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DELAWARE STATE LOTTERY

VIEWS: 36 PAGES: 29

									June 12, 2009



To:     Prospective Vendors



RE:     Request for Proposals (RFP) DSL 2009-1: Sports Wagering System and Services



The Delaware Lottery has issued this addendum to clarify DSL 2009-1: Sports Wagering System and
Services based on questions that have been submitted by prospective vendors within the question and
answer period.

Clarifications are organized by RFP section and numbered requirement in a question and answer format.
Each vendor’s question is listed followed by the Lottery’s clarification. In cases where the same or
similar questions were posed, only a single response may be provided. For questions that were posed
without reference to a specific RFP section or requirement number, those questions and responses, or
citations to applicable clarifications, are provided in a digest at the end of the document.

We also note that there are no items 1.31, 2.23, 2.30, 2.44, 3.6.4, or 3.6.5. These gaps should be
interpreted as an abridgement of the numbering scheme, not missing items.

Additionally, prospective bidders are advised that, pursuant to the recent Delaware Supreme Court
advisory opinion, the Lottery intends for its sports lottery to offer straight bet wagers as described in
Section 4.5(1)(A). Bidding vendors are advised that they are still required to complete both Section
4.5(1)(A) (straight bets and parlay wagers) and Section 4.5(B) (parlay wagers only). The Lottery
reserves the right to use straight bet wagers and/or parlay wagers.

The Delaware Lottery thanks all prospective vendors for their inquiries and interest in RFP DSL 2009-1:
Sports Wagering Systems and Services.




Mr. Vernon Kirk, Principal Deputy
Delaware Lottery
1575 McKee Road
Dover, Delaware 19904
Telephone: (302) 744-1604
FAX: (302) 739-6706
Email: vernon.kirk@state.de.us
Delaware State Lottery                                                             DSL 2009-1: Addendum




Addendum: Questions and Clarifications
Part 1 – RFP Content

1.0 Introduction (p. 6)

   The Term of the Contract may be shortened upon loss of statutory authority by the Lottery.
   Would the Lottery please confirm that such a termination of the Contract would be considered –
   under the provisions of Section 2.32 – Termination without Cause or for Convenience?

   No, Section 2.32 would not apply in this case.


1.0(1) Introduction; 3.9.2, Sports Wagering Experience (pp. 6, 67)

   This section of the RFP requires that the vendor have one or more current clients, either
   governmental entities or private entities, to whom it has supplied a Sports Wagering System.
   Section 3.9.2 of the RFP requires that the vendor have one or more North American clients to
   whom it has supplied a Sports Wagering System of the nature approved by the DE Legislature.

   Would the Lottery please clarify this inconsistency? Further, as this latter requirement
   significantly limits the number of entities eligible to respond to this bid, would the Lottery
   consider modifying this requirement to include vendors that currently supply a Sports Wagering
   System anywhere in the world that is of the nature approved by the DE Legislature? Doing so
   would eliminate the above inconsistency as well as provide the Lottery with a significantly larger
   number of qualified bidders.

   The words “North American” are stricken from the RFP in 3.9.2. Section 1.0 is the correct
   interpretation.


1.0(2) Introduction (p. 6)

   This section of the RFP requires that any vendor submitting a proposal must have a risk
   management operation as a bookmaker currently licensed to operate, and operating, sports
   books in the U.S. Will the Lottery please confirm that this requirement can be subcontracted to a
   person or entity that meets the requirements?

   Yes, this requirement can be met through subcontracting.


1.0(3) Introduction (p. 6)

   This section of the RFP requires that any vendor submitting a proposal must be a technology
   system provider licensed to operate lotteries in the U. S. Currently, all lottery licenses are held

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Delaware State Lottery                                                           DSL 2009-1: Addendum


   by state lottery agencies. As no private organizations in the U.S. hold lottery licenses, would the
   Lottery modify this requirement as follows?

   "Technology system provider that currently provides lottery goods and services to one or more
   lotteries in the United States.‖

   The Lottery will not change the language of the RFP since it is derived from Delaware’s sports
   wagering legislation and the Lottery has no authority to consider alterations. The Lottery does
   consider, however, that companies that have been selected to operate US lotteries by
   authorized (“licensed”) agencies of the states have de facto been licensed and meet the
   requirement.


1.10.1 VOLUME 1, Technical (Non-Price) Proposal (p. 10)

   Would the Lottery please advise how bidders should interpret Subsections 2 and 3 of
   Section 1.10.1?

   Subsection 2 provides vendors with an opportunity to list all exceptions to the RFP specifications
   or terms and conditions.

   Subsection 3 provides that the vendor must formally agree to comply with all Terms
   and Conditions.

   If, following Q&A, a bidder needs to take exception to a term or condition of the RFP, how does
   the bidder do so in a way that would not conflict with Subsection 3?

   Subsection 2 requires that should the Vendor not be able or willing to perform any of the
   specification of the RFP, the Vendor must take exception to that specification in its proposal.
   Failure to do so indicates that the Vendor is able and willing to follow the specifications as
   written. In addition, subsection 2 provides the Vendor with the opportunity to take exception
   to any of the contractual terms and conditions listed in the RFP. Failure to take exception to
   any term or condition in the RFP indicates that all terms and conditions are accepted by the
   Vendor as stated in Subsection 3.


   All exceptions taken in a Vendor’s proposal will be considered in the evaluation process.


1.15 Demonstrability of Proposed System (p. 10)

   How much notice will be given by the Lottery that a demonstration is required, and where will
   demonstrations be expected to take place?

   The Lottery does not anticipate requiring demonstrations and would specifically request a
   demonstration only under exceptional circumstances. Adequate notice would be given. At this
   time the Vendor should not initiate preparations for a demonstration based on Section 1.15.

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Delaware State Lottery                                                           DSL 2009-1: Addendum


   Vendors will be required to make a presentation to the Lottery in Dover as part of the proposal
   evaluation, and if they so opt, the Vendor can provide a demonstration on video, stand-alone,
   or by other means during that presentation. However, a demonstration is not required as part
   of the presentation in Dover.


       1. Will a demonstration of all major elements be required during the vendor presentation?

       2. If not during the presentation when is the demonstration required?

       3. Can the demonstration occur at the vendor’s location?

       4. Can the demonstration be delivered via video?

       5. Please detail the expectations of the demonstration.

   The Lottery does not anticipate requiring demonstrations of the Vendors; however the right is
   reserved if circumstances are extraordinary. Vendors should not undertake preparations for a
   demonstration at this time on the basis of Section 1.15. Bidding Vendors will be required to
   make a Proposal presentation in Dover as part of the evaluation, and may choose to include a
   video demonstration, a stand-alone demonstration, or alternative as part of the presentation.
   Such a demonstration of processing capability is not, however, required at the Dover
   presentation.


1.20 Disclosure and Ownership of Proposal Contents by the Lottery (p. 14)

   Will all documents that are submitted as part of a proposal, but not as part of ―Proprietary
   Information‖ (1.21), including pricing information, be publicly available whether the bidder is
   successful or not?

   Yes, proposal contents become available for review, including pricing. Proprietary
   information would not normally be made available by the Lottery but may be if the Lottery is
   compelled by Delaware State policy or law. It is up to the Vendor, not to the Lottery, to defend
   against the release of its proprietary information.


1.21 Confidential Proposal Materials (p. 14)

   Will the Lottery please confirm that all competitive, confidential, trade secret and proprietary
   information set forth in the offerors’ proposals will not be disclosed to the extent such
   information is excluded from disclosure pursuant to Delaware law and not without prior
   notification to the offeror?

   Yes. The Lottery will not disclose properly marked Confidential and Proprietary information
   unless compelled by Delaware State policy or law. The Vendor will be notified if such a
   disclosure is requested. It is up to the Vendor, not to the Lottery, to defend its proprietary
   information rights.

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1.22 Joint Proposals (p. 15)

   This section provides in pertinent part: ―Services specified in the proposal shall not be
   subcontracted without prior written approval by the Lottery.‖ Can the Lottery confirm that any
   subcontractor identified in the winning bidder’s proposal is approved by the Lottery?

   A subcontractor identified and described in the winning Proposal will have been reviewed by
   the Lottery and can be considered approved. A subcontractor that appears at a later time
   during the implementation or production phases is subject to approval by the Lottery.


1.29 Proposal Tenure and Proposal Bond (p. 16)

   Is a letter of credit an acceptable form of security in lieu of a Bid Bond?

   Yes, but it must equal at least $50,000.


1.30 Disclosure and Investigation during the Proposal Evaluation (p. 17)

   In addition to the individuals addressed will information be required of officers, directors, and
   owners of 5% or more?

   Section 1.30 of the RFP allows the Lottery to seek information regarding any individuals or
   organizations related to the Vendor. This includes officers, directors, and owners. The section
   does not limit such an investigation to owners whose share is beyond a particular percentage.


Part 2 – Terms and Conditions

2.1 Contract Elements (p. 20)

   Will the successful vendor assume responsibility for writing the contract?

   The Lottery will assume responsibility for writing an initial draft of the Contract.


   As to the order of controlling documents should there be a discrepancy, please clarify whether
   the ―Modifications and Clarifications‖ document applies to the ―Clarifications and Addenda to
   this RFP‖ document or to the ―Any modifications to the Vendor’s Proposal, if properly
   submitted and any Proposal Clarifications‖ document.

   “Modifications and Clarifications” in the text refers to the Vendor’s changes regarding the
   Proposal. Amendments to the RFP will be considered part of the RFP.




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2.2 Contract Obligations (p. 20)

   Whether the Successful Vendor resulting from this RFP refers to both the equipment supplier and
   the lottery sports book risk manager.

   The Successful Vendor is the organization responsible for the Proposal and for meeting all the
   Contract obligations. The Successful Vendor is responsible for any partners, consultants,
   suppliers, or subcontractors that it may engage to meet these obligations.


2.6 Emergency Extension (p. 21)

   How many emergency extensions are deemed reasonable and justifiable? And, when do the
   extensions become unjustifiable to the terminated vendor? There should be some maximum
   number of extensions or additional compensation or the termination of the liquidated damages
   provisions?

   The Lottery will not identify a specific number of allowed emergency extensions. It is
   anticipated that none will be necessary, but the Lottery reserves the right to exercise this form
   of protection of its interests. The Lottery will not employ numerous emergency extensions as a
   substitute for a Contract extension nor for its convenience operate indefinitely 30 days at a
   time under the old Contract. If a subsequent vendor proves highly unreliable in delivering a
   replacement System, that vendor will be replaced.


2.8 Audit and Accounting Requirements (p. 22)

   What is the difference between GAAS and GAAP?

   GAAP means Generally Accepted Accounting Principles and GAAS means Generally Accepted
   Auditing Standards. More detailed definitions of these terms can be found by reference to the
   Financial Accounting Standards Board (FASB) and the American Institute of Certified Public
   Accountants (AICPA).


   Subsection (c) states, ―at the sole discretion and determination of the Lottery,‖ what does this
   mean? Whether the audit will occur? Whether the vendor passes the audit? Or, simply the
   selection of the audit firm for the vendor?

   The statement “… at the sole discretion of the Lottery …” in this section means the approval of
   an audit firm suggested by the Successful Vendor.


2.9 Bonds and Insurance Company Qualifications (p. 22)

   Is there a list of pre-approved bond companies available for the vendor to review and contact?


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Delaware State Lottery                                                          DSL 2009-1: Addendum


   The Lottery does not have such a list.


2.10 Insurance (p. 23)

   Errors and Omissions Insurance to indemnify Lottery and State of Delaware for System
   downtime and terminal or machine error: It is highly unlikely—extremely unlikely—that an
   insurance company will provide coverage for acts of negligence, when the agreement also calls
   for liquidated damages in contract damages. There are specialty lines of insurance for computer
   hardware and software to cover operation and business interruption. Most E&O does not cover
   the type of incidents that you are requesting as it pertains to the software and hardware. And, it
   definitely will not cover when you want contract damages as well. Especially where you couch
   the liquidated damages as not being punitive, but as additional to all other remedies---which is
   another way of saying yes, they are in fact punitive.

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms
   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.


2.10.1 Insurance Coverage and Limits, A. Property Insurance (p. 22)

       1. If the Lottery or the State of Delaware is purchasing or leasing the equipment from the
          vendor, why is the vendor charged with the responsibility of having to maintaining the
          property insurance for the actual replacement cost of the property insurance?

       2. What is the scope of the property insurance? As set forth, the language discusses
          insurance on all buildings, fixtures and equipment provided or used in providing the
          System or service must be maintained in the amount of actual replacement cost thereof.
          Is the vendor responsible with replacing only the equipment and the lottery sports book
          venue responsible with replacing the building and the fixtures?

   The Lottery is not purchasing or leasing equipment but is instead awarding a professional
   services contract. The Lottery intends to ensure that the Successful Vendor has protected its
   own infrastructure elements and also the deliverables that are functioning in Delaware. The
   Successful Vendor is not responsible for insuring facilities and equipment that it did not deliver
   (e.g., the building at a racetrack).


2.10.1 Insurance Coverage and Limits, B. General Liability Insurance (p. 23)

   It is common practice in the insurance industry to have Commercial General Liability policies
   written on a Combined Single Limit basis. Will the Lottery accept evidence of $5,000,000 CSL
   for Bodily Injury and Property Damage for Commercial General Liability Coverage? This may
   be evidenced through an underlying Commercial General Liability policy followed by an
   Umbrella (Excess) Liability policy.

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Delaware State Lottery                                                           DSL 2009-1: Addendum


   Yes.


2.11 Performance Bond (p. 24)

   Is a letter of credit an acceptable form of security in lieu of a Performance Bond?

   Yes.


   Will the Lottery accept an Industry Standard bond that includes annual language?

   Yes. Failure to renew the bond would be grounds for immediate termination for cause.


2.14   Liquidated Damages Provisions (p. 25)

   This provision is not agreed to by this proposed vendor. We believe that if the alleged damages
   are to be too impracticable and too difficult to determine, then such agreed upon pre-determined
   remedies cannot be in addition other remedies that may be available at the time of recovery. If
   that is the case, such predetermined remedies are by their very nature punitive and
   unreasonable. Hence, we will not agree to the liquidated damages schedule set forth in Section
   2.14.1-22 below.

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms
   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.


2.14.7 Sports Wagering System Installation (p. 26)

   Will the vendor take responsibility for pulling the power or will the venue assume
   responsibility? UPS requirements?

   The venue will provide electrical power to the sports book area and will provide protected
   power (UPS) unless negotiated differently between the Successful Vendor and the venue.


2.14.7(a) Sports Wagering System Installation - Readiness for Start of Lottery Acceptance Testing
(p. 27); and Section 3.8.2.1 Installation and Acceptance Testing - Schedule for Acceptance Testing
(p. 66)

   Given the compressed timeframe in which the Lottery wants to have the system selling, is it
   accurate to assume that the correct number of days for Section 2.14.7.a is ten (10) days so as to
   match the requirement of Section 3.8.2.1?


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Delaware State Lottery                                                            DSL 2009-1: Addendum


   Section 2.14.7 of the RFP is amended to the same ten (10) day specification as Section 3.8.2.1.


2.14.10 Central System Degraded Performance (p. 28)

   Is there a specific time limit within which transactions must be logged to a second geographic
   location before performance has been deemed to be degraded?

   This logging is intended to occur in real-time so that the backup site has the current ticket and
   cashing information. The time cannot be more than a few seconds. See 3.4.1.1 and 3.4.1.9.
   Note that there is a grace period during which Degraded Performance is not subject to
   liquidated damages, assuming service is being restored in a timely manner.


2.14.11 Timely and Accurate Reports (p. 29)

   Is the Lottery able to supply a list with examples of the types of reports they are expecting to be
   provided?

   No.


2.14.12 Timely and Accurate Files (p. 29)

   Can the Lottery please provide details of what is meant by ―files?‖ Are there specific
   requirements to supply files for external use? If so, is there an interface specification available?

   Files in this context are electronic records in a common format transmitted to the Lottery. It is
   not known at this time by the Lottery what files, if any, will be necessary.There is no interface
   specification available at this time.


2.14.13 Sports Book Venue Terminal/Communications Repair (p. 29)

   Does the condition described apply to circumstances where the terminal has been the subject of
   malicious damage or destruction by fire or similar such event outside of our control?

   It is the Lottery’s intent that non-working terminals be returned to service within the 24 hour
   period allowed. This is regardless of the reason for the failure of the terminal.


   By the description of the condition, it appears the terminal itself could be operational, but a
   peripheral with issues will cause the same penalty as a down. In this case, would every service
   call be considered non-operational and have the same response times?




Sports Wagering Systems and Services                                                             Page |9
Delaware State Lottery                                                           DSL 2009-1: Addendum


   If the Lottery determines that the terminal’s design incorporates non-essential peripherals
   (those that do not affect the ability to sell, cancel, or cash a ticket, or protect transaction
   integrity) then the Lottery may be willing to consider a longer repair schedule for those items.
   Ticket readers, screens, printers, and similar devices are considered essential. In general, the
   Lottery believes that 24 hours is long enough to repair any problem.


2.14.14 Failure to Upgrade Software for Wagering (p. 29)

   Please explain what is meant by ―approved specifications.‖ In particular, is this a joint
   approval by both the Lottery and the vendor? Also, is it envisaged that the acceptance test
   criteria will be deemed to be part of the ―approved specification?‖ This question also applies to
   other references to approved specifications within the RFP.

   The Lottery and the Successful Vendor will collaborate on the specifications, but the Lottery
   must solely approve development and release to the System. Acceptance testing will be defined
   by the details of the specifications. The Lottery will permit only tested and approved changes
   to be installed, and the Vendor’s configuration management practices must support this
   constraint.


2.14.18 Unauthorized Software and /or Hardware Modifications (p. 27)

   Will emergency bug fixes require written approval prior to implementation or is it sufficient to
   report the emergency fix after the fact as stated in 2.14.21 viii?

   Section 2.14.18 is not meant to cover emergency fixes. For that the Vendor is correct that
   2.14.21 would apply.


2.14.21 Failure to Report Incidents (p. 31)

   Can the Lottery provide details of, or examples of, reports that show the type of report and the
   level of detail expected?

   No, see the answer to 2.14.11.


2.16 Right to Use (p. 32)

   This Vendor does not agree to this section at all. Under no circumstances will vendor grant
   Lottery a usufruct in the source code and object program instructions, and the documentation for
   the programs as owned by this vendor.

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms


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Delaware State Lottery                                                          DSL 2009-1: Addendum


   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.


2.17 Force Majeure (p. 33)

   An additional source of force majeure must be the regional or local telecommunications
   provider and regional or local cable/isp data provider. Vendor cannot be held liable for the
   inability to process wagers should the regional or local telecommunications or cable/isp data
   provider be unable to provide the underlying service upon which the System and/or terminals
   operate.

   Likewise, vendor cannot be liable if the lottery sports book venue or the Lottery itself has
   network errors, which in turn cause System errors. We have encountered such experiences with
   other customers, where the customer was making upgrades to its network without telling us.
   Their network upgrades knocked our System off line, and we had to go in and reset. But, it took
   us a few hours to figure out what happened.

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms
   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.


2.18 Security Program under the Contract (p. 33)

   Can the Lottery provide examples of the type of operations security plan that would be deemed
   acceptable by the Lottery?

   No. The Operations Security Plan is further described in 3.7.12.


2.18.1 Vendor Personal Background (p. 34)

   Please be more specific as to what information relative to individuals need be submitted.

   Nothing of 2.18.1 is required to be submitted with the Proposal since that stipulates “upon
   award.” For purposes of the RFP, Section 3.7.1 does require resumes from key members of the
   project team.


2.19 Production-Ready Acceptance Test Following Contract Award (p. 35)

   Does the Lottery have a preferred acceptance test management system to store scripts,
   associated documentation, test results, and test reports?




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Delaware State Lottery                                                            DSL 2009-1: Addendum


   No. The Successful Vendor’s capabilities will be merged with the Lottery’s to accomplish
   acceptance testing.


2.21.2 Workload Accommodation (p. 36)

   Can the Lottery please provide details of expected transaction volumes? Specifically, we would
   like to understand the following:

    Peak transactions per terminal per minute

    The maximum number of connected terminals the system will be expected to accommodate

    The average number of transactions expected per day across all sites

    The number of trading days in a year

    The number of years for which historical transactions need to be stored online

    The period of time that any archived transactions are required to be stored

    How many management information and administration terminals are required

   The Lottery cannot provide good estimates of these quantitative operational measures.


2.25 Title to, Use and Compensation for Intellectual Property (p. 37)

   [sic] … we ask that the license be limited to the term of the contract and only for use related to
   the performance of the contract. Also, please confirm that this is not intended to include the
   intellectual property that may be provided to the Lottery as value-added materials, such as
   branded properties, unique production methods or patented play styles owned by us.

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms
   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.


   This Vendor shall not grant Lottery a license to make use of any such Intellectual Property on an
   indefinite basis with respect to Lottery conduct of games.

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms
   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.




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Delaware State Lottery                                                            DSL 2009-1: Addendum


2.32-2.33 Reserve for further discussion (p. 39)

   Too many questions to list

   There has been no question posed; therefore, no answer is needed. Pursuant to Section 1.10.1.2
   of the RFP, the Vendor should take exception in its proposal to any RFP specification or terms
   and conditions it does not intend to accept in a Contract. All exceptions taken in the Vendor’s
   proposal will be considered in the evaluation process.


2.40 Taxes, Fees and Assessments (p. 43)

   Please clarify the nature in which the taxes, fees, and assessments will be designated, levied or
   based. Will the Lottery pass the sales/use tax it otherwise would have paid back to the vendor?
   Please be as specific as necessary for vendor to make a sound decision as to the financial impact
   the taxes, fees, and assessments will have on the overall profitability of this business opportunity.

   Any taxes, fees, and assessments due are the ordinary Federal and State obligations as a result
   of doing business. The Lottery will not pass any funding back to the Successful Vendor that
   might relate to taxes. The Lottery is not a taxable entity.


Part 3 – Specifications

3.0(1) Introduction (p. 46)

   Can the Lottery please explain what is meant by ―track record‖ in bullet point 1?

   “Track record” was not meant to imply any connections to a race track, but rather the
   experience of the System in the field, operating in production. This may include what
   production generation the System is, where it has been installed/operated, how many wagers
   and terminals it supports in those locations, and any operational data such as uptime and
   throughput.


3.1.1(1) Gaming Configurations at the Primary Site (p. 47)

   Is it a requirement that all server hardware contain redundant components such as dual power
   supplies, network cards, and processor modules capable of continuing operation when a single
   component fails?

   Fault tolerance and the ability to fail over are requirements of the RFP. A simple failure at the
   primary site must not immediately require failover to the backup site. It is not required that
   every server has redundant components, but some servers may, as part of a fault- tolerant
   configuration. The section does require multiple servers for protective redundancy.


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Delaware State Lottery                                                            DSL 2009-1: Addendum


3.2.1 Teller-Operated Wagering Terminal (p. 49)

   While it is understood that the final required quantity of full function teller-operated terminals
   may range between 30 and 60 terminals, for the purposes of having consistent and equally
   comparable vendor proposals, would the Lottery please provide a specific quantity of teller-
   operated terminals (e.g. specify 60 terminals) that all bidders should base their pricing upon?

   For purposes of pricing the Proposal, the Vendor shall assume forty-five (45) full-function
   teller terminals and fifteen (15) self-service terminals, covering the three venues. This quantity
   may be adjusted when the Contract is negotiated or during the Contract lifetime. The Lottery
   would like to see sports wagering expansion beyond this quantity if the sales will support it.


   Is there any requirement to brand or imprint pertinent information on the ticket? If so please
   define.

   Yes. RFP Section 3.2.1.3 identifies the need to print a graphic image such as a logo on a ticket.
   Section 3.4.2.4 requires that the System be able to insert a message into banner space (open
   space) on the tickets.


   To enable us to plan training systems, can the Lottery please advise how many teller staff will
   need to be trained to use the system initially? Also, if training for new staff is expected, what are
   the rates of teller staff turnover likely to be once the system is up and running?

   The Lottery defines for Proposal purposes a population of 45 full function terminals and 15
   self-service terminals across the three venues. Given probable multiple shift operation, the
   Vendor can roughly estimate how many staff may need training. The Lottery does not have
   any information about staff turnover. The Lottery believes that eventually the venues will
   train their own staff, but initial training must be available from the Successful Vendor.


3.2.1(2.a) Teller-Operated Wagering Terminal (p. 49)

   Does ―list of past transactions‖ refer to transactions placed on that particular terminal, or by
   the currently logged on operator/supervisor or by a particular customer? Or does it refer to
   something else?

   The phrase “list of past transactions” refers to transactions placed on that particular terminal
   in recent history. Alternative forms of transaction history reporting may also be provided by
   the Vendor. See 3.2.1.14.


3.2.1(2.b) Teller-Operated Wagering Terminal (p. 49)

   Please define the limits for ―user distances‖ and ―viewing angles.‖


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   The Lottery will not define the terms. The terminal must provide a teller reasonable liberty
   within their work space to see the screen clearly


3.2.1(3) Teller-Operated Wagering Terminal (p. 49)

   Please define the minimum period you would deem to be ―long-lived.‖

   The ticket must last longer than the winner validation period.


   Please expand on the term ―Report‖ in its context in this section. What types of reports are
   expected and what size/format is expected?

   Reports will be worked out in collaboration with the Successful Vendor.


3.2.1(5) Teller-Operated Wagering Terminal (p. 49)

   In the time available, it is unlikely that significant changes can be made to the user interface
   design other than lottery or venue branding? Will this be acceptable for start-up?

   The quality of the user interface will be evaluated as part of the proposal evaluation.


3.2.1(6) Teller-Operated Wagering Terminal (p. 49)

   Can the Lottery please advise as to the maximum size of documents to be scanned and also the
   minimum scan rate (inches or centimeters per second) that will be acceptable?

     There is no set maximum size of document or minimum scan rate at this time.


3.2.1(19) Teller-Operated Wagering Terminal (p. 49)

   Can the Lottery please clarify the reference to ―writer‖ with regard to customer card
   processing?

   A variety of possible technologies may appear under this optional specification. If the Proposal
   suggests a customer card implementation in which data are read and updated on the card
   itself, then the terminal would need to be capable of writing to the card. It is not a requirement
   that the implementation involve writing to the card if that is not an integral part of the
   solution.




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3.2.2(1) Terminal Attachments and Other Venue Equipment (p. 52)

   Is it expected that the single display described will be capable of displaying odds for multiple
   events at the same time? What size display is envisaged by the Lottery?

   It is required that the display be capable of displaying multiple events at once. The Lottery
   does not require a particular size, but rather offers a readability specification (i.e., 30 feet or
   more). The Vendor may propose any of several technologies, sizes, and display features. The
   Lottery’s proposal evaluation will be based on readability.


3.2.2(1) Terminal Attachments and Other Venue Equipment (p. 52), 3.2.2 Terminal Attachments
and Other Venue Equipment

   Will the Lottery consider striking the requirement of a Vendor provided display and proceeding
   as suggested above?

   The Lottery will not strike the requirement. Pursuant to Section 1.10.1.2 of the RFP, the
   Vendor should take exception in its proposal to any RFP specification or terms and conditions
   it does not intend to accept in a Contract. All exceptions taken in the Vendor’s proposal will be
   considered in the evaluation process.


3.2.2(2) Terminal Attachments and Other Venue Equipment (p. 52)

   Is the player transaction display expected to be capable of displaying graphics and multiple
   colors with full wager details, or is it expected to be a summary of the customer transaction?

   The player transaction display may show full details but is only required to provide a
   transaction summary.


3.2.2(3) Terminal Attachments and Other Venue Equipment (p. 52)

   Is it expected that the cash drawers are electronically controlled by the terminal such that they
   are opened automatically and also locked automatically when the terminal is not in use or
   logged in?

   The cash drawers can be electronically controlled by the teller terminal, but are not required
   to be.




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3.2.4 Specialty Terminals (p. 53)

   Would the Lottery please clarify whether bidders are required to propose self-service terminals
   within the Base System Price? If so, will the Lottery please specify how many self-service
   terminals are required to be included in the Base System Pricing?

   Additionally, would the Lottery please clarify whether these self-service terminals are intended
   to be used in addition to, or in replacement of, the full-function teller operated terminals
   required in Section 3.2.1 - Teller-Operated Wagering Terminal?

   For purposes of bidding, the Vendor shall assume forty-five (45) full-function teller terminals
   and fifteen (15) self-service terminals. These are included in the base price.


   Do self service terminals fall under the options category in pricing considerations?

   Self-service terminals are not optional. They must be offered in the Proposal. For purposes of
   bidding the Vendor shall assume that fifteen (15) self-service terminals will be used at the
   onset, covering all three tracks. This number could vary as a result of discussions with the
   Lottery and the tracks, and as a result of Contract negotiations.


3.2.4(2) Specialty Terminals (p. 53)

   Does the Lottery envisage in the future being able to accept wagers from mobile devices such as
   cell phones (e.g., via sms) or mobile Web or intranet-based devices?

   At this time those forms of wager entry are not acceptable.


3.3.1(3) Network Design and Implementation (p. 53)

   How many management terminals will be required at the Lottery headquarters?

   For other gaming systems used in Delaware, the Lottery’s own computers are able to access the
   System as management terminals. If this feature is not supported by the sports wagering
   system, then specialized management terminals will be needed at Lottery Headquarters.


3.3.2 Network Design Features (p. 54)

   Is the requirement to design a dedicated network or is a VLAN allowable?

   The RFP allows wide latitude as to the network design as long as the design specifications are
   all met. Section 3.3 should be reviewed carefully in this regard.



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3.4.1(9) Software Security and Control Features and Functions (p. 56)

   Can the Lottery please explain the expected behavior of this particular requirement when either
   the primary or backup site is down?

   Logging transactions to a second site would not be possible during the time that a site is down,
   or communications to reach it, are down. Storing transactions in only one facility creates a
   single point of failure. This condition could result in liquidated damages for Degraded
   Performance after a grace period allowed for restoration of service. See Section 2.14.10. As
   Sections 3.1 and 3.3 make clear, the System design must incorporate redundancies and
   failovers that mitigate such risks and that provide for the timely restoration of production
   operations.


3.4.1(14) Software Security and Control Features and Functions (p. 56)

   Does this point only refer to terminals and peripherals, or does it include central servers and
   other equipment? Within this context, it is clear what the term ―location‖ means, but what do
   the terms ―history‖ and ―use‖ mean?

   This configuration management specification is meant to apply to teller and self service
   terminals and their key peripherals. The Successful Vendor may bring other components
   under similar configuration management practices, but this is not required. “History” and
   “use” imply knowing when a terminal entered service, where it has been installed, its reliability
   record, and its current whereabouts.


3.4.1(15) Software Security and Control Features and Functions (p. 56)

   We do not understand this item. To avoid misinterpretation, can the Lottery please clarify what
   is meant by ―multiple update conflicts?‖

   Multiple update conflicts can occur if change control is lacking in a configuration management
   program. Two software engineers could withdraw a module from the software library and
   make changes to suit the specific task each is working on. If their updates to production are
   not better controlled, inconsistent results may occur.


3.4.2(2) Application Features and Capabilities (p. 57)

   Can the Lottery please advise if bet acceptance for an event automatically closes at the
   advertised time of the event, before this time, or indeed if there will be any discretionary
   allowances by the teller operators?

   This policy is yet to be determined.



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3.4.4(3) Data Management and Reporting (p. 59)

   Is there any requirement to monitor particular customer betting patterns?

   As part of risk management, the Lottery expects that the System will assist the venues in
   monitoring unusual wagering patterns or events. The System should react accordingly if asked
   to accept an anomalous transaction. It is not anticipated that all transactions of every
   customer can be linked specifically to that customer.


   Will the Lottery be implementing a maximum payout limit? If so, what is the limit likely to be,
   and what reporting is required to help manage this aspect?

   This policy remains to be set.


3.5 Sports Wagering Menu (p. 59)

   Could the Lottery provide a list of sport types that should be accepted by the system at start-up?

   There is no list of sports types at this time.


   Which betting model will the system be required to support (e.g., pools or fixed odds)?

   The Delaware Supreme Court’s Advisory Opinion No. 150, 2009 permits the Lottery latitude in
   parlay and straight betting, but pari-mutuel betting in Delaware is limited to wagering on
   horses.


   Which bet types will be supported by the system (e.g., singles, simple parlays, plan or specialty
   bets, spread bets, etc.)?

   See the previous answer.


   Will terminal betting be anonymous or account-based?

   The Lottery believes that wagering will be anonymous.


   Would the Lottery consider alternative methods of capturing a wager at the terminal without a
   bet slip?

   Yes. Bet slips must be supported but additional methods may also be proposed.



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   Is there a requirement for the system to allow for cross-location payout (e.g., between Delaware
   Park, Dover Downs, and Harrington Raceway) or any other venue in the future?

   Not at this time. No other venues are currently approved under the Delaware legislation.


   Is there a requirement for the Lottery to monitor individual customers to assess potential risk?

   As part of risk management, unusual or anomalous transactions or patterns should result in
   reports or alarms within the System. Primarily the Vendor and the venues should be
   monitoring for this. It is not anticipated that individual customers will be required to have
   identification in the System that permits them to wager and to be uniquely tracked.


   How would the Lottery want the system to deal with parlay wagers where bet contingencies are
   related? Should they be allowed at adjusted odds or not allowed at all

   This policy has not been set.


   Does the Lottery have a full set of betting rules that are to be implemented with the system? If
   so, can these be supplied? If not, will they be at the discretion of the vendor?

   No such policies have been set. The Lottery will be defining certain betting and operational
   rules during the implementation that permit the Lottery some controls and oversight. These
   will be similar to rules already in use at the venues for video lottery. They will be defined in
   collaboration with the Successful Vendor and the venues but are not at the discretion of the
   Vendor.


3.7.8(2) Terminal Maintenance Program (p. 63)

   Staffing and hours are vague for a 24-hour operation. Are there any minimum expectations on
   normal coverage?

   The Lottery reserves the right to allow sports wagering all day and all night but actual business
   hours have not been set. The terminals at a sports book venue must be repaired within 24
   hours of a reported problem; thus 24-hour technician coverage will not be necessary. The
   Successful Vendor should however always (24/7) accept a question or problem call from the
   venues.


3.7.12 Operations Security Plan (p. 65)

   Does the Lottery require all transactions to be monitored in real time for security purposes?




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   The Lottery expects the System to provide real- time monitoring of transactions. See 3.4.1.10.


   Can the Lottery please advise how it wishes lost tickets to be handled by the system?

   Lost tickets will be handled by policies defined by the Lottery. Winning tickets cannot be
   cashed if they are lost and there is nothing to enter into the System. Irrefutable evidence is
   required that the claimant possesses a winning ticket. If the better has an account or other
   mechanism that retains an electronic version of the ticket on the System, that ticket can never
   be “lost.”


   Most quality retail sports betting systems come supplied with advanced security applications that
   allow for the monitoring of bet exceptions and transactions. Does the Lottery intend to use such
   applications itself with its own security department, or is this a requirement for the successful
   vendor to provide and manage?

   Most of the security monitoring will be provided by the Successful Vendor and the venues. The
   Lottery is very interested in security and will address security issues when necessary as part of
   its oversight role.


3.7.15 Risk Management Services (p. 65)

       1. Please be more specific as to allowable wagering models, for example; wagering on
          future events (to win the Super bowl, to win the World Series, Playoff Series, etc.)

               a. Are there minimum or maximum requirements for the number of teams allowable
                  in a parlay wager?

               b. Are teaser bets acceptable wagers?

               c. Have payoff odds been determined.

               d. What is the lottery’s window for cashing winning wagers?

               e. Do all expired winning tickets go to the operator’s bottom line?

               f.   Mail in for redemption anticipated?

       2. Will the Risk Management Service assume responsibility for:

               a. The bankroll

               b. Betting limits

               c. Cashing Limits

               d. Recordable cash wagers in excess of $10,000.



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               e. Teller shortages

               f.   Entering of results

               g. Risk Management auditing functions; results, teller shortages, point spread
                  moves.

               h. IRS reporting

   The Lottery intends to stay within the norms of the sports wagering industry, but no specific
   answers are available at this time.


Part 4 – Pricing

4.5.1 Price Quotation Sheet (p. 72)

   Will the Lottery amend RFP Section 4.5.1 to replace the single, flat percentage of marginal
   revenue fees with a ―tiered‖ approach that requires bidders to propose different percentage fees
   based upon different levels of annual marginal revenues?

   For purposes of bidding, the Vendor shall continue to assume a single percentage as shown in
   the RFP. Pursuant to Section 1.10.1.2 of the RFP, the Vendor should take exception in its
   proposal to any RFP specification or terms and conditions it does not intend to accept in a
   Contract. All exceptions taken in the Vendor’s proposal will be considered in the evaluation
   process.


Part 5 – Proposal Evaluation

5.4.1 Criteria and Weights (Available Points) (p. 73)

   Given its obvious importance, will the lottery consider (i) adding Section 3.5 to the evaluation
   criteria, (ii) specifically assigning separate weighting to the Risk Management Services
   qualifications of Section 3.7.15, and (iii) allocating to these sections a significant majority of the
   points assigned to Section 3.4, which appears to have been allocated too much weight given the
   relative importance of the qualifications of Sections 3.5 and 3.7.15 in the context of a Sports
   Lottery.

   The Lottery did not accord Section 3.5, Sports Wagering Menu, a scoring weight as it
   primarily addresses the possibility of future gaming developments. The Lottery will not assign
   any additional weight to risk management services as it has already been considered in Section
   3.7 of the technical evaluation criteria found in Section 5.4.1 of the RFP. The technical
   evaluation criteria will remain as listed in the RFP.




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5.4.1 Criteria and Weights (p. 74)

   Will the Lottery assign additional weighting to the implementation evaluation in order to
   recognize the critical importance to ensure the state’s financial objectives are adequately
   considered by emphasizing the Vendor’s ability to be ready by September 10, 2009?

   The Lottery will not enhance the weight assigned to the implementation section of the RFP
   (3.8).


Questions without Citations

Wagering

       1. It appears from the RFP (section 4.5, page 72) that the Lottery Commission is
          contemplating allowing both Straight and Parlay Wagers.

               a. Risk - Who is accepting the risk of loss – the Lottery Commission, the Vendor or
                  the Venue? For example, in February 2008 sports books in Nevada lost
                  $6,750,000 in sports wagering.

                         i. In the event Straight Wagers (single event wagers) are allowed:

                         ii.      Will the odds be fixed or variable? Will the odds at the time the
                               wager is placed also be the odds used to determine the payout?

                         iii.      How will betting limits be determined?

                         iv. Will there be aggregate payout limits on straight wagers? If there
                           are aggregate payout limits, how will payouts be determined (limited)?

               b. For Parlay Wagers:

                         i. Will the payouts on Parlay card wagers be fixed or variable? Example
                            of fixed: a 3-team Parlay pay may have fixed odds of 6 for 1. Example
                            of variable: all winners share equally in the winning pool and the
                            winning pool is established as write less house take out percentage.

                         ii.       Will there be aggregate payout limits on Parlay card wagers? If
                               there are aggregate payout limits, how will payouts be determined
                               (limited)?

                         iii. Will off-the-board Parlays be allowed? If yes, how will the betting
                            limits be determined?

                         iv. Will there be aggregate payout limits on board Parlays? If there
                           are aggregate payout limits, how will payouts be determined (limited)?

               c. General questions:


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                          i. What restrictions will apply to the Bookmaker with regards to
                             types/amounts of bets, establishing odds, etc.?

                          ii.      Will money line wagers (no point spread), teaser wagers and future
                                wagers be allowed?

                          iii.     How will wagering cut-off be controlled?

                          iv.      Will voids be allowed after the patron leaves the betting window?

                          v. Will in-progress wagering be allowed?

                          vi. What type of controls will be placed on the Bookmaker responsible
                            for controlling the acceptance of wagers and the adjustment of betting
                            lines?

                          vii. Who (Vendor, Lottery Commission, or Venue) will be responsible to
                            insure compliance with federal laws concerning interstate dissemination
                            of wagering information?

                          viii. Will there be restrictions on messenger wagering? Nevada has
                            restrictions on messengers placing wagers - a messenger is defined as a
                            person who receives compensation for placing a wager.

                          ix. What will be the restriction on the acceptance of structured wagers,
                            i.e. wagers suspected of being structured so as to avoid reporting
                            requirements? Who will enforce?

                          x. What is the proposed operating expense allocation – i.e. who (Vendor,
                             Venue of Lottery Commission) is expected to pay for the basic operating
                             expenses including labor, utilities, repairs and maintenance, sales and
                             marketing, G&A, etc.?

    The answers to these questions have not been determined at this time.


Facilities

        2. Who is financially responsible for the facility build out and FF&E at the three sports
           book locations? Are the facilities operators (assuming they are responsible) penalized if
           they are not able to deliver the facilities in time for a September 10th opening? In the
           event the facilities are not ready in time to accommodate training, equipment set-up and
           etc. will the Vendor be relieved of the penalty situation?

                a. What is the proposed capital expenditures allocation – i.e. who is expected to
                   pay for the cost of purchasing the replacement machines, etc.?

    The venues will design and build out the sports book facilities. The venues will also provide
    operating staff for the sports book. A venue will not be formally penalized if its buildout is

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   incomplete as of September 10, 2009 but consequentially sports wagering business will shift to
   the other venues, which should be perceived as motivation to be ready. The Successful Vendor
   will not be penalized if a delay is due to the venues or to the Lottery. As far as replacement
   machines, the Lottery is buying a professional services contract from the Successful Vendor,
   and it will be the Successful Vendor’s responsibility to deliver wagering terminals, maintain
   them, and replace them if necessary during the life of the Contract. This is also true of any
   other equipment employed by the Successful Vendor to meet the obligations of the Contract.


Logistics

       3. The RFP contemplates 60 terminals initially. Has the Lottery Commission engaged a
          third party consultant to model potential sports book demand or perform a feasibility
          assessment for sports betting (identifying the market potential)? If so, is that study
          publicly available or will it be made available to interested Vendors?

   The Delaware Lottery has not convened any such study.


               a. Does the Lottery Commission have a pro forma write and win analysis over the
                  next six years? If so, is that pro forma available for review by potential
                  Vendors?

   No such analysis has been conducted.


               b. We believe that 60 terminals will not satisfy demand and facilities will have to
                  potentially be expanded to accommodate more terminals. Has the State
                  contemplated a facilities expansion plan? If so, what is that plan?

   The Lottery has determined that flexibility to expand will be a Proposal evaluation
   consideration. See 3.1.5.2.


               c. What flexibility, if any, will the Lottery Commission give the Vendor to increase
                  the number of terminals to meet demand as well as the placement of those
                  terminals?

   The Lottery has determined that flexibility to expand will be a Proposal evaluation
   consideration. See 3.1.5.2.


               d. The RFP is unclear as to whether the Lottery Commission bears the costs of
                  labor and other sports book operating expenses or what costs are to be borne by
                  the Vendor. Please clarify. The sports book venues, the tracks, will bear most of
                  the operating labor.



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   The Vendor must propose to supply, operate, and maintain the System, including the
   terminals, and provide the bookmaking services necessary for operation.


               e.   Please clarify Section 2.40: Taxes, Fees and Assessments. What taxes, fees and
                    assessments are likely – beyond State and Federal income tax?

   Any taxes, fees, and assessments due are the ordinary Federal and State obligations as a result
   of doing business. The Lottery will not pass any funding back to the Successful Vendor that
   might relate to taxes. The Lottery is not a taxable entity.


               f.   Item 3.7.4 Venue Training Program: a) Does the State provide a training venue
                    or is the vendor responsible for such provision? How many sessions are
                    anticipated? How many trainees are likely in each session?

   It is anticipated that training will take place at each venue. The Successful Vendor must
   provide an initial training program and possibly some training thereafter. It is expected that
   eventually the venues will want to train their own staff. The number of trainees can be
   estimated roughly from the number of terminals and the likelihood of a multiple shift
   operation.


               g. Has the Lottery Commission established any limitations regarding either gross
                  win and/or the % of profits to be retained by Vendor (i.e. Marginal Revenue).

   No.


Employee Issues

               a. Who (Vendor, Venue or Lottery Commission) will be responsible for patron
                  disputes at the Venues?

               b. Who (Vendor, Venue or Lottery Commission) will employ the ticket writers?

               c. Who (Vendor, Venue or Lottery Commission) will employ (manage) the
                  accounting and audit personnel?

               d. Who (Vendor, Venue or Lottery Commission) will be financially responsible for
                  cash variances relating to ticket writers?

               e. Who (Vendor, Venue or Lottery Commission) is responsible for training
                  employees on the reporting requirements of Title 31 and other federal tax
                  reporting and withholding requirements as well as enforcing those
                  requirements?




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               f.   Who (Vendor, Venue or Lottery Commission) is responsible for disciplinary
                    action in regard to employee work performance?

   The venues will be responsible for each of these issues posed in questions (a) through (f).


Venue Questions

               a. The RFP requires the Vendor to propose a large display for illustrating events
                  available for wagering and the odds of the various wager types; who is
                  responsible for purchasing, installing, and maintaining the ―large display‖
                  (Vendor, Venue or Lottery Commission)?

   The Vendor must propose one such display as per Section 3.2.2.1.


               b. Who (Vendor, Venue or Lottery Commission) will determine what events will be
                  displayed?

   Displays will be defined by the Successful Vendor and the venues, and approved by the
   Lottery.


                         i. Does the Lottery Commission anticipate the display will be changed
                            manually or by the wagering system?

   The display will be changed by the System.


               c. Who (Vendor, Venue or Lottery Commission) is responsible for designing,
                  constructing and paying for the wagering counters and customer service areas
                  at the venues?

   The venues are responsible for the sports book facilities.


               d. Will the Lottery Commission require the venues to have viewing areas for
                  patrons to watch the sporting events they have wagered on? Will the Lottery
                  Commission dictate the size of those areas as well as the number of television
                  screens, size of screens and etc.? If so, what will be the standard and who will
                  set that standard?

   The Lottery will not dictate design to the venues.




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                          i.   Will the Lottery Commission require the venues to purchase pay-per-
                               view packages such as the NFL Sunday Ticket, ESPN College Game
                               Plan, Mega March Madness, MLB Extra Innings, etc.?

   The Lottery will not dictate to the venues how to display events subject to wagering.


               e. Does the Lottery Commission have a written standard regarding surveillance at
                  the venues and at the hub location? If so, what are the requirements, where will
                  the surveillance monitoring station(s) be located and whose employees will be
                  monitoring? If a written standard does exist, can Vendor applicants have access
                  to those standards?

   A written standard is not available.


Accounting Questions

               a. Who is responsible for providing the bankroll at the Venues? Will the Lottery
                  Commission establish a standard for bankroll? If so, what is that standard?

   The answer to this question has not been determined at this time.


               b. Will winning wagers be paid immediately after the conclusion of an event?

   Yes.


               c. Who will hold funds accepted on future events and funds from uncollected
                  winnings?

   The venues.


               d. What if the Venue does not have enough cash available to pay all winning
                  wagers?

   The venues will be required to have sufficient cash available.


               e. How long will patrons have to collect winning tickets?

   One year from the determination of the result of the last wagered event.


               f.   Will lost winning tickets be honored? If so, what is the procedure?


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   No.


               g. Will the Wagering System require that tax reporting be completed prior to the
                  payout of reportable transactions?

   The answer to this question has not been determined at this time.


               h. If withholding is required, who is required to report and remit the funds withheld
                  to the Department of Treasury?

   The venues.


               i.   Who is responsible for reporting and paying the Occupation Tax and
                    Registration of Individuals for the writers?

   The venues.




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