor in the field, other than:

1. The selection of bills and their limits;

2. Changing of certified EPROMs or downloading of certified software;

3. The method for adjustment of the tolerance level for accepting bills of varying quality should not be accessible from the exterior of the player device. Adjustments of the tolerance level should only be allowed with adequate levels of security in place. This can be accomplished through lock and key, physical switch settings, or other accepted methods approved on a case-by-case basis;

4. Maintenance, adjustment, and repair per approved factory procedures; and

5. Options that set the direction or orientation of bill acceptance.

G. A player device equipped with a bill acceptor shall have the capability of detecting and displaying an error condition for the following events:

1. Stacker full (it is recommended that an explicit "stacker full" error message not be utilized since this may cause a security issue);

2. Bill jams;

3. Bill acceptor door open. If a bill acceptor door is a machine door, a door open signal is sufficient;

4. Stacker door open; and

5. Stacker removed.

H. A player device equipped with a bill acceptor shall maintain sufficient electronic metering to be able to report the following:

1. Total monetary value of all bills accepted;

2. Total number of all bills accepted;

3. A breakdown of the bills accepted for each denomination; and

4. The value of the last five items accepted by the bill acceptor.

11VAC15-40-390. Payment by voucher printers.

A. If the player device has a printer that is used to issue payment to the player by issuing a printed voucher for any unused game plays and/or winnings, the player device shall meet the following rules:

1. The printer shall be located in a secure area of the player device, but shall not be located in the logic area or any cash storage area. The bill acceptor stacker or logic areas containing critical electronic components shall not be accessed when the printer paper is changed;

2. The player device, in which the printer is housed, is linked to a voucher validation system, which records the voucher information; and

3. Data printed on a voucher shall be provided to the voucher validation system that records the following information regarding each voucher printed:

a. Value of unused game plays and/or winnings in U.S. currency, in numerical form;

b. Time the voucher was printed;

c. Date the voucher was printed;

d. Location name or site identifier;

e. Serial number of player device;

f. Unique validation number or barcode; and

g. Expiration date and time.

B. If the player device is capable of printing a duplicate voucher, the duplicate voucher shall clearly state the word "DUPLICATE" on its face.

C. The printer shall use printer paper containing security features such as a watermark as approved by the department.

D. A printer shall have mechanisms to allow the player device to interpret and act upon the following conditions that must disable the game, and produce an error condition that requires attendant intervention to resume play:

1. Out of paper;

2. Printer jam or failure; and

3. Printer disconnect. The player device may detect this error condition when the game tries to print.

E. A player device that uses a voucher printer shall maintain a minimum of the last 25 transactions in critical memory. All voucher transactions shall be logged with a date and time stamp.

11VAC15-40-400. Payment by account.

A. Credit may be added to a player account via a cashier or point of sale station. Credit may also be added by any supporting player device through credits won or bills.

B. Money may be removed from a player account either through downloading of credits to the player device or by cashing out at a cashier's or point-of-sale station.

C. All monetary transactions between a supporting player device and the distributed pull-tab system must be secured by means of a card insertion into a magnetic card reader and PIN entry or by other protected means.

Article 3
Game Requirements

11VAC15-40-410. Game play requirements.

A. A player receives an electronic game card in return for consideration. A player wins if the player's electronic game card contains a combination of symbols or numbers that was designated in advance of the game as a winning combination. There may be multiple winning combinations in each game. Electronic versions of instant bingo and pull-tabs, as authorized by the department, shall only utilize devices that allow players to play electronic game cards. A player device shall meet the following minimum requirements:

1. A player may purchase an opportunity to play an electronic game card by:

a. Insertion of U.S. currency (bills only);

b. Purchase made at a point of sale terminal; or

c. Withdrawing deposits available in a player account.

2. In addition to the available games, the rules of play shall be displayed on the player device's video screen. Rules of play shall include all winning combinations.

3. Any number of game themes may be selectable for play on any given player device. Only one of the game themes shall be playable at any given time.

4. A player device shall be clearly labeled so as to inform the public that no one under 18 years of age is allowed to play.

5. A player device shall not be capable of displaying any enticing animation while in an idle state. A player device may use simple display elements or screen savers to prevent monitor damage.

6. The results of the electronic game card shall be shown to the player using a video display. No rolling, flashing, or spinning animations are permitted. No rotating reels marked into horizontal segments by varying symbols are permitted. No entertaining sound or music is permitted other than an audio effect to simulate the opening of a paper pull-tab or instant bingo card. Any sounds present used to simulate the opening of a paper pull-tab must not be played at a level sufficient to disturb other players or patrons.

7. The player device shall have one or more buttons, electromechanical or touch screen, to facilitate the following functions:

a. Viewing of the game "help" screens;

b. Viewing of the game rules;

c. Initiating game play;

d. Cashout or logout; and

e. One or more buttons designated to reveal the pull-tab or instant bingo windows.

8. Following play on a player device, the result shall be clearly shown on the video display along with any prizes that may have been awarded. Prizes may be dispensed in the form of:

a. Voucher;

b. Added to the machine balance meter; or

c. Added to the player's account balance.

9. An available balance may be collected from the player device by the player pressing the "cashout" button or logging off of the player device at any time other than during:

a. A game being played;

b. While in an audit mode or screen;

c. Any door open;

d. Test mode;

e. A machine balance meter or win meter incrementation unless the entire amount is placed on the meter when the "cashout" button is pressed; or

f. An error condition.

10. The default player device display, upon entering game play mode, shall not be the top award.

B. A player device shall not have hardware or software that determines the outcome of any electronic game card, produce its own outcome, or affect the order of electronic game cards as dispensed from the distributed pull-tab system. The game outcome shall be determined by the distributed pull-tab system as outlined within these rules.

C. Game themes may not contain obscene or offensive graphics, animations, or references. All game themes will be subject to approval by the department.

D. Prior to approval for use, each player device must meet the following specifications with respect to its operation:

1. After accepting an allowable cash payment from the player, the player shall press a "play" button to initiate a game.

2. The player device shall not display in any manner, the number of electronic game cards of each finite category, or how many cards remain.

3. Awards of merchandise prizes in lieu of cash are prohibited.

4. The player must interact with the device to initiate a game and reveal a win or loss. This may involve a button press on the console or on the touch screen.

5. The electronic game card must be initially displayed with a cover and require player interaction to reveal the symbols and game outcome.

6. In no event may a player device simulate play of roulette, poker, keno, lotto or lottery, twenty-one, blackjack, or any other card game, or simulate play of any type of slot machine game, regardless of whether the machine has a payback feature or extra play awards. Card symbols such as ace, king, queen, or heart are acceptable, provided the aforementioned is abided by.

7. Games must not contain any elements of skill.

E. Each player device must meet the following specifications with respect to its metering system:

1. A player device shall contain electronic metering whereby meters record and display on the video screen the following information at a minimum:

a. Total cash in for the bill acceptor if equipped with a bill acceptor;

b. Total cash played;

c. Total cash won;

d. Total cash removed from player device;

e. Total count of electronic game cards played; and

f. Total count of electronic game cards won.

2. An electronic meter shall be capable of maintaining correct totals and be of no less than 10 digits in length.

3. A player device shall not be capable of displaying the number of electronic game cards that remain in the game set or the number of winners or losers that have been drawn or still remain in the game set while the game set is still being played.

4. An electronic meter shall not be capable of being automatically reset or cleared, whether due to an error in any aspect of the meter's or a game's operation or otherwise.

5. Currency meters shall be maintained in dollars and cents.

Part V
Administrative Process

11VAC15-40-420. Procedural rules for the conduct of fact-finding conferences and hearings.

A. Fact-finding conference; notification, appearance, and conduct.

1. Unless automatic revocation or immediate suspension is required by law, no permit to conduct charitable gaming or to sell charitable gaming supplies shall be denied, suspended, or revoked except after review and approval of such proposed denial, suspension, or revocation action by the board, and upon notice stating the basis for such proposed action and the time and place for a fact-finding conference as set forth in § 2.2-4019 of the Administrative Process Act.

2. If a basis exists for a refusal to renew, suspend, or a revoke a permit, the department shall notify by certified mail or by hand delivery the interested persons at the address of record maintained by the department.

3. Notification shall include the basis for the proposed action and afford interested persons the opportunity to present written and oral information to the department that may have a bearing on the proposed action at a fact-finding conference. If there is no withdrawal, a fact-finding conference shall be scheduled at the earliest mutually agreeable date, but no later than 60 days from the date of the notification. Organizations or suppliers who wish to waive their right to a conference shall notify the department at least 14 days before the scheduled conference.

4. If, after consideration of evidence presented during an informal fact-finding conference, a basis for action still exists, the interested persons shall be notified in writing within 60 days of the fact-finding conference via certified or hand-delivered mail of the decision and the right to a formal hearing. Parties to the conference may agree to extend the report deadline if more time is needed to consider relevant evidence.

B. Hearing; notification, appearance, and conduct.

1. If, after a fact-finding conference, a sufficient basis still exists to deny, suspend, or revoke a permit, interested persons shall be notified by certified or hand-delivered mail of the proposed action and of the opportunity for a hearing on the proposed action. If an organization or supplier desires to request a hearing, it shall notify the department within 14 days of receipt of a report on the conference. Parties may enter into a consent agreement to settle the issues at any time prior to, or subsequent to, an informal fact-finding conference.

2. If an interested party or representative fails to appear at a hearing, the hearing officer may proceed in his absence and make a recommendation.

3. Oral and written arguments may be submitted to and limited by the hearing officer. Oral arguments shall be recorded in an appropriate manner.

C. Hearing location. Hearings before a hearing officer shall be held, insofar as practicable, in the county or city in which the organization or supplier is located. If the parties agree, hearing officers may conduct hearings at locations convenient to the greatest number of persons or by telephone conference, video conference, or similar technology, in order to expedite the hearing process.

D. Hearing decisions.

1. Recommendations of the hearing officer shall be a part of the record and shall include a written statement of the hearing officer's findings of fact and recommendations as well as the reasons or basis for the recommendations. Recommendations shall be based upon all the material issues of fact, law, or discretion presented on the record.

2. The department shall review the recommendation of the hearing officer and render a decision on the recommendation within 30 days of receipt. The decision shall cite the appropriate rule, relief, or denial thereof as to each issue.

E. Agency representation. The commissioner's designee may represent the department in an informal conference or at a hearing.

11VAC15-40-430. Reporting violations.

A. Unless otherwise required by law, the identity of any individual who provides information to the department or its agents regarding alleged violations shall be held in strict confidence.

B. Any officer, director, or game manager of a qualified organization or any officer or director of a supplier shall immediately report to the department any information pertaining to the suspected misappropriation or theft of funds or any other violations of charitable gaming statutes or these regulations.

C. Failure to report the information required by subsection B of this section may result in the denial, suspension, or revocation of a permit.

D. Any officer, director, or game manager of a qualified organization involved in the management, operation, or conduct of charitable gaming shall immediately notify the department upon conviction of a felony or a crime involving fraud, theft, or financial crimes.

E. Any officer, director, partner, or owner of a supplier shall immediately notify the department upon conviction or plea of nolo contendere to a felony or a crime involving gambling or an action against any license or certificate held by the supplier in any state in the United States.

F. Failure to report information required by subsection D or E of this section by any officer, director, or game manager of a qualified organization or by any supplier may result in the denial, suspension, or revocation of a permit.

G. Any officer, director, or game manager of a qualified organization involved in charitable gaming shall immediately report to the department any change the Internal Revenue Service makes in the tax status of the organization, or if the organization is a chapter of a national organization covered by a group tax exempt determination, the tax status of the national organization.

H. All organizations regulated by the department shall display prominently a poster advising the public of a phone number where complaints relating to charitable gaming may be made. Such posters shall be provided by the department to organizations at no charge.

FORMS (11VAC15-40)

GAME MANAGEMENT FORMS

Bingo Session Reconciliation Summary, Form 103 (rev. 1/11).

Admission Sales Reconciliation - Paper, Form 104-A (rev. 1/11).

Floor Sales Reconciliation - Paper, Form 104-B (rev. 1/11).

Decision Bingo Reconciliation, Form 104-C (rev. 1/11).

Raffle/Treasure Chest Sales Reconciliation - Bingo Session, Form 104-D (rev. 1/11).

Instant Bingo/Seal Cards/Pull-Tabs Reconciliation, Form 105 (rev. 1/11) .

Storeroom Inventory Issue - Paper, Form 106-A (rev. 7/08).

Storeroom Inventory Issue - Instant Bingo/Seal Cards/Pull-Tabs, Form 106-B (rev. 7/08).

List of Volunteer Workers, Form 107 (rev. 7/08).

Prize Receipt, Form 108 (rev. 7/08).

Storeroom Inventory - Paper, Form 109-A (rev. 1/11).

Storeroom Inventory - Instant Bingo/Seal Cards/Pull-Tabs, Form 109-B (rev. 1/11) .

ORGANIZATION LICENSING FORMS

Charitable Gaming Permit Application - New Applicants Only, Form 201 - N (rev. 1/11).

Charitable Gaming Permit Application - Renewal Applicants Only, Form 201 - R (rev. 1/11).

Permit Amendment (rev. 1/11).

Gaming Personnel Information Update (rev. 7/08).

Report of Game Termination (rev. 7/08).

SUPPLIER LICENSING FORMS

Charitable Gaming Supplier Permit Application, Form 301 (rev. 1/11).

Annual Supplier Sales and Transaction Report, Form 302 (rev. 7/08).

BINGO MANAGER AND BINGO CALLER REGISTRATION FORMS

Charitable Gaming Bingo Caller Certificate of Registration Application, Form 401 (rev. 1/11).

Charitable Gaming Bingo Manager Certificate of Registration Application, Form 402 (rev. 1/11).

Amendment to Certificate of Registration – Registered Bingo Callers and Bingo Managers (rev. 1/11).

Personal Information Update – Registered Bingo Callers and Registered Bingo Managers, Form 404 (rev. 7/07).

Bona Fide Member Verification, Form 405 (rev. 5/11).

DOCUMENTS INCORPORATED BY REFERENCE (11VAC15-40)

IRS Publication 3079, Tax-Exempt Organizations and Gaming (rev. 6/10).

Security Requirements for Cryptographic Modules, Federal Information Processing Standard, FIPS Pub 140-2 (rev. 12/02).

Titles of Regulations: 11VAC15-22. Charitable Gaming Rules and Regulations (repealing 11VAC15-22-10 through 11VAC15-22-120).

11VAC15-31. Supplier Regulations (repealing 11VAC15-31-10 through  11VAC15-31-60).

11VAC15-40. Charitable Gaming Regulations (adding 11VAC15-40-10 through 11VAC15-40-430).

Statutory Authority: § 18.2-340.15 of the Code of Virginia.

Public Hearing Information:

December 13, 2011 - 10:15 a.m. - Oliver Hill Building, 102 Governor Street, 2nd Floor Board Room, Richmond, VA

Public Comment Deadline: January 6, 2012.

Agency Contact: Erin Williams, Policy and Planning Coordinator, Department of Agriculture and Consumer Services, P.O. Box 1163, Richmond, VA 23218, telephone (804) 786-1308, FAX (804) 371-7479, TTY (800) 828-1120, or email erin.williams@vdacs.virginia.gov.

Basis: Section 18.2-340.15 of the Code of Virginia authorizes the Charitable Gaming Board to prescribe regulations and conditions under which charitable gaming is conducted in Virginia to ensure consistency with the purpose for which such gaming is permitted. Additionally, Chapter 264 of the 2007 Acts of Assembly amended the statute by requiring changes to the charitable gaming regulations in order to implement electronic games of chance systems. The Charitable Gaming Board approved the promulgation of a single regulation that will consolidate the two current regulations and provide for the implementation of regulations regarding electronic games of chance systems.

Purpose: The existence of two separate but closely interrelated regulations governing charitable gaming has resulted in duplicative, burdensome, and unnecessarily lengthy efforts in those instances when the agency has had to amend both regulations in response to a single change in the statute, as was the case with the passage of HB 1998 (Chapter 264 of the 2007 Acts of Assembly). The promulgation of a single, consolidated regulation will greatly facilitate the agency's administration of the charitable gaming program.

Proponents of the legislation that resulted in the authorization of electronic games of chance systems in the Commonwealth have indicated that charitable gaming organizations will see significant increases in both attendance and revenues through the offering of electronic pull-tabs at their gaming events. Attendance at charitable gaming events has dropped considerably in the last few years, in some cases by as much as 40%, on account of changing demographics, as well as the economic downturn. The ability to offer electronic pull-tabs is expected to attract younger players to bingo halls across Virginia, to lower the gaming organizations overhead costs through reduced expenses for paper supplies, and to improve the organizations ability to meet the 10% use of proceeds required by the Charitable Gaming Board.

Substance: The proposed regulation consolidates the substance of the current regulation titled Charitable Gaming Rules and Regulations, 11VAC15-22, as well as the substance of the current regulation titled Supplier Regulations, 11VAC15-31. Substantive changes include the addition of provisions regarding full automatic daubing of bingo numbers and progressive bingo games, both of which were authorized by Chapter 429 of the 2010 Acts of Assembly. The proposed regulations reduce the time required between gaming activities from one hour to 30 minutes. The existing regulations pertaining to electronic bingo devices (which are devices that support conventional bingo games and should not be confused with devices that support electronic pull-tabs) were modified to permit the use of electronic bingo device systems that do not identify at the point of sale the number of the electronic bingo device issued to the player.

The section pertaining to electronic games of chance systems includes rules for the conduct of electronic games of chance, requirements for manufacturers and suppliers of electronic games of chance systems, and construction and other standards for electronic games of chance systems.

Issues: The inclusion of provisions pertaining to electronic games of chance systems will provide charitable gaming organizations a new option to promote greater attendance at their gaming events. Greater attendance should increase the revenue organizations generate from their charitable gaming activities, which, in turn, should facilitate compliance with applicable requirements regarding the charitable use of organizations proceeds.

The promulgation of a single, consolidated regulation will greatly facilitate the agency's administration of the charitable gaming program by eliminating the need for duplicative regulatory actions due to the existence of two interrelated regulations.

Special interest groups are monitoring the progress of this regulation to ensure that it does not lead to casino-style gambling or expand the type of gaming that is allowed in the Commonwealth. The agency has involved these stakeholders during relevant discussions; the agency is not aware of specific concerns with the proposed regulations.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Virginia Charitable Gaming Board (Board) proposes to consolidate two separate regulations, Charitable Gaming Rules and Regulations, 11VAC15-22, and Supplier Regulations, 11VAC15-31, into one regulation that will also establish rules regarding electronic games of chance systems for charitable gaming.

Result of Analysis. The benefits likely exceed the costs for one or more proposed changes. There is insufficient data to accurately compare the magnitude of the benefits versus the costs for other changes.

Estimated Economic Impact. Chapter 264 of the 2007 Virginia Acts of Assembly authorized the use of electronic games of chance, also known as electronic pull tabs, by charitable gaming organizations. The chapter also specifies that no person shall offer to sell, sell or otherwise provide charitable gaming supplies to any qualified organization and no manufacturer shall distribute electronic games of chance systems for charitable gaming in the Commonwealth unless and until such person has made application for and has been issued a permit by the Department (of Agriculture and Consumer Services). In practice electronic games of chance have not yet been available for charitable gaming since the Board has not yet promulgated regulations that would enable the issuing of a permit for the distribution of electronic games of chance. In the current action the Board proposes rules that would enable the distribution and use of electronic games of chance to go forward.

In calendar year 2009, the most recent year data is available, there were $279 million in gross receipts for charitable gaming in Virginia.¹ Based on the experiences of other states which introduced electronic pull tabs, the Virginia Department of Agriculture and Consumer Services (Department) expects gross receipts from charitable gaming to at least triple with the advent of electronic pull tabs. Manufacturers and suppliers of electronic games of chance will certainly benefit with increased business. Purchasing and using electronic games of chance for fundraising is of course optional for charitable organizations; so the charitable organizations will only purchase and use them if they believe they will provide a net benefit through increased revenue available for their charitable purposes. A significant portion of Virginians believe that there is a negative impact on morality associated with gambling. The introduction and use of electronic pull tabs will very likely increase at least the dollar value of gambling in Virginia. It is beyond the scope of this analysis to compare the benefits of increased business for manufacturers and suppliers of electronic games of chance and the benefits of increased revenue for charitable organizations to use for their charitable purposes to the potential negative moral impact of increased gambling. That is intrinsically a subjective value judgment.

The Board proposes several other changes that will have some impact. The fee for a permit change would be eliminated. This is obviously beneficial for permit holders. The Board believes funds for operation are sufficient without charging this fee. The Department would use compliance agreements rather than consent orders and remedial business plans rather than corrective action plans. This would be less heavy handed and would likely create a more cooperative relationship between the Department and charitable organizations. The required break between charitable gaming activities would be reduced from one hour to 30 minutes. This would enable more time to be devoted to fundraising while still allotting sufficient transition time between charitable organizations. All of these changes provide benefit without significant cost.

Specific dollar amounts included in the current regulations that are prescribed by the Code of Virginia would be replaced by references to sections of the Code that prescribe these amounts. This is beneficial since when and if these dollar amounts are changed in the Code the dollar amounts currently listed in the regulations would then be in conflict with the Code. When the Code and regulations conflict, the Code prevails. Thus, persons who read the regulations would be misled under these circumstances. Amending regulations can take a significant amount of time. Thus, replacing specified dollar amounts included in the current regulations that are prescribed by the Code with references to sections of the Code that prescribe these amounts would enable the regulations to always be accurate concerning the effective legal dollar figures. Thus this proposed change clearly provides a net benefit.

The current regulations state that volunteer game workers may not play bingo at any session they have worked or purchase instant bingo, pull-tab, or seal card products from organizations they assist on the day they have volunteered or from any deal they have helped sell, whichever is later. Under the proposed regulations, no one involved in the conduct of bingo may play bingo at any session they have worked or intend to work. No one involved in the sale or redemption of any instant bingo, pull-tabs, seal cards, or electronic game cards may purchase directly or through others instant bingo, pull-tab, seal card, or electronic game card products from organizations they assist on the day they have worked or from any deal they have helped sell or redeem, whichever occurs later. Thus paid workers as well as volunteers are prohibited from gambling in games in which they work on the days they work as well as deals they have helped sell or redeem. Paid workers and volunteers could still gamble on other days provided that the games are not deals they have helped sell or redeem. This proposed change does introduce a new limitation on paid workers, but it seems a reasonable change to help ensure fairness while still permitting paid workers the opportunity to participate in games in which they are not directly involved.

Businesses and Entities Affected. The proposed regulations will potentially affect the approximate 400 qualified charitable gaming organizations and 19 charitable gaming suppliers in the Commonwealth as well as manufacturers of electronic games of chance systems. The Virginia Department of Agriculture and Consumer Services estimates that the majority of the charitable gaming suppliers are small businesses.

Localities Particularly Affected. The proposed amendments do not disproportionately affect particular localities.

Projected Impact on Employment. The proposal to establish rules for electronic games of chance systems will enable the distribution and use of electronic games of chance to go forward. This will likely significantly increase business for manufacturers and suppliers of electronic games of chance. Employment at some of these firms will likely moderately increase.

Effects on the Use and Value of Private Property. The proposal to establish rules for electronic games of chance systems will enable the distribution and use of electronic games of chance to go forward. This will likely significantly increase business for manufacturers and suppliers of electronic games of chance. The net value of these firms will likely increase.

Small Businesses: Costs and Other Effects. The proposed amendments are unlikely to increase costs for small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments are unlikely to significantly adversely affect small businesses.

Real Estate Development Costs. The proposed amendments are unlikely to significantly affect real estate development costs.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

____________________________

¹Data source: Virginia Department of Agriculture and Consumer Services

Agency's Response to Economic Impact Analysis: The Department of Agriculture and Consumer Services concurs with the analysis of the Department of Planning and Budget.

Summary:

The proposed regulation consists of five parts pertaining to (i) definitions, (ii) charitable gaming organizations and the conduct of charitable gaming, (iii) charitable gaming suppliers, (iv) electronic games of chance systems, and (v) administrative process.

The section pertaining to charitable gaming organizations and the conduct of charitable gaming reflects the substance of the current regulation titled Charitable Gaming Rules and Regulations, 11VAC15-22. The section pertaining to charitable gaming suppliers reflects the substance of the current regulation titled Supplier Regulations, 11VAC15-31. The section pertaining to electronic games of chance systems includes rules for the conduct of electronic games of chance, requirements for manufacturers and suppliers of electronic games of chance systems, and construction and other standards for electronic games of chance systems. The sections pertaining to definitions and the administrative process consolidate the definitions and administrative process sections found in the current regulations, 11VAC15-22 and 11VAC15-31.

CHAPTER 40
CHARITABLE GAMING REGULATIONS

Part 1
Definitions

11VAC15-40-10. Definitions.

In addition to the definitions contained in § 18.2-340.16 of the Code of Virginia, the words and terms below when used in this regulation shall have the following meanings unless the context clearly indicates otherwise:

"Agent" means any person authorized by a supplier to act for or in place of such supplier.

"Board" means the Virginia Charitable Gaming Board.

"Board of directors" means the board of directors, managing committee, or other supervisory body of a qualified organization.

"Calendar day" means the period of 24 consecutive hours commencing at 12:01 a.m. and concluding at midnight.

"Calendar week" means the period of seven consecutive calendar days commencing at 12:01 a.m. on Sunday and ending at midnight the following Saturday.

"Cash" means United States currency or coinage.

"Commissioner" means the Commissioner of the Virginia Department of Agriculture and Consumer Services.

"Concealed face bingo card" means a nonreusable bingo card constructed to conceal the card face.

"Conduct" means the actions associated with the provision of a gaming operation during and immediately before or after the permitted activity, which may include, but not be limited to (i) selling bingo cards or packs, electronic devices, instant bingo or pull-tab cards, or raffle tickets; (ii) calling bingo games; (iii) distributing prizes; and (iv) any other services provided by volunteer workers.

"Control program" means software involved in any critical game function.

"Daubing" means covering a square containing a number called with indelible ink or otherwise marking a number called on a card or an electronic facsimile of a card.

"Deal" means each separate package or series of packages consisting of one game of instant bingo, pull-tabs, or seal cards with the same serial number.

"Decision bingo" means a bingo game where the cost to a player to play is dependent on the number of bingo numbers called and the prize payout is in direct relationship to the number of participants and the number of bingo numbers called, but shall not exceed statutory prize limits for a regular bingo game.

"Department" means the Virginia Department of Agriculture and Consumer Services, Division of Consumer Protection, Office of Charitable Gaming.

"Designator" means an object used in the number selection process, such as a ping-pong ball, upon which bingo letters and numbers are imprinted.

"Discount" means any reduction in cost of admission or game packs or any other purchases through use of coupons, free packs, or other similar methods.

"Disinterested player" means a player who is unbiased.

"Disposable paper card" means a nonreusable, paper bingo card manufactured with preprinted numbers.

"Distributed pull-tab system" means a computer system consisting of a computer or computers and associated equipment for the use of distributing a finite number of electronic instant bingo and/or pull-tab outcomes (i.e., electronic game cards), a certain number of which entitle a player to prize awards at various levels.

"Door prize" means any prize awarded by the random drawing or random selection of a name or number based solely on attendance at a gaming session.

"Electronic bingo device" means an electronic device that uses proprietary software or hardware or, in conjunction with commonly available software and computers, displays facsimiles of bingo cards and allows a player to daub such cards or allows for the automatic daubing of such cards.

"Electronic game card" means an electronic version of a single instant bingo card or pull-tab. An electronic game card is a predetermined game outcome in electronic form, distributed on-demand from a finite number of game outcomes by a distributed pull-tab system.

"Equipment and video systems" means equipment that facilitates the conduct of charitable gaming such as ball blowers, flashboards, electronic verifiers, and replacement parts for such equipment.

"Event game" means a bingo game that is played using instant bingo cards or pull-tabs in which the winners include both instant winners and winners who are determined by the random draw of a bingo ball, the random call of a bingo number, or the use of a seal card, and that is sold and played to completion during a single bingo session.

"Fiscal year" or "annual reporting period" means the 12-month period beginning January 1 and ending December 31 of any given year.

"Flare" means a piece of paper, cardboard, or similar material that bears printed information relating to the name of the manufacturer or logo, name of the game, card count, cost per play, serial number, the number of prizes to be awarded, and the specific prize amounts in a deal of instant bingo, pull-tab, or seal cards.

"Free space number," "perm number," "center number," "card number," or "face number" means the number generally printed in the center space of a bingo card that identifies the unique pattern of numbers printed on that card.

"Game program" means a written list of all games to be played including, but not limited to, the sales price of all bingo paper and electronic bingo devices, pack configuration, prize amounts to be paid during a session for each game, and an indication whether prize amounts are fixed or are based on attendance.

"Game set" means the entire pool of electronic game cards that contains predefined and randomized game results assigned under a unique serial number. This term is equivalent to "deal" or "deck."

"Game subset" means a division of a game set into equal sizes.

"Gaming activity" means one bingo session and the sale and redemption of instant bingo, pull-tabs, seal cards, or electronic game cards done in conjunction with that bingo session and in accordance with the provisions of this chapter.

"Immediate family" means one's spouse, parent, child, sibling, grandchild, grandparent, mother or father-in-law, or stepchild.

"Interested persons" means the president, an officer, or a bingo manager of any qualified organization that is exempt or is a permit applicant or holds a permit to conduct charitable gaming; or the owner, director, officer or partner of an entity engaged in supplying charitable gaming supplies to organizations.

"IRS" means the United States Internal Revenue Service.

"Management" means the provision of oversight of a gaming operation, which may include, but is not limited to, the responsibilities of applying for and maintaining a permit or authorization; compiling, submitting, and maintaining required records and financial reports; and ensuring that all aspects of the operation are in compliance with all applicable statutes and regulations.

"Manufacturer" means a person who or entity that assembles from raw materials or subparts a completed piece of bingo or other charitable gaming equipment or supplies. "Manufacturer" also means a person who or entity that modifies, converts, adds, or removes parts to or from bingo or other charitable gaming equipment or supplies to further their promotion or sale for the conduct of charitable gaming.

"OCG number" means a unique identification number issued by the department.

"Operation" means the activities associated with production of a charitable gaming activity, which may include, but is not limited to, (i) the direct on-site supervision of the conduct of charitable gaming; (ii) coordination of volunteers; and (iii) all responsibilities of charitable gaming designated by the organization's management.

"Owner" means any individual with financial interest of 10% or more in a supplier.

"Pack" means sheets of bingo paper or electronic facsimiles assembled in the order of games to be played. This shall not include any raffle.

"Player device" means an electronic unit that may take the form of an upright cabinet or a handheld device or may be of any other composition as approved by the department used to facilitate the play of electronic instant bingo or pull-tab games.

"Prize" means cash, merchandise, certificate, or other item of value awarded to a winning player.

"Progressive bingo" means a bingo game in which the prize is carried forward to the next game if a predetermined pattern is not completed within a specified number of bingo numbers called.

"Progressive seal card" means a seal card game in which a prize is carried forward to the next deal if not won when a deal is completed.

"Remuneration" means payment in cash or the provision of anything of value for goods provided or services rendered.

"Seal card" means a board or placard used in conjunction with a deal of the same serial number that contains one or more concealed areas that, when removed or opened, reveal a predesignated winning number, letter, or symbol located on that board or placard.

"Selection device" means a manually or mechanically operated device to randomly select bingo numbers.

"Serial number" means a unique number printed by the manufacturer on each bingo card in a set; each instant bingo, pull-tab, or seal card in a deal; each electronic bingo device; or each door prize ticket.

"Series number" means the number of unique card faces contained in a set of disposable bingo paper cards or bingo hard cards. A 9000 series, for example, has 9000 unique faces.

"Session" means a period of time during which one or more bingo games are conducted that begins with the selection of the first ball for the first game and ends with the selection of the last ball for the last game.

"Treasure chest" means a raffle including a locked treasure chest containing a prize that a participant, selected through some other authorized charitable game, is afforded the chance to select from a series of keys a predetermined key that will open the locked treasure chest to win a prize.

"Use of proceeds" means the use of funds derived by an organization from its charitable gaming activities, which are disbursed for those lawful religious, charitable, community, or educational purposes. This includes expenses relating to the acquisition, construction, maintenance, or repair of any interest in the real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes.

"Voucher" means a printed ticket tendered to the player, upon request, for any unused game plays and/or winnings that remain on the player device.

"WINGO" means a variation of a traditional bingo game that uses visual devices rather than a verbal caller and is intended for play by hearing impaired persons.

Part II
Charitable Gaming Organizations

Article 1
Permits

11VAC15-40-20. Eligibility for permit to conduct charitable gaming; when valid; permit requirements.

A. The conduct of charitable gaming is a privilege that may be granted or denied by the department. Except as provided in § 18.2-340.23 of the Code of Virginia, every eligible organization, volunteer fire department, and rescue squad with anticipated gross gaming receipts that exceed the amount set forth in § 18.2-340.23 of the Code of Virginia in any 12-month period shall obtain a permit from the department prior to the commencement of charitable gaming activities. To be eligible for a permit an organization must meet all of the requirements of § 18.2-340.24 of the Code of Virginia.

B. Pursuant to § 18.2-340.24 B of the Code of Virginia, the department shall review a tax exempt request submitted to the IRS for a tax exempt status determination and may issue an interim certification of tax-exempt status solely for the purpose of charitable gaming, conditioned upon a determination by the IRS. The department shall charge the fee set forth in § 18.2-340.24 B of the Code of Virginia for this review. The fee shall be payable to the Treasurer of Virginia.

C. A permit shall be valid only for activities, locations, days, dates, and times as listed on the permit.

D. In accordance with § 18.2-340.19 A 1 of the Code of Virginia, as a condition of receiving a permit, a minimum of 10% of charitable gaming gross receipts shall be used for (i) those lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized or (ii) those expenses relating to the acquisition, construction, maintenance, or repair of any interest in real property involved in the operation of the organization and used for lawful religious, charitable, community, or educational purposes.

E. If an organization fails to meet the minimum use of proceeds requirement, its permit may be suspended or revoked. However, the department shall not suspend or revoke the permit of any organization solely because of its failure to meet the required percentage without having first provided the organization with an opportunity to implement a corrective action plan.

F. An organization may request a temporary reduction in the predetermined percentage specified in subsection D of this section from the department. In reviewing such a request, the department shall consider such factors appropriate to and consistent with the purpose of charitable gaming, which may include, but not be limited to, (i) the organization's overall financial condition; (ii) the length of time the organization has been involved in charitable gaming; (iii) the extent of the deficiency; and (iv) the progress that the organization has made in attaining the minimum percentage in accordance with a corrective action plan pursuant to subsection E of this section.

G. An organization whose permit is revoked for failure to comply with provisions set forth in subsection D of this section shall be eligible to reapply for a permit at the end of one year from the date of revocation. The department, at its discretion, may issue the permit if it is satisfied that the organization has made substantial efforts towards meeting its corrective action plan.

11VAC15-40-30. Permit application process.

A. Any organization anticipating gross gaming receipts that exceed the amount set forth in § 18.2-340.23 of the Code of Virginia shall complete a department-prescribed application to request issuance or renewal of an annual permit to conduct charitable gaming. Organizations shall submit a nonrefundable fee payable to the Treasurer of Virginia in the amount of $200 with the application, unless the organization is exempt from such fee pursuant to § 18.2-340.23 of the Code of Virginia.

B. The department may initiate action against any organization exempt from permit requirements when it reasonably believes the organization is not in compliance with the provisions of charitable gaming laws or applicable regulations, or both, of the board.

C. Permit holders requiring a special permit pursuant to § 18.2-340.27 E of the Code of Virginia shall convey their request on a form prescribed by the department. Organizations shall submit a fee payable to the Treasurer of Virginia in the amount of $50 with the request for a special permit, unless the organization is exempt from such fee pursuant to § 18.2-340.23 of the Code of Virginia.

D. Permits shall be valid for a period of one year from the date of issuance or for a period specified on the permit. The department may issue permits for periods of less than one year.

E. Permits shall be granted only after a background investigation of an organization or interested persons, or both, to ensure public safety and welfare as required by § 18.2-340.25 of the Code of Virginia. Investigations shall consider the nature, the age and severity, and the potential harm to public safety and welfare of any criminal offenses. The investigation may include, but shall not be limited to, the following:

1. A search of Virginia criminal history records for the chief executive officer and chief financial officer of the organization. Information and authorization to conduct these records checks shall be provided in the permit application. In addition, the department shall require that the organization provides assurances that all other members involved in the management, operation, or conduct of charitable gaming meet the requirements of subdivision 13 of § 18.2-340.33 of the Code of Virginia. Applications may be denied if:

a. Any person participating in the management of any charitable gaming has ever been:

(1) Convicted of a felony; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

b. Any person participating in the conduct of charitable gaming has been:

(1) Convicted of any felony in the preceding 10 years; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years;

2. An inquiry as to whether the organization has been granted tax-exempt status pursuant to § 501(c) by the Internal Revenue Service and is in compliance with IRS annual filing requirements;

3. An inquiry as to whether the organization has entered into any contract with, or has otherwise employed for compensation, any persons for the purpose of organizing or managing, operating, or conducting any charitable gaming activity;

4. Inquiries into the finances and activities of the organization and the sources and uses of funds; and

5. Inquiries into the level of community or financial support to the organization and the level of community involvement in the membership and management of the organization.

F. The permit application for an organization that has not previously held a permit shall include:

1. A list of members participating in the management or operation of charitable gaming. For any organization that is not composed of members, a person who is not a bona fide member may volunteer in the conduct of a charitable game as long as that person is directly supervised by a bona fide official member of the organization;

2. A copy of the articles of incorporation, bylaws, charter, constitution, or other appropriate organizing document;

3. A copy of the determination letter issued by the IRS under § 501(c) of the Internal Revenue Code, if appropriate, or a letter from the national office of an organization indicating the applicant organization is in good standing and is currently covered by a group exemption ruling. A letter of good standing is not required if the applicable national or state office has furnished the department with a listing of member organizations in good standing in the Commonwealth as of January 1 of each year and has agreed to promptly provide the department any changes to the listing as they occur;

4. A copy of the organization's most recent annual financial statement and balance sheet or most recent Form 990 that has been filed with the IRS;

5. A copy of the written lease or proposed written lease agreement and all other agreements if the organization rents or intends to rent a facility where bingo is or will be conducted. Information on the lease shall include name, address, and phone number of the landlord; maximum occupancy of the building; and the rental amount per session; and

6. An authorization by an officer or other appropriate official of the organization to permit the department to determine whether the organization has been investigated or examined by the IRS in connection with charitable gaming activities during the previous three years.

G. Copies of minutes of meetings of the organization and any contracts with landlords or suppliers to which the organization is or may be a party may be requested by the department prior to rendering a permitting decision.

H. Organizations applying to renew a permit previously issued by the department shall submit articles of incorporation, bylaws, charter, constitution, or other organizing document, and IRS determination letter only if there are any amendments or changes to these documents that are directly related to the management, operation, or conduct of charitable gaming.

I. Organizations may request permits to conduct joint bingo games as provided in § 18.2-340.29 of the Code of Virginia.

1. In the case of a joint game, all the organizations shall file a permit application.

2. The nonrefundable permit fee for joint games shall be a total of $200. Volunteer fire departments or rescue squads or auxiliary units thereof that have been recognized in accordance with § 15.2-955 of the Code of Virginia shall be exempt from the payment of applications fees.

3. A single permit shall be issued in the names of all the organizations conducting a joint game. All restrictions and prohibitions applying to single organizations shall apply to qualified organizations jointly conducting bingo games pursuant to § 18.2-340.29 of the Code of Virginia.

4. No charitable gaming shall be conducted prior to the issuance of a joint permit.

5. Applications for joint games shall include an explanation of the division of manpower, costs, and proceeds for the joint game.

J. An organization wishing to change dates, times, or locations of its charitable gaming shall request a change in the permit. Change requests shall be made in writing on a form prescribed by the department at least 30 days in advance of the proposed effective date.

K. Changes in dates, times, or locations due to inclement weather, disasters, or other circumstances outside the organization's control may be made without a change in the permit. The organization shall request such a change on a form prescribed by the department as soon as the necessity for the change is known.

L. An organization may sell raffle tickets for a drawing to be held outside of the Commonwealth of Virginia in the United States provided:

1. The raffle is conducted by the organization in conjunction with a meeting outside the Commonwealth of Virginia or with another organization that is licensed to conduct raffles outside the Commonwealth of Virginia;

2. The raffle is conducted in accordance with these regulations and the laws and regulations of the state where the drawing is to be held; and

3. The portion of the proceeds derived from the sale of raffle tickets in the Commonwealth is reported to the department.

M. Any permitted organization that ceases to conduct charitable gaming shall immediately notify the department in writing and provide the department a report as to the disposition of all unused gaming supplies on a form prescribed by the department.

11VAC15-40-40. Suspension, revocation, or denial of permit.

A. Pursuant to § 18.2-340.20 of the Code of Virginia, the department may suspend, revoke, or deny the permit to conduct charitable gaming of any organization for cause including, but not limited to, any of the following reasons:

1. The organization is found to be in violation of or has failed to meet any of the requirements of the statutes or regulations governing the operation, management, and conduct of charitable gaming in the Commonwealth.

2. The organization is found to be not in good standing with its state or national organization.

3. The IRS revokes or suspends the organization's tax-exempt status.

4. The organization willfully and knowingly provides false information in its application for a permit to conduct charitable gaming.

5. The organization is found to have a member involved in the management, operation, or conduct of its charitable gaming who has been convicted of any felony or any misdemeanor as follows:

a. For any person participating in the management or operation of any charitable gaming:

(1) Convicted of a felony; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

b. For any person participating in the conduct of charitable gaming:

(1) Convicted of any felony within the preceding 10 years; or

(2) Convicted of any misdemeanor involving fraud, theft, or financial crimes within the preceding five years.

B. The failure to meet any of the requirements of § 18.2-340.24 of the Code of Virginia shall cause the denial of the permit, and no organization shall conduct any charitable gaming until the requirements are met and a permit is obtained.

C. Except when an organization fails to meet any of the requirements of § 18.2-340.24 of the Code of Virginia, in lieu of suspending, revoking, or denying a permit to conduct charitable gaming, the department may afford an organization an opportunity to enter into a compliance agreement specifying additional conditions or requirements as it may deem necessary to ensure an organization's compliance with the statute and regulations governing the conduct of charitable gaming activities and may require that an organization participates in such training as is offered by the department.

D. If a permit is suspended, the department shall set the terms of the suspension, which shall include the length of the suspension and a requirement that, prior to reinstatement of the permit, the organization shall submit a remedial business plan to address the conditions that resulted in the suspension.

Article 2
Conduct of Games, Rules of Play, Electronic Bingo

11VAC15-40-50. Conduct of bingo, instant bingo, pull-tabs, seal cards, event games, and raffles.

A. Organizations subject to this chapter shall post their permit at all times on the premises where charitable gaming is conducted.

B. No individual shall provide any information or engage in any conduct that alters or is intended to alter the outcome of any charitable game.

C. Individuals under 18 years of age may play bingo provided such persons are accompanied by a parent or legal guardian. It shall be the responsibility of the organization to ensure that such individuals are eligible to play. An organization's house rules may further limit the play of bingo or purchase raffle tickets by minors.

D. Individuals under the age of 18 may sell raffle tickets for a qualified organization raising funds for activities in which they are active participants.

E. No individual under the age of 18 may participate in the management or operation of bingo games. Individuals 14 through 17 years of age may participate in the conduct of a bingo game provided the organization permitted for charitable gaming obtains and keeps on file written parental consent from the parent or legal guardian and verifies the date of birth of such youth. An organization's house rules may further limit the involvement of minors in the conduct of bingo games.

F. No qualified organization shall sell any instant bingo, pull-tab, seal card, event game card, or electronic game card to any individual under 18 years of age. No individual under 18 years of age shall play or redeem any instant bingo, pull-tab, seal card, event game card, or electronic game card.

G. Unless otherwise prohibited by the Code of Virginia or this chapter, nonmembers who are under the direct supervision of a bona fide member may participate in the conduct of bingo.

H. All volunteer game workers shall have in their possession a picture identification, such as a driver's license or other government-issued identification, and shall make the picture identification available for inspection upon request by a department agent while participating in the management, operation, or conduct of a bingo game.

I. A game manager who is a bona fide member of the organization and is designated by the organization's management as the person responsible for the operation of the bingo game during a particular session shall be present any time a bingo game is conducted.

J. Organizations shall ensure that all charitable gaming equipment is in working order before charitable gaming activities commence.

K. Any organization selling bingo, instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards shall:

1. Maintain a supplier's invoice or a legible copy thereof at the location where the gaming is taking place and cards are sold. The original invoice or legible copy shall be stored in the same storage space as the gaming supplies. All gaming supplies shall be stored in a secure area that has access limited only to bona fide members of the organization; and

2. Pay for all gaming supplies only by a check drawn on the charitable gaming account of the organization.

A complete inventory of all such gaming supplies shall be maintained by the organization on the premises where the gaming is being conducted.

L. A volunteer working a bingo session may receive complimentary food and nonalcoholic beverages provided on premises, as long as the retail value of such food and beverages does not exceed $15 for each session.

M. Permitted organizations shall not commingle records, supplies, or funds from permitted activities with those from instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards sold in social quarters in accordance with § 18.2-340.26:1 of the Code of Virginia.

N. Individuals who are not members of an organization or are members who do not participate in any charitable gaming activities may be paid reasonable fees for preparation of quarterly and annual financial reports.

O. No free packs, free electronic bingo devices, discounts, or remuneration in any other form shall be provided directly or indirectly to volunteers, members of their family, or individuals residing in their household. The reduction of tuition, dues, or any fees or payments due as a result of a member or shareholder, or anyone in their household, working bingo games or raffles is prohibited.

P. Individuals providing security for an organization's charitable gaming activity shall not participate in the charitable gaming activity and shall not be compensated with charitable gaming supplies or with rentals of electronic bingo devices.

Q. No organization shall award any prize money or any merchandise valued in excess of the amounts specified by the Code of Virginia.

R. Multiple bingo sessions shall be permitted in a single premise as long as the sessions are distinct from one another and are not used to advertise or do not result in the awarding of more in prizes than is permitted for a single qualified organization. All leases for organizations to conduct charitable gaming in a single premise shall ensure gaming activity is separated by an interval of at least 30 minutes. Bingo sales for the subsequent session may take place during the 30-minute break once the building is cleared of all patrons and workers from the previous session.

S. All bingo and instant bingo, pull-tabs, seal card, event game card, or electronic game card sales, play, and redemption must occur within the time specified on the charitable gaming permit.

T. Instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards shall only be sold in conjunction with a bingo session, except as authorized by § 18.2-340.26:2 of the Code of Virginia. No instant bingo, pull-tabs, seal card, event game card, or electronic game card sales shall take place more than two hours before or after a session. If multiple sessions are held at the same location, no instant bingo, pull-tab, seal card, event game card, or electronic game card sales shall be conducted during the required 30-minute break between gaming activities. The department may take action if it believes that a bingo session is not legitimate or is being conducted in a manner such that instant bingo, pull-tabs, seal cards, event game cards, or electronic game cards are not being sold in conjunction with a bingo session.

U. Only a volunteer game worker of qualified organizations may rent, exchange, or otherwise provide electronic bingo devices to players.

V. A qualified organization shall conduct only bingo games and raffles listed on a game program for that session. The program shall list all prize amounts. If the prize amounts are determined by attendance or at the end of a game, the game program shall list the attendance required for the prize amount or disclose that prizes shall be determined at the end of a game and the method for determining the prize amount. In such case, the organization shall announce the prize amount at the end of the game.

W. A qualified organization selling instant bingo, pull-tabs, seal cards, or electronic game cards shall post a flare provided by the manufacturer at the location where such cards are sold. All such sales and prize payouts shall be in accordance with the flare for that deal.

X. Only qualified organizations, facilities in which qualified organizations play bingo, and suppliers permitted by the department shall advertise a bingo game. Providing players with information about bingo games through printed advertising is permitted, provided the name of the qualified organization shall be in a type size equal to or larger than the name of the premises, the hall, or the word "bingo." Printed advertisements shall identify the use of proceeds percentage reported in the past quarter or fiscal year.

Y. Raffles that award prizes based on a percentage of gross receipts shall use prenumbered tickets.

Z. The following rules shall apply to instant bingo, pull-tab, seal card, or event game card dispensing devices:

1. A dispensing device shall only be used at a location and time during which a qualified organization holds a permit to conduct charitable gaming. Only cards purchased by an organization to be used during the organization's charitable gaming activity shall be in the dispensing device.

2. Keys to the dispensing area and coin/cash box shall be in the possession and control of the game manager or designee of the organization's board of directors at all times. Keys shall at all times be available at the location where the dispensing device is being used.

3. The game manager or designee shall provide access to the dispensing device to a department agent for inspection upon request.

4. Only a volunteer game worker of an organization may stock the dispensing device, remove cash, or pay winners' prizes.

AA. Organizations shall only purchase gaming supplies from a supplier who has a current permit issued by the department.

BB. An organization shall not tamper with bingo paper received from a supplier.

CC. The total amount of all discounts given by any organization during any fiscal year shall not exceed 1.0% of the organization's gross receipts.

11VAC15-40-60. Rules of play.

A. Each organization shall adopt "house rules" regarding conduct of the game. Such rules shall be consistent with the provisions of the law and this chapter. "House rules" shall be conspicuously posted or, at an organization's option, printed on the game program.

B. All players shall be physically present at the location where the bingo numbers for a bingo game are drawn to play the game or to claim a prize. Seal card prizes that can only be determined after a seal is removed or opened must be claimed within 30 days of the close of a deal. All other prizes must be claimed on the game date.

C. The following rules of play shall govern the sale of instant bingo, pull-tabs, and seal cards:

1. No cards that have been marked, defaced, altered, tampered with, or otherwise constructed in a manner that tends to deceive the public or affect the chances of winning or losing shall be placed into play.

2. Winning cards shall have the winning symbol or number defaced or punched immediately after redemption by the organization's authorized representative.

3. An organization may commingle unsold instant bingo cards and pull-tabs with no more than one additional deal. The practice of commingling deals shall be disclosed to the public via house rules or in a similar manner. Seal card deals shall not be commingled.

4. If a deal is not played to completion and unsold cards remain, the remaining cards shall be sold at the next session the same type of ticket is scheduled to be sold. If no future date is anticipated, the organization shall, after making diligent efforts to sell the entire deal, consider the deal closed or completed. The unsold cards shall be retained for three years following the close of the fiscal year and shall not be opened.

5. All seal card games purchased shall contain the sign-up sheet, the seals, and the cards packaged together in each deal.

6. Progressive seal card prizes not claimed within 30 days shall be carried forward to the next progressive game in progress and paid to the next progressive game prize winner.

D. No one involved in the conduct of bingo may play bingo at any session they have worked or intend to work. No one involved in the sale or redemption of any instant bingo, pull-tabs, seal cards, or electronic game cards may purchase directly or through others instant bingo, pull-tab, seal card, or electronic game card products from organizations they assist on the day they have worked or from any deal they have helped sell or redeem, whichever occurs later.

E. Electronic bingo.

1. Electronic bingo devices may be used by bingo players in the following manner:

a. Players may input into the device each number called or the device may automatically daub each number as the number is called;

b. Players must notify the game operator or caller of a winning pattern of bingo by a means other than use of the electronic device;

c. Players are limited to playing a maximum of 54 card faces per device per game;

d. Electronic bingo devices shall not be reserved for players. Each player shall have an equal opportunity to use the available devices on a first come, first served basis;

e. Each electronic bingo device shall produce a player receipt with the organization name, date, time, location, sequential transaction or receipt number, number of electronic bingo cards loaded, cost of electronic bingo cards loaded, and date and time of the transaction. Images of cards or faces stored in an electronic device must be exact duplicates of the printed faces if faces are printed;

f. Department agents may examine and inspect any electronic bingo device and related system. Such examination and inspection shall include immediate access to the device and unlimited inspection of all parts and associated systems and may involve the removal of equipment from the game premises for further testing;

g. All electronic bingo devices must be loaded or enabled for play on the premises where the game will be played;

h. All electronic bingo devices shall be rented or otherwise provided to a player only by an organization and no part of the proceeds of the rental of such devices shall be paid to a landlord, or his employee, agent, or member of his immediate family; and

i. If a player's call of a bingo is disputed by another player, or if a department agent makes a request, one or more cards stored on an electronic bingo device shall be printed by the organization.

2. Players may exchange a defective electronic bingo device for another device provided a disinterested player verifies that the device is not functioning. A disinterested player shall also verify that no numbers called for the game in progress have been keyed into the replacement device prior to the exchange.

F. The following rules of play shall govern the conduct of raffles:

1. Before a prize drawing, each stub or other detachable section of each ticket sold shall be placed into a receptacle from which the winning tickets shall be drawn. The receptacle shall be designed so that each ticket placed in it has an equal chance to be drawn.

2. All prizes shall be valued at fair market value.

G. The following rules shall apply to "decision bingo" games:

1. Decision bingo shall be played on bingo cards in the conventional manner.

2. Players shall enter a game by paying a predetermined amount for each card face in play.

3. Players shall pay a predetermined fee for each set of three bingo numbers called for each card in play.

4. The prize amount shall be the total of all fees not to exceed the prize limit set forth for regular bingo in § 18.2-340.33 of the Code of Virginia. Any excess funds shall be retained by the organization.

5. The predetermined amounts in subdivisions 2 and 3 of this subsection shall be printed in the game program. The prize amount for a game shall be announced before the prize is paid to the winner.

H. The following rules shall apply to "treasure chest" games:

1. The organization shall list the treasure chest game on the bingo game program as a "Treasure Chest Raffle."

2. The organization shall have house rules posted that describe how the game is to be played.

3. The treasure chest participant shall only be selected through some other authorized charitable game at the same bingo session.

4. The organization shall account for all funds as treasure chest/raffle sales on the session reconciliation form.

5. If the player does not open the lock on the treasure chest, the game manager or his designee shall proceed to try every key until the correct key opens the treasure chest lock to show all players that one of the keys will open the lock.

I. The following rules shall apply to progressive bingo games:

1. Bingo paper sold for use in progressive bingo games shall conform to the standards set forth in 11VAC15-40-130.

2. Organizations shall not include in admission packs the bingo paper intended for use in progressive bingo games.

3. Any progressive bingo game, its prize, and the number of bingo numbers to be called shall be clearly announced before the progressive bingo game is played and shall be posted on the premises where the progressive bingo game is played during each session that a progressive bingo game is played.

4. Pricing for a progressive bingo game card or sheet shall be listed on the game program.

5. If the predetermined pattern is not covered within the predetermined number of bingo numbers to be called, then the number of bingo numbers called will increase by one number for each subsequent session the progressive game is played.

6. If the predetermined pattern is not covered within the predetermined number of bingo numbers to be called for that progressive bingo game, then the game will continue as a regular bingo game until the predetermined pattern is covered and a regular bingo prize is awarded.

7. The prize for any progressive bingo game shall be in accordance with the provisions of § 18.2-340.33 of the Code of Virginia.

J. The following rules shall apply to "WINGO":

1. "WINGO" shall be played only for the hearing-impaired players.

2. "WINGO" shall utilize a visual device such as an oversized deck of cards in place of balls selected from a blower.

3. A caller must be in an area visible to all players and shall randomly select cards or other visual devices one at a time and display them so that all players can see them.

4. The organization must have house rules for "WINGO" and the rules shall identify how players indicate that they have won.

5. All financial reporting shall be consistent with reporting for a traditional bingo game.

K. The following rules of play shall apply to event games:

1. No instant bingo cards or pull-tabs that have been marked, defaced, altered, tampered with, or otherwise constructed in a manner that tends to deceive the public or affect the chances of winning or losing shall be placed into play.

2. Instant bingo cards and pull-tabs used in an event game shall not be offered for sale or sold at a purchase price other than the purchase price indicated on the flare for that particular deal.

3. The maximum prize amount for event games shall not exceed the amount set forth in § 18.2-340.33 (9) of the Code of Virginia for instant bingo, pull-tab, or seal card.

4. A sign-up sheet is not required for event games in which the winner or winners are determined using a seal card.

5. Organizations shall determine the winner or winners of event games during the same bingo session in which the instant bingo cards or pull-tabs are sold.

6. An authorized representative of the organization shall deface or punch the winning instant bingo cards or winning pull-tabs immediately after redemption.

7. If unsold bingo cards or unsold pull-tabs remain, the unsold cards shall be retained for three years following the close of the fiscal year and shall not be opened.

Article 3
Bank Accounts, Recordkeeping, Financial Reporting, Audits, Fees

11VAC15-40-70. Bank accounts.

A. A qualified organization shall maintain a charitable gaming bank account that is separate from any other bank account and all gaming receipts shall be deposited into the charitable gaming bank account.

B. Disbursements for expenses other than prizes and reimbursement of meal expenses shall be made by check directly from a charitable gaming account.

C. All charitable gaming bank account records, including but not limited to monthly bank statements, canceled checks or facsimiles thereof, and reconciliations, shall be maintained for three years following the close of a fiscal year.

D. All receipts from each session of bingo games and instant bingo, pull-tabs, or seal cards shall be deposited by the second business day following the session at which they were received.

E. Raffle proceeds shall be deposited into the qualified organization's charitable gaming bank account no later than the end of the calendar week following the week during which the organization received the proceeds.

11VAC15-40-80. Recordkeeping.

A. In addition to the records required by § 18.2-340.30 D of the Code of Virginia, qualified organizations conducting bingo shall maintain a system of records for a minimum of three years, unless otherwise specified for each gaming session on forms prescribed by the department, or reasonable facsimiles of those forms approved by the department, that include:

1. Charitable gaming supplies purchased and used;

2. A session reconciliation form and an instant bingo, pull-tab, seal card, or electronic game card reconciliation form completed and signed within 48 hours of the end of the session by the bingo manager;

3. All discounts provided;

4. A reconciliation to account for cash received from floor workers for the sale of extra bingo sheets for any game;

5. Number of electronic bingo devices rented, unique serial numbers of such devices, number of faces sold by each unit, and a summary report for each session to include date, time, location, and detailed information on income and expenses;

6. An admissions control system that provides a cross-check on the number of players in attendance and admission sales. This may include a ticket control system, cash register, or any similar system;

7. All operating expenses including rent, advertising, and security. Copies of invoices for all such expenses shall also be maintained;

8. Expected and actual receipts from games played on hard cards and number of games played on hard cards;

9. A record of the name and address of each winner for all seal cards; in addition, the winning ticket and seal card shall be maintained for a minimum of 90 days after the session;

10. A record of all door prizes awarded; and

11. For any prize or jackpot of a value that meets or exceeds the reporting requirements in the Internal Revenue Service's Publication 3079, the name and address of each individual to whom any such prize or jackpot is awarded and the amount of the award.

B. Qualified organizations conducting raffles shall have a recordkeeping system to account for cash receipts, cash disbursements, raffle tickets purchased or sold, and prizes awarded. All records shall be maintained for three years from the close of the fiscal year. The recordkeeping system shall include:

1. Invoices for the purchase of raffle tickets, which shall reflect the following information:

a. Name and address of supplier;

b. Name of purchaser;

c. Date of purchase;

d. Number of tickets printed;

e. Ticket number sequence for tickets printed; and

f. Sales price of individual ticket;

2. A record of cash receipts from raffle ticket sales by tracking the total number of tickets available for sale, the number issued to sellers, the number returned, the number sold, and reconciliation of all raffle sales to receipts;

3. Serial numbers of tickets for raffle sales initiated and concluded at a bingo game or sequentially numbered tickets, which shall state the name, address, and telephone number of the organization, the prize or prizes to be awarded, the date of the prize drawing or selection, the selling price of the raffle ticket, and the charitable gaming permit number;

4. For any raffle prize of a value that meets or exceeds the reporting requirements in the Internal Revenue Service's Publication 3079, receipts on which prize winners must provide printed name, residence address, and the amount and description of the prize received; and

5. Deposit records of the required weekly deposits of raffle receipts.

C. All raffle tickets shall have a detachable section; be consecutively numbered with the detachable section having the same number; provide space for the purchaser's name, complete address, and telephone number; and state (i) the name and address of the organization; (ii) the prize or prizes to be awarded; (iii) the date, time and location of the prize drawing; (iv) the selling price of the ticket; and (v) the charitable gaming permit number. Winning tickets and unsold tickets shall be maintained for three years from the close of the fiscal year.

D. All unused charitable gaming supplies shall either be returned for refund to the original supplier in unopened original packaging in resalable condition as determined by the supplier or turned in to the department for destruction. The organization shall maintain a receipt for all such supplies returned to the supplier or turned in to the department.

11VAC15-40-90. Financial reporting, penalties, inspections, and audits.

A. Each charitable gaming permit holder shall file an annual report of receipts and disbursements by March 15 of each year on a form prescribed by the department. The annual report shall cover the activity for the fiscal year.

B. The annual report shall be accompanied by the audit and administration fee as established by the department for the fiscal year unless the fee has been remitted with quarterly reports or the organization is exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia.

C. An organization desiring an extension to file its annual report for good cause shall request the extension in writing on a form prescribed by the department and shall pay the projected audit and administration fee, unless exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. The extension request and payment of projected fees shall be made in accordance with the provisions of § 18.2-340.30 of the Code of Virginia.

D. Unless exempted by § 18.2-340.23 of the Code of Virginia, qualified organizations realizing any gross gaming receipts in any calendar quarter shall file a quarterly report of receipts and disbursements on a form prescribed by the department as follows:

Quarter Ending	Date Due
March 31	June 1
June 30	September 1
September 30	December 1
December 31	March 1

Qualified organizations shall submit quarterly reports with the appropriate audit and administration fee unless the organization is exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. An annual financial report may substitute for a quarterly report if the organization has no further charitable gaming income during the remainder of the reporting period and the annual report is filed by the due date for the applicable calendar quarter.

E. An organization desiring an extension to file its quarterly report for good cause shall request the extension in writing on a form prescribed by the department and shall pay the projected audit and administration fee unless exempt from payment of the fee pursuant to § 18.2-340.23 of the Code of Virginia. The extension request and payment of projected fees shall be made in accordance with the provisions of § 18.2-340.30 of the Code of Virginia.

F. Organizations failing to file required reports, request an extension, or make fee payments when due shall be charged a penalty of $25 per day from the due date until such time as the required report is filed.

G. Any qualified organization in possession of funds derived from charitable gaming (including those who have ceased operations), regardless of when such funds may have been received or whether it has a valid permit from the department, shall file an annual financial report on a form prescribed by the department on or before March 15 of each year until such funds are depleted. If an organization ceases the conduct of charitable gaming, it shall provide the department with the name of an individual who shall be responsible for filing financial reports. If no such information is provided, the president of an organization shall be responsible for filing reports until all charitable gaming proceeds are depleted.

H. If an organization has been identified through inspection, audit, or other means as having deficiencies in complying with statutory or regulatory requirements or having ineffective internal controls, the department may impose restrictions or additional recordkeeping and financial reporting requirements.

I. Any records deemed necessary to complete an inspection, audit, or investigation may be collected by the department, its employees, or its agents from the premises of an organization or any location where charitable gaming is conducted. The department shall provide a written receipt of such records at the time of collection.

11VAC15-40-100. Use of proceeds.

A. All payments by an organization intended as use of proceeds must be made by check written from the organization's charitable gaming account.

B. Use of proceeds payments may be made for scholarship funds or the future acquisition, construction, remodeling, or improvement of real property or the acquisition of other equipment or vehicles to be used for religious, charitable, educational, or community purposes. In addition, an organization may obtain department approval to establish a special fund account or an irrevocable trust fund for special circumstances. Transfers to such an account or an irrevocable trust fund from the organization's charitable gaming account may be included as a use of proceeds if the payment is authorized by an organization's board of directors.

No payments made to such a special fund account shall be withdrawn for other than the specified purpose unless prior notification is made to the department.

C. Expenditures of charitable gaming funds for social or recreational activities or for events, activities, or programs that are open primarily to an organization's members and their families shall not qualify as use of proceeds unless substantial benefit to the community is demonstrated.

D. Payments made to or on behalf of indigent, sick, or deceased members or their immediate families shall be allowed as use of proceeds provided they are approved by the organization's board of directors and the need is documented.

E. Payments made directly for the benefit of an individual member, member of his family, or person residing in his household shall not be allowed as a use of proceeds unless authorized by law or elsewhere in this chapter.

F. Use of proceeds payments by an organization shall not be made for any activity that is not permitted by federal, state, or local laws or for any activity that attempts to influence or finance directly or indirectly political persons or committees or the election or reelection of any person who is or has been a candidate for public office.

G. Organizations shall maintain details of all use of proceeds disbursements for a minimum of three years and shall make this information available to the department upon request.

H. The department may disallow a use of proceeds payment to be counted against the minimum percentage referred to in 11VAC15-40-20 D. If any payment claimed as use of proceeds is subsequently disallowed, an organization may be allowed additional time as specified by the department to meet minimum use of proceeds requirements.

Article 4
Rent

11VAC15-40-110. Requirements regarding renting premises, agreements, and landlord participation.

A. No organization shall rent or use any leased premises to conduct charitable gaming unless all terms for rental or use are set forth in a written agreement and signed by the parties thereto prior to the issuance of a permit to conduct charitable gaming. A qualified organization that leases a building or other premises that is utilized in whole or in part for the purpose of conducting charitable gaming more frequently than two calendar days in one calendar week shall only lease such premises directly from (i) a qualified organization that is exempt from taxation pursuant to § 501 (c) of the Internal Revenue Code or (ii) any county, city, or town.

B. Organizations shall not make payments to a landlord except by check drawn on the organization's charitable gaming account.

C. No landlord, his agent or employee, member of his immediate family, or person residing in his household shall make directly or indirectly a loan to any officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of an organization in Virginia that leases its charitable gaming facility from the landlord.

D. No landlord, his agent or employee, member of his immediate family, or person residing in his household shall make any direct or indirect payment to any officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming conducted at a facility rented from the landlord in Virginia unless the payment is authorized by the lease agreement and is in accordance with the law.

E. No landlord, his agent or employee, member of his immediate family, or person residing in the same household shall at charitable games conducted on the landlord's premises:

1. Participate in the management, operation, or conduct of any charitable games;

2. Sell, lease, or otherwise provide any bingo supplies including, but not limited to, bingo cards, pull-tab cards, electronic game cards, or other game pieces; or

3. Require as a condition of the lease or contract that a particular manufacturer, distributor, or supplier of bingo supplies is used by the organization.

"Bingo supplies" as used in this chapter shall not include glue, markers, or tape sold from concession stands or from a location physically separated from the location where bingo supplies are normally sold.

F. No member of an organization involved in the management, operation, or conduct of charitable gaming shall provide any services to a landlord or be remunerated in any manner by the landlord of the facility where an organization is conducting its charitable gaming.

Part III
Suppliers

11VAC15-40-120. Suppliers of charitable gaming supplies: application, qualifications, suspension, revocation or refusal to renew permit, maintenance, and production of records.

A. Prior to providing any charitable gaming supplies, a supplier shall submit an application on a form prescribed by the department and receive a permit. A $1,000 application fee payable to the Treasurer of Virginia is required. In addition, a supplier must be authorized to conduct business in the Commonwealth of Virginia, which may include, but not be limited to, registration with the State Corporation Commission, the Department of Taxation, and the Virginia Employment Commission. The actual cost of background investigations for a permit may be billed by the department to an applicant. The department shall act on an application within 90 days of receipt of the application.

B. The department may refuse to issue a permit or may suspend or revoke a permit if an officer, director, employee, agent, or owner:

1. Is operating without a valid license, permit, or certificate as a supplier or manufacturer in any state in the United States;

2. Fails or refuses to recall a product as directed by the department;

3. Conducts business with unauthorized entities or is not authorized to conduct business in the Commonwealth of Virginia;

4. Has been convicted of or pleaded nolo contendere to any crime as specified by § 18.2-340.34 B of the Code of Virginia; has had any license, permit, certificate, or other authority related to activities defined as charitable gaming in the Commonwealth suspended or revoked in the Commonwealth or in any other jurisdiction; has failed to file or has been delinquent in excess of one year in the filing of any tax returns or the payment of any taxes due the Commonwealth; or has failed to establish a registered office or registered agent in the Commonwealth if so required by § 13.1-634 or 13.1-763 of the Code of Virginia. As this provision relates to employees or agents, it shall only apply to individuals involved in sales to or solicitations of customers in the Commonwealth of Virginia;

5. Fails to notify the department within 20 days of the occurrence, knowledge, or receipt of the filing of any administrative or legal action relating to charitable gaming or the distribution of charitable gaming supplies involving or concerning the supplier, any officers or directors, employees, agent, or owner during the term of its permit;

6. Fails to provide to the department upon request a current Letter for Company Registration on file with the U.S. Department of Justice-Gambling Devices Registration Unit, if required in accordance with The Gambling Devices Act of 1962, 15 USC §§ 1171-1178, for any device that it sells, distributes, services, or maintains in the Commonwealth of Virginia; or

7. Has been engaged in conduct that would compromise the department's objective of maintaining the highest level of integrity in charitable gaming.

C. A supplier shall not sell, offer to sell, or otherwise provide charitable gaming supplies for use by anyone in the Commonwealth of Virginia other than to an organization with a permit from the department or another permitted supplier. However, a supplier may:

1. Sell charitable gaming supplies to an organization that expects to gross the amount set forth in § 18.2-340.23 of the Code of Virginia or less in any 12-month period, providing that the amount of such purchase would not be reasonably expected to produce more than the amount set forth in § 18.2-340.23 of the Code of Virginia in gross sales. For each such organization, the supplier shall maintain the name, address, and telephone number. The supplier shall also obtain a written and signed statement from an officer or game manager of such organization confirming that gross receipts are expected to be the amount set forth in § 18.2-340.23 of the Code of Virginia or less. Such statement shall be dated and kept on file for three years from the end of a fiscal year.

2. Sell bingo cards and paper to persons or entities other than qualified organizations provided such supplies shall not be sold or otherwise provided for use in charitable gaming activities regulated by the department or in unlawful gambling activities. For each such sale, the supplier shall maintain the name, address, and telephone number of the purchaser. The supplier shall also obtain a written statement from the purchaser verifying that such supplies will not be used in charitable gaming or any unlawful gambling activity. Such statement shall be dated and kept on file for three years from the end of a fiscal year. Payment for such sales in excess of $50 shall be accepted in the form of a check.

3. Sell pull-tabs, seal cards, event game cards, and electronic game cards to organizations for use only upon the premises owned or exclusively leased by the organization and at such times as the portion of the premises in which the pull-tabs, seal cards, event game cards, or electronic game cards are sold is open only to members and their guests as authorized by § 18.2-340.26:1 of the Code of Virginia. Each such sale shall be accounted for separately and the accompanying invoice shall be clearly marked: "For Use in Social Quarters Only."

All such sales shall be documented pursuant to subsection H of this section and reported to the department pursuant to subsection J of this section. This provision shall not apply to the sale to landlords of equipment and video systems as defined in this chapter. Equipment and video systems shall not include dispensing devices, electronic bingo devices, and player devices.

D. A supplier shall not sell, offer to sell, or otherwise provide charitable gaming supplies to any individual or organization in the Commonwealth of Virginia unless the charitable gaming supplies are purchased or obtained from a manufacturer or another permitted supplier. Suppliers may take back for credit and resell supplies received from an organization with a permit that has ceased charitable gaming or is returning supplies not needed.

E. No supplier, supplier's agent, or employee may be involved in the management, operation, or conduct of charitable gaming in the Commonwealth of Virginia. No member of a supplier's immediate family or person residing in the same household as a supplier may be involved in the management, operation, or conduct of charitable gaming of any customer of the supplier in the Commonwealth of Virginia. No supplier, supplier's agent, or employee may participate in any charitable gaming of any customer of the supplier in the Commonwealth of Virginia. For the purposes of this regulation, servicing of electronic devices shall not be considered conduct or participation.

F. The department shall conduct a background investigation prior to the issuance of a permit to any supplier. The investigation may include, but shall not be limited to, the following:

1. A search of the Virginia Central Criminal Records Exchange (CCRE) on all officers, directors, and owners; and

2. Verification of current compliance with Commonwealth of Virginia tax laws.

If the officers, directors, or owners are domiciled outside of the Commonwealth of Virginia, or have resided in the Commonwealth of Virginia for fewer than five years, a criminal history search conducted by the appropriate authority in any state in which they have resided during the previous five years shall be provided by the applicant.

G. Appropriate information and authorizations shall be provided to the department to verify information cited in subsection F of this section.

H. Suppliers shall document each sale or rental of charitable gaming supplies to an organization in the Commonwealth of Virginia on an invoice, which reflects the following:

1. Name, address, and OCG number of the organization;

2. Date of sale or rental and location where bingo supplies are shipped if different from the billing address;

3. Name, form number, and serial number of each deal of instant bingo, pull-tabs, seal cards, electronic game cards, or bundles and the number of cards in each deal;

4. Quantity of deals sold, the cost per deal, the selling price per card, the cash take-in per deal, and the cash payout per deal;

5. Serial number of the top sheet in each pack of disposable bingo paper, the number of sheets in each pack or pad, the cut and color, and the number of packs or pads sold;

6. Serial number for each series of uncollated bingo paper and the number of sheets sold;

7. Detailed information concerning the type, quantity, and individual price of any other charitable gaming supplies or related items including, but not limited to, concealed face bingo cards, hard cards, markers or daubers and refills, or any other merchandise. For concealed face bingo cards, the number of sets, price per set, and the serial number of each set shall be included;

8. Serial number of each player device, the form of the player device, the number of player devices sold or rented, and the physical address to which each player device is shipped;

9. Serial number and description of any other equipment sold or rented that is used to facilitate the distribution, play, and redemption of electronic game cards and the physical address to which the equipment is shipped; and

10. Any type of equipment, device, or product manufactured for or intended to be used in the conduct of charitable games including, but not limited to, designators, designator receptacles, number display boards, selection devices, dispensing machines, and verification devices.

I. Suppliers shall ensure that two copies of the detailed invoice are provided to the customer for each sale of charitable gaming supplies.

J. Each supplier shall provide a report to the department by March 1 of each year on sales of charitable gaming supplies for the fiscal year ending December 31 of the previous year to each organization in the Commonwealth of Virginia. This report shall be provided to the department on computer disk or other department-approved media. The report shall include the name and address of each organization and the following information for each sale or transaction:

1. Bingo paper sales including purchase price, description of paper to include number of sheets in pack and number of faces on sheet, and quantity of single sheets or packs shipped;

2. Deals of instant bingo, pull-tabs, seal cards, electronic game cards, or any other raffle sales including purchase price, deal name, deal form number, number of tickets in deal, ticket price, cash take-in per deal, cash payout per deal, and number of deals;

3. Electronic bingo device sales including purchase or rental price and number of units;

4. Equipment used to facilitate the distribution, play, and redemption of electronic game cards including purchase or rental price, description of equipment, number of units of each type of equipment, and the physical address to which the equipment is shipped; and

5. Sales of miscellaneous items such as daubers, markers, and other merchandise including purchase price, description of product, and number of units.

K. The department shall set manufacturing and testing criteria for all electronic bingo devices and other equipment used in the conduct of charitable gaming. An electronic bingo device shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use in the conduct of charitable gaming until an identical sample device containing identical proprietary software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the device conforms, at a minimum, to the restrictions and conditions set forth in these regulations. Once the testing facility reports the test results to the department, the department will either approve or disapprove the submission and inform the manufacturer of the results within 10 business days. If any such equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the manufacturer of such equipment.

L. Department employees shall have the right to inspect all electronic and mechanical equipment used in the conduct of charitable gaming.

M. Suppliers, their agents and employees, members of the supplier's immediate family, or persons residing in their household shall not make any loan directly or indirectly to any organization or officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of a supplier's customer located in the Commonwealth of Virginia.

N. No supplier, supplier's agent, or employee shall directly or indirectly provide a rebate, discount, or refund to any person other than an organization that purchases supplies or leases or purchases equipment from the supplier. All such transactions shall be recorded on the supplier's account books.

O. A supplier shall not rent, sell, or otherwise provide electronic bingo devices or equipment used to distribute, play, or redeem electronic game cards unless the supplier possesses a valid permit in the Commonwealth of Virginia.

P. A written agreement specifying the terms of lease or rental shall be required for any electronic bingo devices or equipment used to distribute, play, or redeem electronic game cards provided to an organization.

11VAC15-40-130. Construction and other standards for bingo, instant bingo, pull-tabs, seal cards, event games, raffles, electronic bingo devices, and instant bingo, pull-tab, and seal card dispensers.

A. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use bingo supplies unless they conform to the following construction standards:

1. Disposable paper sold shall be of sufficient weight and quality to allow for clearly readable numbers and to prevent ink from spreading, bleeding, or otherwise obscuring other numbers or cards.

2. Each sheet of disposable bingo paper shall be comprised of cards bearing a serial number. No serial number shall be repeated on or in the same style, series, and color of cards within a three-year period.

3. Disposable bingo paper assembled in books or packs shall not be separated except for single-sheet specials. This provision does not apply to two-part cards on which numbers are filled by players and one part is separated and provided to an organization for verification purposes.

4. Each unit of disposable bingo paper shall have an exterior label listing the following information:

a. Description of product;

b. Number of packs or loose sheets;

c. Series numbers;

d. Serial number of the top sheet;

e. Number of cases;

f. Cut of paper; and

g. Color of paper.

5. "Lucky Seven" bingo cards or electronic facsimiles thereof shall have a single face where seven numbers shall be chosen. "Lucky Seven" sheets or electronic facsimiles thereof shall have multiple faces where seven numbers shall be chosen per face.

B. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use instant bingo, pull-tab, seal cards, or event game cards unless they conform to the following construction standards:

1. Cards shall be constructed so that concealed numbers, symbols, or winner protection features cannot be viewed or determined from the outside of the card by using a high intensity lamp of 500 watts, with or without utilizing a focusing lens.

2. Deals shall be designed, constructed, glued, and assembled in a manner to prevent determination of a winning or losing ticket without removing the tabs or otherwise uncovering the symbols or numbers as intended.

3. Each card in a deal shall bear the same serial number. Only one serial number shall be used in a deal. No serial number used in a deal shall be repeated by the same manufacturer on that same manufacturer's form within a three-year period. The flare of each deal shall accompany the deal and shall have affixed to it the same serial number as the tickets in such deal.

4. Numbers or symbols on cards shall be fully visible in the window and shall be placed so that no part of a number or symbol remains covered when the tab is removed.

5. Cards shall be glued on all edges and around each window. Glue shall be of sufficient strength and type to prevent the undetectable separation or delamination of the card. For banded tickets, the glue must be of sufficient strength and quality to prevent the separation of the band from the ticket.

6. The following minimum information shall be printed on a card:

a. Break open pull-tab, instant bingo cards, and event game cards:

(1) Name of the manufacturer or its distinctive logo;

(2) Name of the game;

(3) Manufacturer's form number;

(4) Price per individual card or bundle;

(5) Unique minimum five-digit game serial number printed on the game information side of the card; and

(6) Number of winners and respective winning number or symbols and specific prize amounts unless accompanied by a manufacturer's preprinted publicly posted flare with that information.

b. Banded pull-tabs:

(1) Manufacturer;

(2) Serial number;

(3) Price per individual card or bundle unless accompanied by a manufacturer's preprinted publicly posted flare with that information; and

(4) Number of winners and respective winning numbers or symbols and prize amounts or a manufacturer's preprinted publicly posted flare giving that information.

7. All seal card games sold to organizations shall contain the sign-up sheet, seals, and cards packaged together in each deal.

C. Raffle tickets used independent of a bingo game must conform to the following construction standards:

1. Each ticket shall have a detachable section and shall be consecutively numbered.

2. Each section of a ticket shall bear the same number. The section retained by the organization shall provide space for the purchaser's name, complete address, and telephone number.

3. The following information shall be printed on the purchaser's section of each ticket:

a. Dates and times of drawings;

b. Locations of the drawings;

c. Name of the charitable organization conducting the raffle;

d. Price of the ticket;

e. Charitable gaming permit number; and

f. Prizes.

Exceptions to these construction standards are allowed only with prior written approval from the department.

D. Electronic bingo.

1. The department, at its discretion, may require additional testing of electronic bingo devices at any time. Such additional testing shall be at the manufacturer's expense and shall be a condition of the continued use of such device.

2. All electronic bingo devices shall use proprietary software and hardware or commonly available software and computers and shall be enabled for play on the premises where the game is to be played.

3. Each electronic bingo device shall have a unique identification number permanently coded into the software of such device. Manufacturers of electronic bingo devices shall employ sufficient security safeguards in designing and manufacturing the devices such that it may be verified that all proprietary software components are authentic copies of the approved software components and all functioning components of the device are operating with identical copies of approved software programs. The device must also have sufficient security safeguards so that any restrictions or requirements authorized by the department or any approved proprietary software are protected from alteration by unauthorized personnel. The device shall not contain hard-coded or unchangeable passwords. Security measures that may be employed to comply with these provisions include, but are not limited to, the use of dongles, digital signature comparison hardware and software, secure boot loaders, encryption, and key and callback password systems.

4. Electronic bingo devices shall not allow a player to create a card by the input of specific numbers on each card. Manufacturers shall ensure that an electronic bingo device does not allow for the play of any bingo card faces other than those verifiably purchased by the patron.

5. Electronic bingo devices shall not accept cash, currency, or tokens for play.

6. Electronic bingo devices shall require the manual entry of numbers as they are called, the manual verification of numbers as they have been electronically transmitted to the device, or the full automatic daubing of numbers as each number is called. During the play of a bingo game, the transmission of data to electronic bingo devices shall be limited to one-way communication to the device and shall consist only of the number called.

7. A device shall not allow the play of more than 54 cards per device per game.

8. The electronic bingo device system shall record a sequential transaction number or audit tracking number for each transaction. The system shall not allow the manual resetting or changing of this number.

9. The system shall produce a receipt and a transaction log containing the following:

a. Organization name;

b. Location of bingo game;

c. Sequential transaction or receipt number;

d. Number of electronic bingo cards loaded;

e. Cost of electronic bingo cards loaded; and

f. Date and time of each transaction.

10. The system shall maintain and make available on demand a summary report for each session that includes the following:

a. Organization name;

b. Physical location of bingo game;

c. Date and time of each transaction;

d. Sequential transaction or receipt number;

e. Number of electronic bingo cards loaded;

f. Cost of electronic bingo cards loaded;

g. A transaction history correlating each electronic sale to the device identification number of the device on which the sale was played;

h. Sufficient information to identify voids, including the date and time of each voided transaction;

i. Sufficient information to identify device returns; and

j. Total gross receipts for each session.

11. Each device shall be programmed to automatically erase all stored electronic cards at the end of the last game of a session, within a set time from their rental to a player, or by some other clearance method approved by the department.

12. All devices shall be reloaded with another set of cards at the beginning of each session if the devices are to be reused at the same location.

E. In instances where a defect in packaging or in the construction of deals or electronic devices is discovered by or reported to the department, the department shall notify the manufacturer of the deals or devices containing the alleged defect. Should the department, in consultation with the manufacturer, determine that a defect exists, and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to deals or electronic devices for use still located within the Commonwealth of Virginia, require the supplier to:

1. Recall the deals or electronic devices affected that have not been sold or otherwise provided; or

2. Issue a total recall of all affected deals or electronic devices.

F. No instant bingo, pull-tab, or seal card dispenser may be sold, leased, or otherwise furnished to any person or organization in the Commonwealth of Virginia or used in the conduct of charitable gaming until an identical sample device containing identical proprietary software, if applicable, has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The cost of testing shall be borne by the manufacturer of such equipment. In addition, suppliers and manufacturers of such dispensers shall comply with the requirements of The Gambling Devices Act of 1962 (15 USC §§ 1171-1178).

G. All instant bingo, pull-tab, or seal card dispensing devices must meet the following standards:

1. Each dispenser shall be manufactured in a manner that ensures a pull-tab ticket is dispensed only after insertion of United States currency or coinage into the dispenser. Such ticket and any change due shall be the only items dispensed from the machine.

2. Each dispenser shall be manufactured in a manner that ensures the device neither displays nor has the capability of displaying or otherwise identifying an instant bingo, pull-tab, or seal card winning or nonwinning ticket.

3. Each dispenser shall be manufactured in such a manner that any visual animation does not simulate or display rolling or spinning reels or produce audible music or enhanced sound effects.

4. Each dispenser shall be equipped with separate locks for the instant bingo, pull-tab, or seal card supply modules and money boxes. Locks shall be configured so that no one key will operate both the supply modules and money boxes.

H. The department may require additional testing of a dispensing device at any time to ensure that it meets construction standards and allows for fair play. Such tests shall be conducted at the cost of the manufacturer of such devices.

I. The face value of cards being dispensed shall match the amount deposited in the currency/coin acceptor less change provided.

11VAC15-40-140. Instant bingo, pull-tabs, seal cards, or event game cards randomization standards.

All instant bingo, pull-tabs, seal cards, or event game cards shall meet the following randomization standards:

1. Deals shall be assembled so that winning tickets are placed throughout each deal.

2. Deals shall be assembled and packaged in a manner that prevents isolation of winning cards due to variations in printing, graphics, colors, sizes, appearances of cut edges, or other markings of cards.

3. Winning cards shall be distributed and mixed among all other cards in a deal so as to eliminate any pattern between deals or portions of deals from which the location or approximate location of any winning card may be determined.

Part IV
Electronic Games of Chance Systems

Article 1
General Requirements

11VAC15-40-150. Approval of distributed pull-tab systems, validation systems, point-of-sale stations, and redemption terminals.

A. The department shall set manufacturing and testing criteria for all distributed pull-tab systems, validation systems, point-of-sale stations, redemption terminals, and other equipment used in the conduct of charitable gaming. A distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use in the conduct of charitable gaming until an identical sample system or equipment containing identical software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the distributed pull-tab system and associated hardware and software conform, at a minimum, to the requirements set forth in this chapter. Once the testing facility reports the test results to the department, the department will either approve or disapprove the distributed pull-tab system or system components and inform the manufacturer of the results within 10 business days. If any such system or equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the manufacturer of such equipment.

B. No supplier shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use a distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment used to conduct charitable gaming unless it conforms to the requirements set forth in this regulation.

C. If a defect in a distributed pull-tab system, validation system, point-of-sale station, redemption terminal, or other equipment used to conduct charitable gaming is discovered by or reported to the department, the department shall notify the manufacturer of the system or equipment containing the alleged defect. Should the department, in consultation with the manufacturer, determine that a defect exists and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to any distributed pull-tab system, validation system, point of sale station, redemption terminal, or other equipment used to conduct charitable gaming still located within the Commonwealth of Virginia, require the supplier to issue a recall of all affected distributed pull-tab systems, validation systems, point-of-sale stations, redemption terminals, or other equipment.

Article 2
System Requirements

11VAC15-40-160. Distributed pull-tab system.

A distributed pull-tab system shall be dedicated primarily to electronic accounting, reporting, and the presentation, randomization, and transmission of electronic game cards to the player devices. It shall also be capable of generating the data necessary to provide the reports required within this article or otherwise specified by the department.

11VAC15-40-170. Dispensing of electronic game cards.

A distributed pull-tab system shall dispense, upon request, an electronic game card or cards. All games must be played without replacement, drawing from a single finite game set.

11VAC15-40-180. Game set requirements.

Each game set shall meet the following minimum requirements:

1. Each game set shall be made up of a finite number of electronic game cards;

2. The game set shall consist of a maximum of 25,000 electronic game cards;

3. All electronic game cards in a particular game set shall be of the same purchase price;

4. The maximum win amount awarded per any one electronic game card shall not exceed the value set forth for pull-tabs by § 18.2-340.33 of the Code of Virginia;

5. Each game set shall be assigned a unique serial number; and

6. After randomization, game sets may be broken into subsets of equal size. If game subsets are used, they shall each be assigned a unique serial number and be traceable to a parent game set.

11VAC15-40-190. Game set definition.

If the system has the capability to create a game set from a predefined set of criteria, the criteria must contain the following information:

1. Game ID;

2. Game set version;

3. Manufacturer;

4. Game name;

5. Paytable ID;

6. Purchase price per electronic game card;

7. Subset size;

8. Total number of subsets; and

9. Prize values with an associated index and frequency.

11VAC15-40-200. Data required to be available for each game set.

A. The following data shall be available prior to the opening of a game set for distribution and shall be maintained and be viewable both electronically and, if requested, by printed report, upon demand:

1. A unique serial number identifying each game set and/or subset;

2. A description of the game set sufficient to categorize the game set or subset relative to other game sets;

3. The total number of electronic game cards in the game set;

4. The number of game subsets to be created from the game set and the number of electronic game cards in each subset when applicable;

5. The payout percentage of the entire game set;

6. The purchase price per electronic game card assigned to the game set; and

7. Prize values with an associated index and frequency.

B. The following data shall be available subsequent to the completion of a game set and shall be maintained and viewable both electronically and, if requested, by printed report, upon demand:

1. A unique serial number identifying each game set and/or subset;

2. Description of the game set sufficient to categorize the game set relative to other game sets;

3. The total number of electronic game cards unsold;

4. The total number of electronic game cards purchased;

5. The time and date that the game set and/or each game subset became available for play;

6. The time and date that the game set and/or each game subset was completed or removed from play;

7. Location where game set and/or subset was played;

8. The final payout percentage of the game set when removed from play; and

9. The purchase price per electronic game card assigned to the game set.

C. In order to provide maximum game integrity, no audit or other determination of the status of any game set or any subset, including, but not limited to, a determination of the prizes won or prizes remaining to be won, shall be conducted by anyone while a game set or subset is in play without causing termination of the entire game set or subset. Only upon game set termination shall the details of the associated game set and subsets be revealed to the individual or individuals performing the audit.

D. Once terminated, a game set shall not be able to be reopened.

11VAC15-40-210. Security requirements.

A. A distributed pull-tab system computer must be in a locked, secure enclosure with key controls in place.

B. A distributed pull-tab system shall provide a means for terminating the game set if information about electronic game cards in an open game set has been accessed or at the discretion of the department. In such cases, traceability of unauthorized access including time and date, users involved, and any other relevant information shall be available.

C. A distributed pull-tab system shall not permit the alteration of any accounting or significant event information that was communicated from the player device without supervised access controls. In the event financial data is changed, an automated audit log must be capable of being produced to document the following:

1. Data element altered;

2. Data element value prior to alteration;

3. Data element value after alteration;

4. Time and date of alteration; and

5. Personnel that performed alteration.

D. A distributed pull-tab system must provide password security or other secure means of ensuring data integrity and enforcing user permissions for all system components through the following means:

1. All programs and data files must only be accessible via the entry of a password that will be known only to authorized personnel;

2. The distributed pull-tab system must have multiple security access levels to control and restrict different classes;

3. The distributed pull-tab system access accounts must be unique when assigned to the authorized personnel and shared accounts amongst authorized personnel must not be allowed;

4. The storage of passwords and PINs must be in an encrypted, nonreversible form; and

5. A program or report must be available that will list all registered users on the distributed pull-tab system including their privilege level.

E. All components of a distributed pull-tab system must have a password sign-on with two-level codes comprising the personal identification code and a personal password.

1. The personal identification code must have a length of at least six ASCII characters; and

2. The personal password must have a minimum length of six alphanumeric characters, which should include at least one nonalphabetic character.

F. A distributed pull-tab system must have the capability to control potential data corruption that can be created by multiple simultaneous log-ons by system management personnel.

1. A distributed pull-tab system shall specify which of the access levels allow for multiple simultaneous sign-ons by different users and which of the access levels do not allow for multiple sign-ons, and, if multiple sign-ons are possible, what restrictions, if any, exist; or

2. If a distributed pull-tab system does not provide adequate control, a comprehensive procedural control document must be drafted for the department's review and approval.

G. Distributed pull-tab system software components/modules shall be verifiable by a secure means at the system level. A distributed pull-tab system shall have the ability to allow for an independent integrity check of the components/modules from an outside source and is required for all control programs that may affect the integrity of the distributed pull-tab system. This must be accomplished by being authenticated by a third-party device, which may be embedded within the distributed pull-tab system software or having an interface or procedure for a third-party application to authenticate the component. This integrity check will provide a means for field verification of the distributed pull-tab system components.

H. A distributed pull-tab system may be used to configure and perform security checks on player devices, provided such functions do not affect the security, integrity, or outcome of any game and meets the requirements set forth in this regulation regarding program storage devices.

11VAC15-40-220. Backup and recovery.

A. A distributed pull-tab system computer shall have a separate physical medium for securely storing game sets or subsets on the computer, which shall be mirrored in real time by a backup medium.

B. All data required to be available or reported by this chapter must be retained for a period of not less than three years.

C. All storage of critical data shall utilize error checking and be stored on a nonvolatile physical medium.

D. The database shall be stored on redundant media so that no single failure of any portion of the system would result in the loss or corruption of data.

E. In the event of a catastrophic failure when the distributed pull-tab system cannot be restarted in any other way, it shall be possible to reload the distributed pull-tab system from the last viable backup point and fully recover the contents of that backup, to consist of at least the following information:

1. All significant events;

2. All accounting information;

3. Auditing information, including all open game sets and the summary of completed game sets; and

4. Employee files with access levels.

11VAC15-40-230. Electronic accounting and reporting.

A. One or more electronic accounting systems shall be required to perform reporting and other functions in support of distributed pull-tab system. The electronic accounting system shall not interfere with the outcome of any gaming function.

B. The following reporting capabilities must be provided by the electronic accounting system:

1. Electronic game card game set report – game sets in play. An electronic game card game set report must be available on demand for each game set currently in play. Game cards, outcomes, or prizes must not be revealed. The report must contain the following information:

a. A unique serial number identifying each game set and/or subsets;

b. A description of the game set sufficient to categorize the game set or subset relative to other game sets;

c. The total number of electronic game cards in the game set;

d. The number of game subsets to be created from the game set and the number of electronic game cards in each subset when applicable;

e. The theoretical payout percentage of the entire game set;

f. The purchase price per electronic game card assigned to the game set;

g. The time and date that the game set and/or each game subset became available for play; and

h. Location where the game set and/or subset is being played.

2. Electronic game card game set report – completed game set. An electronic game card game set report must be available on demand, for each completed game set. The report must contain the following information:

a. A unique serial number identifying each game set and/or subset;

b. Description of the game set sufficient to categorize the game set relative to other game sets;

c. The total number of electronic game cards unsold;

d. The total number of electronic game cards purchased;

e. The time and date that the game set and/or each game subset became available for play;

f. The time and date that the game set and/or each game subset was completed or removed from play;

g. Location where game set and/or subset was played;

h. The final payout percentage of the game set when removed from play; and

i. The purchase price per electronic game card assigned to the game set.

3. A report that shall indicate all prizes that exceed the threshold that triggers additional procedures to be followed for the purpose of compliance with federal tax reporting requirements. At a minimum, on a daily and monthly basis, the report shall provide the following information per player device:

a. The date and time won;

b. Location of prize award; and

c. Amount of each prize occurrence.

4. Liability report. A liability report shall provide a summary of the outstanding funds that carry from business day to business day. At a minimum, this report shall include:

a. Amount of prizes and/or vouchers that were awarded in dollars and cents, but have not yet been claimed that have not yet expired; and

b. Summary of all outstanding accounts.

5. Master reconciliation report. A master reconciliation report must be available on a per session basis, monthly basis, and quarterly basis at a minimum. A master reconciliation report shall include the following:

a. Total of all moneys used to purchase electronic game cards;

b. Total of all prizes, in dollars and cents, awarded from electronic game cards;

c. Total of all moneys inserted into a player device or provided to a cashier for the purchase of electronic game cards; and

d. Total of all moneys removed from a player device.

C. A distributed pull-tab system shall be capable of providing an electronic file in a format specified by the department on a periodic basis to a location specified by the department. The data to be reported will contain, at a minimum, the following items per session:

1. Organization identification;

2. Session date;

3. Total cash in;

4. Total cash out;

5. Total cash played;

6. Total cash won;

7. For all game sets on the system in play or in inventory:

a. Serial number;

b. Description;

c. Ticket price;

d. Number of subsets if applicable;

e. Number of tickets or number of tickets per subset;

f. Theoretical return percentage; and

g. Date game set was opened for play, when applicable; and

8. For all game sets completed or closed since the previous reporting date:

a. Serial number;

b. Description;

c. Ticket price;

d. Number of subsets, if applicable;

e. Number of tickets or number of tickets per subset;

f. Theoretical return percentage;

g. Date game set was opened;

h. Date game set was closed;

i. Total tickets sold;

j. Total dollars in;

k. Total prizes paid; and

l. Actual return percentage.

11VAC15-40-240. Randomization.

A. As used in this section, unless the context requires a different meaning:

"Card position" means the first card dealt, second card dealt in sequential order.

"Number position" means the first number drawn in sequential order.

B. A distributed pull-tab system shall utilize randomizing procedures in the creation of game sets for electronic game cards or externally generated randomized game sets that have been created using a method previously approved by the department.

C. Any random number generation, shuffling, or randomization of outcomes used in connection with a distributed pull-tab system must be by use of a random number generation application that has successfully passed standard tests for randomness and unpredictability including but not limited to:

1. Each card position or number position satisfies the 99% confidence limit using the standard chi-squared analysis. "Chi-squared analysis" is the sum of the ratio of the square difference between the expected result and the observed result to the expected result.

2. Each card position or number position does not produce a significant statistic with regard to producing patterns of occurrences. Each card position or number position will be considered random if it meets the 99% confidence level with regard to the "run test" or any similar pattern testing statistic. The "run test" is a mathematical statistic that determines the existence of recurring patterns within a set of data.

3. Each card position or number position is independently chosen without regard to any other card or number drawn within that game play. This test is the "correlation test." Each pair of card positions or number positions is considered random if it meets the 99% confidence level using standard correlation analysis.

4. Each card position or number position is independently chosen without reference to the same card position or number position in the previous game. This test is the "serial correlation test." Each card position or number position is considered random if it meets the 99% confidence level using standard serial correlation analysis.

11VAC15-40-250. Communications and network requirements.

A. Where the distributed pull-tab system components are linked with one another in a network, communication protocols shall be used that ensure that erroneous data or signals will not adversely affect the operations of any such system components.

B. All data communication shall incorporate an error detection and correction scheme to ensure the data is transmitted and received accurately.

C. Connections between all components of the distributed pull-tab system shall only be through the use of secure communication protocol(s) that are designed to prevent unauthorized access or tampering, employing Advanced Encryption Standard (AES), or equivalent encryption.

D. The minimum width (size) for encryption keys is 112 bits for symmetric algorithms and 1024 bits for public keys.

E. There must be a secure method implemented for changing the current encryption key set. It is not acceptable to only use the current key set to "encrypt" the next set.

F. There must be a secure method in place for the storage of any encryption keys. Encryption keys must not be stored without being encrypted themselves.

G. If a wireless network is used, wireless products used in conjunction with any gaming system or system component must meet the following minimum standards:

1. Employ a security process that complies with the Federal Information Processing Standard 140-2 (FIPS 140-2); or

2. Employ an alternative method, as approved by the department.

11VAC15-40-260. Significant events.

The following significant events, if applicable, shall be collected from the player device or point of sale and communicated to the system for storage and a report of the occurrence of the significant event must be made available upon request:

1. Power resets or power failure.

2. Communication loss between a player device and any component of the distributed pull-tab system.

3. Player device jackpot (any award in excess of the single win limit of the player device).

4. Door openings (any external door that accesses a critical area of the player device).

5. Bill validator errors:

a. Stacker full (if supported); and

b. Bill jam.

6. Printer errors:

a. Printer empty; and

b. Printer disconnect or failure.

7. Corruption of the player device RAM or program storage device.

8. Any other significant events as defined by the protocol employed by the distributed pull-tab system.

11VAC15-40-270. Validation system and redemption.

A distributed pull-tab system may utilize a voucher validation system to facilitate gaming transactions. The validation system may be entirely integrated into a distributed pull-tab system or exist as a separate entity.

1. Payment by voucher printer as a method of redeeming unused game plays and/or winnings on a player device is only permissible when the device is linked to an approved validation system or distributed pull-tab system that allows validation of the printed voucher.

a. A distributed pull-tab system may allow voucher out only; vouchers shall not be inserted, scanned, or used in any way at the player device for redemption.

b. The validation system must process voucher redemption correctly according to the secure communication protocol implemented.

2. The algorithm or method used by the validation system or distributed pull-tab system to generate the voucher validation numbers must guarantee an insignificant percentage of repetitive validation numbers.

3. The validation system must retrieve the voucher information correctly based on the secure communication protocol implemented and store the voucher information in a database. The voucher record on the host system must contain, at a minimum, the following voucher information:

a. Validation number;

b. Date and time the player device printed the voucher;

c. Value of voucher in dollars and cents;

d. Status of voucher;

e. Date and time the voucher will expire;

f. Serial number of player device; and

g. Location name or site identifier;

4. The validation system or distributed pull-tab system must have the ability to identify the following occurrences and notify the cashier when the following conditions exist:

a. Voucher cannot be found on file;

b. Voucher has already been paid; or

c. Amount of voucher differs from amount on file (requirement may be met by display of voucher amount for confirmation by cashier during the redemption process).

5. If the connection between the validation system and the distributed pull-tab system fails, an alternate method or procedure of payment must be available and shall include the ability to identify duplicate vouchers and prevent fraud by redeeming vouchers that were previously issued by the player device.

6. The following reports related to vouchers shall be generated on demand:

a. Voucher Issuance Report shall be available from the validation system that shows all vouchers generated by an electronic game card device; and

b. Voucher Redemption Report shall detail individual vouchers, the sum of the vouchers paid by the validation terminal or point of sale by session, and include the following information:

(1) The date and time of the transaction;

(2) The dollar value of the transaction;

(3) Validation number;

(4) A transaction number; and

(5) Point-of-sale identification number or name.

7. The validation system database must be encrypted and password-protected and should possess a nonalterable user audit trail to prevent unauthorized access.

8. The normal operation of any device that holds voucher information shall not have any options or method that may compromise voucher information. Any device that holds voucher information in its memory shall not allow removal of the information unless it has first transferred that information to the ticketing database or other secured component or components of the validation system.

11VAC15-40-280. Point of sale; validation terminal.

A. A distributed pull-tab system may utilize a point-of-sale and/or validation terminal that is capable of facilitating the sale of the organization's pull tab outcomes or used for the redemption of credits from player accounts or vouchers. The point of sale may be entirely integrated into a distributed pull-tab system or exist as a separate entity.

B. Point-of-sale use is only permissible when the device is linked to an approved validation system or distributed pull-tab system.

C. If a distributed pull-tab system utilizes a point of sale, it shall be capable of printing a receipt for each sale, void, or redemption.

1. The receipt shall contain the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Validation number, if applicable;

d. Quantity of associated products, if applicable;

e. Transaction number;

f. Account number, if applicable; and

g. Point-of-sale identification number or name.

D. The following point-of-sale or validation terminal reports shall be generated on demand:

1. Sales Transaction History Report shall show all sales and voids by session and include the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Quantity of associated products;

d. Transaction number; and

e. Point of sale identification number or name;

2. Voucher Redemption Report shall detail individual voucher redemptions paid by the validation terminal or point of sale by session and include the following information:

a. Date and time of the transaction;

b. Dollar value of the transaction;

c. Validation number;

d. Transaction number; and

e. Point of sale identification number or name.

11VAC15-40-290. Location of equipment.

All equipment used to facilitate the distribution, play, or redemption of electronic pull-tab or instant bingo games must be physically located within the boundaries of the Commonwealth of Virginia. This includes but is not limited to the distributed pull-tab system, player devices, redemption terminals, and point-of-sale stations.

Article 2
Player Devices

11VAC15-40-300. Player device general requirements.

A. Each player device shall bear a seal approved by the commissioner and affixed by the department.

B. A player device shall not be capable of being used for the purposes of engaging in any game prohibited by the department.

C. In addition to a video monitor or touch screen, each player device may have one or more of the following: a bill acceptor, printer, and electromechanical buttons for activating the game and providing player input, including a means for the player to make selections and choices in games.

D. For each player device, there shall be located anywhere within the distributed pull-tab system, nonvolatile memory or its equivalent. The memory shall be maintained in a secure location for the purpose of storing and preserving a set of critical data that has been error checked in accordance with the critical memory requirements of this regulation.

E. A player device shall not have any switches, jumpers, wire posts, or other means of manipulation that could affect the operation or outcome of a game. The player device may not have any functions or parameters adjustable through any separate video display or input codes except for the adjustment of features that are wholly cosmetic.

F. A player device shall not have any of the following attributes: spinning or mechanical reels, pull handle, sounds other than an audio effect to simulate the opening of a paper pull-tab or instant bingo card, flashing lights, tower light, top box, coin tray, ticket acceptance, hopper, coin acceptor, enhanced animation, cabinet or payglass artwork, or any other attribute identified by the department.

G. A player device shall be robust enough to withstand forced illegal entry that would leave behind physical evidence of the attempted entry or such entry that causes an error code that is displayed and transmitted to the distributed pull-tab system. Any such entry attempt shall inhibit game play until cleared, and shall not affect the subsequent play or any other play, prize, or aspect of the game.

H. The number of player devices, other than those player devices that are handheld, present at any premise at which charitable gaming is conducted shall be limited to one device for every 50 permissible occupants under the maximum occupancy as determined pursuant to the Uniform Statewide Building Code. The department shall determine whether a player device is handheld.

11VAC15-40-310. Cabinet wiring.

A. Proof of UL or equivalent certification shall be required for all submitted electronic devices.

B. A player device shall be designed so that power and data cables into and out of the player device can be routed so that the cables are not accessible to the general public.

11VAC15-40-320. Player device identification.

A player device shall have a permanently affixed identification badge that cannot be removed without leaving evidence of tampering. This badge shall be affixed to the exterior of the player device and shall include the following information:

1. Manufacturer name;

2. A unique serial number;

3. The player device model number;

4. The date of manufacture; and

5. Any other information required by the department.

11VAC15-40-330. Doors; compartments.

A. If a player device possesses an external door that allows access to the interior of the machine the following rules shall apply:

1. Doors and their associated hinges shall be capable of withstanding determined illegal efforts to gain access to the inside of the player device and shall leave evidence of tampering if an illegal entry is made;

2. All external doors shall be locked and monitored by door access sensors that shall detect and report all external door openings by way of an audible alarm, on-screen display, or both;

3. The player device shall cease play when any external door is opened;

4. It shall not be possible to disable a door open sensor when the machine's door is closed without leaving evidence of tampering;

5. The sensor system shall register a door as being open when the door is moved from its fully closed and locked position; and

6. Door open conditions shall be recorded in an electronic log that includes a date/time stamp.

B. Player devices that contain control programs located within an accessible area shall have a separate internal locked logic compartment, that shall be keyed differently than the front door access lock. The logic compartment shall be a locked cabinet area with its own locked door, that houses critical electronic components that have the potential to significantly influence the operation of the player device. There may be more than one such logic area in a player device. Electronic component items that are required to be housed in one or more logic areas are:

1. CPUs and other electronic components involved in the operation and calculation or display of game play;

2. Communication controller electronics and components housing the communication program storage media or, the communication board for the on-line system may reside outside the player device; and

3. Logic compartment door open conditions shall be recorded in a log that includes a date/time stamp.

C. Player devices that do not contain a door shall have adequate security for any panels or entry points that allow access to the interior of the device.

11VAC15-40-340. Memory clear.

A. Following the initiation of a memory reset procedure utilizing a certified reset method, the program shall execute a routine that initializes the entire contents of memory to the default state. For player devices that allow for partial memory clears, the methodology in doing so must be accurate and the game application must validate the uncleared portions of memory. The player device display after a memory reset shall not be the top award.

B. It shall not be possible to change a configuration setting that causes an alteration or obstruction to the electronic accounting meters without a memory clear.

11VAC15-40-350. Critical memory.

A. Critical memory shall be used to store all data that is considered vital to the continued operation of the player device. Critical memory storage shall be maintained by a methodology that enables errors to be identified and corrected in most circumstances. This methodology may involve signatures, checksums, partial checksums, multiple copies, timestamps, and/or use of validity codes. This includes, but is not limited to:

1. All electronic meters required in 11VAC15-40-420 E;

2. Current unused credits;

3. Player device or game configuration data;

4. Recall of all wagers and other information necessary to fully reconstruct the game outcome associated with the last 10 plays;

5. Software state, which is the last state the player device software was in before interruption; and

6. Error conditions that may have occurred on the player device that may include:

a. Memory error or control program error;

b. Low memory battery, for batteries external to the memory itself or low power source;

c. Program error or authentication mismatch; and

d. Power reset.

B. Comprehensive checks of critical memory shall be made continually to test for possible corruption. In addition, all critical memory:

1. Shall have the ability to retain data for a minimum of 180 days after power is discontinued from the player device. If the method used is an off-chip battery source, it shall recharge itself to its full potential in a maximum of 24 hours. The shelf life shall be at least five years. Memory that uses an off-chip back-up power source to retain its contents when the main power is switched off shall have a detection system that will provide a method for software to interpret and act upon a low battery condition;

2. Shall only be cleared by a department certified memory clear method; and

3. Shall result in an error if the control program detects an unrecoverable memory error.

11VAC15-40-360. Program storage devices.

A. All program storage devices (writable/nonwritable), including Erasable Programmable Read Only Memory (EPROM), DVD, CD-ROM, compact flash, and any other type of program storage device shall be clearly marked with sufficient information to identify the software and revision level of the information stored in the devices.

B. Program storage devices shall meet the following requirements:

1. Program storage, including CD-ROM, shall meet the following rules:

a. The control program shall authenticate all critical files by employing a hashing algorithm that produces a "message digest" output of at least 128 bits at minimum, as certified by the recognized independent test laboratory and agreed upon by the department. Any message digest shall be stored on a read-only memory device within the player device. Any message digest that resides on any other medium shall be encrypted, using a public/private key algorithm with a minimum of a 512 bit key, or an equivalent encryption algorithm with similar security certified by the independent test laboratory and agreed upon by the department.

b. The player device shall authenticate all critical files against the stored message digests. In the event of a failed authentication, the player device should immediately enter an error condition with the appropriate indication such as an audible signal, on-screen display, or both. This error shall require operator intervention to clear. The player device shall display specific error information and shall not clear until the file authenticates properly and/or the player device's memory is cleared, the game is restarted, and all files authenticate correctly.

2. CD-ROM specific based program storage shall:

a. Not be a rewriteable disk; and

b. The "write session" shall be closed to prevent any further writing to the storage device.

C. Player devices where the control program is capable of being erased and reprogrammed without being removed from the player device, or other equipment or related peripheral devices shall meet the following requirements:

1. Reprogrammable program storage shall only write to alterable storage media containing data, files, and programs that are not critical to the basic operation of the game.

2. Notwithstanding the foregoing, data may be written to media containing critical data, files, and programs provided that:

a. A log of all information that is added, deleted, and modified be stored on the media;

b. The control program verifies the validity of all data, files, and programs that reside on the media using the methods required herein;

c. The player device's program contains appropriate security to prevent unauthorized modifications; and

d. The player device's program does not allow game play while the media containing the critical data, files, and programs is being modified.

D. The control program shall ensure the integrity of all critical program components during the execution of said components and the first time the files are loaded for use even if only partially loaded. Space that is not critical to machine security (e.g., video or sound) is not required to be validated, although the department recommends a method be in place for the files to be tested for corruption. If any of the video or sound files contain payout amounts or other information needed by the player, the files are to be considered critical.

11VAC15-40-370. Touch screens.

Any touch screen must meet the following rules:

1. A touch screen shall be accurate once calibrated;

2. A touch screen shall be able to be recalibrated; and

3. A touch screen shall have no hidden or undocumented buttons or touch points anywhere on the touch screen, except as provided for by the game rules that affect game play.

11VAC15-40-380. Bill acceptors.

A. A player device may have a mechanism that accepts U.S. currency and provides a method to enable the player device software to interpret and act appropriately upon a valid or invalid input.

B. An acceptance device shall be electronically based and be configured to ensure that it only accept valid bills and rejects all others in a highly accurate manner.

C. A bill input system shall be constructed in a manner that protects against vandalism, abuse, or fraudulent activity. In addition, a bill acceptance device shall only register credits when:

1. The bill has passed the point where it is accepted and stacked; and

2. The bill acceptor has sent the "irrevocably stacked" message to the machine.

D. A bill acceptor shall communicate to the player device using a bidirectional protocol.

E. A bill acceptor shall be designed to prevent the use of cheating methods such as stringing, the insertion of foreign objects, and any other manipulation that may be deemed as a cheating technique.

F. If a bill acceptor is designed to be factory set only, it shall not be possible to access or conduct maintenance or adjustments to that bill acceptor in the field, other than:

1. The selection of bills and their limits;

2. Changing of certified EPROMs or downloading of certified software;

3. The method for adjustment of the tolerance level for accepting bills of varying quality should not be accessible from the exterior of the player device. Adjustments of the tolerance level should only be allowed with adequate levels of security in place. This can be accomplished through lock and key, physical switch settings, or other accepted methods approved on a case-by-case basis;

4. Maintenance, adjustment, and repair per approved factory procedures; and

5. Options that set the direction or orientation of bill acceptance.

G. A player device equipped with a bill acceptor shall have the capability of detecting and displaying an error condition for the following events:

1. Stacker full (it is recommended that an explicit "stacker full" error message not be utilized since this may cause a security issue);

2. Bill jams;

3. Bill acceptor door open. If a bill acceptor door is a machine door, a door open signal is sufficient;

4. Stacker door open; and

5. Stacker removed.

H. A player device equipped with a bill acceptor shall maintain sufficient electronic metering to be able to report the following:

1. Total monetary value of all bills accepted;

2. Total number of all bills accepted;

3. A breakdown of the bills accepted for each denomination; and

4. The value of the last five items accepted by the bill acceptor.

11VAC15-40-390. Payment by voucher printers.

A. If the player device has a printer that is used to issue payment to the player by issuing a printed voucher for any unused game plays and/or winnings, the player device shall meet the following rules:

1. The printer shall be located in a secure area of the player device, but shall not be located in the logic area or any cash storage area. The bill acceptor stacker or logic areas containing critical electronic components shall not be accessed when the printer paper is changed;

2. The player device, in which the printer is housed, is linked to a voucher validation system, which records the voucher information; and

3. Data printed on a voucher shall be provided to the voucher validation system that records the following information regarding each voucher printed:

a. Value of unused game plays and/or winnings in U.S. currency, in numerical form;

b. Time the voucher was printed;

c. Date the voucher was printed;

d. Location name or site identifier;

e. Serial number of player device;

f. Unique validation number or barcode; and

g. Expiration date and time.

B. If the player device is capable of printing a duplicate voucher, the duplicate voucher shall clearly state the word "DUPLICATE" on its face.

C. The printer shall use printer paper containing security features such as a watermark as approved by the department.

D. A printer shall have mechanisms to allow the player device to interpret and act upon the following conditions that must disable the game, and produce an error condition that requires attendant intervention to resume play:

1. Out of paper;

2. Printer jam or failure; and

3. Printer disconnect. The player device may detect this error condition when the game tries to print.

E. A player device that uses a voucher printer shall maintain a minimum of the last 25 transactions in critical memory. All voucher transactions shall be logged with a date and time stamp.

11VAC15-40-400. Payment by account.

A. Credit may be added to a player account via a cashier or point of sale station. Credit may also be added by any supporting player device through credits won or bills.

B. Money may be removed from a player account either through downloading of credits to the player device or by cashing out at a cashier's or point-of-sale station.

C. All monetary transactions between a supporting player device and the distributed pull-tab system must be secured by means of a card insertion into a magnetic card reader and PIN entry or by other protected means.

Article 3
Game Requirements

11VAC15-40-410. Game play requirements.

A. A player receives an electronic game card in return for consideration. A player wins if the player's electronic game card contains a combination of symbols or numbers that was designated in advance of the game as a winning combination. There may be multiple winning combinations in each game. Electronic versions of instant bingo and pull-tabs, as authorized by the department, shall only utilize devices that allow players to play electronic game cards. A player device shall meet the following minimum requirements:

1. A player may purchase an opportunity to play an electronic game card by:

a. Insertion of U.S. currency (bills only);

b. Purchase made at a point of sale terminal; or

c. Withdrawing deposits available in a player account.

2. In addition to the available games, the rules of play shall be displayed on the player device's video screen. Rules of play shall include all winning combinations.

3. Any number of game themes may be selectable for play on any given player device. Only one of the game themes shall be playable at any given time.

4. A player device shall be clearly labeled so as to inform the public that no one under 18 years of age is allowed to play.

5. A player device shall not be capable of displaying any enticing animation while in an idle state. A player device may use simple display elements or screen savers to prevent monitor damage.

6. The results of the electronic game card shall be shown to the player using a video display. No rolling, flashing, or spinning animations are permitted. No rotating reels marked into horizontal segments by varying symbols are permitted. No entertaining sound or music is permitted other than an audio effect to simulate the opening of a paper pull-tab or instant bingo card. Any sounds present used to simulate the opening of a paper pull-tab must not be played at a level sufficient to disturb other players or patrons.

7. The player device shall have one or more buttons, electromechanical or touch screen, to facilitate the following functions:

a. Viewing of the game "help" screens;

b. Viewing of the game rules;

c. Initiating game play;

d. Cashout or logout; and

e. One or more buttons designated to reveal the pull-tab or instant bingo windows.

8. Following play on a player device, the result shall be clearly shown on the video display along with any prizes that may have been awarded. Prizes may be dispensed in the form of:

a. Voucher;

b. Added to the machine balance meter; or

c. Added to the player's account balance.

9. An available balance may be collected from the player device by the player pressing the "cashout" button or logging off of the player device at any time other than during:

a. A game being played;

b. While in an audit mode or screen;

c. Any door open;

d. Test mode;

e. A machine balance meter or win meter incrementation unless the entire amount is placed on the meter when the "cashout" button is pressed; or

f. An error condition.

10. The default player device display, upon entering game play mode, shall not be the top award.

B. A player device shall not have hardware or software that determines the outcome of any electronic game card, produce its own outcome, or affect the order of electronic game cards as dispensed from the distributed pull-tab system. The game outcome shall be determined by the distributed pull-tab system as outlined within these rules.

C. Game themes may not contain obscene or offensive graphics, animations, or references. All game themes will be subject to approval by the department.

D. Prior to approval for use, each player device must meet the following specifications with respect to its operation:

1. After accepting an allowable cash payment from the player, the player shall press a "play" button to initiate a game.

2. The player device shall not display in any manner, the number of electronic game cards of each finite category, or how many cards remain.

3. Awards of merchandise prizes in lieu of cash are prohibited.

4. The player must interact with the device to initiate a game and reveal a win or loss. This may involve a button press on the console or on the touch screen.

5. The electronic game card must be initially displayed with a cover and require player interaction to reveal the symbols and game outcome.

6. In no event may a player device simulate play of roulette, poker, keno, lotto or lottery, twenty-one, blackjack, or any other card game, or simulate play of any type of slot machine game, regardless of whether the machine has a payback feature or extra play awards. Card symbols such as ace, king, queen, or heart are acceptable, provided the aforementioned is abided by.

7. Games must not contain any elements of skill.

E. Each player device must meet the following specifications with respect to its metering system:

1. A player device shall contain electronic metering whereby meters record and display on the video screen the following information at a minimum:

a. Total cash in for the bill acceptor if equipped with a bill acceptor;

b. Total cash played;

c. Total cash won;

d. Total cash removed from player device;

e. Total count of electronic game cards played; and

f. Total count of electronic game cards won.

2. An electronic meter shall be capable of maintaining correct totals and be of no less than 10 digits in length.

3. A player device shall not be capable of displaying the number of electronic game cards that remain in the game set or the number of winners or losers that have been drawn or still remain in the game set while the game set is still being played.

4. An electronic meter shall not be capable of being automatically reset or cleared, whether due to an error in any aspect of the meter's or a game's operation or otherwise.

5. Currency meters shall be maintained in dollars and cents.

Part V
Administrative Process

11VAC15-40-420. Procedural rules for the conduct of fact-finding conferences and hearings.

A. Fact-finding conference; notification, appearance, and conduct.

1. Unless automatic revocation or immediate suspension is required by law, no permit to conduct charitable gaming or to sell charitable gaming supplies shall be denied, suspended, or revoked except after review and approval of such proposed denial, suspension, or revocation action by the board, and upon notice stating the basis for such proposed action and the time and place for a fact-finding conference as set forth in § 2.2-4019 of the Administrative Process Act.

2. If a basis exists for a refusal to renew, suspend, or a revoke a permit, the department shall notify by certified mail or by hand delivery the interested persons at the address of record maintained by the department.

3. Notification shall include the basis for the proposed action and afford interested persons the opportunity to present written and oral information to the department that may have a bearing on the proposed action at a fact-finding conference. If there is no withdrawal, a fact-finding conference shall be scheduled at the earliest mutually agreeable date, but no later than 60 days from the date of the notification. Organizations or suppliers who wish to waive their right to a conference shall notify the department at least 14 days before the scheduled conference.

4. If, after consideration of evidence presented during an informal fact-finding conference, a basis for action still exists, the interested persons shall be notified in writing within 60 days of the fact-finding conference via certified or hand-delivered mail of the decision and the right to a formal hearing. Parties to the conference may agree to extend the report deadline if more time is needed to consider relevant evidence.

B. Hearing; notification, appearance, and conduct.

1. If, after a fact-finding conference, a sufficient basis still exists to deny, suspend, or revoke a permit, interested persons shall be notified by certified or hand-delivered mail of the proposed action and of the opportunity for a hearing on the proposed action. If an organization or supplier desires to request a hearing, it shall notify the department within 14 days of receipt of a report on the conference. Parties may enter into a consent agreement to settle the issues at any time prior to, or subsequent to, an informal fact-finding conference.

2. If an interested party or representative fails to appear at a hearing, the hearing officer may proceed in his absence and make a recommendation.

3. Oral and written arguments may be submitted to and limited by the hearing officer. Oral arguments shall be recorded in an appropriate manner.

C. Hearing location. Hearings before a hearing officer shall be held, insofar as practicable, in the county or city in which the organization or supplier is located. If the parties agree, hearing officers may conduct hearings at locations convenient to the greatest number of persons or by telephone conference, video conference, or similar technology, in order to expedite the hearing process.

D. Hearing decisions.

1. Recommendations of the hearing officer shall be a part of the record and shall include a written statement of the hearing officer's findings of fact and recommendations as well as the reasons or basis for the recommendations. Recommendations shall be based upon all the material issues of fact, law, or discretion presented on the record.

2. The department shall review the recommendation of the hearing officer and render a decision on the recommendation within 30 days of receipt. The decision shall cite the appropriate rule, relief, or denial thereof as to each issue.

E. Agency representation. The commissioner's designee may represent the department in an informal conference or at a hearing.

11VAC15-40-430. Reporting violations.

A. Unless otherwise required by law, the identity of any individual who provides information to the department or its agents regarding alleged violations shall be held in strict confidence.

B. Any officer, director, or game manager of a qualified organization or any officer or director of a supplier shall immediately report to the department any information pertaining to the suspected misappropriation or theft of funds or any other violations of charitable gaming statutes or these regulations.

C. Failure to report the information required by subsection B of this section may result in the denial, suspension, or revocation of a permit.

D. Any officer, director, or game manager of a qualified organization involved in the management, operation, or conduct of charitable gaming shall immediately notify the department upon conviction of a felony or a crime involving fraud, theft, or financial crimes.

E. Any officer, director, partner, or owner of a supplier shall immediately notify the department upon conviction or plea of nolo contendere to a felony or a crime involving gambling or an action against any license or certificate held by the supplier in any state in the United States.

F. Failure to report information required by subsection D or E of this section by any officer, director, or game manager of a qualified organization or by any supplier may result in the denial, suspension, or revocation of a permit.

G. Any officer, director, or game manager of a qualified organization involved in charitable gaming shall immediately report to the department any change the Internal Revenue Service makes in the tax status of the organization, or if the organization is a chapter of a national organization covered by a group tax exempt determination, the tax status of the national organization.

H. All organizations regulated by the department shall display prominently a poster advising the public of a phone number where complaints relating to charitable gaming may be made. Such posters shall be provided by the department to organizations at no charge.

FORMS (11VAC15-40)

GAME MANAGEMENT FORMS

Bingo Session Reconciliation Summary, Form 103 (rev. 1/11).

Admission Sales Reconciliation - Paper, Form 104-A (rev. 1/11).

Floor Sales Reconciliation - Paper, Form 104-B (rev. 1/11).

Decision Bingo Reconciliation, Form 104-C (rev. 1/11).

Raffle/Treasure Chest Sales Reconciliation - Bingo Session, Form 104-D (rev. 1/11).

Instant Bingo/Seal Cards/Pull-Tabs Reconciliation, Form 105 (rev. 1/11) .

Storeroom Inventory Issue - Paper, Form 106-A (rev. 7/08).

Storeroom Inventory Issue - Instant Bingo/Seal Cards/Pull-Tabs, Form 106-B (rev. 7/08).

List of Volunteer Workers, Form 107 (rev. 7/08).

Prize Receipt, Form 108 (rev. 7/08).

Storeroom Inventory - Paper, Form 109-A (rev. 1/11).

Storeroom Inventory - Instant Bingo/Seal Cards/Pull-Tabs, Form 109-B (rev. 1/11) .

ORGANIZATION LICENSING FORMS

Charitable Gaming Permit Application - New Applicants Only, Form 201 - N (rev. 1/11).

Charitable Gaming Permit Application - Renewal Applicants Only, Form 201 - R (rev. 1/11).

Permit Amendment (rev. 1/11).

Gaming Personnel Information Update (rev. 7/08).

Report of Game Termination (rev. 7/08).

SUPPLIER LICENSING FORMS

Charitable Gaming Supplier Permit Application, Form 301 (rev. 1/11).

Annual Supplier Sales and Transaction Report, Form 302 (rev. 7/08).

BINGO MANAGER AND BINGO CALLER REGISTRATION FORMS

Charitable Gaming Bingo Caller Certificate of Registration Application, Form 401 (rev. 1/11).

Charitable Gaming Bingo Manager Certificate of Registration Application, Form 402 (rev. 1/11).

Amendment to Certificate of Registration – Registered Bingo Callers and Bingo Managers (rev. 1/11).

Personal Information Update – Registered Bingo Callers and Registered Bingo Managers, Form 404 (rev. 7/07).

Bona Fide Member Verification, Form 405 (rev. 5/11).

DOCUMENTS INCORPORATED BY REFERENCE (11VAC15-40)

IRS Publication 3079, Tax-Exempt Organizations and Gaming (rev. 6/10).

Security Requirements for Cryptographic Modules, Federal Information Processing Standard, FIPS Pub 140-2 (rev. 12/02).

Title of Regulation: 12VAC5-590. Waterworks Regulations (amending 12VAC5-590-10, 12VAC5-590-340, 12VAC5-590-350, 12VAC5-590-370, 12VAC5-590-380, 12VAC5-590-410, 12VAC5-590-420, 12VAC5-590-440, 12VAC5-590-460, 12VAC5-590-500, 12VAC5-590-530, 12VAC5-590-540, 12VAC5-590-545, 12VAC5-590-550; adding 12VAC5-590-379, 12VAC5-590-421, 12VAC5-590-425).

Statutory Authority: §§ 32.1-12 and 32.1-170 of the Code of Virginia.

Effective Date: December 7, 2011.

Agency Contact: Robert A. K. Payne, Compliance Manager, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-7498, or email rob.payne@vdh.virginia.gov.

Summary:

The amendments provide for (i) periodic sanitary surveys of groundwater source waterworks that require the evaluation of eight critical elements and the identification of significant deficiencies; (ii) source water monitoring to test for the presence of E. coli; (iii) required corrective actions for any waterworks with a significant deficiency or source water E. coli contamination; and (iv) compliance monitoring to ensure that treatment technology installed to treat drinking water achieves at least 99.99% inactivation or removal of viruses.

Part I
General Framework for Waterworks Regulations

Article 1
Definitions

12VAC5-590-10. Definitions.

As used in this chapter, the following words and terms shall have meanings respectively set forth unless the context clearly requires a different meaning:

"Action level" means the concentration of lead or copper in water specified in 12VAC5-590-385, which determines, in some cases, the treatment requirements contained in 12VAC5-590-405 that an owner is required to complete.

"Air gap separation" means the unobstructed vertical distance through the free atmosphere between the lowest opening from any pipe or faucet supplying pure water to a tank, plumbing fixture, or other device and the rim of the receptacle.

"Annual daily water demand" means the average rate of daily water usage over at least the most recent three-year period.

"Applied water" means water that is ready for filtration.

"Approved" means material, equipment, workmanship, process or method that has been accepted by the commissioner as suitable for the proposed use.

"Auxiliary water system" means any water system on or available to the premises other than the waterworks. These auxiliary waters may include water from a source such as wells, lakes, or streams; or process fluids; or used water. They may be polluted or contaminated or objectionable, or constitute an unapproved water source or system over which the water purveyor does not have control.

"Backflow" means the flow of water or other liquids, mixtures, or substances into the distribution piping of a waterworks from any source or sources other than its intended source.

"Backflow prevention device" means any approved device, method, or type of construction intended to prevent backflow into a waterworks.

"Bag filters" means pressure-driven separation devices that remove particulate matter larger than one micrometer using an engineered porous filtration media. They are typically constructed of a nonrigid, fabric filtration media housed in a pressure vessel in which the direction of flow is from the inside of the bag to outside.

"Bank filtration" means a water treatment process that uses a well to recover surface water that has naturally infiltrated into groundwater through a river bed or bank(s). Infiltration is typically enhanced by the hydraulic gradient imposed by a nearby pumping water supply or other well(s).

"Best available technology (BAT)" means the best technology, treatment techniques, or other means which the commissioner finds, after examination for efficacy under field conditions and not solely under laboratory conditions and in conformance with applicable EPA regulations, are available (taking cost into consideration).

"Board" means the State Board of Health.

"Breakpoint chlorination" means the addition of chlorine to water until the chlorine demand has been satisfied and further additions result in a residual that is directly proportional to the amount added.

"Cartridge filters" means pressure-driven separation devices that remove particulate matter larger than one micrometer using an engineered porous filtration media. They are typically constructed as rigid or semi-rigid, self-supporting filter elements housed in pressure vessels in which flow is from the outside of the cartridge to the inside.

"Chlorine" means dry chlorine.

"Chlorine gas" means dry chlorine in the gaseous state.

"Chlorine solution (chlorine water)" means a solution of chlorine in water.

"Coagulation" means a process using coagulant chemicals and mixing by which colloidal and suspended materials are destabilized and agglomerated into floc.

"Coliform bacteria group" means a group of bacteria predominantly inhabiting the intestines of man or animal but also occasionally found elsewhere. It includes all aerobic and facultative anaerobic, gram-negative, non-sporeforming bacilli that ferment lactose with production of gas. Also included are all bacteria that produce a dark, purplish-green colony with metallic sheen by the membrane filter technique used for coliform identification.

"Combined distribution system" means the interconnected distribution system consisting of the distribution systems of wholesale waterworks and of the consecutive waterworks that receive finished water.

"Commissioner" means the State Health Commissioner.

"Community waterworks" means a waterworks which serves at least 15 service connections used by year-round residents or regularly serves at least 25 year-round residents.

"Compliance cycle" means the nine-year calendar year cycle during which a waterworks shall monitor. Each compliance cycle consists of three three-year compliance periods. The first calendar year cycle begins January 1, 1993, and ends December 31, 2001; the second begins January 1, 2002, and ends December 31, 2010; the third begins January 1, 2011, and ends December 31, 2019.

"Compliance period" means a three-year calendar year period within a compliance cycle. Each compliance cycle has three three-year compliance periods. Within the first compliance cycle, the first compliance period runs from January 1, 1993, to December 31, 1995; the second from January 1, 1996, to December 31, 1998; the third from January 1, 1999, to December 31, 2001.

"Comprehensive performance evaluation" or "(CPE)" means a thorough review and analysis of a treatment plant's performance-based capabilities and associated administrative, operational and maintenance practices. It is conducted to identify factors that may be adversely impacting a plant's capability to achieve compliance and emphasizes approaches that can be implemented without significant capital improvements. For purposes of compliance with 12VAC5-590-530 C 1 b (2), the comprehensive performance evaluation shall consist of at least the following components: assessment of plant performance; evaluation of major unit processes; identification and prioritization of performance limiting factors; assessment of the applicability of comprehensive technical assistance; and preparation of a CPE report.

"Confluent growth" means a continuous bacterial growth covering the entire filtration area of a membrane filter, or a portion thereof, in which bacterial colonies are not discrete.

"Consecutive waterworks" means a waterworks which has no water production or source facility of its own and which obtains all of its water from another permitted waterworks or receives some or all of its finished water from one or more wholesale waterworks. Delivery may be through a direct connection or through the distribution system of one or more consecutive waterworks.

"Consumer" means any person who drinks water from a waterworks.

"Consumer's water system" means any water system located on the consumer's premises, supplied by or in any manner connected to a waterworks.

"Contaminant" means any objectionable or hazardous physical, chemical, biological, or radiological substance or matter in water.

"Conventional filtration treatment" means a series of processes including coagulation, flocculation, sedimentation, and filtration resulting in substantial particulate removal.

"Corrosion inhibitor" means a substance capable of reducing the corrosivity of water toward metal plumbing materials, especially lead and copper, by forming a protective film on the interior surface of those materials.

"Cross connection" means any connection or structural arrangement, direct or indirect, to the waterworks whereby backflow can occur.

"CT" or "CT calc" means the product of "residual disinfectant concentration" (C) in mg/L determined before or at the first customer, and the corresponding "disinfectant contact time" (T) in minutes, i.e., "C" x "T".

"Daily fluid intake" means the daily intake of water for drinking and culinary use and is defined as two liters.

"Dechlorination" means the partial or complete reduction of residual chlorine in water by any chemical or physical process at a waterworks with a treatment facility.

"Degree of hazard" means the level of health hazard, as derived from an evaluation of the potential risk to health and the adverse effect upon the waterworks.

"Diatomaceous earth filtration" means a process resulting in substantial particulate removal in which (i) a precoat cake of diatomaceous earth filter media is deposited on a support membrane (septum), and (ii) while the water is filtered by passing through the cake on the septum, additional filter media known as body feed is continuously added to the feed water to maintain the permeability of the filter cake.

"Direct filtration" means a series of processes including coagulation and filtration but excluding sedimentation resulting in substantial particulate removal.

"Disinfectant" means any oxidant (including chlorine) that is added to water in any part of the treatment or distribution process for the purpose of killing or deactivating pathogenic organisms.

"Disinfectant contact time ("T" in CT calculations)" means the time in minutes that it takes for water to move from the point of disinfectant application to the point where residual disinfectant concentration ("C") is measured.

"Disinfection" means a process that inactivates pathogenic organisms in water by chemical oxidants or equivalent agents.

"Disinfection profile" means a summary of Giardia lamblia or virus inactivation through the treatment plant.

"Distribution main" means a water main whose primary purpose is to provide treated water to service connections.

"District Engineer" means the employee assigned by the Commonwealth of Virginia, Department of Health, Office of Drinking Water to manage its regulatory activities in a geographical area of the state consisting of a state planning district or subunit of a state planning district.

"Domestic or other nondistribution system plumbing problem" means a coliform contamination problem in a waterworks with more than one service connection that is limited to the specific service connection from which the coliform positive sample was taken.

"Domestic use or usage" means normal family or household use, including drinking, laundering, bathing, cooking, heating, cleaning and flushing toilets (see Article 2 (§ 32.1-167 et seq.) of Chapter 6 of Title 32.1 of the Code of Virginia).

"Double gate-double check valve assembly" means an approved assembly composed of two single independently acting check valves including tightly closing shutoff valves located at each end of the assembly and petcocks and test gauges for testing the watertightness of each check valve.

"Dual sample set" means a set of two samples collected at the same time and same location, with one sample analyzed for TTHM and the other sample analyzed for HAA5. Dual sample sets are collected for the purposes of conducting an initial distribution system evaluation (IDSE) under 12VAC5-590-370 B 3 e (2) and determining compliance with the TTHM and HAA5 MCLs under 12VAC5-590-370 B 3 e (3).

"Effective corrosion inhibitor residual" means, for the purpose of 12VAC5-590-405 A 1 only, a concentration sufficient to form a passivating film on the interior walls of a pipe.

"Enhanced coagulation" means the addition of sufficient coagulant for improved removal of disinfection byproduct precursors by conventional filtration treatment.

"Enhanced softening" means the improved removal of disinfection byproduct precursors by precipitative softening.

"Entry point" means the place where water from the source after application of any treatment is delivered to the distribution system.

"Equivalent residential connection" means a volume of water used equal to a residential connection which is 400 gallons per day unless supportive data indicates otherwise.

"Exception" means an approved deviation from a "shall" criteria contained in Part III (12VAC5-590-640 et seq.) of this chapter.

"Exemption" means a conditional waiver of a specific PMCL or treatment technique requirement which is granted to a specific waterworks for a limited period of time.

"Filter profile" means a graphical representation of individual filter performance, based on continuous turbidity measurements or total particle counts versus time for an entire filter run, from startup to backwash inclusively, that includes an assessment of filter performance while another filter is being backwashed.

"Filtration" means a process for removing particulate matter from water by passage through porous media.

"Finished water" means water that is introduced into the distribution system of a waterworks and is intended for distribution and consumption without further treatment, except as treatment necessary to maintain water quality in the distribution system (e.g., booster disinfection, addition of corrosion control chemicals).

"First draw sample" means a one-liter sample of tap water, collected in accordance with 12VAC5-590-375 B 2, that has been standing in plumbing pipes at least six hours and is collected without flushing the tap.

"Flocculation" means a process to enhance agglomeration or collection of smaller floc particles into larger, more easily settleable particles through gentle stirring by hydraulic or mechanical means.

"Flowing stream" means a course of running water flowing in a definite channel.

"Free available chlorine" means that portion of the total residual chlorine remaining in water at the end of a specified contact period which will react chemically and biologically as hypochlorous acid or hypochlorite ion.

"GAC10" means granular activated carbon filter beds with an empty-bed contact time of 10 minutes based on average daily flow and a carbon reactivation frequency of every 180 days, except that the reactivation frequency for GAC10 used as a best available technology for compliance with 12VAC5-590-410 C 2 b (1) (b) shall be 120 days.

"GAC20" means granular activated carbon filter beds with an empty-bed contact time of 20 minutes based on average daily flow and a carbon reactivation frequency of every 240 days.

"Governmental entity" means the Commonwealth, a town, city, county, service authority, sanitary district or any other governmental body established under the Code of Virginia, including departments, divisions, boards or commissions.

"Gross alpha particle activity" means the total radioactivity due to alpha particle emission as inferred from measurements on a dry sample.

"Gross beta particle activity" means the total radioactivity due to beta particle emission as inferred from measurements on a dry sample.

"Groundwater" means all water obtained from sources not classified as surface water (or surface water sources).

"Groundwater system" means any waterworks that uses groundwater as its source of supply; however, a waterworks that combines all its groundwater with surface water or with groundwater under the direct influence of surface water prior to treatment is not a groundwater system. Groundwater systems include consecutive waterworks that receive finished groundwater from a wholesale waterworks.

"Groundwater under the direct influence of surface water" or "GUDI" means any water beneath the surface of the ground with significant occurrence of insects or other macroorganisms, algae, or large-diameter pathogens such as Giardia lamblia, or Cryptosporidium. It also means significant and relatively rapid shifts in water characteristics such as turbidity, temperature, conductivity, or pH that closely correlate to climatological or surface water conditions. The commissioner in accordance with 12VAC5-590-430 will determine direct influence of surface water.

"Haloacetic acids (five)" or "(HAA5)" means the sum of the concentrations in milligrams per liter of the haloacetic acid compounds (monochloroacetic acid, dichloroacetic acid, trichloroacetic acid, monobromoacetic acid, and dibromoacetic acid), rounded to two significant figures after addition.

"Halogen" means one of the chemical elements chlorine, bromine, fluorine, astatine or iodine.

"Health hazard" means any condition, device, or practice in a waterworks or its operation that creates, or may create, a danger to the health and well-being of the water consumer.

"Health regulations" means regulations which include all primary maximum contaminant levels, treatment technique requirements, and all operational regulations, the violation of which would jeopardize the public health.

"Hypochlorite" means a solution of water and some form of chlorine, usually sodium hypochlorite.

"Initial compliance period" means for all regulated contaminants, the initial compliance period is the first full three-year compliance period beginning at least 18 months after promulgation with the exception of waterworks with 150 or more service connections for contaminants listed at Table 2.3, VOC 19-21; Table 2.3, SOC 19-33; and antimony, beryllium, cyanide (as free cyanide), nickel, and thallium which shall begin January 1993.

"Interchangeable connection" means an arrangement or device that will allow alternate but not simultaneous use of two sources of water.

"Karstian "Karst geology" means an area predominantly underlain by limestone, dolomite, or gypsum and characterized by rapid underground drainage. Such areas often feature sinkholes, caverns, and sinking or disappearing creeks. In Virginia, this generally includes all that area west of the Blue Ridge and, in Southwest Virginia, east of the Cumberland Plateau.

"Lake/reservoir" means a natural or man-made basin or hollow on the Earth's surface in which water collects or is stored that may or may not have a current or single direction of flow.

"Large waterworks" means, for the purposes of 12VAC5-590-375, 12VAC5-590-405, 12VAC5-590-530 D, and 12VAC5-590-550 D only, a waterworks that serves more than 50,000 persons.

"Lead free" means the following:

1. When used with respect to solders and flux refers to solders and flux containing not more than 0.2% lead;

2. When used with respect to pipes and pipe fittings refers to pipes and pipe fittings containing not more than 8.0% lead;

3. When used with respect to plumbing fittings and fixtures intended by the plumbing manufacturer to dispense water for human ingestion refers to fittings and fixtures that are in compliance with standards established in accordance with 42 USC § 300g-6(e).

"Lead service line" means a service line made of lead which connects the water main to the building inlet and any lead pigtail, gooseneck or other fitting that is connected to such lead line.

"Legionella" means a genus of bacteria, some species of which have caused a type of pneumonia called Legionnaires Disease.

"Liquid chlorine" means a liquefied, compressed chlorine gas as shipped in commerce.

"Locational running annual average" or "LRAA" means the average of sample analytical results for samples taken at a particular monitoring location during the previous four calendar quarters.

"Log inactivation (log removal)" means that a 99% reduction is a 2-log inactivation; a 99.9% reduction is a 3-log inactivation; a 99.99% reduction is a 4-log inactivation.

"Man-made beta particle and photon emitters" means all radionuclides emitting beta particles and/or photons listed in the most current edition of "Maximum Permissible Body Burdens and Maximum Permissible Concentration of Radionuclides in Air or Water for Occupational Exposure," National Bureau of Standards Handbook 69, except the daughter products of thorium-232, uranium-235 and uranium-238.

"Maximum daily water demand" means the rate of water usage during the day of maximum water use.

"Maximum contaminant level (MCL)" means the maximum permissible level of a contaminant in pure water which is delivered to any user of a waterworks. MCLs are set as close to the MCLGs as feasible using the best available treatment technology. MCLs may be either "primary" (PMCL), meaning based on health considerations or "secondary" (SMCL) meaning based on aesthetic considerations.

"Maximum residual disinfectant level (MRDL)" means a level of a disinfectant added for water treatment that may not be exceeded at the consumer's tap without an unacceptable possibility of adverse health effects. For chlorine and chloramines, a waterworks is in compliance with the MRDL when the running annual average of monthly averages of samples taken in the distribution system, computed quarterly, is less than or equal to the MRDL. For chlorine dioxide, a waterworks is in compliance with the MRDL when daily samples are taken at the entrance to the distribution system and no two consecutive daily samples exceed the MRDL. MRDLs are enforceable in the same manner as maximum contaminant levels. There is convincing evidence that addition of a disinfectant is necessary for control of waterborne microbial contaminants. Notwithstanding the MRDLs listed in Table 2.12, operators may increase residual disinfectant levels of chlorine or chloramines (but not chlorine dioxide) in the distribution system to a level and for a time necessary to protect public health to address specific microbiological contamination problems caused by circumstances such as distribution line breaks, storm runoff events, source water contamination, or cross-connections.

"Maximum residual disinfectant level goal (MRDLG)" means the maximum level of a disinfectant added for water treatment at which no known or anticipated adverse effect on the health of persons would occur, and which allows an adequate margin of safety. MRDLGs are nonenforceable health goals and do not reflect the benefit of the addition of the chemical for control of waterborne microbial contaminants.

"Maximum total trihalomethane potential (MTP)" means the maximum concentration of total trihalomethanes produced in a given water containing a disinfectant residual after seven days at a temperature of 25°C or above.

"Medium-size waterworks" means, for the purpose of 12VAC5-590-375, 12VAC5-590-405, 12VAC5-590-530, and 12VAC5-590-550 D only, a waterworks that serves greater than 3,300 and less than or equal to 50,000 persons.

"Membrane filtration" means a pressure or vacuum-driven separation process in which particulate matter larger than one micrometer is rejected by an engineered barrier, primarily through a size exclusion mechanism, and that has a measurable removal efficiency of a target organism that can be verified through the application of a direct integrity test. This definition includes the common membrane technologies of microfiltration, ultrafiltration, nanofiltration, and reverse osmosis.

"Method detection limit" means the minimum concentration of a substance that can be measured and reported with 99% confidence that the analyte concentration is greater than zero and is determined from analysis of a sample in a given matrix containing the analyte.

"Most probable number (MPN)" means that number of organisms per unit volume that, in accordance with statistical theory, would be more likely than any other number to yield the observed test result or that would yield the observed test result with the greatest frequency, expressed as density of organisms per 100 milliliters. Results are computed from the number of positive findings of coliform-group organisms resulting from multiple-portion decimal-dilution plantings.

"Noncommunity waterworks" means a waterworks that is not a community waterworks, but operates at least 60 days out of the year.

"Nonpotable water" means water not classified as pure water.

"Nontransient noncommunity waterworks (NTNC)" means a waterworks that is not a community waterworks and that regularly serves at least 25 of the same persons over six months out of the year.

"Office" or "ODW" means the Commonwealth of Virginia, Department of Health, Office of Drinking Water.

"One hundred year flood level" means the flood elevation which will, over a long period of time, be equaled or exceeded on the average once every 100 years.

"Operator" means any individual employed or appointed by any owner, and who is designated by such owner to be the person in responsible charge, such as a supervisor, a shift operator, or a substitute in charge, and whose duties include testing or evaluation to control waterworks operations. Not included in this definition are superintendents or directors of public works, city engineers, or other municipal or industrial officials whose duties do not include the actual operation or direct supervision of waterworks.

"Optimal corrosion control treatment" means the corrosion control treatment that minimizes the lead and copper concentrations at users' taps while ensuring that the treatment does not cause the waterworks to violate any other section of this chapter.

"Owner" or "water purveyor" means an individual, group of individuals, partnership, firm, association, institution, corporation, governmental entity, or the federal government which supplies or proposes to supply water to any person within this state from or by means of any waterworks (see Article 2 (§ 32.1-167 et seq.) of Chapter 6 of Title 32.1 of the Code of Virginia).

"Picocurie (pCi)" means that quantity of radioactive material producing 2.22 nuclear transformations per minute.

"Plant intake" means the works or structures at the head of a conduit through which water is diverted from a source (e.g., river or lake) into the treatment plant.

"Point of disinfectant application" means the point where the disinfectant is applied and water downstream of that point is not subject to recontamination by surface water runoff.

"Point-of-entry treatment device (POE)" means a treatment device applied to the water entering a house or building for the purpose of reducing contaminants in the water distributed throughout the house or building.

"Point-of-use treatment device (POU)" means a treatment device applied to a single tap for the purpose of reducing contaminants in the water at that one tap.

"Pollution" means the presence of any foreign substance (chemical, physical, radiological, or biological) in water that tends to degrade its quality so as to constitute an unnecessary risk or impair the usefulness of the water.

"Pollution hazard" means a condition through which an aesthetically objectionable or degrading material may enter the waterworks or a consumer's water system.

"Post-chlorination" means the application of chlorine to water subsequent to treatment.

"Potable water" – see "Pure water."

"Practical quantitation level (PQL)" means the lowest level achievable by good laboratories within specified limits during routine laboratory operating conditions.

"Prechlorination" means the application of chlorine to water prior to filtration.

"Presedimentation" means a preliminary treatment process used to remove gravel, sand and other particulate material from the source water through settling before the water enters the primary clarification and filtration processes in a treatment plant.

"Process fluids" means any fluid or solution which may be chemically, biologically, or otherwise contaminated or polluted which would constitute a health, pollutional, or system hazard if introduced into the waterworks. This includes, but is not limited to:

1. Polluted or contaminated water;

2. Process waters;

3. Used waters, originating from the waterworks which may have deteriorated in sanitary quality;

4. Cooling waters;

5. Contaminated natural waters taken from wells, lakes, streams, or irrigation systems;

6. Chemicals in solution or suspension; and,

7. Oils, gases, acids, alkalis, and other liquid and gaseous fluid used in industrial or other processes, or for fire fighting purposes.

"Pure water" or "potable water" means water fit for human consumption and domestic use which is sanitary and normally free of minerals, organic substances, and toxic agents in excess of reasonable amounts for domestic usage in the area served and normally adequate in quantity and quality for the minimum health requirements of the persons served (see Article 2 (§ 32.1-167 et seq.) of Chapter 6 of Title 32.1 of the Code of Virginia).

"Raw water main" means a water main which conveys untreated water from a source to a treatment facility.

"Reduced pressure principle backflow prevention device (RPZ device)" means a device containing a minimum of two independently acting check valves together with an automatically operated pressure differential relief valve located between the two check valves. During normal flow and at the cessation of normal flow, the pressure between these two checks shall be less than the supply pressure. In case of leakage of either check valve, the differential relief valve, by discharging to the atmosphere, shall operate to maintain the pressure between the check valves at less than the supply pressure. The unit shall include tightly closing shut-off valves located at each end of the device, and each device shall be fitted with properly located test cocks. These devices shall be of the approved type.

"REM" means the unit of dose equivalent from ionizing radiation to the total body or any internal organ or organ system. A "millirem" (MREM) is 1/1000 of a REM.

"Repeat compliance period" means any subsequent compliance period after the initial compliance period.

"Residual disinfectant concentration ("C" in CT Calculations)" means the concentration of disinfectant measured in mg/L in a representative sample of water.

"Responsible charge" means designation by the owner of any individual to have duty and authority to operate or modify the operation of waterworks processes.

"Sanitary facilities" means piping and fixtures, such as sinks, lavatories, showers, and toilets, supplied with potable water and drained by wastewater piping.

"Sanitary survey" means an investigation of any condition that may affect public health evaluation conducted by ODW of a waterworks' water supply, facilities, equipment, operation, maintenance, monitoring records. and overall management of a waterworks to ensure the provision of pure water.

"Secondary water source" means any approved water source, other than a waterworks' primary source, connected to or available to that waterworks for emergency or other nonregular use.

"Sedimentation" means a process for removal of solids before filtration by gravity or separation.

"Service connection" means the point of delivery of water to a customer's building service line as follows:

1. If a meter is installed, the service connection is the downstream side of the meter;

2. If a meter is not installed, the service connection is the point of connection to the waterworks;

3. When the water purveyor is also the building owner, the service connection is the entry point to the building.

"Service line sample" means a one-liter sample of water, collected in accordance with 12VAC5-590-375 B 2 c, that has been standing for at least six hours in a service line.

"Sewer" means any pipe or conduit used to convey sewage or industrial waste streams.

"Significant deficiency" means any defect in a waterworks' design, operation, maintenance, or administration, as well as the failure or malfunction of any waterworks component, that may cause, or has the potential to cause, an unacceptable risk to health or could affect the reliable delivery of pure water to consumers.

"Single family structure" means, for the purpose of 12VAC5-590-375 B only, a building constructed as a single-family residence that is currently used as either a residence or a place of business.

"Slow sand filtration" means a process involving passage of raw water through a bed of sand at low velocity (generally less than 0.4 m/h) resulting in substantial particulate removal by physical and biological mechanisms.

"Small waterworks" means, for the purpose of 12VAC5-590-375, 12VAC5-590-405, 12VAC5-590-530 D and 12VAC5-590-550 D only, a waterworks that serves 3,300 persons or fewer.

"Standard sample" means that portion of finished drinking water that is examined for the presence of coliform bacteria.

"Surface water" means all water open to the atmosphere and subject to surface runoff.

"SUVA" means specific ultraviolet absorption at 254 nanometers (nm), an indicator of the humic content of water. It is a calculated parameter obtained by dividing a sample's ultraviolet absorption at a wavelength of 254 nm (UV₂₅₄) (in m-1) by its concentration of dissolved organic carbon (DOC) (in mg/L).

"Synthetic organic chemicals (SOC)" means one of the family of organic man-made compounds generally utilized for agriculture or industrial purposes.

"System hazard" means a condition posing an actual, or threat of, damage to the physical properties of the waterworks or a consumer's water system.

"Terminal reservoir" means an impoundment providing end storage of water prior to treatment.

"Too numerous to count" means that the total number of bacterial colonies exceeds 200 on a 47-mm diameter membrane filter used for coliform detection.

"Total effective storage volume" means the volume available to store water in distribution reservoirs measured as the difference between the reservoir's overflow elevation and the minimum storage elevation. The minimum storage elevation is that elevation of water in the reservoir that can provide a minimum pressure of 20 psi at a flow as determined in 12VAC5-590-690 C to the highest elevation served within that reservoir's service area under systemwide maximum daily water demand.

"Total organic carbon (TOC)" means total organic carbon in mg/L measured using heat, oxygen, ultraviolet irradiation, chemical oxidants, or combinations of these oxidants that convert organic carbon to carbon dioxide, rounded to two significant figures.

"Total trihalomethanes (TTHM)" means the sum of the concentrations of the trihalomethanes expressed in milligrams per liter (mg/L) and rounded to two significant figures. For the purpose of these regulations, the TTHM's shall mean trichloromethane (chloroform), dibromochloromethane, bromodichloromethane, and tribromomethane (bromoform).

"Transmission main" means a water main whose primary purpose is to move significant quantities of treated water among service areas.

"Treatment technique requirement" means a requirement which specifies for a contaminant a specific treatment technique(s) demonstrated to the satisfaction of the division to lead to a reduction in the level of such contaminant sufficient to comply with these regulations.

"Triggered source water monitoring" means monitoring required of any groundwater system as a result of a total coliform-positive sample in the distribution system.

"Trihalomethane (THM)" means one of the family of organic compounds, named as derivatives of methane, wherein three of the four hydrogen atoms in methane are each substituted by a halogen atom in the molecular structure.

"Two-stage lime softening" means a process in which chemical addition and hardness precipitation occur in each of two distinct unit clarification processes in series prior to filtration.

"Uncovered finished water storage facility" means a tank, reservoir, or other facility used to store water that will undergo no further treatment to reduce microbial pathogens (except residual disinfection) and is directly open to the atmosphere.

"Unregulated contaminant (UC)" means a contaminant for which a monitoring requirement has been established, but for which no MCL or treatment technique requirement has been established.

"Used water" means any water supplied by a water purveyor from the waterworks to a consumer's water system after it has passed through the service connection.

"Variance" means a conditional waiver of a specific regulation which is granted to a specific waterworks. A PMCL Variance is a variance to a Primary Maximum Contaminant Level, or a treatment technique requirement. An Operational Variance is a variance to an operational regulation or a Secondary Maximum Contaminant Level. Variances for monitoring, reporting and public notification requirements will not be granted.

"Virus" means a microbe that is infectious to humans by waterborne transmission.

"Volatile synthetic organic chemical (VOC)" means one of the family of manmade organic compounds generally characterized by low molecular weight and rapid vaporization at relatively low temperatures or pressures.

"Waterborne disease outbreak" means the significant occurrence of acute infectious illness, epidemiologically associated with the ingestion of water from a waterworks which is deficient in treatment, as determined by the commissioner or the State Epidemiologist.

"Water purveyor" (same as owner).

"Water supply" means water that shall have been taken into a waterworks from all wells, streams, springs, lakes, and other bodies of surface waters (natural or impounded), and the tributaries thereto, and all impounded groundwater, but the term "water supply" shall not include any waters above the point of intake of such waterworks (see Article 2 (§ 32.1-167 et seq.) of Chapter 6 of Title 32.1 of the Code of Virginia).

"Water supply main" or "main" means any water supply pipeline that is part of a waterworks distribution system.

"Water Well Completion Report" means a report form published by the State Water Control Board entitled "Water Well Completion Report" which requests specific information pertaining to the ownership, driller, location, geological formations penetrated, water quantity and quality encountered as well as construction of water wells. The form is to be completed by the well driller.

"Waterworks" means a system that serves piped water for drinking or domestic use to (i) the public, (ii) at least 15 connections, or (iii) an average of 25 individuals for at least 60 days out of the year. The term "waterworks" shall include all structures, equipment and appurtenances used in the storage, collection, purification, treatment and distribution of pure water except the piping and fixtures inside the building where such water is delivered (see Article 2 (§ 32.1-167 et seq.) of Chapter 6 of Title 32.1 of the Code of Virginia).

"Waterworks with a single service connection" means a waterworks which supplies drinking water to consumers via a single service line.

"Wholesale waterworks" means a waterworks that treats source water as necessary to produce finished water and then delivers some or all of that finished water to another waterworks. Delivery may be through a direct connection or through the distribution system of one or more consecutive waterworks.

Part II
Operation Regulations for Waterworks

Article 1
General

12VAC5-590-340. General.

All physical, chemical, bacteriological, or radiological analyses for the purpose of demonstrating compliance with primary and secondary maximum contaminant levels, or action levels, or contaminants that do not have PMCLs but for which compliance samples must be analyzed by certified laboratories shall be performed by the Commonwealth of Virginia, Department of General Services, Division of Consolidated Laboratory Services (DCLS) or in laboratories certified by the Division of Consolidated Laboratory Services for such purposes. The owner is responsible for the collection and submission of all samples. A sample is deemed to have been collected only if and when its results are made known to the Division of Water Supply Engineering Office of Drinking Water.

12VAC5-590-350. Sanitary surveys.

A. Frequent sanitary surveys assessments shall be made by the owner of the water supply source and waterworks to locate and identify health hazards to the waterworks. The manner and frequency of making these surveys assessments, and the rate at which discovered health hazards are to be removed, shall be in accordance with a program approved by the division the responsibility of the owner. These surveys shall be submitted to the division for review. Every effort shall be made by the owner, to the extent of his jurisdiction, to prevent the degradation of the quality of water supply sources (see Appendix E). The division may also perform sanitary surveys.

B. The commissioner may perform sanitary surveys. Owners shall provide any existing information that will enable the commissioner to conduct the sanitary survey.

C. A sanitary survey includes, but is not limited to, an onsite evaluation of all of the following eight components:

1. Source;

2. Treatment;

3. Distribution system;

4. Finished water storage;

5. Pumps, pumping facilities, and controls;

6. Monitoring, reporting, and data verification;

7. Waterworks management and operation; and

8. Number and classification of licensed operator(s) required in 12VAC5-590-460. Licensed operators shall also comply with all applicable regulations promulgated by the Virginia Board for Water Works and Wastewater Works Operators and Onsite Sewage System Professionals, Department of Professional and Occupational Regulation.

D. Significant deficiencies discovered as a result of a sanitary survey shall be addressed in accordance with the following:

1. The commissioner shall issue written notification describing the significant deficiency to the owner.

2. Within 30 days of the significant deficiency notification, the owner shall consult with the commissioner regarding the appropriate corrective action with a schedule for implementing corrective action. Any waterworks with significant deficiencies must have a Corrective Action Plan (CAP) as described in 12VAC5-590-421 A.

3. Within 45 days of the significant deficiency notification, the owner shall submit a CAP with a schedule for meeting the requirements of 12VAC5-590-421 A.

Article 2
General Information

12VAC5-590-370. Sampling frequency.

The commissioner may exempt consecutive waterworks that obtain potable water from another water system for distribution from all monitoring requirements in this section except for bacteriological (subsection A of this section), disinfectant residuals, byproducts and disinfection byproduct precursors (subdivision B 3 of this section), and lead and copper (subdivision B 6 of this section). The required sampling frequencies are as follows:

A. Bacteriological.

1. The owner shall collect total coliform samples at sites which are representative of water throughout the distribution system according to a written sample siting report. The report shall be established or approved by the district engineer after investigation of the source, method of treatment and storage, and protection of the water concerned. The report shall include, but is not limited to, the following:

a. The frequency of sampling distributed evenly throughout the month/quarter.

b. Distribution map showing the generalized location where specific sampling sites will be selected.

c. Supporting statement explaining how specific individual sites are selected, how sampling will be rotated among the sites, how repeat samples will be collected and other information demonstrating that sampling will be conducted in a manner to comply with this chapter.

d. Adequate sampling points to provide sampling representative of all the conditions in the system.

e. For small systems (less than 3,301 population), sample sites shall also be identified by address and code number location.

f. Minimum of three sample locations for each sample required monthly so repeat sample locations are previously ascertained as being adequate in number and five customer service connections upstream and downstream. (See Appendix J for an example.)

g. The sampling point required to be repeat sampled shall not be eliminated from future collections based on a history of questionable water quality unless the sampling point is unacceptable as determined by the district engineer.

2. The minimum number of bacteriological samples for total coliform evaluation to be collected and analyzed monthly from the distribution system of a community or nontransient noncommunity waterworks shall be in accordance with Table 2.1. Owners of all noncommunity waterworks that use a surface water source or a groundwater source under the direct influence of surface water, and large noncommunity (serving 1,000 or more persons per day) waterworks, shall collect and submit samples monthly for analysis in accordance with Table 2.1. Owners of all other noncommunity waterworks shall submit samples for analysis each calendar quarter in accordance with Table 2.1.

3. The samples shall be taken at reasonably evenly spaced time intervals throughout the month or quarter.

If the results of a sanitary survey or other factors determine that some other frequency is more appropriate than that stated above, a modified sampling program report may be required. The altered frequency shall be confirmed or changed on the basis of subsequent surveys.

TABLE 2.1
POPULATION SERVED PER DAY	MINIMUM NUMBER OF SAMPLES (See subdivision A 2 of this section)
25 to 1,000	1
1,001 to 2,500	2
2,501 to 3,300	3
3,301 to 4,100	4
4,101 to 4,900	5
4,901 to 5,800	6
5,801 to 6,700	7
6,701 to 7,600	8
7,601 to 8,500	9
8,501 to 12,900	10
12,901 to 17,200	15
17,201 to 21,500	20
21,501 to 25,000	25
25,001 to 33,000	30
33,001 to 41,000	40
41,001 to 50,000	50
50,001 to 59,000	60
59,001 to 70,000	70
70,001 to 83,000	80
83,001 to 96,000	90
96,001 to 130,000	100
130,001 to 220,000	120
220,001 to 320,000	150
320,001 to 450,000	180
450,001 to 600,000	210
600,001 to 780,000	240
780,001 to 970,000	270
970,001 to 1,230,000	300
1,230,001 to 1,520,000	330
1,520,001 to 1,850,000	360
1,850,001 to 2,270,000	390

4. All bacteriological analyses shall be performed in accordance with 12VAC5-590-440 by the DCLS or by a laboratory certified by DCLS for drinking water samples.

B. Chemical. The location of sampling points, the chemicals measured, the frequency, and the timing of sampling within each compliance period shall be established or approved by the commissioner at the time of issuance of a waterworks operation permit. The commissioner may increase required monitoring where necessary to detect variations within the waterworks. Analysis of field composite samples shall not be allowed. Samples for contaminants that may exhibit seasonal variations shall be collected during the period of the year when contamination is most likely to occur. Failure to comply with the sampling schedules in this section shall require public notification pursuant to 12VAC5-590-540.

Any other dates contained in this chapter notwithstanding, all waterworks shall comply with all applicable PMCLs listed in Tables 2.2 and 2.3.

Design criteria for new or modified waterworks or owners developing new sources of supply are found in 12VAC5-590-820, 12VAC5-590-830 and 12VAC5-590-840.

1. Inorganic chemical. Community and nontransient noncommunity waterworks owners shall conduct monitoring to determine compliance with the MCLs in Table 2.2 in accordance with this section. All other noncommunity waterworks owners shall conduct monitoring to determine compliance with the nitrate and nitrite PMCLs in Table 2.2 (as appropriate) in accordance with this section. Monitoring shall be conducted as follows:

a. The owner of any groundwater source waterworks with 150 or more service connections shall take a minimum of one sample at each entry point to the distribution system which is representative of each source, after treatment, unless a change in condition makes another sampling point more representative of each source or treatment plant (hereafter called a sampling point) starting in the compliance period beginning January 1, 1993. The owner of any groundwater source waterworks with fewer than 150 service connections shall take a minimum of one sample at each sampling point for asbestos, barium, cadmium, chromium, fluoride, mercury, nitrate, nitrite, and selenium in the compliance period beginning January 1, 1993, for antimony, beryllium, cyanide (as free cyanide), nickel, and thallium in the compliance period beginning January 1, 1996, and for arsenic (for community and nontransient noncommunity waterworks) in compliance with subdivision B 1 d (6) (b) of this section.

b. The owner of any waterworks which uses a surface water source in whole or in part with 150 or more service connections shall take a minimum of one sample at each entry point to the distribution system after any application of treatment or in the distribution system at a point which is representative of each source, after treatment, unless a change in conditions makes another sampling point more representative of each source or treatment plant (hereafter called a sampling point) beginning January 1, 1993. The owner of any waterworks which use a surface water source in whole or in part with fewer than 150 service connections shall take a minimum of one sample at each sampling point for asbestos, barium, cadmium, chromium, fluoride, mercury, nitrate, nitrite, and selenium beginning January 1, 1993, for antimony, beryllium, cyanide (as free cyanide), nickel, and thallium beginning January 1, 1996, and for arsenic (for community and nontransient noncommunity waterworks) in compliance with subdivision B 1 d (6) (a) of this section.

c. If a waterworks draws water from more than one source and the sources are combined before distribution, the owner shall sample at an entry point to the distribution system during periods of normal operating conditions (i.e., when water is representative of all sources being used).

d. The frequency of monitoring for asbestos shall be in accordance with subdivision B 1 d (1) of this section; the frequency of monitoring for barium, cadmium, chromium, fluoride, mercury, and selenium shall be in accordance with subdivision B 1 d (2) of this section; the frequency of monitoring for antimony, beryllium, cyanide (as free cyanide), nickel, and thallium shall be in accordance with subdivision B 1 d (3) of this section; the frequency of monitoring for nitrate shall be in accordance with subdivision B 1 d (4) of this section; the frequency of monitoring for nitrite shall be in accordance with subdivision B 1 d (5) of this section; and the frequency of monitoring for arsenic shall be in accordance with subdivision B 1 d (6) of this section.

(1) The frequency of monitoring conducted to determine compliance with the PMCL for asbestos specified in Table 2.2 shall be conducted as follows:

(a) The owner of each community and nontransient noncommunity waterworks is required to monitor for asbestos during the first three-year compliance period of each nine-year compliance cycle beginning in the compliance period starting January 1, 1993.

(b) If the owner believes the waterworks is not vulnerable to either asbestos contamination in its source water or due to corrosion of asbestos-cement pipe, or both, the owner may apply to the commissioner for a waiver of the monitoring requirement in subdivision B 1 d (1) (a) of this section. If the commissioner grants the waiver, the owner is not required to monitor.

(c) The commissioner may grant a waiver based on a consideration of the following factors:

(i) Potential asbestos contamination of the water source; and

(ii) The use of asbestos-cement pipe for finished water distribution and the corrosive nature of the water.

(d) A waiver remains in effect until the completion of the three-year compliance period. The owner of a waterworks not receiving a waiver shall monitor in accordance with the provisions of subdivision B 1 d (1) (a) of this section.

(e) The owner of a waterworks vulnerable to asbestos contamination due solely to corrosion of asbestos-cement pipe shall take one sample at a tap served by asbestos-cement pipe and under conditions where asbestos contamination is most likely to occur.

(f) The owner of a waterworks vulnerable to asbestos contamination due solely to source water shall monitor sampling points in accordance with subdivision B 1 of this section.

(g) The owner of a waterworks vulnerable to asbestos contamination due both to its source water supply and corrosion of asbestos-cement pipe shall take one sample at a tap served by asbestos-cement pipe and under conditions where asbestos contamination is most likely to occur.

(h) The owner of a waterworks which exceeds the PMCL as determined in 12VAC5-590-410 B 1 shall monitor quarterly beginning in the next quarter after the exceedance occurred.

(i) The commissioner may decrease the quarterly monitoring requirement to the frequency specified in subdivision B 1 d (1) (a) of this section provided the commissioner has determined that the waterworks is reliably and consistently below the PMCL. In no case can the commissioner make this determination unless the owner of a groundwater source waterworks takes a minimum of two quarterly samples or the owner of a waterworks which uses a surface water source in whole or in part takes a minimum of four quarterly samples.

(j) If monitoring data collected after January 1, 1990, are generally consistent with the requirements of subdivision B 1 d (1) of this section, then the commissioner may allow an owner to use that data to satisfy the monitoring requirement for the initial compliance period beginning January 1, 1993.

(2) The frequency of monitoring conducted to determine compliance with the MCLs in Table 2.2 for barium, cadmium, chromium, fluoride, mercury, and selenium shall be as follows:

(a) The owner of a groundwater source waterworks shall take one sample at each sampling point during each compliance period beginning in the compliance period starting January 1, 1993.

(b) The owner of a waterworks which uses a surface water source in whole or in part shall take one sample annually at each sampling point beginning January 1, 1993.

(c) An owner may apply to the commissioner for a waiver from the monitoring frequencies specified in subdivision B 1 d (2) (a) or (b) of this section.

(d) A condition of the waiver shall require that the owner shall take a minimum of one sample while the waiver is effective. The term during which the waiver is effective shall not exceed one compliance cycle (i.e., nine years).

(e) The commissioner may grant a waiver provided the owner of a waterworks that uses a surface water source in whole or in part has monitored annually for at least three years and groundwater waterworks have conducted a minimum of three rounds of monitoring. (At least one sample shall have been taken since January 1, 1990.) The owner of any waterworks which uses a surface water source in whole or in part or a groundwater source waterworks shall demonstrate that all previous analytical results were less than the PMCL. Waterworks that use a new water source are not eligible for a waiver until three rounds of monitoring from the new source have been completed.

(f) In determining the appropriate reduced monitoring frequency, the commissioner shall consider:

(i) Reported concentrations from all previous monitoring;

(ii) The degree of variation in reported concentrations; and

(iii) Other factors that may affect contaminant concentrations such as changes in groundwater pumping rates, changes in the waterworks configuration, changes in the waterworks operating procedures, or changes in stream flows or characteristics.

(g) A decision by the commissioner to grant a waiver shall be made in writing and shall set forth the basis for the determination. The request for a waiver may be initiated by the commissioner or upon an application by the owner. The owner shall specify the basis for the request. The commissioner shall review and, where appropriate, revise the determination of the appropriate monitoring frequency when the owner submits new monitoring data or when other data relevant to the waterworks appropriate monitoring frequency become available.

(h) Owners of waterworks that exceed the PMCLs as calculated in 12VAC5-590-410 shall monitor quarterly beginning in the next quarter after the exceedance occurred.

(i) The commissioner may decrease the quarterly monitoring requirement to the frequencies specified in subdivision B 2 1 d (2) (a), (b) or (c) of this section provided a determination has been made that the waterworks is reliably and consistently below the PMCL. In no case can the commissioner make this determination unless the owner of a groundwater source waterworks takes a minimum of two quarterly samples or the owner of a waterworks which uses a surface water source in whole or in part takes a minimum of four quarterly samples.

(3) The frequency of monitoring conducted to determine compliance with the PMCLs in Table 2.2 for antimony, beryllium, cyanide (as free cyanide), nickel, and thallium shall be as follows:

(a) The owner of a groundwater source waterworks with 150 or more service connections shall take one sample at each sampling point during each compliance period beginning in the compliance period starting January 1, 1993. The owner of a groundwater source waterworks with fewer than 150 service connections shall take one sample at each sampling point during each compliance period beginning in the compliance period starting January 1, 1996.

(b) The owner of a waterworks that uses a surface water source in whole or in part with 150 or more service connections shall take one sample annually at each sampling point beginning January 1, 1993. The owner of a waterworks that uses a surface water source in whole or in part with fewer than 150 service connections shall take one sample annually at each sampling point beginning January 1, 1996.

(c) An owner may apply to the commissioner for a waiver from the monitoring frequencies specified in subdivision B 2 1 d (3) (a) or (b) of this section.

(d) A condition of the waiver shall require that the owner take a minimum of one sample while the waiver is effective. The term during which the waiver is effective shall not exceed one compliance cycle (i.e., nine years).

(e) The commissioner may grant a waiver provided the owner of a waterworks that uses a surface water source in whole or in part has monitored annually for at least three years and groundwater waterworks have conducted a minimum of three rounds of monitoring. (At least one sample shall have been taken since January 1, 1990.) The owner of any waterworks which uses a surface water source in whole or in part or a groundwater source waterworks shall demonstrate that all previous analytical results were less than the PMCL. Waterworks that use a new water source are not eligible for a waiver until three rounds of monitoring from the new source have been completed.

(f) In determining the appropriate reduced monitoring frequency, the commissioner shall consider:

(i) Reported concentrations from all previous monitoring;

(ii) The degree of variation in reported concentrations; and

(iii) Other factors which may affect contaminant concentrations such as changes in groundwater pumping rates, changes in the waterworks configuration, changes in the waterworks operating procedures, or changes in stream flows or characteristics.

(g) A decision by the commissioner to grant a waiver shall be made in writing and shall set forth the basis for the determination. The request for a waiver may be initiated by the commissioner or upon an application by the owner. The owner shall specify the basis for the request. The commissioner shall review and, where appropriate, revise the determination of the appropriate monitoring frequency when the owner submits new monitoring data or when other data relevant to the waterworks appropriate monitoring frequency become available.

(h) Owners of waterworks that exceed the PMCLs as calculated in 12VAC5-590-410 shall monitor quarterly beginning in the next quarter after the exceedance occurred.

(i) The commissioner may decrease the quarterly monitoring requirement to the frequencies specified in subdivision B 2 1 d (3) (a), (b) or (c) of this section provided a determination has been made that the waterworks is reliably and consistently below the PMCL. In no case shall the commissioner make this determination unless the owner of a groundwater source waterworks takes a minimum of two quarterly samples or the owner of a waterworks which uses a surface water source in whole or in part takes a minimum of four quarterly samples.

(4) All community, nontransient noncommunity and noncommunity waterworks owners shall monitor to determine compliance with the PMCL for nitrate in Table 2.2.

(a) Owners of community and nontransient noncommunity waterworks that use a groundwater source shall monitor annually beginning January 1, 1993.

(b) Owners of community and nontransient noncommunity waterworks that use a surface water source in whole or in part shall monitor quarterly beginning January 1, 1993.

(c) For owners of community and nontransient noncommunity waterworks that use groundwater, the repeat monitoring frequency shall be quarterly for at least one year following any one sample in which the concentration is greater than 50% of the PMCL. The commissioner may allow the owner of a waterworks, that uses groundwater, to reduce the sampling frequency to annually after four consecutive quarterly samples are reliably and consistently less than the PMCL.

(d) For community and nontransient noncommunity waterworks, the commissioner may allow the owner of a waterworks that uses a surface water source in whole or in part, to reduce the sampling frequency to annually if all analytical results from four consecutive quarters are less than 50% of the PMCL. Such waterworks shall return to quarterly monitoring if any one sample is greater than or equal to 50% of the PMCL.

(e) The owners of all other noncommunity waterworks shall monitor annually beginning January 1, 1993.

(f) After the initial round of quarterly sampling is completed, the owner of each community and nontransient noncommunity waterworks that is monitoring annually shall take subsequent samples during the quarter(s) which previously resulted in the highest analytical result.

(5) All owners shall monitor to determine compliance with the PMCL for nitrite in Table 2.2.

(a) All owners shall take one sample at each sampling point in the compliance period beginning January 1, 1993.

(b) After the initial sample, the owner of any waterworks where an analytical result for nitrite is less than 50% of the PMCL shall monitor at the frequency specified by the commissioner.

(c) The repeat monitoring frequency for any owner shall be quarterly for at least one year following any one sample in which the concentration is greater than 50% of the PMCL. The commissioner may allow an owner to reduce the sampling frequency to annually after determining the analysis results are reliably and consistently less than the PMCL.

(d) Owners of waterworks which are monitoring annually shall take each subsequent sample during the quarter(s) which previously resulted in the highest analytical result.

(6) The frequency of monitoring conducted to determine compliance with the PMCLs in Table 2.2 for arsenic shall be as follows:

(a) The owner of each community and nontransient noncommunity waterworks that uses a surface water source in whole or in part shall take one sample annually at each sampling point beginning January 23, 2006.

(b) The owner of each community and nontransient noncommunity groundwater source waterworks shall take one sample at each entry point during each compliance period starting January 23, 2006.

(c) Owners of waterworks that exceed the PMCL, as calculated in 12VAC5-590-410, shall monitor quarterly beginning in the next quarter after the exceedance has occurred.

(d) The commissioner may decrease the quarterly monitoring requirement to the frequencies specified in subdivision B 1 d (6) (a) or (b) of this section provided a determination has been made that the waterworks is reliably and consistently below the PMCL. In no case can the commissioner make this determination unless the owner of a groundwater source waterworks takes a minimum of two quarterly samples or the owner of a waterworks that uses a surface water source in whole or in part takes a minimum of four quarterly samples.

(e) No waivers shall be granted by the commissioner for arsenic.

2. Organic chemicals. Owners of all community and nontransient noncommunity waterworks shall sample for organic chemicals in accordance with their water source. Where two or more sources are combined before distribution, the owner shall sample at the entry point for the combined sources during periods of normal operating conditions.

a. Owners of waterworks that use groundwater shall take a minimum of one sample at each entry point to the distribution system which is representative of each source, after treatment (hereafter called a sampling point).

b. Owners of waterworks that use a surface water source in whole or in part shall take a minimum of one sample at points in the distribution system that are representative of each source or at each entry point to the distribution system, after treatment (hereafter called a sampling point).

c. The owner of each community and nontransient noncommunity waterworks shall take four consecutive quarterly samples for each contaminant listed in Table 2.3-VOC 2 through 21 and SOC during each compliance period, beginning in the compliance period starting January 1, 1993.

d. Reduced monitoring.

(1) VOC.

(a) If the initial monitoring for contaminants listed in Table 2.3-VOC 1 through 8 and the monitoring for the contaminants listed in Table 2.3-VOC 9 through 21 as allowed in subdivision B 2 d (1) (c) of this section has been completed by December 31, 1992, and the waterworks did not detect any contaminant listed in Table 2.3-VOC 1 through 21, then the owner of each groundwater waterworks and waterworks that use a surface water source in whole or in part shall take one sample annually beginning January 1, 1993.

(b) After a minimum of three years of annual sampling, the commissioner may allow the owner of a groundwater waterworks with no previous detection of any contaminant listed in Table 2.3-VOC 2 through 21 to take one sample during each compliance period.

(c) The commissioner may allow the use of monitoring data collected after January 1, 1988, for purposes of initial monitoring compliance. If the data are generally consistent with the other requirements in this section, the commissioner may use these data (i.e., a single sample rather than four quarterly samples) to satisfy the initial monitoring requirement of subdivision B 2 c of this section. Owners of waterworks that use grandfathered samples and did not detect any contaminants listed in Table 2.3-VOC, 2 through 21, shall begin monitoring annually in accordance with subdivision B 2 d (1) (a) of this section beginning January 1, 1993.

(2) SOC.

(a) Owners of waterworks serving more than 3,300 persons that do not detect a contaminant listed in Table 2.3-SOC in the initial compliance period, may reduce the sampling frequency to a minimum of two quarterly samples in one year during each repeat compliance period.

(b) Owners of waterworks serving less than or equal to 3,300 persons that do not detect a contaminant listed in Table 2.3-SOC in the initial compliance period may reduce the sampling frequency to a minimum of one sample during each repeat compliance period.

e. Waiver application.

(1) For VOCs. The owner of any community and nontransient noncommunity groundwater waterworks which does not detect a contaminant listed in Table 2.3-VOC may apply to the commissioner for a waiver from the requirements of subdivisions B 2 d (1) (a) and (b) of this section after completing the initial monitoring. A waiver shall be effective for no more than six years (two compliance periods). The commissioner may also issue waivers to small systems for the initial round of monitoring for 1,2,4-trichlorobenzene.

(2) For SOCs. The owner of any community and nontransient noncommunity waterworks may apply to the commissioner for a waiver from the requirement of subdivisions B 2 c and d (2) of this section. The owner shall reapply for a waiver for each compliance period.

f. The commissioner may grant a waiver after evaluating the following factors: Knowledge of previous use (including transport, storage, or disposal) of the contaminant within the watershed or zone of influence of the source. If a determination by the commissioner reveals no previous use of the contaminant within the watershed or zone of influence, a waiver may be granted. If previous use of the contaminant is unknown or it has been used previously, then the following factors shall be used to determine whether a waiver is granted.

(1) Previous analytical results.

(2) The proximity of the waterworks to a potential point or nonpoint source of contamination. Point sources include spills and leaks of chemicals at or near a waterworks or at manufacturing, distribution, or storage facilities, or from hazardous and municipal waste landfills and other waste handling or treatment facilities. Nonpoint sources for SOCs include the use of pesticides to control insect and weed pests on agricultural areas, forest lands, home and gardens, and other land application uses.

(3) The environmental persistence and transport of the contaminants listed in Table 2.3 VOC and SOC.

(4) How well the water source is protected against contamination, such as whether it is a waterworks that uses a surface water source in whole or in part or whether it is a groundwater source waterworks. Groundwater source waterworks shall consider factors such as depth of the well, the type of soil, wellhead protection, and well structure integrity. Owners of waterworks that use surface water in whole or in part shall consider watershed protection.

(5) Special factors.

(a) For VOCs. The number of persons served by the waterworks and the proximity of a smaller waterworks to a larger waterworks.

(b) For SOCs. Elevated nitrate levels at the waterworks supply source.

(c) For SOCs. Use of PCBs in equipment used in the production, storage, or distribution of water (i.e., PCBs used in pumps, transformers, etc.).

g. Condition for waivers.

(1) As a condition of the VOC waiver the owner of a groundwater waterworks shall take one sample at each sampling point during the time the waiver is effective (i.e., one sample during two compliance periods or six years) and update its vulnerability assessment considering the factors listed in subdivision B 2 f of this section. Based on this vulnerability assessment the commissioner shall reconfirm that the waterworks is nonvulnerable. If the commissioner does not make this reconfirmation within three years of the initial determination, then the waiver is invalidated and the owner is required to sample annually as specified in subdivision B 2 d (1) (a) of this section.

(2) The owner of any community and nontransient noncommunity waterworks that use surface water in whole or in part which does not detect a contaminant listed in Table 2.3-VOC may apply to the commissioner for a waiver from the requirements of subdivision B 2 d (1) (a) of this section after completing the initial monitoring. Waterworks meeting these criteria shall be determined by the commissioner to be nonvulnerable based on a vulnerability assessment during each compliance period. Each owner receiving a waiver shall sample at the frequency specified by the commissioner (if any).

(3) There are no conditions to SOC waivers.

h. If a contaminant listed in Table 2.3-VOC 2 through 21 or SOC 1 through 33 is detected then (NOTE: Detection occurs when a contaminant level exceeds the current detection limit as defined by EPA.):

(1) Each owner shall monitor quarterly at each sampling point which resulted in a detection.

(2) The commissioner may decrease the quarterly monitoring requirement specified in subdivision B 2 h (1) of this section provided it has determined that the waterworks is reliably and consistently below the PMCL. In no case shall the commissioner make this determination unless the owner of a groundwater waterworks takes a minimum of two quarterly samples and the owner of a waterworks that use surface water in whole or in part takes a minimum of four quarterly samples.

(3) If the commissioner determines that the waterworks is reliably and consistently below the PMCL, the commissioner may allow the waterworks to monitor annually. Owners of waterworks that monitor annually shall monitor during the quarter(s) that previously yielded the highest analytical result.

(4) Owners of waterworks that have three consecutive annual samples with no detection of a contaminant may apply to the commissioner for a waiver for VOC as specified in subdivision B 2 e (1) or to SOC as specified in subdivision B 2 e (2) of this section.

(5) Subsequent monitoring due to contaminant detection.

(a) Owners of groundwater waterworks that have detected one or more of the following two-carbon organic compounds: trichloroethylene, tetrachloroethylene, 1,2-dichloroethane, 1,1,1-trichloroethane, cis-1,2-dichloroethylene, trans-1,2-dichloroethylene, or 1,1-dichloroethylene shall monitor quarterly for vinyl chloride. A vinyl chloride sample shall be taken at each sampling point at which one or more of the two-carbon organic compounds was detected. If the results of the first analysis do not detect vinyl chloride, the commissioner may reduce the quarterly monitoring frequency of vinyl chloride monitoring to one sample during each compliance period. Owners of waterworks that use surface water in whole or in part are required to monitor for vinyl chloride as specified by the commissioner.

(b) If monitoring results in detection of one or more of certain related contaminants (heptachlor and heptachlor epoxide), then subsequent monitoring shall analyze for all related contaminants.

i. Owners of waterworks that violate the requirements of Table 2.3 for VOCs or SOCs, as determined by 12VAC5-590-410 C, shall monitor quarterly. After a minimum of four consecutive quarterly samples that show the waterworks is in compliance as specified in 12VAC5-590-410 C and the commissioner determines that the waterworks is reliably and consistently below the PMCL, the owner may monitor at the frequency and time specified in subdivision B 2 h (3) of this section.

3. Disinfectant residuals, disinfection byproducts and disinfection byproduct precursors.

a. Unless otherwise noted, owners of all waterworks that use a chemical disinfectant shall comply with the requirements of this section as follows:

(1) Owners of community or nontransient noncommunity waterworks that use surface water or groundwater under the direct influence of surface water and serving 10,000 or more persons shall comply with this section beginning January 1, 2002.

(2) Owners of community or nontransient noncommunity waterworks that use surface water or groundwater under the direct influence of surface water serving fewer than 10,000 persons and waterworks using only groundwater not under the direct influence of surface water shall comply with this section beginning January 1, 2004.

(3) Owners of transient noncommunity waterworks that use surface water or groundwater under the direct influence of surface water and serving 10,000 or more persons and using chlorine dioxide as a disinfectant or oxidant shall comply with any requirements for chlorine dioxide in this section beginning January 1, 2002.

(4) Owners of transient noncommunity waterworks that use surface water or groundwater under the direct influence of surface water serving fewer than 10,000 persons and using chlorine dioxide as a disinfectant or oxidant and waterworks using only groundwater not under the direct influence of surface water and using chlorine dioxide as a disinfectant or oxidant shall comply with any requirements for chlorine dioxide in this section beginning January 1, 2004.

b. Owners shall take all samples during normal operating conditions.

(1) Analysis under this section for disinfection byproducts (TTHM, HAA5, chlorite and bromate) shall be conducted by a laboratory that has received certification by EPA or the state except as noted in subdivision B 3 b (2) of this section.

(2) Measurement under this section of daily chlorite samples at the entry point to the distribution system, disinfection residuals (free chlorine, combined chlorine, total chlorine and chlorine dioxide), alkalinity, bromide, TOC, SUVA (DOC and UV₂₅₄), pH and magnesium shall be made by a party approved by the commissioner.

(3) DPD colorimetric test kits may be used to measure residual disinfectant concentrations for chlorine, chloramines and chlorine dioxide.

c. Failure to monitor in accordance with the monitoring plan required under subdivision B 3 j of this section is a monitoring violation. Failure to monitor shall be treated as a violation for the entire period covered by the annual average where compliance is based on a running annual average of monthly or quarterly samples or averages and the owner's failure to monitor makes it impossible to determine compliance with PMCLs or MRDLs.

d. Owners may use only data collected under the provisions of this section or the US EPA Information Collection Rule, 40 CFR Part 141 Subpart M, Information Collection Requirements (ICR) for Public Water Systems, to qualify for reduced monitoring.

e. TTHM/HAA5 monitoring. Owners of community or nontransient noncommunity waterworks shall monitor TTHM and HAA5 at the frequency indicated below, unless otherwise indicated:

(1) Running annual average monitoring requirements.

(a) Routine monitoring requirements:

(i) Owners of waterworks using surface water or groundwater under the direct influence of surface water and serving at least 10,000 persons shall collect four water samples per quarter per treatment plant. At least 25% of all samples collected each quarter shall be at locations representing maximum residence time in the distribution system. The remaining samples shall be taken at locations representative of at least average residence time in the distribution system and representative of the entire distribution system. When setting the sample locations the waterworks shall take into account number of persons served, different sources of water, and different treatment methods.

(ii) Owners of waterworks using surface water or groundwater under the direct influence of surface water and serving from 500 to 9,999 persons shall collect one sample per quarter per treatment plant. The sample location shall represent maximum residence time in the distribution system.

(iii) Owners of waterworks using surface water or groundwater under the direct influence of surface water and serving fewer than 500 persons shall collect one sample per year per treatment plant during the month of warmest water temperature. The sample location shall represent maximum residence time in the distribution system. If the sample (or average of annual samples, if more than one sample is taken) exceeds PMCL in Table 2.13, the owner shall increase monitoring to one sample per treatment plant per quarter, taken at a point reflecting the maximum residence time in the distribution system, until waterworks meets reduced monitoring criteria.

(iv) Owners of waterworks using only groundwater not under direct influence of surface water using chemical disinfectant and serving at least 10,000 persons shall collect one sample per quarter per treatment plant. The sample location shall represent maximum residence time in the distribution system.

(v) Owners of waterworks using only groundwater not under direct influence of surface water using chemical disinfectant and serving fewer than 10,000 persons shall collect one sample per year per treatment plant during the month of warmest water temperature. The sample location shall represent maximum residence time in the distribution system. If the sample (or average of annual samples, if more than one sample is taken) exceeds PMCL in Table 2.13, the owner shall increase monitoring to one sample per treatment plant per quarter, taken at a point reflecting the maximum residence time in the distribution system, until the waterworks meets the criteria for reduced monitoring found in subdivision B 3 e (1) (d) of this section.

(vi) If an owner elects to sample more frequently than the minimum required, at least 25% of all samples collected each quarter (including those taken in excess of the required frequency) shall be taken at locations that represent the maximum residence time of the water in the distribution system. The remaining samples shall be taken at locations representative of at least average residence time in the distribution system.

(vii) With prior approval of the commissioner, owners of waterworks that utilize multiple wells from a common aquifer may consider these multiple sources as one treatment plant for determining the minimum number of samples to be collected for TTHM and HAA5 analysis.

(b) After one year of routine monitoring an owner may reduce monitoring, except as otherwise provided, as follows:

(i) Owners of waterworks using surface water or groundwater under the direct influence of surface water and serving at least 10,000 persons that has a source water annual average TOC level, before any treatment, of equal to or less than 4.0 mg/L and a TTHM annual average equal to or less than 0.040 mg/L and HAA5 annual average equal to or less than 0.030 mg/L may reduce its monitoring to one sample per treatment plant per quarter at a distribution system location reflecting maximum residence time.

(ii) Owners of waterworks using surface water or groundwater under the direct influence of surface water serving from 500 to 9,999 persons that has a source water annual average TOC level, before any treatment, equal to or less than 4.0 mg/L and a TTHM annual average equal to or less than 0.040 mg/L and HAA5 annual average equal to or less than 0.030 mg/L may reduce its monitoring to one sample per treatment plant per year at a distribution system location reflecting maximum residence time during the month of warmest water temperature.

(iii) Owners of waterworks using only groundwater not under the direct influence of surface water, using chemical disinfectant and serving at least 10,000 persons that has a TTHM annual average of equal to or less than 0.040 mg/L and HAA5 annual average of equal to or less than 0.030 mg/L may reduce its monitoring to one sample per treatment plant per year at a distribution system location reflecting maximum residence time during the month of warmest water temperature.

(iv) Owners of waterworks using only groundwater not under the direct influence of surface water, using chemical disinfectant and serving fewer than 10,000 persons that has a TTHM annual average equal to or less than 0.040 mg/L and HAA5 annual average equal to or less than 0.030 mg/L for two consecutive years or TTHM annual average equal to or less than 0.020 mg/L and HAA5 annual average of equal to or less than 0.015 mg/L for one year may reduce its monitoring to one sample per treatment plant per three-year monitoring cycle at a distribution system location reflecting maximum residence time during the month of warmest water temperature, with the three-year cycle beginning on January 1 following the quarter in which the system qualifies for reduced monitoring.

(v) Owners of waterworks using surface water or groundwater under the direct influence of surface water serving fewer than 500 persons may not reduce its monitoring to less than one sample per treatment plant per year.

(vi) In order to qualify for reduced monitoring for TTHM and HAA5 under subdivision B 3 e (1) (b) (i) through (iv) of this section, owners of waterworks using surface water or groundwater under the direct influence of surface water not monitoring under the provisions of subdivision B 3 (i) shall take monthly TOC samples every 30 days at a location prior to any treatment, beginning April 1, 2008. In addition to meeting other criteria for reduced monitoring in subdivision B 3 e (1) (b) (i) through (iv) of this section, the source water TOC running annual average shall be less than or equal to 4.0 mg/L (based on the most recent four quarters of monitoring) on a continuing basis at each treatment plant to reduce or remain on reduced monitoring for TTHM and HAA5. Once qualified for reduced monitoring for TTHM and HAA5 under subdivision B 3 e (1) (b) (i) through (iv) of this section, a system may reduce source water TOC monitoring to quarterly TOC samples taken every 90 days at a location prior to any treatment.

(c) Owners of waterworks on a reduced monitoring schedule may remain on that reduced schedule as long as the average of all samples taken in the year (for waterworks that must monitor quarterly) or the result of the sample (for waterworks that must monitor no more frequently than annually) is no more than 0.060 mg/L and 0.045 mg/L for TTHMs and HAA5, respectively. Owners of waterworks that do not meet these levels shall resume monitoring at the frequency identified in subdivision B 3 e (1) (a) of this section in the quarter immediately following the monitoring period in which the waterworks exceeds 0.060 mg/L or 0.045 mg/L for TTHMs and HAA5, respectively. For waterworks using only groundwater not under the direct influence of surface water and serving fewer than 10,000 persons, if either the TTHMs annual average is greater than 0.080 mg/L or the HAA5 annual average is greater than 0.060 mg/L, the owner shall go to increased monitoring identified in subdivision B 3 e (1) (a) of this section in the quarter immediately following the monitoring period in which the waterworks exceeds 0.080 mg/L or 0.060 mg/L for TTHM or HAA5 respectively.

(d) Owners of waterworks on increased monitoring may return to routine monitoring if, after at least one year of monitoring, their TTHM annual average is equal to or less than 0.060 mg/L and their HAA5 annual average is equal to or less than 0.045 mg/L.

(e) The commissioner may return a waterworks to routine monitoring at the commissioner's discretion.

(2) Initial distribution system evaluations (IDSE).

(a) This subdivision establishes monitoring and other requirements for identifying locational running annual average (LRAA) compliance monitoring locations for determining compliance with maximum contaminant levels for total trihalomethanes (TTHM) and haloacetic acids (five) (HAA5). Owners shall use an IDSE to determine locations with representative high TTHM and HAA5 concentrations throughout the distribution system. IDSEs are used in conjunction with, but separate from running annual average compliance monitoring locations, subdivision B 3 e (1) (a) of this section, to identify and select locational running annual average compliance monitoring locations, subdivision B 3 e (3) of this section.

(b) This subdivision applies to the following waterworks:

(i) Community waterworks that use a primary or residual disinfectant other than ultraviolet light or delivers water that has been treated with a primary or residual disinfectant other than ultraviolet light; or,

(ii) Nontransient noncommunity waterworks that serve at least 10,000 people and use a primary or residual disinfectant other than ultraviolet light or delivers water that has been treated with a primary or residual disinfectant other than ultraviolet light.

(c) Owners shall comply with the following schedule: