COMMITTEE SUBSTITUTE
FOR
H. B. 2594
(By Delegates Pettit, Hutchins and L. White)
(Originating in the Committee on Finance)
[April 2,1997]
A BILL to amend and reenact sections three, six and thirteen,
article twenty-two-a, chapter twenty-nine of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to further amend said article by adding thereto a new
section, designated section ten-b all relating to the
operation of video lottery games at licensed horse and dog
racetracks; providing definitions of terms; providing for non- cash prizes, annuitized payments over time, coins, vouchers or
tokens in connection with video lottery games; relating to
maximum amount to be wagered on a single video lottery game;
providing for video lottery terminal electronic accounting
metering for coins and tokens; and to provide a special
allocation of video lottery terminal income to be distributed
to counties and municipalities.
Be it enacted by the Legislature of West Virginia:
That sections three, six and thirteen, article twenty-two-a,
chapter twenty-nine of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; to
further amend said article by adding thereto a new section,
designated section ten-b, all to read as follows:
ARTICLE 22A. RACETRACK VIDEO LOTTERY
§29-22A-3. Definitions.
As used in this article:
(a)"Applicant" means any person applying for any video
lottery license or permit.
(b)"Associated equipment" means any hardware located on a
licensed racetrack's premises which is connected to the video
lottery system for the purpose of performing communication,
validation or other functions, but not including the video lottery
terminals or the communication facilities of a regulated public
utility.
(c)"Background investigation" means a security, criminal and
credit investigation of a person, as defined in this section, who
has applied for a video lottery license or permit, or who has been
granted a video lottery license or permit.
(d)"Central computer," "central control computer" or
"central site system" means any central site computer provided to
and controlled by the commission to which video lottery terminals
communicate for purposes of information retrieval and terminal activation and disable programs.
(e)"Commission" or "state lottery commission" means the West
Virginia lottery commission created by article twenty-two of this
chapter.
(f)"Control" means the authority to direct the management
and policies of an applicant or a license or permit holder.
(g)"Costs" means the expenses incurred by the commission in
the testing and examination of video lottery terminals and the
performance of background investigations and other related
activities which are charged to and collected from applicants or
license or permit holders.
(h)"Director" means the individual appointed by the governor
to provide management and administration necessary to direct the
state lottery office.
(i)"Disable" or "terminal disable" means the process of
executing a shutdown command from the central control computer
which causes video lottery terminals to cease functioning.
(j)"Display" means the visual presentation of video lottery
game features on the video display monitor or screen of a video
lottery terminal.
(k)"Gross terminal income" means the total amount of cash,
vouchers or tokens inserted into the video lottery terminals
operated by a licensee, minus the total value of tokens won by a
player and game credits which are cleared from the video lottery
terminals in exchange for winning redemption tickets.
(l)"License" or "video lottery license" means authorization
granted by the commission to a racetrack which is licensed by the
West Virginia racing commission to conduct thoroughbred or
greyhound racing meetings pursuant to article twenty-three, chapter
nineteen of this code permitting the racetrack to operate video
lottery terminals authorized by the commission.
(m)"Lottery" means the public gaming systems or games
established and operated by the state lottery commission.
(n)"Manufacturer" means any person holding a permit granted
by the commission to engage in the business of designing, building,
constructing, assembling or manufacturing video lottery terminals,
the electronic computer components thereof, the random number
generator thereof, or the cabinet in which it is housed, and whose
product is intended for sale, lease or other assignment to a
licensed racetrack in West Virginia, and who contracts directly
with the licensee for the sale, lease or other assignment to a
licensed racetrack in West Virginia.
(o)"Net terminal income" means gross terminal income minus
an amount deducted by the commission to reimburse the commission
for its actual costs of administering racetrack video lottery at
the licensed racetrack. No deduction for any or all costs and
expenses of a licensee related to the operation of video lottery
games shall be deducted from gross terminal income.
(p)"Non-cash prize" means merchandise which a video lottery
player may be given the option to receive in lieu of cash in exchange for a winning redemption ticket and which shall be
assigned a redemption value equal to the actual cost of the
merchandise to the licensed racetrack.
(p)(q)"Own" means any beneficial or proprietary interest
in any property or business of an applicant or licensed racetrack.
(q)(r)"Pari-mutuel racing facility," "licensed racetrack,"
"racetrack" or "track" means a facility where horse or dog race
meetings are held and the pari-mutuel system of wagering is
authorized pursuant to the provisions of article twenty-three,
chapter nineteen of this code: Provided, That, for the purposes of
this article, "pari-mutuel racing facility," "licensed racetrack,"
"racetrack" or "track" includes only a facility which was licensed
prior to the first day of January, one thousand nine hundred
ninety-four, to hold horse or dog race meetings, and which conducts
not less than two hundred twenty live racing dates for each horse
or dog race meeting or such other number of live racing dates as
may be approved by the racing commission in accordance with the
provisions of section twelve-b, article twenty-three, chapter
nineteen of this code.
(r)(s)"Permit" means authorization granted by the
commission to a person to function as either a video lottery
manufacturer, service technician or validation manager.
(s)(t)"Person" means any natural person, corporation,
association, partnership, limited partnership, or other entity, regardless of its form, structure or nature.
(t)(u)"Player" means a person who plays a video lottery
game on a video lottery terminal at a racetrack licensed by the
commission to conduct video lottery games.
(u)(v)"Service technician" means a person, employed by a
licensed racetrack, who holds a permit issued by the commission and
who performs service, maintenance and repair on licensed video
lottery terminals in this state.
(v)(w) "Video lottery game" means a commission approved, owned
and controlled electronically simulated game of chance which is
displayed on the screen or video monitor of a video lottery
terminal and which:
(1)Is connected to the commission's central control computer
by an on-line or dial-up communication system;
(2)Is initiated by a player's insertion of coins, or
currency, vouchers or tokens into a video lottery terminal, which
causes game play credits to be displayed on the video lottery
terminal and, with respect to which, each game play credit entitles
a player to choose one or more symbols or numbers or to cause the
video lottery terminal to randomly select symbols or numbers;
(3)Allows the player to win additional game play credits,
tokens based upon game rules which establish the random selection
of winning combinations of symbols or numbers or both and the
number of free play credits, tokens to be awarded for each winning
combination of symbols or numbers or both;
(4)Is based upon computer-generated random selection of
winning combinations based totally or predominantly on chance;
(5)In the case of a video lottery game which allows the
player an option to select replacement symbols or numbers or
additional symbols or numbers after the game is initiated and in
the course of play, either (A) signals the player, prior to any
optional selection by the player of randomly generated replacement
symbols or numbers, as to which symbols or numbers should be
retained by the player to present the best chance, based upon
probabilities, that the player may select a winning combination,
(B) signals the player, prior to any optional selection by the
player of randomly generated additional symbols or numbers, as to
whether such additional selection presents the best chance, based
upon probabilities, that the player may select a winning
combination, or (C) randomly generates additional or replacement
symbols and numbers for the player after automatically selecting
the symbols and numbers which should be retained to present the
best chance, based upon probabilities, for a winning combination,
so that in any event, the player is not permitted to benefit from
any personal skill, based upon a knowledge of probabilities, before
deciding which optional numbers or symbols to choose in the course
of video lottery game play;
(6)Allows a player at any time to simultaneously clear all
game play credits and print a redemption ticket entitling the
player to receive the cash value of the free plays cleared from the video lottery terminal; and
(7)Does not use the following game themes commonly
associated with casino gambling: Roulette, dice, or baccarat card
games: Provided, That games having a video display depicting
symbols which appear to roll on drums to simulate a classic casino
slot machine, game themes of other card games and keno may be
used.
(w)(x) "Validation manager" means a person who holds a permit
issued by the commission and who performs video lottery ticket
redemption services.
(x)(y)"Video lottery" means a lottery which allows a game
to be played utilizing an electronic computer and an interactive
computer terminal device, equipped with a video screen and keys, a
keyboard or other equipment allowing input by an individual player,
into which terminal device the player inserts coins, or currency,
vouchers or tokens as consideration in order for play to be
available, and through which terminal device the player may receive
free games, tokens or credit that can be redeemed for cash,
annuitized payments over time, a non-cash prize or nothing, as may
be determined wholly or predominantly by chance. "Video lottery"
does not include a lottery game which merely utilizes an electronic
computer and a video screen to operate a lottery game and
communicate the results thereof, such as the game "Travel," and
which does not utilize an interactive electronic terminal device allowing input by an individual player.
(y)(z)"Video lottery terminal" means a commission-approved
interactive electronic terminal device which is connected with the
commission's central computer system, and which is used for the
purpose of playing video lottery games authorized by the
commission. A video lottery terminal may simulate the play of one
or more video lottery games.
(z)(aa) "Wager" means a sum of money or thing of value risked
on an uncertain occurrence.
§29-22A-6. Video lottery terminal hardware and software
requirements; hardware specifications; software requirements
for randomness testing; software requirements for percentage
payout; software requirements for continuation of video
lottery game after malfunction; software requirements for play
transaction records.
(a)Video lottery terminals licensed for placement in this
state shall meet the following hardware specifications:
(1)Electrical and mechanical parts and design principles may
not subject a player to physical hazards or injury.
(2)A surge protector shall be installed on the electrical
power supply line to each video lottery terminal. A battery or
equivalent power back-up for the electronic meters shall be capable
of maintaining accuracy of all accounting records and terminal
status reports for a period of one hundred eighty days after power is disconnected from the terminal. The power back-up device shall
be located within the locked logic board compartment of the video
lottery terminal.
(3)An on/off switch which controls the electrical current
used in the operation of the terminal shall be located in an
accessible place within the interior of the video lottery terminal.
(4)The operation of each video lottery terminal may not be
adversely affected by any static discharge or other electromagnetic
interference.
(5)A minimum of one electronic or mechanical coin acceptor
or other means accurately and efficiently to establish credits
shall be installed on each video lottery terminal. Each video
lottery terminal may also contain bill acceptors for one or more of
the following: One dollar bills, five dollar bills, ten dollar
bills, and twenty dollar bills, fifty dollar bills and one hundred
dollar bills. All coin and bill acceptors must be approved by the
commission prior to use on any video lottery terminal in this
state.
(6)Access to the interior of video lottery terminal shall be
controlled through a series of locks and seals.
(7)The main logic boards and all erasable programmable read-
only memory chips (Eproms) are deemed to be owned by the commission
and shall be located in a separate locked and sealed area within
the video lottery terminal.
(8)The cash compartment shall be located in a separate locked area within or attached to the video lottery terminal.
(9)No hardware switches, jumpers, wire posts or any other
means of manipulation may be installed which alter the pay tables
or payout percentages in the operation of a game. Hardware
switches on a video lottery terminal to control the terminal's
graphic routines, speed of play, sound and other purely cosmetic
features may be approved by the commission.
(10)Each video lottery terminal shall contain a single
printing mechanism capable of printing an original ticket and
retaining an exact legible copy within the video lottery terminal
or other means of capturing and retaining an electronic copy of the
ticket data as approved by the commission: Provided, That such
printing mechanism is optional on any video lottery terminal which
is designed and equipped exclusively for token payouts. The
following information shall be recorded on the ticket when credits
accrued on a video lottery terminal are redeemed for cash:
(Ii)The number of credits accrued;
(ii)Value of the credits in dollars and cents displayed in
both numeric and written form;
(iii)Time of day and date;
(iv)Validation number; and
(v)Any other information required by the commission.
(11)A permanently installed and affixed identification plate
shall appear on the exterior of each video lottery terminal and the
following information shall be on the plate:
(Ii)Manufacturer of the video lottery terminal;
(ii)Serial number of the terminal; and
(iii)Model number of the terminal.
(12)The rules of play for each game shall be displayed on the
video lottery terminal face or screen. The commission may reject
any rules of play which are incomplete, confusing, misleading or
inconsistent with game rules approved by the commission. For each
video lottery game, there shall be a display detailing the credits
awarded for the occurrence of each possible winning combination of
numbers or symbols. A video lottery terminal may not allow more
than two ten dollars to be wagered on a single game. All
information required by this subdivision shall be displayed under
glass or another transparent substance. No stickers or other
removable devices may be placed on the video lottery terminal
screen or face without the prior approval of the commission.
(13)Communication equipment and devices shall be installed to
enable each video lottery terminal to communicate with the
commission's central computer system by use of a communications
protocol provided by the commission to each permitted manufacturer,
which protocol shall include information retrieval and terminal
activation and disable programs, and the commission may require
each licensed racetrack to pay the cost of a central site computer
as a part of the licensing requirement.
(14)All video lottery terminals shall have a security system
which temporarily disables the gaming function of the terminal while opened.
(b)Each video lottery terminal shall have a random number
generator to determine randomly the occurrence of each specific
symbol or number used in video lottery games. A selection process
is random if it meets the following statistical criteria:
(1)Chi-square test. Each symbol or number shall satisfy the
ninety-nine percent confidence limit using the standard chi-square
statistical analysis of the difference between the expected result
and the observed result.
(2)Runs test. Each symbol or number may not produce a
significant statistic with regard to producing patterns of
occurrences. Each symbol or number is random if it meets the
ninety-nine percent confidence level with regard to the "runs test"
for the existence of recurring patterns within a set of data.
(3)Correlation test. Each pair of symbols or numbers is
random if it meets the ninety-nine percent confidence level using
standard correlation analysis to determine whether each symbol or
number is independently chosen without regard to another symbol or
number within a single game play.
(4)Serial correlation test. Each symbol or number is random
if it meets the ninety-nine percent confidence level using standard
serial correlation analysis to determine whether each symbol or
number is independently chosen without reference to the same symbol
or number in a previous game.
(c)Each video lottery terminal shall meet the following maximum and minimum theoretical percentage payout during the
expected lifetime of said terminal:
(1)Video lottery games shall pay out no less than eighty
percent and no more than ninety-five percent of the amount wagered.
The theoretical payout percentage will be determined using standard
methods of probability theory.
(2)Manufacturers must file a request and receive approval
from the commission prior to manufacturing for placement in this
state video lottery terminals programmed for a payout greater than
ninety-two percent of the amount wagered. Commission approval must
be obtained prior to applying for testing of such high payout
terminals.
(3)Each terminal shall have a probability greater than one
in seventeen million of obtaining the maximum payout for each play.
(d)Each video lottery terminal shall be capable of
continuing the current game with all current game features after a
video lottery terminal malfunction is cleared. If a video lottery
terminal is rendered totally inoperable during game play, the
current wager and all credits appearing on the video lottery
terminal screen prior to the malfunction shall be returned to the
player.
(e)Each video lottery terminal shall at all times maintain
electronic accounting regardless of whether the terminal is being
supplied with electrical power. Each meter shall be capable of
maintaining a total of no less than eight digits in length for each type of data required. The electronic meters shall record the
following information:
(1)Number of coins inserted by players or the coin
equivalent if a bill acceptor is being used or tokens or vouchers
are used;
(2)Number of credits wagered;
(3)Number of total credits, tokens won;
(4)Number of credits paid out by a printed ticket;
(5)Number of tokens won, if applicable;
(5)(6)Number of times the logic area was accessed;
(6)(7)Number of times the cash door was accessed;
(7)(8)Number of credits wagered in the current game;
(8)(9)Number of credits won in the last complete video
lottery game; and
(9)(10) Number of cumulative credits representing money
inserted by a player and credits for video lottery games won but
not collected.
(f)No video lottery terminal may have any mechanism which
allows the electronic accounting meters to clear automatically.
Electronic accounting meters may not be cleared without the prior
approval of the commission. Both before and after any electronic
accounting meter is cleared, all meter readings shall be recorded
in the presence of a commission employee.
(g)The primary responsibility for the control and regulation
of any video lottery games and video lottery terminals operated pursuant to this article rests with the commission.
(h)The commission shall directly or through a contract with
a third party vendor other than the video lottery licensee,
maintain a central site system of monitoring the lottery terminals,
utilizing an on-line or dial-up inquiry. The central site system
shall be capable of monitoring the operation of each video lottery
game or video lottery terminal operating pursuant to this article
and, at the direction of the director, immediately disable and
cause not to operate, any video lottery game and video lottery
terminal. As provided in this section, the commission may require
the licensed racetrack to pay the cost of a central site computer
as part of the licensing requirement.
HB2594 H FIN AM 4/2 #1
Delegate Doyle moves to amend the bill on page 18, following line
three by inserting a new section to read as follows:
§29-22A-10b. Special payments to municipalities.
Beginning with the fiscal year beginning on the first day of
July, one thousand nine hundred ninety-seven, the two percent of
net terminal income from video lottery payable pursuant to section
ten, subsection c, subdivision three, to the counties in which
licensed racetracks are located shall be allocated as follows:
(a) The amount equal to two percent of the net terminal
income earned in fiscal year one thousand nine hundred ninety-six,
shall be distributed to the county where the video lottery
terminals are located.
(b) An amount equal to the net terminal income collected
during the fiscal year in which the disbursement is being made less the amount of net terminal income collected during the fiscal year
one thousand nine hundred ninety-six, shall be distributed as
follows:
(1) Seventy-five percent to the county where the video lottery
terminals are located; and
(2) Twenty-five percent to the municipalities within the
county where video lottery terminals are located based on the
relative populations of the municipalities as of the last census.
§29-22A-13. Payment of credits; no state liability; method of
payment; restrictions on payment of credits; redeemed tickets
required to be defaced; liability for video lottery terminal
malfunction.
(a)No payment for credits awarded on a video lottery
terminal may be made unless the ticket meets the following
requirements:
(1)The ticket is fully legible and printed on paper approved
by the commission and the ticket contains all information required
by this article;
(2)The ticket is not mutilated, altered, unreadable or
tampered with in any manner;
(3)The ticket is not counterfeit, in whole or in part; and
(4)The ticket is presented by a person authorized to play
video lottery pursuant to this article.
(b)Each licensed racetrack shall designate validation managers and employees authorized to redeem tickets and to sell and
redeem tokens during the business hours of operation. Credits
shall be immediately paid in cash or by check, by annuitized
payments over time, when a player presents a valid ticket or tokens
for payment. No credits may be paid in tokens, chips or
merchandise.
(c)Licensed racetracks shall not redeem tickets for credits
awarded on video lottery terminals which are not located on its
premises. A ticket must be presented for payment no later than ten
days after the date the ticket is printed. The commission is not
liable for the payment of any video lottery ticket credits.
(d)All tickets redeemed by a licensed racetrack shall be
defaced in a manner which prevents any subsequent presentment and
payment.
(e)The commission is not responsible for any video lottery
terminal malfunction which causes a credit to be wrongfully awarded
or denied to players. The licensed racetrack is solely responsible
for any wrongful award or denial of credits.