WSR 97-14-013

PERMANENT RULES

GAMBLING COMMISSION

[Filed June 20, 1997, 11:34 a.m.]

Date of Adoption: June 13, 1997.

Purpose: Bingo net income variance procedures, these rules establish procedures for filing for variance and for obtaining license upgrades.

Citation of Existing Rules Affected by this Order: Amending WAC 230-04-190, 230-04-260, 230-20-060, 230-20-062, 230-50-010, 230-50-012, and 230-20-242.

Statutory Authority for Adoption: RCW 9.46.070 (1), (2).

Adopted under notice filed as WSR 97-09-076 on April 22, 1997.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 1, repealed 0.

Number of Sections Adopted on the Agency's own Initiative: New 0, amended 1, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.

Number of Sections Adopted using Negotiated Rule Making: New 0, amended 1, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.

Effective Date of Rule: Thirty-one days after filing.

June 20, 1997

Soojin Kim

Rules and Policy Coordinator

AMENDATORY SECTION (Amending WSR 96-24-007, effective 1/1/97)

WAC 230-04-190 Issuance of license--Expiration--Restrictions. The commission may only issue a license to qualified applicants. All licenses are issued subject to the following restrictions:

(1) The commission may issue the following licenses:

(a) Charitable and nonprofit organizations and agricultural fairs. The commission may issue a license to qualified bona fide charitable or nonprofit organizations or to qualified agricultural fairs to operate each of the following activities upon a specified location:

(((a))) (i) Bingo;

(((b))) (ii) Raffles;

(((c))) (iii) Amusement games;

(((d))) (iv) Punchboards and pull tabs;

(((e))) (v) Social card games; and

(((f))) (vi) Fund raising events as defined in RCW 9.46.0233: Provided, That any agricultural fair authorized under the provisions of chapter 15.76 or 36.37 RCW is prohibited from conducting fund raising events.

(((2))) (b) Commercial amusement games. The commission may issue a separate license to any person to operate amusement games at one or more of the locations listed in WAC 230-04-138.

(((3))) (c) Commercial stimulant card games. The commission may issue a license to any person operating a business primarily engaged in the selling of items of food or drink for consumption on the premises to allow a specified portion of a specified premises to be used by persons to play authorized card games.

(((4))) (d) Public card room employee. The commission may issue a license to any person to perform duties in a public card room.

(((5))) (e) Commercial stimulant punchboards and pull tabs. The commission may issue a license to a person operating a business primarily engaged in the selling of items of food or drink for consumption on the premises to operate punchboards and pull tabs upon specified premises.

(((6))) (f) Manufacturers and distributors of gambling equipment and paraphernalia. The commission may issue a separate or combination license to the following:

(((a))) (i) Manufacturers of punchboards, pull tabs, devices for the dispensing of pull tabs, bingo equipment, and other gambling equipment, supplies, and paraphernalia; and

(((b))) (ii) Distributors of punchboards, pull tabs, devices for the dispensing of pull tabs, bingo equipment, and any gambling equipment, supplies, or paraphernalia for use in connection with authorized activities.

(((7))) (g) Representatives of manufacturers or distributors. The commission may issue a separate license to a representative of a manufacturer or distributor to engage in the sale and distribution of gambling equipment and paraphernalia.

(((8))) (h) Recreational gaming activity permit. The commission may issue a permit to an organization that has been in existence for at least six months to conduct a recreational gaming activity as defined by WAC 230-02-505.

(((9))) (2) License expiration. Each such license shall be valid for the period of time or the level of gross gambling receipts set forth on the license. In no case shall the time period exceed one year from the date that such license ((it)) is issued: Provided, That license expiration dates may be adjusted by commission staff to schedule workload. Organizations licensed for more than one activity may have all expiration dates adjusted to end on the same day. Whenever license expiration dates are adjusted under this provision, the required fee shall be prorated by the commission. The prorated fees shall be computed on a monthly basis (i.e., one-twelfth of the annual payment per month) and subtracted from the regular annual fee. A prorated fee will be based on the number of whole months remaining upon approval of a license. For purposes of computing fees under this section, any part of a month in which the activity is authorized to be operated shall be deemed to be a whole month. Any difference between the required fee which exceeds twenty dollars, shall be refunded to the applicant. Specific expiration dates are as follows:

(a) Licenses issued to conduct any authorized activity in connection with and upon the site of a qualified agricultural fair, qualified community-wide civic festival, qualified world's fair, or qualified civic center shall be valid only for the duration of the fair or festival, or, in the case of an activity at a civic center, for the seasons during which the civic center is operating and open to the public. In no event shall such license exceed one calendar year.

(b) A license issued to conduct a raffle in connection with a qualified agricultural fair, qualified community-wide civic festival or qualified world's fair shall be in effect from the date the license was issued through the conclusion of the fair or festival;

(c) A license issued to conduct a card tournament shall be valid only for the duration of the tournament, but in no event shall exceed ten consecutive days;

(d) A license issued to conduct a fund raising event shall be valid only for the place and time set forth in the application or otherwise approved by the commission. The number of events permitted under the license in any calendar year is subject to the limitations set out in RCW 9.46.0233 defining a fund raising event: Provided, That a fund raising event license shall allow an organization to have possession of gambling equipment authorized for use at a fund raising event for a period of one year beginning on the day of the event and to rent such for up to four occasions per year to other organizations licensed to operate fund raising events;

(e) A license issued to an individual shall be valid for a period ((of)) not to exceed one year from the date ((of employment or issuance)) the individual was assigned duties requiring a license, the date the license was actually issued, or as set forth elsewhere in this title, whichever occurs first: Provided, That a charitable or nonprofit gambling manager or distributor representative license shall ((expire as set out in WAC 230-04-145.)) become void upon a change of employer; and

(f) A bingo license that has been limited under the restrictions of WAC 230-20-062 shall expire when the level of authorized gross gambling receipts is reached. A license that expires under this subsection shall not be granted an increase in license class for the current license period until all requirements of WAC 230-04-260 have been met or the commission grants an increase in license class under procedures set forth in WAC 230-20-062.

(((10))) (3) If any licensee fails to submit a properly completed application and all applicable fees prior to the normal expiration date, the license shall expire and the operation of the applicable activity must immediately cease. When a license expires, a new application must then be submitted and a prelicensing evaluation/investigation to the extent deemed necessary by the director will be completed prior to granting a license: Provided, That if a properly completed renewal application and fees are received at the commission headquarters office within the fourteen-day period following the expiration date, the commission may reinstate the license using normal renewal procedures. Reinstating a license under this provision does not, in any case, grant authority to operate the activity during the period between the normal expiration date and the date of reinstatement.

(((11))) (4) The commission may allow an applicant renewing an annual license or applying for an additional license to pay the license fee in two payments under the following conditions:

(a) The license fee is at least one thousand two hundred dollars;

(b) The applicant pays an administrative processing fee as set forth in WAC 230-04-202 or 230-04-203, plus one-half of the annual license fee at the time of application or renewal;

(c) Licenses issued under the two-payment plan shall be issued with an expiration date as determined by subsection (((9))) (2) of this section and a second-half payment due date. If the second-half payment is received on or before the due date, the license will remain in effect until the expiration date. If the licensee fails to submit the second-half payment prior to the due date, the license shall expire and all operations of the activity must stop; and

(d) Gross gambling receipts during the first-half payment period must not exceed fifty percent of the authorized class limitation for annual gross gambling receipts. Licensees whose gross gambling receipts exceed fifty percent of the authorized level shall be required to ((upgrade to)) apply for a license at the appropriate license class as required by WAC 230-04-260 and pay the full upgrade fee, plus an administrative processing fee, as set forth in WAC 230-04-202 and 230-04-203.

(((12))) (5) Conditions of license issuance. All activities so licensed are licensed subject to compliance with all of the applicable provisions of chapter 9.46 RCW, including any amendments thereto, all applicable rules and regulations passed by the commission, all other applicable laws of the United States, the state of Washington and all political subdivisions of the state of Washington which include but are not limited to the following:

(a) Business licenses or permits;

(b) Health certificates;

(c) Fire inspections;

(d) Use and occupancy permit; and

(e) Liquor license or permit.

[Statutory Authority: RCW 9.46.070 and 9.46.116. 96-24-007 (Order 304), 230-04-190, filed 11/21/96, effective 1/1/97. Statutory Authority: RCW 9.46.070. 94-23-007, 230-04-190, filed 11/3/94, effective 1/1/95. Statutory Authority: RCW 9.46.0331. 91-22-029 (Order 229), 230-04-190, filed 10/29/91, effective 11/29/91. Statutory Authority: Chapter 9.46 RCW. 91-15-040 (Order 224), 230-04-190, filed 7/17/91, effective 8/17/91. Statutory Authority: Chapter 34.05 RCW. 90-03-064 (Order 203), 230-04-190, filed 1/18/90, effective 2/18/90. Statutory Authority: RCW 9.46.070 (4), (11) and (14). 89-24-002 (Order 201), 230-04-190, filed 11/27/89, effective 12/28/89. Statutory Authority: RCW 9.46.070 (7), (8), (9), (10), (14), (19) and (20). 89-09-047 (Order 190), 230-04-190, filed 4/18/89, effective 7/1/89. Statutory Authority: RCW 9.46.070 (8), (11) and (14). 88-13-060 (Order 179), 230-04-190, filed 6/14/88. Statutory Authority: RCW 9.46.070 (1), (2), (3), (4) and (14). 87-21-015 (Order 172), 230-04-190, filed 10/9/87. Statutory Authority: RCW 9.46.020(23). 81-03-045 (Order 105), 230-04-190, filed 1/16/81. Statutory Authority: RCW 9.46.070(16). 78-06-066 (Order 85), 230-04-190, filed 5/25/78. Statutory Authority: RCW 9.46.070(10). 78-05-043 (Order 84), 230-04-190, filed 4/21/78; Order 78, 230-04-190, filed 11/17/77; Order 51, 230-04-190, filed 4/30/76; Order 42, 230-04-190, filed 9/18/75; Order 23, 230-04-190, filed 9/23/74; Order 5, 230-04-190, filed 12/19/73.]

AMENDATORY SECTION (Amending Order 262, filed 12/5/94)

WAC 230-04-260 Effect of exceeding license class income limit--Procedures--Penalties. During any annual license period, a licensee shall not exceed the gross gambling receipts limits set forth on the license, except as authorized by this section. The following procedures, limitations, and penalties apply to licensees that exceed limits for any license.

What must I do when it appears I will exceed the gross gambling receipts limits of my license?

(1) ((A licensee shall not exceed the class limit on annual gross or net receipts from the licensed activity.)) Each licensee shall monitor the level of gross gambling receipts received from each gambling activity. When a projection of year-to-date receipts, as applied to the remaining period of the license, indicates that it is reasonably likely that a license will be exceeded, the licensee shall immediately comply with the following:

(a) Apply for a license that authorizes the anticipated level of gross gambling receipts; and

(b) Submit the basic fee required for the new license, less the amount originally submitted for the previous license, plus a change of classification fee required by WAC 230-04-202 or WAC 230-04-203; and, if applicable,

(c) Organizations whose bingo licenses were previously limited pursuant to WAC 230-20-062 shall include with their application, evidence of the ability to maintain net return requirements set forth in WAC 230-20-059, table 1, at or above the minimum level for the class of license sought. Achieving net return at or above the minimum level for the license class sought, for at least the six consecutive months immediately preceding the month in which the application for a license upgrade is submitted, shall be prima facie evidence of the ability to operate at the new license class level. A bingo licensee that is unable to demonstrate the ability to achieve net return requirements for at least six consecutive months preceding the application for upgrade may petition the director for a variance in accordance with the criteria set forth in WAC 230-20-060. If the licensee's petition for a variance is denied, the licensee may petition the commission for review of the director's decision, in accordance with the criteria set forth in WAC 230-20-062.

If I upgrade my license during my normal annual license period, when will my license expire?

(2) ((When it is apparent that any licensee's class limit of annual gross or net receipts from licensed activity will be exceeded, the licensee shall immediately notify the commission and shall apply for the license class which is proper, submitting the basic fee required for the upgrade class less the amount originally submitted for the previous license, plus a change of classification fee required by WAC 230-04-202 and/or 230-04-203.)) Any ((such additional)) license upgrade issued by the commission shall be valid only for the ((period which remains in)) remainder of the original term of the ((previous)) license ((at the time such additional license is issued: Provided, that if the commission assigns a license class, or if a licensee voluntarily upgrades their license to comply with this subsection, and in either case operates at a level lower than the class assigned or requested, then the licensee shall be allowed to apply for a refund. The amount of refund shall be the difference between the fee for the licensed class)).

What are the penalties for failing to voluntarily apply for a license upgrade when my license has not previously been limited?

(3) Any licensee ((failing)) that fails to comply with the requirements set forth in paragraph (((2))) (1) above and exceeds the license class limit within a present or previous license year, may be assessed an exceeding class fee not to exceed 50% of the difference between the fees for the present license class ((fee)) and the new license class or $1,000, whichever is less. Upon written notice by the commission assessing an exceeding class fee, a licensee shall remit the proper fee plus all upgrade fees within 20 days. Failure to remit such fees may result in a summary suspension of all licenses held by the licensee pending a hearing for the suspension or revocation of such licenses.

What are the penalties for failing to voluntarily apply for a license upgrade when my license has been previously limited?

(4) In addition to the penalties set forth in paragraph (3) of this section, any organization that has had its bingo license limited under the restrictions set forth in WAC 230-20-062 and which exceeds its annual gross receipts limits for its assigned class of license, shall have its gambling license summarily suspended.

Can I request a refund of license fees when I do not achieve the level of gross gambling receipts for which I was authorized?

(5) A licensee shall be allowed to apply for a partial refund of its license fee when its annual gross gambling receipts are less than the minimum for the class of license issued. The amount of refund shall be the difference between fees actually paid to operate during the period and those fees that would normally apply to the level of gross gambling receipts actually received during the period. Such request shall be made after the end of any annual license period and prior to the end of the next annual license period.

[Statutory Authority: Chapter 9.46 RCW. 94-24-056 (Order 262), 230-04-260, filed 12/5/94, effective 1/5/95. Statutory Authority: RCW 9.46.070(14). 88-15-019 (Order 181), 230-04-260, filed 7/11/88. Statutory Authority: RCW 9.46.070 (5), (6), (8), (10), and (11). 84-01-026 (Order 139), 230-04-260, filed 12/12/83. Statutory Authority: RCW 9.46.070 (5) and (9). 80-03-060 (Order 99), 230-04-260, filed 2/25/80; Order 42, 230-04-260, filed 9/18/75; Order 5, 230-04-260, filed 12/19/73.]

AMENDATORY SECTION (Amending Order 303, filed 11/21/96)

WAC 230-20-060 Petitioning the director for a variance from net return requirements. This rule will apply to organizations with measurement periods beginning on or after January 1, 1996. The director may allow a licensee that is being impacted by one or more factors set forth in this ((sub))section a variance to return less funds than the requirements set out in Table 1 of WAC 230-20-059. A licensee is impacted by these factors when its license is subject to expiration pursuant to WAC 230-04-190, and/or when a licensee's application to operate at a higher license class may be subject to denial pursuant to WAC 230-04-260. When petitioning the director for such a variance, the licensee bears the burden of clearly setting forth all facts to demonstrate that it qualifies to be granted the variance. The following procedures and limitations apply to requests for variances:

What factors will ((be considered by)) the director ((in)) consider before granting a request for a variance?

(1) In determining the scope and period of time for variances, the director shall consider at least the following factors:

(a) The competition from gambling activities within a licensee's impact market area;

(b) Whether the organization has been previously licensed to conduct bingo at any level prior to beginning operations;

(c) Circumstances outside the control of the licensee that directly impact the bingo game;

(d) The impact on the licensee's charitable or nonprofit programs;

(e) The licensee's record of compliance with net return requirements prior to being impacted by any new factors;

(f) The level of prizes being paid by the licensee; and

(g) Other factors defined by the licensee.

What ((are the reasons for requesting a)) type of variance may be granted?

(2) ((Variances granted by)) The director ((under subsection (1) of this section)) may grant the following variances to the net return requirements set forth in WAC 230-20-059, table 1:

(a) A general variance for conditions that impact a group of licensees under similar circumstances and for a similar period of time; or

(b) A limited variance for conditions that impact a specific licensee.

What are the conditions for granting a general variance?

(3) The director may grant a general variance to all licensees that are impacted by conditions that are beyond their control, under the following conditions:

(a) The circumstance that cause the impact are so unusual and unexpected as to prevent planning to mitigate impacts;

(b) The conditions that cause the impact are longer in duration than one week;

(c) The conditions affect all licensees within the area;

(d) The variance granted does not exceed three months; and

(e) Variances granted under this subsection are applied by removing all income and expenses from the equation used to compute net return for the period of time established by the director;

What are the conditions, procedures, and restrictions that apply to a limited variance?

(4) A limited variance may be granted to an individual licensee for any of the conditions set forth in subsection (1) of this section. Such variances shall be limited cumulatively to a total of two percentage points and individually to those set forth below in this subsection. The director may extend or modify a variance at the end of the approval adjustment period if a licensee demonstrates continued impact and a request for an extension is received prior to the end of the adjustment period. The following variances ((are)) may be authorized:

(a) When a new class E or above or any bingo game not under the jurisdiction of the commission begins operations within the primary market area of an operating class E or above bingo game, and:

(i) The new game operates two or more occasions per week that are common to the currently operating game, the annual minimum net requirements may be decreased by up to a maximum of two percentage points, depending on the size of the game impacting the licensee, for a period not to exceed two annual measurement periods after operation of the new game begins; or

(ii) The new game operates one occasion or less per week that is common to the currently operating game, the annual minimum net return requirement may be decreased by up to a maximum of one percentage point for a periods not to exceed ((one)) two annual measurement periods after operation of the new game begins.

(b) When a new class E or above or any bingo game not under the jurisdiction of the commission begins operations within the secondary market area of an operating class E or above bingo game and the new game operates on two or more occasions common to the current game, then the minimum net return requirement may be decreased by one percentage point for a period not to exceed one annual measurement period after operation of the new bingo game begins;

(c) When an organization is forced to move its game:

(i) Within its primary market area - the actual cost of the move and expenses incurred during the time period the game is closed for the move shall be factored out of the computation of net return for the period. In addition, the minimum net return requirement may be decreased by one percentage point for a period of six months after beginning operation in the new location;

(ii) Outside its primary market area - the actual cost of the move and expenses incurred during the time period closed for the move shall be factored out of the computation of net return for the period. In addition, the minimum net return requirement may be decreased by one percentage point for a period not to exceed the first two annual measurement periods of operation in the new location;

(d) When an organization, which has not been previously licensed to conduct bingo at any level, begins operation, the minimum net return requirement may be decreased by two percentage points for the first annual measurement period;

(e) When an organization experiences a temporary interruption in customer flow, the minimum net return requirement may be decreased by no more than two percentage points during the annual measurement period.

(f) When an organization experiences circumstances outside of its control, the minimum net return requirement may be decreased by up to two percentage points for up to two annual measurement periods, depending upon the severity of the impact; and

(g) When an organization experiences other factors within its impact market area, the director shall make a determination on a case-by-case basis ((but)). The time allowance for any such variance shall not ((exceed two percentage points or)) be longer than two measurement periods.

What do I have to do to request a variance?

(((3))) (5) A licensee requesting a variance ((of the minimum net return requirements in Table 1 of WAC 230-20-059)) shall bear the burden of clearly setting forth all facts necessary to demonstrate that it qualifies to be granted the variance and shall follow these procedures:

(a) Upon receiving a "Notice of Intent to Limit License," submit an application for a brief adjudicative proceeding along with a written petition for a variance to the director ((as soon as the factor impacting the bingo game is discovered. In no case may the petition be submitted later than thirty days following the end of the annual measurement period for which a variance is requested. This));

(b) The petition shall be detailed and include:

(i) The specific circumstances for which ((such)) relief is sought;

(((b) Provide)) (ii) Objective evidence regarding the scope of the impact on the organization's charitable or nonprofit programs if a variance is not granted;

(((c) Provide)) (iii) The date the factor causing the impact began and ended. If the conditions continue to impact the licensee during the current period, provide the estimated ending date((, if known; and)).

(((d))) (c) Provide a copy of the most recently issued financial statements if not currently on file with the commission.

How are variances calculated and how do they affect my compliance?

(((4))) (6) For purposes of this section, variances shall begin on the first day of the next calendar quarter after the impact for which the variance is granted ((begins)) and continue((s)) for the number of calendar quarters authorized by the director. Variances that span more than one annual measurement period shall be prorated over all measurement periods by multiplying the variance by the portion of the measurement period for which the variance is authorized.

Example: If a licensee is granted a two percent variance (((.02))) (2.0%) for one year at the beginning of the last quarter of the licensee's annual measurement period, the variance would be prorated as follows: a one-half percent (((.05%))) (0.5%) variance in the current measurement period [computed by multiplying the variance ((percent)) factor (.02) times one quarter of a year (((.225))) (.25)]; and one and one-half percent variance (1.5%) in the subsequent measurement period [computed by multiplying the variance (.02) times three quarters of a year (.75).

(((5) This rule will apply to organizations with measurement periods beginning on or after January 1, 1996.))

What legal procedures will be used for hearings for variances or appeals of the director's decision?

(7) Petitions for variances shall be heard and decisions issued in accordance with the standards for brief adjudicative proceedings, set forth in RCW 34.05.485 and WAC 230-50. Any petition for review of the director's decision shall be made to the commissioners in accordance with WAC 230-20-062(4). The commissioners' review shall be conducted in accordance with the administrative review procedures set forth in RCW 34.05.491.

[Statutory Authority: RCW 9.46.070, 9.46.0209, 9.46.0237, 9.46.0205 and 9.46.075. 96-24-008 (Order 303), 230-20-060, filed 11/21/96, effective 12/22/96.]

NOTES:

Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency.

Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.

Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.

Reviser's note: The typographical errors in the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.

AMENDATORY SECTION (Amending Order 303, filed 11/26/96 [11/21/96])

WAC 230-20-062 Minimum net return from bingo games--Sanctions. This rule will apply to organizations with a measurement period beginning on or after January 1, 1996. A licensee that fails to comply with the minimum net return provisions of WAC 230-20-059((, or as adjusted by the director pursuant to WAC 230-20-060,)) shall ((have its license restricted or)) be subject to ((summary suspension and revocation of its license.)) the following restrictions and procedures ((apply to this section)):

What happens if I fail to meet minimum net return requirements for my class of license during any calendar quarter?

(1) Any licensee that ((does not achieve the minimum net)) fails to return the required percentage of its gross gambling receipts for its class of bingo license during any calendar quarter and whose net return ((falls below the)) is lower than the annual ((minimum)) requirement((s)), when measured for its current annual measurement period to-date, shall ((take immediate steps to ensure net return requirements for the annual period will be met by completing)) immediately comply with the following requirements:

(a) ((Any licensee that is out of compliance by)) When net return is less than one percentage point ((shall, upon discovery of the problem, immediately)) lower than required, a licensee shall:

(i) Evaluate prices, prize structure, and expenses for bingo and all activities conducted in conjunction with the bingo game; and

(ii) Develop a plan to gain compliance prior to the end of its annual measurement period. The plan and the degree to which the licensee implements the plan ((may be used as a part of the director's decision to grant a variance to a licensee, if one is later sought,)) will be considered by the director when reviewing a request for a variance under authority of WAC 230-20-060 and/or for recommendations made to the commission regarding actions to limit or suspend the organization's license ((class));

(b) ((Any licensee that is out of compliance by)) When net return is at least one percentage point ((or)) lower than required but not more((, but less)) than three percentage points((, shall)) lower, a licensee shall:

(i) Report the condition to commission staff as soon as discovered, but in no case later than thirty days following the end of the quarter; and ((shall))

(ii) Take immediate steps to increase net return for bingo and all associated activities by either increasing prices, decreasing prizes, decreasing expenses, or a combination of all((,)); and((:))

(((i))) (iii) Provide to the commission no later than forty-five days following the end of the quarter a written plan of actions to gain compliance. This plan shall be evaluated by commission staff. The plan and the degree to which the licensee implements the plan ((may be used as a part of)) will be considered by the director(('s decision to)) grant when reviewing a request for a variance to a licensee under authority of WAC 230-20-060, and/or for recommendations made to the commission regarding actions to limit or ((summarily)) suspend the organization's license; and

(((ii))) (iv) Provide the commission additional reports determined by the staff as necessary to monitor progress toward compliance; and

(((iii))) (v) If requested by the director, a committee of the licensee's management, including the chief executive officer, executive director, or equivalent manager, and the licensed gambling manager responsible of the bingo game shall meet with commission staff to discuss the action plan.

(c) ((Any licensee that is out of compliance by three percentage points or more shall,)) In addition to the requirements in subsection (b) above, when net return is more than three percentage points lower than required, a licensee shall:

(i) Immediately freeze all controllable expenses for bingo and all other activities operated in conjunction with bingo((. The licensee must also take the following actions:)) ; and

(((i))) (ii) Reduce expenses for bingo and all other activities operated in conjunction with bingo to a level that does not exceed twenty percent of gross gambling receipts or sales; and

(((ii))) (iii) Reduce prizes to the level set forth as guidelines in Table 1 of WAC 230-20-059 for its class of license; and

(((iii))) (iv) Increase prices and/or decrease expenses for snack bar operations to a level that will result in a profit being earned from this activity.

What happens if I fail to meet the net return requirements for my class of license during my annual measurement period?

(2) Any licensee that fails to achieve the minimum net return requirements for its class of license during an annual measurement period, as set forth in WAC 230-20-059, table 1, may be subject to any or all of the following restrictions and/or penalties:

(a) Reduction in the authorized level of gross gambling receipts for the next license period; and/or

(b) Denial of a request for an increase in license class if its license has previously been restricted; and/or

(c) Suspension or revocation of its license.

What if I have not met the net income requirements, but I ((am)) still ((making money for my organization's stated purposes)) maintained a positive cash flow from the bingo operation?

(((2))) (3) Any licensee that fails to achieve the minimum net return requirement for its class of license, including any variance authorized by the director, during ((any)) an annual measurement period and which maintains a positive cash flow from the bingo operation for the same period shall have its license ((class)) limited for the next annual license period ((reduced to)) subject to the following conditions:

(a) The licensee will be issued a new license which corresponds to the license class that is equal to the level of net return it actually achieved((.)) during the applicable annual measurement period;

(b) ((Provided,)) The license class to which the licensee is reduced must authorize at least one-half of the maximum gross gambling receipts of the ((current)) license class((:)) from which it is being reduced;

(c) ((Provided further, That)) The reduction for the first violation shall be a maximum of two license classes((.)) ; and

(d) A licensee limited under this section ((will not be)) must comply with the requirements of WAC 230-04-260 prior to being granted ((an)) any subsequent increase in its bingo license class ((until it has demonstrated the ability to maintain net return requirements at or above the minimum level for the class of license sought. Provided, That Achieving net return requirements at or above the minimum level for at least two quarters, one of which may be the last quarter in the previous license year, shall be prima facie evidence of such ability));

What if I have not met the net ((income)) return requirements and I ((am)) did not ((longer contributing towards the organization's stated purposes)) maintain a positive cash flow from the bingo operation?

(((3))) (4) Any licensee that fails to achieve the minimum net return requirement during ((any)) its most recently completed annual measurement period and ((fails to)) does not maintain a positive cash flow from the bingo operation for the same period shall be deemed to be operating primarily for gambling purposes ((and shall may be subject to summary license suspension and license revocation; and)). In this event, the director will review the licensee's most recent three-month operating results and begin appropriate administrative actions based upon net return compliance during that period:

(a) If the licensee has not corrected the condition and continues to subsidize the operation of bingo games with program funds, the director may summarily suspend the organization's bingo license; or

(b) If the licensee is no longer subsidizing the operation of bingo games with program funds, the licensee shall have its license limited pursuant to subsection (3) above.

What if my license has been ((downgraded)) limited ((and I want to operate at a higher level again)) and/or the director has denied my application for a variance to net return requirements?

(((4))) (5) A licensee that has had its bingo gross gambling receipts restricted by this section and whose petition for a variance has been denied may petition the commissioners for a license to ((operate at a higher level)) receive more gross gambling receipts. The commissioners' review will be conducted in accordance with the administrative review procedures set forth in RCW 34.05.491 and WAC 230-50, as applicable. Any such petition ((would)) will be heard at a regular public meeting of the commission. The commission may take testimony from other parties that may be affected by approval or denial of the petition during the hearing. The petitioner must ensure that an officer of the organization and the licensed gambling manager responsible for the bingo operation ((attends)) attend the public meeting and ((is)) are prepared to answer questions from the commissioners and/or staff regarding the petition and bingo game operations. Any approval granted under this section may be made contingent upon future compliance and/or other factors as determined by the commission. In addition to the requirements set forth in WAC 230-20-060(3), petitions for relief under this section must include the following:

(a) The portion of the organization's programs that are charitable as compared to nonprofit;

(b) Income from other sources available ((to fund)) for funding of programs ((from other sources)); and

(c) Estimated time that the maximum gross gambling receipts limit for its current license will be reached.

(((5) This rule will apply to organizations with measurement period beginning on or after January 1, 1996.))

[Statutory Authority: RCW 9.46.070, 9.46.0209, 9.46.0237, 9.46.0205 and 9.46.075. 96-24-008 (Order 303), 230-20-062, filed 11/21/96, effective 12/22/96.]

Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.

Reviser's note: The typographical errors in the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.

AMENDATORY SECTION (Amending Order 303, filed 11/21/96)

WAC 230-20-242 Activities conducted as a part of bingo games--Authorization--Restrictions.

What activities are authorized for consideration as part of a bingo game?

(1) The following activities are authorized:

(a) Drawings.

(b) Creativity and originality contests. A competition to determine the best costume, flower arrangement, cake decorating, ugliest tie, or other activities requiring skill or original thought.

(c) "Good neighbor" schemes. Prizes are awarded based upon the seating location of a player(s) in regards to the winner of a bingo game.

(d) Second element of chance schemes. An additional chance is offered to win an increased minimum bingo game after the winner(s) of the game has been determined by calling numbers and symbols.

(e) Birthday bonus schemes. Prizes are awarded to a player who wins a bingo game during the same calendar week in which the player's birthday occurs.

What general restrictions apply to the awarding of prizes for these activities?

(2) Bingo licensees may award prizes to winners of activities authorized by this section when such activities are conducted as a part of bingo games. Such activities shall be deemed to be bingo games if all players paying to participate are allowed to compete equally and all prizes awarded are treated as bingo game prizes for purposes of compliance with WAC 230-20-059.

What additional restrictions apply to drawings?

(3) Drawings. Each licensee shall be allowed to award prizes that are determined by a random drawing of tickets or by other random selection methods involving the numbering system on such tickets if the requirements of WAC 230-20-105 are followed, and:

(a) All rules regarding these drawings, including requirements to qualify for participation, time and date of the drawing, and whether a player must be present to win, are clearly posted and distinctly explained to the players;

(b) Tickets or other facsimiles used to enter such drawings are awarded only to players purchasing cards to play in bingo games;

(c) Tickets, from which the winners of any such drawing are selected, shall not be accumulated for a period that is longer than thirty days. Drawings may be conducted using tickets that accumulate during any bingo occasion, week, or any other period that does not exceed thirty consecutive days;

(d) ((Licensees may restrict the awarding of tickets to players that are)) Players may only be awarded or otherwise receive tickets to participate in drawings at bingo games by meeting the following criteria:

(i) Pay an amount not to exceed one dollar per ticket. If a licensee elects to charge for entry into drawings, such drawings shall not be combined with other means of entry allowed by this subsection, and the gross gambling receipts, prizes, and expenses shall be recorded and reported as bingo activities: Provided, that if players are required to purchase tickets to enter the drawing, they shall not be required to be present to win if the drawing is not held at the same session as tickets are purchased;

(ii) Be a winner((s)) of a bingo game((s)) during the session;

(((ii))) (iii) Be a "good neighbor((s))" winner, as defined by subsection (5) of this section; or

(((iii) Other players that)) (iv) Meet other specific and predetermined ((specific requirements)) criterion that has been approved by the director;

(e) The criterion for granting tickets, and the number of tickets awarded during each session, shall be recorded in the daily bingo record for each session. All winning tickets and other records shall be maintained as a part of the daily bingo records.

What additional restrictions apply to creativity and originality contests?

(4) Creativity and originality contests. A bingo licensee may conduct contests in which players may demonstrate their creativity and originality skills on up to eight occasions annually. The following rules must be observed in conducting these contests:

(a) The total value of prizes shall not exceed five hundred dollars during any occasion;

(b) Only players who have paid to participate in bingo games during the current session may participate in the contest; and

(c) A record shall be completed for each contest setting out the criterion for selecting the winners, the number of participants in the contest, and all details required by WAC 230-08-080 and 230-20-102. Such records shall be maintained as a part of the daily bingo records.

What additional restrictions apply to "good neighbor" schemes?

(5) "Good neighbor" prize schemes. A licensee may award prizes based upon the seating location of a player or players in regards to a winner of a bingo game. The following requirements must be observed prior to awarding "good neighbor" prizes:

(a) All rules regarding these prizes, including the amount to be awarded to each "good neighbor" or group of "good neighbors" and all requirements to qualify for a prize, must be clearly posted and distinctly explained to the players; and

(b) A record shall be completed setting out the criterion for awarding such prizes, the number of such prizes awarded during each session, and all details required by WAC 230-08-080 and 230-20-102. Such record shall be maintained as a part of the daily bingo records.

What additional restrictions apply to second element of chance schemes?

(6) Second element of chance schemes. Licensees may use these schemes to increase the minimum prize for a bingo game after the winner(s) of the game has been determined by calling numbers and symbols if:

(a) The schemes do not involve the use of gambling devices specifically prohibited by public policy or commission rules;

(b) A player's minimum odds of winning the highest prize is equal to or greater than one winner out of one hundred twenty-five chances or the probability of winning the highest prize is .008 or greater;

(c) The scheme does not require the player to risk any portion of a prize already won;

(d) Every possible outcome of the scheme provides the player with an additional prize;

(e) All rules regarding play of the game are clearly posted and distinctly explained to the players. At least the following information shall be disclosed:

(i) The players minimum odds of winning the highest prize;

(ii) How a winner is determined;

(iii) Any contingencies or special requirements that may affect the outcome;

(iv) The cash value of the highest prize available; and

(v) Any financial burden that must be borne by the winner, such as taxes or registration fees.

(f) All requirements of WAC 230-20-010 are met before cards are purchased; and

(g) The scheme and supporting records contain control factors necessary for commission audit.

What additional restrictions apply to birthday bonus prizes?

(7) Birthday bonus prizes. Licensees may offer birthday bonus prizes subject to the following restrictions:

(a) The maximum bonus prize is fifty dollars;

(b) The player's birthday must be within the calendar week that the winning combination occurred and the bonus is paid;

(c) A licensee may award only one birthday bonus to any player during any calendar year;

(d) In addition to all requirements of WAC 230-20-102, the prize receipt for such prizes must include:

(i) The address of the winner;

(ii) The player's date of birth; and

(iii) The type of identification provided by the player to verify the winner's date of birth.

[Statutory Authority: RCW 9.46.070, 9.46.0209, 9.46.0237, 9.46.0205 and 9.46.075. 96-24-008 (Order 303), 230-20-242, filed 11/21/96, effective 12/22/96. Statutory Authority: RCW 9.46.070 (1), (8) - (11), (14), (20). 96-13-067 (Order 293), 230-20-242, filed 6/18/96, effective 7/19/96. Statutory Authority: Chapter 9.46 RCW. 94-24-055 (Order 263), 230-20-242, filed 12/5/94, effective 1/5/95. Statutory Authority: RCW 9.46.070. 93-13-062 (Order 240), 230-20-242, filed 6/17/93, effective 7/18/93.]

AMENDATORY SECTION (Amending WSR 95-13-030, filed 6/13/95)

WAC 230-50-010 Adjudicative proceedings--Hearings. (1) Adjudicated proceedings shall be commenced for any and all matters wherein the commission is causing administrative charges to be brought against any applicant, licensee or permittee within the limitations to chapter 34.05 RCW as applicable.

(2) The commission shall afford an applicant for a license an opportunity for an adjudicated proceeding prior to denying such application, and shall afford a licensee the opportunity for an adjudicated proceeding prior to suspending or revoking a license.

(3) The commission will afford a person applying to the commission for approval of a pull tab dispensing device under WAC 230-30-095 an opportunity for an adjudicated proceeding prior to denying approval of such device.

(4) No hearing will be conducted with respect to any adjudicated proceeding unless an application for an adjudicated proceeding and request for hearing is timely filed by the applicant or licensee with the commission in compliance with WAC 230-50-210. The application must be made upon a form to be obtained from the commission, or facsimile thereof, and must be received within 20 days following service upon the party affected by the commission or the director of a notice of administrative charges and opportunity for an adjudicated proceeding. Said document shall contain the maximum penalty that may be assessed should an application not be filed by the party affected. An application for an adjudicated proceeding and request for hearing shall accompany all notices of administrative charges.

(5) If an application for an adjudicated proceeding is not timely filed, then the party affected shall have waived the right to a hearing on the allegations set forth in the notice of administrative charges. The party shall be deemed to be in default pursuant to RCW 34.05.440 and the commission and director may take action against the party not to exceed the maximum penalty as stated in the notice of administrative charges and opportunity for an adjudicated proceeding, which action shall be final.

(6) The procedures of RCW 34.05.485, brief adjudicative proceedings, shall be used for the following purposes:

(a) All hearings in which the penalty sought by the commission is for a suspension of seven days or less;

(b) Hearings held pursuant to WAC 230-50-015 (stay of summary suspension);

(c) Hearings held pursuant to WAC 230-04-400(3) (failure to pay required gambling taxes);

(d) Hearings held pursuant to WAC 230-04-190 (10)(c) (two part payment plan: Failure to make second payment);

(e) Hearings in which the parties have stipulated to facts or the parties have stipulated to charges, and the hearing is limited to a determination of whether facts constitute violations as charged and/or determination of appropriate penalty to be imposed; ((or))

(f) Denial of an application to operate at a higher bingo license class when the licensee has been restricted by WAC 230-20-062;

(g) Petitions for a variance to bingo net return requirements authorized by WAC 230-20-060; or

(h) Where the parties have stipulated to the use of brief adjudicative proceedings.

[Statutory Authority: RCW 9.46.070. 95-13-030, 230-50-010, filed 6/13/95, effective 7/14/95; 92-19-107 (Order 231), 230-50-010, filed 9/18/92, effective 10/19/92. Statutory Authority: Chapter 34.05 RCW. 89-24-003 (Order 200), 230-50-010, filed 11/27/89, effective 12/28/89. Statutory Authority: RCW 9.46.070(13). 80-03-059 (Order 98), 230-50-010, filed 2/25/80; Order 45, 230-50-010, filed 12/30/75; Order 9, 230-50-010, filed 12/19/73.]

Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.

AMENDATORY SECTION (Amending Order 231, filed 9/18/92)

WAC 230-50-012 Summary suspensions. (1) Pursuant to RCW 34.05.422(4), the director may exercise the commission's authority to summarily suspend any license or permit issued to such licensee or permittee upon a determination that one or more of the actions identified in subsection (2) of this section have occurred and that immediate cessation of the licensed or permitted activities is necessary for the protection or preservation of the safety and welfare of the public. Suspension of a license under this provision shall take effect immediately upon service of the summary suspension order unless otherwise provided in the order.

(2) The commission deems the following actions of a licensee or permittee to constitute an immediate danger to the public safety and welfare which may require the immediate cessation of licensed or permitted activities:

(a) Failure or refusal to comply with the provisions, requirements, conditions, limitations, or duties imposed by chapter 9.46 RCW and any amendments thereto, or any rules adopted by the commission pursuant thereto;

(b) Knowingly causing, aiding, abetting, or conspiring with another to cause any person to violate any of the laws of this state or the rules of the commission;

(c) Obtaining a license or permit by fraud, misrepresentation, concealment, or through inadvertence or mistake;

(d) Conviction of, or forfeiture of a bond upon a charge of, or having pled guilty to, forgery, larceny, extortion, conspiracy to defraud, willful failure to make required payments or reports to a governmental agency at any level, or filing false reports therewith, or of any similar offense or offenses, or of bribing or otherwise unlawfully influencing a public official or employee of any state or the United States, or of any crime, whether a felony or misdemeanor involving any gambling activity or physical harm to individuals or involving moral turpitude;

(e) Allowing any person who has been convicted of, or forfeited bond upon, any of the offenses included under (d) of this subsection, to participate in the management or operation of any activity regulated by the commission without prior written approval of the commission or its director;

(f) Licensee is subject to current prosecution or pending charges, or a conviction which is under appeal, for any of the offenses included under (d) of this subsection;

(g) Denying the commission or its authorized representatives, including authorized local law enforcement agencies, access to any place where a licensed activity is conducted or failure to promptly produce for inspection or audit any book, record, document, or item required by law or commission rule;

(h) Making a misrepresentation of, or failure to disclose, a material fact to the commission;

(i) Licensee has pursued or is pursuing economic gain in an occupational manner or context which is in violation of the criminal or civil public policy of this state if such pursuit creates probable cause to believe that the participation of such person in gambling or related activities would be inimical to the proper operation of an authorized gambling or related activity in this state. For the purposes of this section, occupational manner or context shall be defined as the systematic planning, administration, management, or execution of an activity for financial gain; ((and))

(j) Licensee is a career offender or a member of a career offender cartel or an associate of a career offender or career offender cartel in such a manner which creates probable cause to believe that the association is of such a nature as to be inimical to the policy of chapter 9.46 RCW or to the proper operation of the authorized gambling or related activities in this state. For the purposes of this section, career offender shall be defined as any person whose behavior is pursued in an occupational manner or context for the purpose of economic gain utilizing such methods as are deemed criminal violations of the public policy of this state. A career offender cartel shall be defined as any group of persons who operate together as career offenders((.)); and

(k) A charitable or nonprofit organization has been deemed to be operating bingo primarily for gambling purposes and continues to utilize program funds to subsidize the operation of such activities.

(3) When a license or permit has been summarily suspended by the director, an adjudicated proceeding shall be commenced and the licensee or permittee shall be afforded an opportunity for a hearing before an Administrative Law Judge or the commission, upon the question of the suspension or revocation of the license or permit, or upon the renewal of the license or permit should it expire during the period of summary suspension. If an application for an adjudicated proceeding and request for hearing is timely filed by the licensee or permittee, then a hearing shall be held within ((90)) ninety days of the effective date of the summary suspension ordered by the director.

[Statutory Authority: RCW 9.46.070. 92-19-107 (Order 231), 230-50-012, filed 9/18/92, effective 10/19/92. Statutory Authority: RCW 34.05.422(4). 90-07-018 (Order 207) 230-50-012, filed 3/13/90, effective 4/13/90. Statutory Authority: Chapter 34.05 RCW. 89-24-003 (Order 200), 230-50-012, filed 11/27/89, effective 12/28/89; Order 29, 230-50-012, filed 1/23/75.]

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