Date of Adoption: May 14, 1999.
Purpose: No rules were in place governing payment terms on lease, rental, and license agreements between a manufacturer or distributor and operators. This new rule sets out the procedures for payment terms and restricts the use of credit for leasing or renting gambling equipment and licensing of card games. This will bring consistency with rules governing the sale of gambling equipment.
Statutory Authority for Adoption: RCW 9.46.070.
Adopted under notice filed as WSR 99-08-093 on April 6, 1999, with a publication of April 21, 1999.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 1, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 1, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.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: July 1, 1999.
May 28, 1999
Leases, rentals, and license agreements--Requirements--Restrictions.
Manufacturers and distributors may lease or rent gambling equipment, other than punch boards, pull-tabs, bingo paper, bingo supplies, playing cards, and other consumable gambling-related equipment or devices to operators. In addition, manufacturers may enter into license agreements with operators permitting them to use their patented, copyrighted, or trademarked card games. All operating leases, rentals, or license agreements must be transacted on a cash basis only, except as provided in subsection (2) of this section. The following requirements and procedures shall apply:
(1) For purposes of this section, lease, rental, or license fees must be received by the manufacturer or distributor in advance of the period in which the equipment, device, or card game is to be used. Agreements shall be constructed so that regularly scheduled payments comply with this condition: Provided, That fees from electronic bingo equipment may be based on the amount of usage a device receives, as outlined in subsection (2) of this section.
(2) Fee structures for electronic bingo equipment may be based on usage, under the following circumstances:
(a) Fees may be determined by the number of times a device is used or the number of bingo sessions in which devices are utilized;
(b) Fees may not be determined by a percentage of sales, the number of bingo cards sold through the device, or the average amount a player spends on a device;
(c) Fees must be billed at least every thirty days and invoices must be dated within fifteen days from the end of each thirty-day period; and
(d) Fees must be received by the manufacturer or distributor within thirty days of the invoice date.
(3) When an operator fails to pay regularly scheduled payments in accordance with subsection (1) or (2) of this section, the following procedures shall apply:
(a) If payment is not received within ten days of the payment due date, the manufacturer or distributor shall notify the delinquent operator and the commission by the end of the next business day. The following information shall be reported:
(i) Operator’s name;
(ii) Delinquent amount and due date; and
(iii) Any relevant information about the account if it is delinquent.
(b) If payment is not received within twenty days, the manufacturer shall notify the operator that it must cease using or operating the equipment, device, or card game immediately.
(c) If payment is still not received within thirty days, the manufacturer or distributor shall remove any equipment, device, or card game materials provided under the agreement from the licensed premises within five days. The commission shall be notified of the date and time removal is to occur.
(d) When a manufacturer or distributor receives an operator’s delinquent payment, it shall notify the commission by the end of the next business day.
(4) Any freight, delivery, installation, or other set up fees must be paid within thirty days of the delivery date.
(5) Operators that fail to pay for lease, rental, or license fees by the date due may be deemed to have solicited credit.
(6) Manufacturers or distributors that fail to comply with the procedures noted above may be deemed to have extended credit.
(7) All capital leases for the sale of gambling equipment shall comply with WAC 230-12-340.