• If this legislation is to raise funds for covid 19 please consider taxing skill games such as multi player fish tables as 1 unit. By definition a "game/ terminal " is most often defined as 1 board/computer, 1 power supply, 1 power cord. By over taxation the state further risk yet more games being removed from the field. If taxation based on every player is the states goal then consider raising  the minimum number from 6 to 10 . This is a bill put in place to raise money for Covid relief. The more possible units on location is further revenue for all parties. 

My name is Barry Rutherford and I work for Primero Games one of the nation's largest manufacturers and distributors of legal skill games. I have had the privilege of speaking with John Daniel and other ABC agents prior to the regulations being published yesterday. 

Thank you for the opportunity to comment on the proposed regulations regarding video skill games in Virginia.  We have only one comment.  Section 3VAC5-80-80 allows the relocation of skill games from one location to another, but such relocations may not exceed 10% of the total number of skill games initially registered.  We request that this proposed regulation be deleted for the following reasons: 

It inhibits competition
If a 10% cap on relocation is implemented distributors will be unwilling to place skill games in new locations because it will be too risky.  Because new locations do not have a history of skill game revenue, distributors primarily will place skill games in established locations that will be able to support the new tax.  If the relocation restriction was removed, distributors would be more willing to try new locations and, if it does not work financially, then transfer the skill game to another location.  Also, some locations (such as bars and restaurants) are still closed or are operating at reduced capacity due to COVID-19.  Those locations will be closed out of the skill game market because the limited number of game relocations may be used up by the time such locations are ready to participate in the market.       

It will provide an unfair advantage to certain market participants
Incumbent distributors who have a large market share, and therefore have games in established locations with a history of game revenue, will have an unfair advantage.  Because such distributors know which locations are viable under the new tax, they can simply keep the good locations and will have few reasons to relocate any games.  Newer or smaller distributors will be forced to take the risk of finding new locations and therefore will need to perform more relocations.

It will decrease tax revenue
If the number of relocations are limited as currently proposed, a large number of skill games will leave the Virginia market. This will result in businesses to leave the state, employees to be let go, and inevitably cause tax revenues to be lower. 

Legislative Intent
This bill was passed to help businesses survive and keep their employees during the COVID crisis. The 10% cap on relocation of machines will have the opposite result. Distributors will put less machines in the market causing them to let go of any marginal employees. Additionally, ABC retailers that have machines but the distributor decides to remove the machines will result in a loss of income for the store and possibly letting marginal employees go.

Finally, in the alternative, if the proposed regulation cannot be deleted, we suggest that the regulation allow unlimited relocations without prior notice, subject to a transfer fee to compensate the Authority for the administrative inconvenience associated with such relocations.

I'd be happy to discuss this issue further with you and anyone else as I think it is imperative that this section is removed from the regulations. I look forward to your response and consideration on this issue.

Barry

I currently have 20 skilled gaming machines between four locations.  The proposed tax of $1,200 per machine per month will completely wipe out our profits as one of our restaurants is a seasonal location and does not bring in enough revenue to support this tax.  If this becomes law, the end result will be I will have to lay off three people that take care of the machines and return all the machines to the manufacturer. In short, the substantial losses to my restaurants and businesses from covid-19 will go from bad to worse.  PLEASE, IF YOU MUST TAX THE MACHINES MAKE IT REASONABLE!!

In approving the Governor's recommendations for the regulation of "skill games" during the 2020 reconvened session, the General Assembly made it clear that it intended the taxation and regulation of these games as a revenue source to assist in budgetary challenges associated with the ongoing COVID-19 pandemic.  As proposed, these regulations appear to be designed specifically to reduce or eliminate the availability of skill games in Virginia, and to frustrate the Assembly's intent to utilize the availability and popularity of these games as a new revenue source.  Moreover, certain aspects of the proposed regulations appear to exceed the scope of the amendments to Section 18.2-325 which address skill gaming as passed by the Assembly, and therefore have questionable legal validity.

Specifically:

(1)  The 10% cap on the relocation of games threatens to inhibit the ability of game operators to remove and replace malfunctioning machines, and inhibits the ability of distributors from removing machines from unproductive locations, creating market inefficiencies which will deter participation by distributors and operators.

(2) The limit of six games in ABC licensed establishments and twelve in truckstop facilities is nowhere to be found in the Assembly's action or intent, and appears to be an entirely arbitrary and capricious administrative restriction.

(3)  The definition that one seat constitutes one game fails to recognize that certain gaming formats allow for multiple players to simultaneously utilize a single machine.    

As offered, these regulations appear to inhibit competition, create arbitrary obstacles to distribution and utilization, and provide presumably unintended advantages to certain distributors and operators.  These regulation frustrate and undermine the Assembly's unambiguous intent to facilitate and open skill games for play as a source of revenue generation in response to the Commonwealth's budgetary crisis arising from the COVID-19 pandemic.   

I want to thank the Virginia Alcoholic Beverage Control Authority on behalf of Banilla Games, Inc. for the opportunity to inform their decision making on these regulations related to the deployment of Skill Games in Virginia (3VAC5-80-10 et seq). We appreciate the challenge the ABC faces in quickly drafting new regulations under the current global conditions, and we are committed to doing all we can to ensure a functional and compliant system that maximizes the revenues Virginia collects for its COVID-19 Relief Fund.

Suggested Language Changes/Edits

• 3VAC5-80-50. Initial registration and monthly reporting.

• • We suggest amending subsection C of this section as follows:

C. No distributor shall locate more than six 12 skill game machines at any ABC retail licensed establishment or more than 12 24 skill game machines at any truck stop.

While we understand the intent of the original proposal, we think a six and 12 skill game machine limit would frustrate the purpose of this program – revenue for the Commonwealth’s COVID-19 Relief Fund. Distributors will not place more machines than they feel the market will bear. In other words, a distributor will not place a machine in a location if they do not think it is fiscally viable in light of the monthly tax. Increasing the per location limit as we suggest will still ensure a cap is in place but would better allow the market to determine how many machines to place in a specific location, thereby ultimately increasing the revenue to the COVID-19 Relief Fund.

• 3VAC5-80-80. Relocation of skill game machine from one establishment to another.

• • We suggest amending subsection B of this section as follows:

B. Prior to being relocated pursuant to subsection A of this section, the distributor shall provide notice, including an image (photograph with a clearly visible numeric identifier) of the obliterated label of the malfunctioning machine to the Authority Bureau of Law Enforcement. Such notice shall be provided at least 10 days prior to the relocation date. No skill game shall be relocated prior to approval by the Authority Bureau of Law Enforcement. Upon receipt of such notice and evidence and approval, the Authority Bureau of Law Enforcement may issue a new label to the distributor for the replacement machine. The new label shall be adhered to the replacement machine in accordance with 3VAC5-80-60 prior to the replacement game being enabled for play.

This requested change eliminates the words “malfunctioning” and “replacement” as subsection A of this section does not limit the relocation of skill game machines to only malfunctioning machines. Therefore, this change will ensure clarity and consistent interpretation and application of subsection A.

• • We suggest adding the following to this section as subsection C:

C. Should an internal hardware component of a skill machine malfunction or break, the distributor may repair or replace the internal component(s) provided the distributor notifies the Authority Bureau of Law Enforcement at least one day prior to the repair, but the Authority Bureau of Law Enforcement need not formally approve the repair; such repair of an internal hardware component shall not count towards the 10% relocation maximum established in subsection A of this section. Should a skill game machine malfunction such that it is irreparable, the distributor shall follow the procedure set forth in subsection B of this section, except that the distributor only need to provide five days’ notice to the Authority Bureau of Law Enforcement, and, if approved by the Authority Bureau of Law Enforcement, the distributor may replace the malfunctioning machine with a replacement machine of the same make and model; such replacement of a malfunctioning machine shall not count towards the 10% relocation maximum established in subsection A of this section.

The first sentence in this new subsection C clarifies that a distributor may repair or replace an internal hardware component, such as the circuit board or bill acceptor, of a skill game machine. The distributor would need to notify the Authority Bureau of Law Enforcement at least one day prior to the scheduled repair. However, the Authority Bureau of Law Enforcement would not need to formally approve the repair because a hardware repair is readily distinguishable from relocating or replacing an entire machine and the notice would still ensure that the Authority Bureau of Law Enforcement is kept fully apprised and able to perform its oversight duties. Lastly, the repair would not count towards the 10% cap in subsection A of this section as a hardware repair is not the same as relocating a machine to another qualified location, and the distributor should not be punished or negatively impacted for keeping their machines in optimal or working order.

The second sentence in this new subsection C permits a distributor to replace an irreparable malfunctioning machine with a machine of the same make and model. The distributor would still be required to notify and gain approval of the Authority Bureau of Law Enforcement prior to replacing the machine, except that the distributor must only notify the Authority Bureau of Law Enforcement five days prior to replacement. We think five days is ideal because it still provides enough time for the Authority Bureau of Law Enforcement to approve the request and does not require that the distributor have an idle machine for 10 days. Waiting 10 days would not be fair to the distributor as they would have an idle, unusable machine for approximately one-third of a month yet still be required to pay the full $1,200 monthly tax. Similar to the first change, the replacement would not count towards the 10% cap in subsection A of this section as replacing a malfunctioning machine is not the same as relocating a machine to another qualified location, and the distributor should not be punished or negatively impacted because a machine is malfunctioning and cannot be repaired.

• • We also suggest adding the following to this section as subsection D:

D. A distributor may exchange or swap a skill game machine with a different make or model machine provided the distributor (i) does not exceed the total number of machines initially registered pursuant to 3VAC5-80-50, (ii) registers the new machine pursuant to 3VAC5-80-50, and (iii) complies with the notice procedure set forth in subsection B of this section. An exchange or swap under this subsection shall count towards the 10% relocation maximum established in subsection A of this section.

Under this new subsection, a distributor could replace a poor-performing skill game machine with a different machine. For instance, a distributor initially places a single screen skill game machine and it is not performing well enough to be fiscally viable, but the distributor thinks a dual screen machine would perform much better. This subsection would permit the distributor to exchange or swap the single screen machine with a dual screen machine. This is logical because, currently, if a skill game machine does not perform well enough to justify paying the monthly tax and the distributor does not have another qualified location to relocate the machine to, the distributor’s only option is to permanently warehouse the machine to alleviate their monthly tax burden. This in turn hurts the Commonwealth as it would be one less machine from which the state receives the $1,200 monthly tax. This new subsection D, on the other hand, would give distributors one last option or alternative before permanently warehousing the machine and decreasing the tax revenue the Commonwealth ultimately collects. Importantly, this new subsection prevents an increase in the total number of machines, requires registration, and ensures notification to the Authority and requires its approval pursuant to the procedure established in subsection B of this section. Moreover, by including such an exchange or swap in a distributor’s 10% relocation allowance under subsection A, the Authority can remain assured that there is a hard maximum cap and that its agents and employees will not get bogged down or lose track of the machines.

Regulating gaming devices in any state is important. what also is important is that all locations that have, or would like to have Skill Games, employ local residents who in turn, spend in their communities. Many small businesses are struggling these days because of COVID -19. They are struggling to re-open and find new revenue streams. I believe that the $1,200 tax per machine will result in a monopoly for the existing distributors and may result in them reducing the number of machines that they have per location not just to be in compliance, but for the cost. For the small businessman it may be impossible to pay the 1,200.00 tax per machine.

As a small business owner in Security Surveillance, I have to pay license fees and this is my opinion as a small business owner. Having to pay $1,200.00 per machine would be challenging. A reasonable fee per machine or location, plus a tax on net profits would be more palatable. 

I was told by a county sherrif ( carolina county) that we were not permitted skill  games in their county.Other places have them in the county already.Anyone know whats up with that? Please let us know..Thanks Mark Edwards ceo fishgamesofamerica PS  We are not operating Fishgames in Virginia. 

I am the small business skill game operator. I have currently only 10 games in 3 locations. My question is; how many games I need to register now, do I need to register only 10 games or I can register more than 10 games in the hope that in future I get other location and I put more machines. If I have to register only 10 games with the 10% relocate rule I can only relocate 1 game, I don’t see any growth in the business  because I can’t add more skill games and placed them in the ABC retail locations. And later it forces me to close the business if my location is not doing well. I think the purpose draft/regulation will only help those who already have majority share in the market and eventually create business for only few people. Please consider following two things to save small operator business.

1.  Please remove the 10% relocation rule.
2. Also please allow us to register more than the numbers of games we have currently in the possession which helps us to find new location and place skill games. As of result of this state not only generate more tax revenue and also new location will have opportunity to generate revenue from skill games.

Thank you.

I need clarification on the fish games.  There is only one game board per cabinet but the cabinet can have anywhere from 4 to 10 players.  Would a fish game be taxed $1200 or would it taxed according to how many players the cabinet is?  

Also does the warehouse have to be located in VA or can it be located out of state?

Working with several Truck Stops in the Commonwealth SEAM has determined that a minimum of twenty four skill game machines are required at a Truck Stop. These games or machines will be placed in several location within the Truck Stop to service the needs of the hundreds of Commercial Drivers that visit the facilities each day. If the number of machines drops below twenty It becomes difficult to service the needs of the customers and to prevent waiting lines from forming. Therefore, I would respectfully request that the number of skill games allowed in a Truck Stop be no less than twenty four. 

It should also be noted that the many ABC License locations are under 2000 sq ft. and under the current draft regulation will be allowed 6 machines. Whereas, many Truck Stops are over 20,000 sqft. and will be limited to 12 machines. It would be a more efficient program to manage for the VA. ABC if more machines are allowed at each locations. 

Many Truck Stops do not have ABC Licenses therefore they will be unable to combine the c-store component with the Truck Stop component to reach twenty machines which would or should be the bare minimum for a Truck Stop. 

Executive Summary: As the Commonwealth of Virginia works to finalize rules and regulations for the play and taxation of skill game machines, it is critical that each of the issues raised in this document are addressed. Each issue, the suggested amendment, and the Distributor Comments are intended to provide clarity on key issues to benefit all skill game machine distributors. The changes and clarifications sought in this document ensure we maximize revenues for the Commonwealth of Virginia and small business owners particularly in the wake of the Covid-19 pandemic.

In this comments, we raise the immediate issues which require amendments. The justification and reasoning behind those changes are detailed below. It is critical that each skill game machine distributor clearly understands the proposed regulations and operates in a manner that conforms with the law and all applicable regulations.

ISSUE #1 & SUGGESTED AMENDMENT:

Current Regulation and Suggested Redline Changes to: 3VAC5-80-80 - Movement of Skill Game Machines

1. Skill game machines may be relocated from one qualified location to another qualified location or warehoused and subsequently placed in any qualified location provided however; from July 1, 2020 through September 30, 2020, a distributor may not relocate skill game machines in excess of 40% of the total number of skill games initially registered and available for play on June 30, 2020, per month; and from October 1, 2020 through July 1, 2021, a distributor may not relocate skill game machines in excess of 20% of the total number of skill games initially registered and available for play on June 30, 2020, per month, by any distributor.

Distributor Comments

The regulation as proposed appears to track the movement of skill game machines that are legitimately placed, taxed, and labeled as required by other proposed regulations. 

As the regulations are proposed, 3VAC5-80-80 does not increase the tax, change the number of games, or enhance the ability of the taxing authority to monitor skill game machines. 

This regulation greatly increases the bureaucracy needed to regulate this industry, but; does not enhance the enforcement of taxation. Properly labeled machines are already subject to reporting monthly and machines that are not properly labeled or placed in qualified locations are already penalized in other proposed regulations. 

Additionally, as we are all aware, neither the administration nor the legislature, could anticipate then, nor anticipate now, the depth and the breadth of damage being caused daily to local businesses. With most restaurants and bars still shutdown, neither location owners nor skill game distributors can effectively or economically plan when or if these businesses will reopen.

Consequently, skill game machine distributors will need additional time to assess the market and must be afforded the flexibility to freely return games to and from their warehouse facilities back to the marketplace as the economy and restaurant and bars begin to reopen. Current language contained within the proposed regulations initiates an artificial cap on the number of skill game machines available for movement out of a warehouse or between locations. These proposed regulations would leave all skill game distributors with no choice but to drastically reduce the number of skill game machines available for play on June 30, 2020.

We would suggest the above red-line language revisions which increases the percentage of games that can be moved during the first three months to remove skill game machines not available for play from the market and give any Distributor greater flexibility to return skill game machines to and from the market. Beginning on October 1, the amended language would allow for 20% of the total number of skill games initially registered and available for play on June 30, 2020, per month, to be moved or relocated. Increasing the ability to move skill game machines increases the ability for the industry to adapt to unforeseen market concerns, like another Covid-19 outbreak.

ISSUE #2 & SUGGESTED AMENDMENT:

3VAC5-80-130 - Referral to commonwealth attorney.

In the event that the authority determines that an illegal gambling device is located in a retail licensed establishment or truck stop, such skill game may constitute illegal gambling activity pursuant to § 18.2-331 of the Code of Virginia, and the authority shall refer such allegation to the Commonwealth's Attorney for the jurisdiction in which the skill game is located.

Distributor Comments

In order to protect the market and ensure compliance with all regulations and laws, it is crucial that 3VAC5-80-130 more clearly explain that any skill game operated for play by the public which awards any prize redeemable for cash in the Commonwealth must be operated within an ABC retail establishment or truck stop. Any games outside of those establishments shall be considered illegal and the owners of those games and establishments are undermining the legislation and as such will be presented to the Commonwealth Attorney for prosecution. Without absolute rigid enforcement of this clause, nefarious Manufacturers, Operators, and Locations would simply open without an ABC license, or drop their current ABC license in order to operate without paying the tax per terminal.

This behavior would be a large stain on the efforts by the Administration, the Legislature, the Tax Department and the ABC greatly diminishing their efforts to help small businesses in Virginia. 

ISSUE #3 & SUGGESTED AMENDMENT:

Suggested Redline Amendment to: 3VAC5-80-60 - Labeling of skill game machines

1. No later than July 20, 2020, the distributor of each skill game placed in an ABC retail licensed establishment or truck stop that they have registered pursuant to 3VAC5-80-50 shall cause to be adhered to each skill game labels as prescribed by the Authority Bureau of Law Enforcement. The authority shall provide the required labels. All labels shall be adhered on the front and rear top panel of all skill games in a conspicuous and visible location to the authority, its law enforcement agents, and players of the game. For added compliance, a third sticker must be adhered inside the locked front door panel. Any skill game without the requisite labels adhered to the skill game machine by July 20, 2020, shall be in violation of this chapter.

Distributor Comments

Having participated in multiple regulatory game labeling or stickering programs across the nation and where asset chain of custody is important to maintain, we have found it practical for many reasons to affix three labels to the same piece of property with the same identity number for skill game machines.

We suggest placement on:

2. 1. 1. Front of the terminal for easy view of inspection.
      2. Inside the locked front door panel. This label is protected from vandalism.
      3. Rear top panel of the terminal which is somewhat protected from vandalism.

The cost to for the additional stickering is de minimis and will eliminate any excuse not to have a sticker on a game which is out for play in the market. Further we believe labels with QR codes embedded will help law enforcement verify authenticity and they are more difficult to copy or produce fraudulently.

ISSUE #4 & SUGGESTED AMENDMENT:

Suggested Redline Amendment to: 3VAC5-80-50 - Initial registration and monthly reporting.

3. Each distributor shall, beginning in the month of August 2020, and no later than the 20th of the succeeding month file with the Authority Bureau of Law Enforcement on such form prescribed by the authority the following requisite information.

Distributor Comments

 The legislation states that the taxation for skill games begins July 1^st, 2020 through June 30^th, 2021. All other businesses file their state sales taxes on the 20^th of the month. By using the 20^th of each month for both Tax Payments and Records submission this allows for the normal business practice of making skill game machine collections every two weeks and as such allows time for accurate reconciliation and tax payments. Any date earlier would not allow for the collection and remittance or accurate data. Payments and

Record submission for July would be on August 20^th and repeat monthly for 11 consecutive months.

ISSUE #5:

3VAC5-80-70 - Initial registration and monthly reporting.

3. No distributor shall locate more than six skill game machines at any ABC retail licensed establishment or more than 12 skill game machines at any truck stop.

Distributor Comments

During the legislative process, we had proposed keeping the number of skill games in locations to 5 terminals within any retail location and 10 terminals within any truck stop. It is our belief the number proposed in the regulations is sufficient. Raising this number substantively has the potential to create destination gaming facilities which was not the intention of this emergency legislation. Rather, the intent was to help those local small business which were affected. We believe increasing the number of terminals that have been proposed in these regulations would foster the growth of mini-casinos or slots parlors.

Mr. Hill,

On behalf of American Amusement, a distributor of Skill Games, I want to thank you for the opportunity to comment.

Over the course of the last 6 weeks, the Virginia Alcoholic Beverage Control Authority (“ABC”) has performed the unenviable task of crafting regulations to govern a highly competitive market. We appreciate the opportunity to comment on these emergency regulations and wish to thank John Daniel and the remainder of the ABC staff for their hard work in providing the regulatory template for the deployment of Skill Games in Virginia (3VAC5-80-10 et seq.).

We seek to provide comments that not only maximize revenues for Virginia’s COVID-19 Relief Fund, but also seeks to provide a regulatory framework that lessens the burden on the ABC, while ensuring the integrity of the law and the protection of the public.

Suggested Language Changes/Edits

3VAC5-80-20

“Skill games” means an electronic, computerized, or mechanical contrivance, terminal, machine, or other device that requires the insertion, of a coin, currency, ticket, token, or similar object to operate, activate, or play a game, the outcome of which is determined by any element of skill of the player and that may deliver or entitle the person playing or operating the device to receive cash, cash equivalents, gift cards, vouchers, billets, tickets, tokens, or electronic credits to be exchanged for cash, merchandise, or anything of value whether the payoff is made automatically from the device or manually.

Each terminal of a skill game machine where a player may play a game shall constitute a game made available for play, regardless of whether it is a standalone terminal or a terminal that is part of a skill game machine that has multiple terminals. Each power supply of a skill game machine shall constitute a game made available play, regardless of whether it is a standalone terminal or a skill game machine with multiple terminals.

-Comment: The idea here is that each machine, regardless of how many terminals are part of the machine counts as one machine. In the alternative, if each terminal is considered a skill game machine, the request is that a skill machine with more terminals than permitted may be disabled to only permit the permitted number of machines.

3VAC5-80-50

C. No distributor shall locate more than six 12 skill game machines at any ABC retail licensed establishment or more than 12 skill game machines at any truck stop.

-Comment: The intent of the legislation is to produce revenue for the Commonwealth. In accomplishing this legislative intent these regulations should equitably apply to retail establishments and truck stops. The only distinguishing feature between truck stops and ABC retail license establishments is simply truck stops, as defined. There may certainly be occasions where ABC retail licensees have significantly more retail space than truck stops, and similarly there may be instances where truck stops have significantly less retail space than ABC retail licensees. Moreover, it seems it appears the large corporate truck stops are receiving more favorable treatment than the local, Virginia owned, small businesses. It is believed that certain market participants have a majority, if not all, of the truck stop locations in Virginia, which not only provides truck stops more favorable treatment, but also provides these certain market participants more favorable treatment.

Additionally, from an enforcement standpoint, requiring parity -- 12 machines per location, regardless of whether it is an ABC retail licensee or a truck stop -- ensures ABC enforcement officers do not have to discern what is or is not a truck stop vs. ABC retail licensee.

3VAC5-80-60

A. No later than July 20, 2020, the distributor of each skill game placed in an ABC retail licensed establishment or truck stop that they have registered pursuant to 3VAC5-80-50 shall cause to be adhered to each skill game a label as prescribed by the Authority Bureau of Law Enforcement. The authority shall provide the required labels. All labels shall be adhered on the side of all skill games in a conspicuous and visible location to the authority, its law enforcement agents, and players of the game. Any skill game without the requisite label adhered to the skill game machine by July 20, 2020, shall be in violation of this chapter.

B. The distributor shall adhere to the front of any skill game machine a notice in font ? Times New Roman Bold ? 16 point as follows: "It is unlawful for any person under the age of eighteen (18) to play this game. The outcome of this game is not regulated by the state."

-Comment: Places the Notice requirements in one place. While not encompassed in the public comment, the addition of subsection B to 3VAC5-80-60 simply moves the clause from 3VAC5-80-120, in order to provide a distributor clarity on its notice requirements.

3VAC5-80-80

A. Once registered with ABC, skill game machines may be relocated from one qualified location to another qualified location, or warehoused and subsequently placed a qualified location, provided however, a distributor may not relocate skill game machines in excess of 20% 10% of the total number of skill games initially registered and available for play on June 30, 2020, by any distributor (e.g., distributor registers 5,000 machines = 1000500 relocations prior to July 1, 2021). A Distributor shall provide notice, as required by subsection E of this section.

- Comment: The current figure of 10% favors those distributors with a larger market share. Specifically, those distributors know where machines perform well and are in turn less likely to move them. Smaller distributors do not have that luxury and will therefore be taking on more risk to find locations that are profitable enough to meet the $1,200 per month tax. Providing the ability to move machines to more profitable locations will ultimately lead to more revenue for the Commonwealth, as well as new and smaller market participants.

B. Should a registered skill game machine malfunction or break, the Distributor may replace the malfunctioning or broken machine with a new machine subject to the notice requirements set forth in subsection E. In the event a skill game machine requires minimal maintenance, such that repair occurs on site, the Distributor need not notify the Authority Bureau of Law Enforcement. In no event, shall the repair or replacement of a skill game machine count towards the 20% relocation maximum established in subsection A of this section.

- Comment: A distributor, who ultimately will be paying the tax and filing monthly reports should be allowed to replace a broken machine with another of the same make and model. It is unreasonable to expect a distributor to wait nearly 2 weeks for approval to fix an idle machine that could otherwise be in operation, yet still be on the hook for the full $1,200 monthly tax. Similarly, if the machine can be fixed on site it is unfair to require the distributor to provide notice and obtain approval for a fix that can occur in a matter of hours.

C. At any time following initial registration of “in play” skill game machines, a Distributor may warehouse, or otherwise store, its skill game machines during the applicable time period. Provided the skill game machine is out of play for the entire month, the Distributor shall not be subject to the tax set forth in 3VAC5-80-90. In the event a Distributor wishes to return its skill game machine to play, a Distributor may return the skill game machine to its last registered location and such return shall not count towards the 20% relocation maximum established in subsection A of this section. In the event the Distributor wishes to return the machine to a new qualified location, such relocation shall count towards the 20% relocation maximum established in subsection A of this section. In both instances, the Distributor shall provide notice to the Authority Bureau of Law Enforcement, as required by subsection E of this section.

D. A Distributor may exchange or swap a skill game machine with a different make or model skill game machine owned by the Distributor, provided the Distributor (i) does not exceed the total number of machines initially registered pursuant to 3VAC5-80-50, (ii) properly registers the skill game machine pursuant to the requirements of 3VAC5-80-50, and (iii) complies with the notice requirements set forth in subsection E of this section. Any exchange or swap under this subsection shall count towards to 20% relocation maximum established in subsection A of this section.

E. A Distributor shall provide notice to the Authority Bureau of Law Enforcement at least 5 days prior to the relocation or replacement date on a form provided by the Authority Bureau of Law Enforcement, with such information including the specific identifying number, the address of the new qualified location, the address of the prior qualified location, and the proposed date of relocation. In the event of replacement, the Distributor shall provide an image of the obliterated specific identifying number and request for new specific identifying number. No skill game machine shall be relocated or replaced prior to approval by the Authority Bureau of Law Enforcement.

- Comment: Again the 5-day notice is a reasonable and fair window for both regulators and distributors. From a regulatory standpoint it is sufficient time for the Authority Bureau of Law Enforcement to be made aware of a relocation, repair or replacement. A distributor is given the ability to keep their machines in optimal working order to service their customers and meet the tax goals established by the legislation.

Additional Comments that have no provided language:

For ease of determining where skill game machines are, ABC shall assign an identifiable number, located on the face of the sticker, that is attributable to each Distributor. I.e. If a Distributor A registers 100 machines, Distributor A’s stickers are labeled 1-100. The specific number is then required as part of the monthly reporting (3VAC5-80-50), and required as part of any movement of machines. (Additionally, ABC may reserve an additional 20 stickers to be issued as part of relocation maximum- in such instance Distributor A would be appropriated stickers 1-100 (with 101-120 serving as its relocation maximum).

Additionally, in order to obtain an accurate count on the location and number of machines provided by and in play by a distributor, we request ABC impose a requirement that as part of the registration of games in play, all Distributors shall provide a location agreement between a Distributor and Location, with an effective date of July 1, 2020.

Again, we thank you for the opportunity to comment, and would be glad to answer any questions moving forward.

Jeff Smith, IV

If we can not change machine , there will be big problems, we don’t know which game people like where so we have to try and if store doesn’t do much then we can take it if we have to pay 1200 month so it’s not fair any way.

Hi

 As vander SWAPPING  skill Game Machine limit should be 50%  OR more,  it’s always hard to decide what Game customer likes  Also requesting for lower fees per machine. 

In this current times of Covid19, small businesses are suffering the most. Government’s decision to charge $1200 per machine per month, would hurt small business revenue drastically. This is very harsh fee for business owners to operate their businesses. Please suspend this egregious fees on skill gaming machines.

I would like to suggest that as a distributor, we be allowed to register few extra machines to meet the needs of new locations, as it will not be fair to the new locations that open after July 1. Please understand and provide some leaveway, so it is worthit for us as distributor to invest in the machines and provide our services to customers. This will also allow commonwealth to take in more towards the COVID funds as when this machines are placed in location, it will generate additional $1,200/machine/month. Please provide some text stating we can add new machines for brand new locations only. 

As for relocation, please allow us to be able to relocate all machines on as needed basis. Increase the 10% relocation condition to either 100% relocation allowed or atleast 50%. 

The draft of this bill is not ready to be passed. There are many nuisances and clarifications missing. There are several items that are not clear or even mentioned. This does not account for current contracts and situations and does not include potentional positions that small businesses might be in. The $1,200 is beyond unfair to pose on small business owners in such a rough time, especially considering the ongoing pandemic. This draft needs a lot of work and should include a townhall with distributors and small business owners that have this machine in their stores.

For us small distributors, this legislation is not fair because since we have fewer machines compared to bigger distributors, we are put at a disadvantage in terms of being able to relocate machines. They would be able to gain a lot more business where as because of the relocation clause, we can't as we will surpass that a lot soon. This stops us from gaining more business and we can't expand any further.

This is very unfair for store as it is giving monopoly to distributors. Due to the relocation clause which allows only 10% machines to be relocated, it is going to put small distributors out of business and the bigger distributors are going to treat the stores unfairly and control the stores. I have 3 stores under construction and I will not be able to get the machines as per current requirements, so I will like to kindly request that there is a clause added where my new stores are allowed to have the machine. The distributors I have spoke to have told me that they will not be able to provide me machines because they are going to be registering around 50 machines  only due to the $1,200 liability which only allows them to move 5 machines to a different location,and due to that they wont have any machines to relocate to my location. I will like to even request that the distributors be allowed to have machines for stores that are under construction or stores that have already applied for ABC license. 

During the recent hard times due to COVID-19, small business owners seem to be thrown under the bus and being pressured from distributors as well as state government with unfair laws . If the 10% relocation law and $1200 per machine goes into effect then it would be hard for small business owners to move around the machines and will also be hard to acquire the new ones. As a small business owner I would like to request that distributors and government come on a common ground which helps all the three parties. 

First of all, I would like to Thank Virginia Alcoholic Beverage Control Authority for the opportunity to comment.

3VAC5-80-50.

C. No distributor shall locate more than six skill game machines at any ABC retail licensed establishment or more than 12 skill game machines at any truck stop.

Comment: This section is not clear as there are so many locations at the moment with more than one operator. Can both operators register six machines? Or maximum 6 machine at any ABC retail licensed establishment. Moreover, adding limit defeat the purpose of this legislation. Locations which can afford more than 6 machines will be caped at 6 machines where on the other hand location can hardly afford 1 machine will be allowed to keep 6 machines. Since $1200 is significant amount no cap should be placed as no business owner/operator will keep more than required and it will help fulfill the purpose of this legislation.

3VAC5-80-80. Relocation of skill game machine from one establishment to another.

A. Skill game machines may be relocated from one qualified location to another qualified location or warehoused and subsequently placed a qualified location, provided however, a distributor may not relocate skill game machines in excess of 10% of the total number of skill games initially registered and available for play on June 30, 2020, by any distributor (e.g., distributor registers 5,000 machines = 500 relocations prior to July 1, 2021).

Comment : 10% relocation cap would favor those distributors with larger market. Again, any cap would defeat purpose of this legislation as it will reduce number of machines among smaller distributor. For example A distributor decided to place 2 machine at a particular location where 1 machine works great however other one is not. Distributor should be allowed to replace the machine which is not working as per expectation otherwise that machine will be reduced hence $1200 Tax will reduce along with the machine reduction.

Additionally, all distributor should communicate clearly with locations regarding $1200 tax if any portion of tax is to be collected with location as to determine by location if its affordable especially with 10% cap. This will avoid injustice to location any dispute post July 1^st. to avoid dispute post July 1^st all distributor should take an approval from location, this will also help in the case there are more than one distributor providing service at any location.