Administrative Code

Virginia Administrative Code
12/2/2022

Part V. Network Bingo

Article 1
Network Bingo Providers

11VAC15-40-440. Network bingo providers: application, qualifications, suspension, revocation or refusal to renew permit, maintenance, and production of records.

A. Prior to providing network bingo, a network bingo provider shall submit an application on a form prescribed by the department and receive a permit. A $500 application fee payable to the Treasurer of Virginia is required. In addition, a network bingo provider must be authorized to conduct business in the Commonwealth of Virginia, which may include, but not be limited to, registration with the State Corporation Commission, the Department of Taxation, and the Virginia Employment Commission. The actual cost of background investigations for a permit may be billed by the department to an applicant.

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

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

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

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

4. Has been convicted of or pleaded nolo contendere to any crime as specified by § 18.2-340.34:2 B of the Code of Virginia; has had any license, permit, certificate, or other authority related to activities defined as charitable gaming in the Commonwealth suspended or revoked in the Commonwealth or in any other jurisdiction; has failed to file or has been delinquent in excess of one year in the filing of any tax returns or the payment of any taxes due the Commonwealth; or has failed to establish a registered office or registered agent in the Commonwealth if so required by § 13.1-634 or 13.1-763 of the Code of Virginia. As this provision relates to employees or agents, it shall only apply to individuals involved in sales to or solicitations of customers in the Commonwealth of Virginia;

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

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

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

C. A network bingo provider shall not distribute a network bingo system, network bingo supplies, or other incidental items to perform network bingo to anyone in the Commonwealth of Virginia or to an organization for use upon the premises owned or exclusively leased by the organization in which the portion of the premises are qualified to sell pull-tabs to members and their guests only as authorized by § 18.2-340.26:1 of the Code of Virginia. However, a network bingo provider may:

1. Distribute such a system, supply, or item to a qualified organization authorized to conduct charitable gaming for use during a session that is open to the public and not limited to members and their guests only.

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

All such distributions shall be documented pursuant to subsection G of this section and reported to the department pursuant to subsection I of this section.

D. No network bingo provider, its agents, or its employees may be involved in the management, operation, or conduct of charitable gaming in the Commonwealth of Virginia. A network bingo provider, its agents, or its employees may call a network bingo game or distribute network bingo prizes associated with the network bingo provider's network bingo system. No member of a network bingo provider's immediate family or person residing in the same household as a network bingo provider may be involved in the management, operation, or conduct of charitable gaming of any customer of the network bingo provider in the Commonwealth of Virginia. No network bingo provider, its agents, or its employees may participate in any charitable gaming of any customer of the network bingo provider in the Commonwealth of Virginia. For the purposes of this chapter, servicing of the network bingo system shall not be considered conduct or participation.

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

1. A search of criminal history records on all officers, directors, and owners; and

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

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

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

G. Network bingo providers shall document each sale of network bingo supplies, equipment, and other incidental items to perform network bingo to any person for use in the Commonwealth of Virginia on an invoice, which reflects the following:

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

2. Date of sale, lease, or rental and location where the network bingo supplies, equipment, and other incidental items to perform network bingo is shipped or delivered, if different from the billing address;

3. Form number, serial number, quantity, and purchase or rental price of the network bingo supplies, equipment, and other incidental items to perform network bingo;

4. Quantity of network bingo cards sold, the cost per card, and the selling price per card; and

5. Date of the network bingo game in which the qualified organization participated, the start time and end time of the game, and the number of balls called during the game.

H. Network bingo providers shall ensure that two copies of the detailed invoice are provided to the customer for the sale of network bingo supplies, equipment, and other incidental items to perform network bingo.

I. Each network bingo provider shall provide a report to the department by March 1 of each year on the sale of network bingo supplies, equipment, and other incidental items to perform network bingo for the fiscal year ending December 31 of the previous year to each organization in the Commonwealth of Virginia. This report shall be provided to the department via a department-approved electronic medium. The report shall include the name, address, and organization number of each organization and the following information for each sale or transaction:

1. Date of sale, lease, or rental and location where the network bingo supplies, equipment, and other incidental items to perform network bingo is shipped or delivered, if different from the billing address;

2. Serial number, quantity, and purchase or rental price of the network bingo supplies, equipment, and other incidental items to perform network bingo;

3. Quantity of network bingo cards sold, the cost per card, and the selling price per card;

4. Date of the network bingo game in which qualified organizations participated, the start time and end time of the game, the number of balls called during the game, the total gross receipts for the game; and

5. Prize amount awarded to the winning player and which organization sold the winning network bingo card.

J. A network bingo provider shall maintain documentation on all deposits and disbursements into the prize pool for the network bingo game.

K. A network bingo provider, its agents, and its employees; members of a network bingo provider's immediate family; or persons residing in a network bingo provider's household shall not make any loan directly or indirectly to any organization or officer, director, game manager, or entity involved in the management, operation, or conduct of charitable gaming of the network bingo provider's customer located in the Commonwealth of Virginia.

L. A network bingo provider, its agent, or its employee shall not directly or indirectly provide a rebate, discount, or refund to any person other than an organization that purchases, rents, or leases network bingo supplies, equipment, and other incidental items to perform network bingo. All such transactions shall be recorded on the network bingo provider's account books.

M. A network bingo provider shall not rent, sell, or otherwise provide network bingo supplies, equipment, and other incidental items to perform network bingo unless the network bingo provider possesses a valid permit in the Commonwealth of Virginia.

N. A written agreement specifying the terms of lease or rental between the network bingo provider and the qualified organization shall be required for any equipment used to perform network bingo.

O. A network bingo provider shall record the following information on each winner of a network bingo game:

1. Name and address of the winner;

2. Name of the qualified organization that sold the winning network bingo card;

3. Date and time when the winning network bingo card was purchased by the winner; and

4. Location where the winning network bingo card was purchased by the winner.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

Article 2
General Requirements

11VAC15-40-450. Approval of equipment used to perform network bingo.

A. The department shall set manufacturing and testing criteria for all equipment used to perform network bingo. Equipment used to perform network bingo shall not be sold, leased, or otherwise furnished to any person in the Commonwealth of Virginia for use as part of network bingo until an identical sample of equipment containing identical proprietary software has been certified by a testing facility that has been formally recognized by the department as a testing facility that upholds the standards of integrity established by the department. The testing facility must certify that the equipment conforms, at a minimum, to the requirements set forth in this chapter. Once the testing facility reports the test results to the department, the department will either approve or disapprove the equipment and inform the network provider of the results. If any such equipment does not meet the department's criteria, it shall be recalled and shall not be distributed in the Commonwealth of Virginia. The cost of testing shall be borne by the network provider of such equipment.

B. No network bingo provider shall knowingly sell or otherwise provide to an organization and no organization shall knowingly use equipment to perform network bingo unless it conforms to the requirements set forth in this chapter.

C. If a defect in any equipment used to perform network bingo is discovered by or reported to the department, the department shall notify the network bingo provider that is using the equipment containing the alleged defect. Should the department, in consultation with the network bingo provider, determine that a defect exists and should the department determine the defect affects game security or otherwise threatens public confidence in the game, the department may, with respect to any equipment used to perform network bingo still located within the Commonwealth of Virginia, require the network bingo provider to issue a recall of all affected equipment.

D. Department employees shall have the right to inspect all equipment used to perform network bingo. The department, at its discretion, may require additional testing of any equipment to perform network bingo at any time. Such additional testing shall be at the network provider's expense and shall be a condition of the continued use of such equipment.

E. Equipment used to perform network bingo shall have a permanently affixed identification badge that cannot be removed without leaving evidence of tampering. This badge shall be affixed to the exterior of the equipment and shall include the following information:

1. Manufacturer name;

2. A unique serial number;

3. The equipment model number;

4. The date of manufacture; and

5. Any other information required by the department.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

Article 3
System Requirements

11VAC15-40-460. Location of equipment.

All equipment used to perform network bingo must be physically located within the boundaries of the Commonwealth of Virginia.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

11VAC15-40-470. Communications and network requirements.

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

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

C. Connections between all components of the network bingo system shall only be through the use of secure communication protocols that are designed to prevent unauthorized access or tampering, employing Advanced Encryption Standard, or equivalent encryption.

D. A firewall or equivalent hardware device configured to block all inbound and outbound traffic that has not been expressly permitted and is not required for continued use of the network bingo system must exist between the network bingo system and any external point of access.

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

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

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

H. If a wireless network is used, wireless products used in conjunction with any gaming system or system component must meet the following minimum standards:

1. Employ a security process that complies with the Federal Information Processing Standard 140-2 (FIPS 140-2); or

2. Employ an alternative method, as approved by the department.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

11VAC15-40-480. Backup and recovery.

A. A network bingo system shall have a separate physical medium for securely storing data for the network bingo game, which shall be mirrored in real time by a backup medium.

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

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

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

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

1. All significant events;

2. All accounting information;

3. Auditing information, including all sales and disbursements; and

4. Employee files with access levels.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

11VAC15-40-490. Security requirements.

A. A network bingo system shall not permit the alteration of any accounting or significant event information that was communicated from a point-of-sale terminal without supervised access controls. In the event financial data is changed, an automated audit log must be capable of being produced to document the following:

1. Data element altered;

2. Data element value prior to alteration;

3. Data element value after alteration;

4. Time and date of alteration; and

5. Personnel that performed alteration.

B. A network bingo system must provide password security or other secure means of ensuring data integrity and enforcing user permissions for all system components through the following means:

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

2. The network bingo system must have multiple security access levels to control and restrict different classes;

3. The network bingo system access accounts must be unique when assigned to the authorized personnel and shared accounts amongst authorized personnel must not be allowed;

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

5. A program or report must be available that will list all registered users on the network bingo system including their privilege level.

C. All components of a network bingo system that allow access to users, other than the player, must have a password sign-on with at least two-level codes comprising the personal identification code and a personal password.

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

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

D. A network bingo system must have the capability to control potential data corruption that can be created by multiple simultaneous log-ons by system management personnel.

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

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

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

F. A network bingo system may be used to configure and perform security checks on the point-of-sale terminals, provided such functions do not affect the security, integrity, or outcome of any game and meets the requirements set forth in this chapter regarding program storage devices.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

11VAC15-40-500. Randomization.

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

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

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

B. A network bingo system shall utilize randomizing procedures in the creation of network bingo cards.

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

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

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

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

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

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

11VAC15-40-510. Point of sale terminal.

A. A network bingo system may utilize a point-of-sale terminal that is capable of facilitating the sale of network bingo cards. The point of sale may be entirely integrated into a network bingo system or exist as a separate entity.

B. Point-of-sale use is only permissible when the device is linked to an approved network bingo system.

C. If a network bingo system utilizes a point of sale, it shall be capable of printing a receipt for each sale or void. The receipt shall contain the following information:

1. Date and time of the transaction;

2. Dollar value of the transaction;

3. Validation number, if applicable;

4. Quantity of network bingo cards purchased;

5. Transaction number;

6. Point-of-sale identification number or name; and

7. Date and time when the network bingo game will begin.

D. The following point-of-sale report shall be generated on demand. Sales transaction history report shall show all sales and voids by session and include the following information:

1. Date and time of the transaction;

2. Dollar value of the transaction;

3. Quantity of network bingo cards sold;

4. Transaction number;

5. Point of sale identification number or name; and

6. Date and time of the network bingo game.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

11VAC15-40-520. Game play requirements.

A. Any device that sells network bingo cards shall be clearly labeled so as to inform the public or game worker that no one younger than 18 years of age is allowed to play or redeem a network bingo card.

B. A network bingo provider shall have physical on-site independent supervision while the numbers for a network bingo game are called by a live caller. This independent supervision shall be unbiased in verifying the outcome of the network bingo game and uphold the department's objective of maintaining the highest level of integrity in charitable gaming. A written agreement specifying the terms of any arrangement between the entity or person providing the physical on-site independent supervision and the network bingo provider shall be required prior to any supervision being performed on the network bingo game. This written agreement shall be maintained by the network bingo provider for a minimum of three years from the close of the fiscal year, unless otherwise specified.

C. A network bingo provider shall ensure qualified organizations participating in its network bingo comply with § 18.2-340.28:1 F of the Code of Virginia.

D. A network bingo provider or the live caller shall announce the prize amount and the predetermined pattern to players immediately before the start of the network bingo game. Each location where a qualified organization is selling network bingo cards shall be equipped to visually display the broadcast or signal of the numbers as they are being called by a live caller.

E. Gross receipts from the sale of network bingo cards shall be allocated in the following manner:

1. Up to 50% of such receipts to the organization selling network bingo cards;

2. Up to 50% of gross receipts to the prize pool; and

3. Any remaining amount to the network bingo provider.

However, if the prize pool reaches the maximum prize limitation, then the network bingo provider shall enable the organization to retain those gross receipts normally allocated to the prize pool.

F. All written agreements specifying the terms of any arrangement between the qualified organization and network bingo provider shall be maintained by both parties for a minimum of three years from the close of the fiscal year, unless otherwise specified.

G. Network bingo prizes must be claimed by the player within 30 days of winning the game and if not, the network bingo provider shall roll the unclaimed prize into the prize pool for the next network bingo game. The network bingo provider shall pay the prize by check to the winning player within 30 days. If the outcome of a network bingo game results in multiple winning players, then the prize amount shall be equally divided among them.

H. No single network bingo prize shall exceed the prize limitation set forth in § 18.2-340.28:1 I of the Code of Virginia.

Statutory Authority

§ 18.2-340.15 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 33, Issue 4, eff. November 17, 2016.

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