H. B. 2594


(By Delegates Pettit, Hutchins and L. White)


[Introduced March 18,1997; referred to the

Committee on Finance.]




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, 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.

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, 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 coins and 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, coins or 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, coins or 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, coins, 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 coin or token payouts. The following information shall be recorded on the ticket when credits accrued on a video lottery terminal are redeemed for cash:
(i)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:
(i)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, coins and tokens won;
(4)Number of credits paid out by a printed ticket;
(5)Number of coins or 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.
§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.

NOTE: The purpose of this bill is to expand the payment options for video lottery winnings to include non-cash prizes and coins, to allow use of tokens or vouchers and to increase the maximum wager per game from two dollars to ten dollars.

NOTE: Strike-throughs indicate language that would be stricken from the present law and underscoring indicates new language that would be added.<<>>