WSR 98-20-013
PERMANENT RULES
LOTTERY COMMISSION
[Filed September 25, 1998, 10:19 a.m.]
Date of Adoption: September 18, 1998.
Purpose: Provides for credit checks of retailers applying for instant scratch ticket licenses. Revises provisions regarding retailer credit. Moves retailer credit criteria provisions from chapters 315-30 to 315-04 WAC. Provides for reporting retailer credit history to credit bureaus or other credit organizations.
Citation of Existing Rules Affected by this Order: Repealing WAC 315-30-090; and amending WAC 315-30-080, 315-04-090, and 315-04-130.
Statutory Authority for Adoption: RCW 67.70.040.
Adopted under notice filed as WSR 98-16-078 on August 5, 1998.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 2, amended 3, repealed 1.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.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.
September 24, 1998
Mary Jane Ferguson
Rules Coordinator
OTS-2351.1
AMENDATORY SECTION (Amending Order 116, filed 4/10/89)
WAC 315-30-080 On-line retailer selection criteria. (1) The selection and distribution of on-line retailers throughout the state will be based on:
(a) The number of licensed retailers in each of the regions identified in WAC 315-12-030, and then;
(b) The potential for revenue generation, demographics, and public accessibility within that region.
(2) An on-line license endorsement shall be issued only to a person who possesses a valid general license, provided, the director may issue an on-line endorsement to a lottery retailer who possesses a valid provisional license if that retailer is a new owner of a previously established on-line location.
(3) In addition, the director shall consider the following factors in the selection of on-line retailers.
(a) Business and security considerations which include but
are not limited to: (i) Instant game accounts receivable record,
(ii) criminal history of owners and officers, (iii) history of
criminal activity at the business establishment, (iv) past
security problems, (v) credit rating as defined in WAC ((315-30-090)) 315-04-095, (vi) licensing requirements, and (vii) history
of administrative or regulatory actions.
(b) Marketing considerations which include but are not limited to: (i) Instant ticket sales history, (ii) outside vehicle traffic, (iii) retail customer count, (iv) access to location, and (v) management attitude and willingness to promote lottery products.
(4) The director shall determine the total number of TDM's
to be installed throughout the state and shall establish
procedures for on-line site selection. In determining the order
in which TDMs will be installed within a given geographic
area(([,])), an on-line site selection survey will be completed
in which, the factors considered will include but not be limited
to:
(a) General information;
(b) Description of proposed site;
(c) Proposed TDM location;
(d) Products sold;
(e) Services available;
(f) Store's hours;
(g) Estimated on-line sales;
(h) Instant sales per week;
(i) Nearest four on-line agents' sales per week;
(j) District sales representative's assessment; and
(k) Regional sales manager's assessment.
(5) The director may, after a TDM has been in operation for six months, order the removal of a TDM from a low producing on-line retailer location after considering marketing factors which include but are not limited to:
(a) Sales volume not increasing at state-wide average;
(b) Weekly sales volume below that of similar businesses with similar market potential;
(c) Sales volume below $5,000 per week in metropolitan areas;
(d) Public is adequately served by other on-line agent locations; and
(e) Failure to generate sufficient sales volume to cover the lottery's administrative costs.
(6) The director may immediately discontinue a TDM's operation, order removal of a TDM from an on-line retailer location, or take any other action authorized under WAC 315-04-200 in the event that the on-line agent:
(a) Fails to comply with any rule established by the commission, any instruction issued by the director;
(b) Tampers with or attempts to tamper with the TDM or on-line system;
(c) Fails to make payment of a prize;
(d) Makes payment with a business check and the check is dishonored for any reason; or
(e) Fails to enter into the uniform agreement with the lottery as required in WAC 315-30-075.
[Statutory Authority: RCW 67.70.040. 89-09-009 (Order 116), § 315-30-080, filed 4/10/89; 85-22-057 (Order 81), § 315-30-080, filed 11/5/85; 85-09-004 (Order 72), § 315-30-080, filed 4/5/85; 84-21-013 (Order 66), § 315-30-080, filed 10/5/84; 84-05-008 (Order 51), § 315-30-080, filed 2/7/84.]
NOTES:
Reviser's note: RCW 34.04.058 requires the use of underlining and deletion marks to indicate amendments to existing rules, and deems ineffectual changes not filed by the agency in this manner. The bracketed material in the above section does not appear to conform to the statutory requirement.
REPEALER
The following section of the Washington Administrative Code is repealed:
WAC 315-30-090 On-line retailer credit criteria.
OTS-2350.1
AMENDATORY SECTION (Amending Order 101, filed 5/4/87)
WAC 315-04-090 License issuance eligibility. (1) The director may issue a license to any person to act as a lottery retailer who meets the eligibility criteria established by chapter 7, Laws of 1982 2nd ex. sess., and these rules.
(2) Before issuing a license, the director shall consider:
(a) The financial responsibility and security of the person and its business or activity;
(b) The background and reputation of the applicant in the community for honesty and integrity;
(c) The type of business owned or operated by the applicant to ensure consonance with the dignity of the state, the general welfare of the people and the operation and integrity of the lottery;
(d) The conformance of businesses located in residential areas to local land use and zoning codes, regulations, and ordinances;
(e) The accessibility of the applicant's place of business or activity to the public;
(f) The sufficiency of existing licenses to serve the public convenience;
(g) The volume of expected sales;
(h) The veracity of the information supplied in the application for a lottery retailer license; and
(i) The applicant's indebtedness to the state of Washington, local subdivisions of the state and/or the United States government.
(3) The director may condition the issuance of any license upon the posting of a bond or cash in lieu of a bond in such terms and conditions as the director may require.
(4) The director shall establish procedures to assure that approval of the appropriate local governmental unit is obtained prior to issuance of a license to a business located in a residential area which is a nonconforming use under local land use and zoning codes, regulations, and ordinances.
[Statutory Authority: RCW 67.70.040. 87-10-043 (Order 101), § 315-04-090, filed 5/4/87; 86-01-060 (Order 83), § 315-04-090, filed 12/16/85. Statutory Authority: RCW 67.70.040 and 67.70.050. 83-05-029 (Order 14), § 315-04-090, filed 2/10/83. Statutory Authority: 1982 2nd ex.s. c 7. 82-21-037 (Order 2), § 315-04-090, filed 10/15/82.]
NEW SECTION
WAC 315-04-095 Retailer credit criteria. (1) The director shall deny an instant scratch ticket license or an on-line license endorsement to any applicant whose credit is found to be poor.
(2) The director may grant an instant scratch ticket license or an on-line license endorsement to an applicant whose credit is rated as marginal or minimum as defined in this section. Provided, the director shall require:
(a) Applicants whose credit is rated as marginal as defined in this section to obtain a surety bond or savings certificate under terms and conditions established by the director prior to issuance of the license. Such surety bond must be secured from a company licensed to do business in the state of Washington. The bond or certificate shall be in the amount of seven thousand five hundred dollars unless the director determines a higher amount is required.
(b) Applicants whose credit is rated as minimum as defined in this section to obtain a surety bond or post cash in lieu of a bond under terms and conditions established by the director or submit five letters of credit to the lottery prior to issuance of the on-line license endorsement. Such surety bond must be secured from a company licensed to do business in the state of Washington. The bond or cash shall be in the amount of seven thousand five hundred dollars unless the director determines a higher amount is required, based on sales volume and financial solvency of the retailer.
(3) In the event the retailer's credit is rated as poor or marginal subsequent to the issuance of the license the director may:
(a) Revoke or suspend a retailer's license; and/or
(b) Require such a retailer to secure a surety bond from a company licensed to do business in the state of Washington or post a savings certificate under terms and conditions established by the director. The surety bond or saving certificate shall be in the amount of seven thousand five hundred dollars unless the director determines, based on sales volume and financial solvency of the retailer, a higher amount is required.
(4) Credit rating is defined as the ability to meet financial obligations when they become due. It includes current reporting accounts payable and public financial record information including, but not limited to, court records, other public records and reports from credit bureaus or other credit reporting agencies up to three years prior to the lottery's credit check request. A significant incident shall be defined as public financial record information which includes any lien, judgment, bankruptcy, involuntary collection action or any similar incident which reflects on the individual's willingness and ability to pay creditors. A numerical rating of "one" represents excellent credit. A numerical rating of "nine" represents involuntary collection.
(a) A "poor" credit rating indicates public record showing three or more significant incidents within the past three years.
(b) A "marginal" credit rating indicates public record information showing one or more significant incidents within the past three years.
(c) A "minimum" credit rating indicates the information is insufficient for evaluation.
(d) An "acceptable" credit rating indicates that there have been no significant incidents in the public record within the past three years. Provided, at least three accounts must be evaluated in order to receive an "acceptable" rating.
(5) Credit rating checks shall be conducted as follows:
(a) Corporation business credit ratings shall be checked. Personal credit ratings of the corporate officers and owners of ten percent or more equity in the corporation may also be checked.
(b) Sole proprietors and partnership business credit ratings shall be checked. Personal credit ratings of:
(i) The sole proprietor and his or her spouse; or
(ii) All partners and their spouses shall also be checked.
(c) Findings shall be applied in accordance with subsections (1), (2) and (3) of this section.
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NEW SECTION
WAC 315-04-105 Reporting retailer credit history. The lottery may report any part of a retailer's credit information to a credit bureau or agency which is a clearinghouse for information regarding credit history.
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AMENDATORY SECTION (Amending Order 83, filed 12/16/85)
WAC 315-04-130 Death or incapacity of licensee. (1) In the event of the proven incapacity, death, receivership, bankruptcy or assignment for benefit of creditors of any lottery retailer, upon approval of the director, the license may be transferred to a court appointed or court confirmed guardian, executor or administrator, receiver, trustee, or assignee for the benefit of creditors, who may continue to operate the activity under the license, subject to the provisions of chapter 7, Laws of 1982 2nd ex. sess. and these rules.
(2) The person to whom a license is transferred hereunder must be otherwise qualified to hold a license.
(3) The license following transfer shall be void upon that person ceasing to hold such a court appointed or court confirmed position.
(4) The director may condition the transfer of any license under this section upon the posting of a bond or cash in lieu of a bond in such terms and conditions as the director may require.
[Statutory Authority: RCW 67.70.040. 86-01-060 (Order 83), § 315-04-130, filed 12/16/85; 85-09-004 (Order 72), § 315-04-130, filed 4/5/85. Statutory Authority: 1982 2nd ex.s. c 7. 82-21-039 (Order 4), § 315-04-130, filed 10/15/82.]