WSR 98-06-027

PROPOSED RULES

GAMBLING COMMISSION

[Filed February 25, 1998, 2:35 p.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 98-01-093 dated December 15, 1997.

Title of Rule: WAC 230-30-225 Interest in separate business involving gambling activities at different marketing levels.

Purpose: This new rule clarifies the prohibitions and explains the intent behind the restrictions on holding an interest in businesses at different marketing levels.

Statutory Authority for Adoption: RCW 9.46.070 (1), (11).

Summary: This new rule clarifies the prohibitions and explains the intent behind the restrictions on holding an interest in businesses at different marketing levels.

Reasons Supporting Proposal: Rule will safeguard against undue influence over a market by one entity.

Name of Agency Personnel Responsible for Drafting: Soojin Kim, Lacey, (360) 438-7654 ext. 310; Implementation: Ben Bishop, Lacey, (360) 438-7654 ext. 302; and Enforcement: Carrie Tellefson, Lacey, (360) 438-7654 ext. 373.

Name of Proponent: Staff, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: This new rule adopts the principles of WAC 230-30-220 (currently up for repeal) which prohibits holding interest in separate businesses at different marketing levels. This new rule clarifies the prohibitions and explains the intent behind restrictions on holding an interest in businesses at different marketing levels.

This rule defines marketing level and answers the following questions:

(1) "If I am involved in the supply of pull tabs or punch boards am I prohibited from obtaining another license as an operator?"

(2) "If I am a licensed representative for a manufacturer or distributor can I have any interest in a licensed operator?"

(3) "Can I be licensed as a manufacturer and also be licensed as a distributor?"

(4) "If my spouse is a substantial interest holder in an operator, manufacturer, or distributor, will I be considered a substantial interest holder in the same business?"

This rule clarifies that a person is no longer prohibited from working for an operator as a bartender, wait person, or similar position and working for a distributor or manufacturer as either a licensed representative or in an unlicensed position such as a bookkeeper, etc.

Proposal does not change existing rules.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Proposal is exempt under RCW 19.85.025(2); therefore, a small business economic impact statement is not required.

RCW 34.05.328 does not apply to this rule adoption. This agency does not choose to make section 201, chapter 403, Laws of 1995, apply to this rule adoption.

Hearing Location: The Inn at Semi-ah-moo, 17228 International Boulevard, Blaine, WA 98230, (360) 371-2000, on April 10, 1998, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Susan Green by April 1, 1998, TDD (360) 438-7638, or (360) 438-7654 ext. 302.

Submit Written Comments to: Soojin Kim, Mailstop 42400, Olympia, Washington 98504-2400, FAX (360) 438-8652, by March 30, 1998.

Date of Intended Adoption: April 10, 1998.

Soojin Kim

Rules and Policy Coordinator

NEW SECTION

WAC 230-30-225 Interest in separate business involving punch boards and pull-tabs at a different marketing level prohibited. It is in the public interest for gambling activities to be closely controlled and for all income from such activities to be properly recorded. When one person has control over both the supply and the operation of a gambling activity, the opportunity for defrauding players and avoiding the reporting of income increases. Therefore, any person who controls the supply of punch boards, pull-tabs, pull-tab dispensing devices or related equipment shall not also be an operator of punch boards, pull-tabs, pull-tab dispensing devices or related equipment.

Definitions

(1) For purposes of this section, "marketing level" means operator level or supplier level; manufacturers or distributors are considered to be at the supplier level.

If I am involved in the supply of pull-tabs or punch boards am I prohibited from obtaining another license as an operator?

(2) For purposes of this section, the following scenarios are prohibited for all licensees involved in the supply or operation of pull-tabs or punch boards:

(a) A manufacturer or distributor shall not hold any interest in any other business operating at a different marketing level;

(b) An officer or any other person holding a substantial interest in a manufacturer or distributor shall not have any interest in any other business operating at a different marketing level;

(c) A manufacturer, distributor, or operator shall not allow any other business operating at a different marketing level, or any person with a substantial interest therein, to hold any interest in their business: Provided, That this subsection shall not prohibit agreements entered into pursuant to WAC 230-12-340.

If I am a licensed representative for a manufacturer or distributor can I have any interest in a licensed operator?

(3) If a licensed representative of a manufacturer or distributor is employed by or holds a substantial interest in a licensed punch board or pull-tab operator, such licensed representative and their employer is prohibited from conducting business of any type with such operator.

Can I be licensed as a manufacturer and also be licensed as a distributor?

(4) This section shall not prohibit the same person licensed and operating as a manufacturer from being also licensed and operating as a distributor.

If my spouse is a substantial interest holder in an operator, manufacturer, or distributor, will I be considered a substantial interest holder in the same business?

(5) For purposes of this section only, a person may not be considered a substantial interest holder if, after considering the entire circumstances, the director finds no potential for any involvement or influence in the spouse's business interest by the person. In addition to considering one or more of the documents listed below, the director may impose additional requirements on the spouses, including, but not limited to, prohibiting the manufacturer or distributor from conducting business of any type with the operator:

(a) Community or marital property agreements;

(b) Separate property agreements;

(c) Prenuptial agreements; or

(d) Wills and codicils.

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