WSR 16-12-110 PROPOSED RULES GAMBLING COMMISSION [Filed June 1, 2016, 10:53 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 16-08-057.
Title of Rule and Other Identifying Information: Amending WAC 230-03-185 Applying for a manufacturer license, 230-03-190 Applying for a distributor license and 230-06-110 Buying, selling, or transferring gambling equipment; and new WAC 230-06-112 Buying, selling, renting and leasing amusement games.
Hearing Location(s): Red Lion, 18220 International Boulevard, Seattle, WA 98188, (206) 246-5535, on July 14 or 15, 2016, at 11:30 a.m. or 1:00 p.m. NOTE: Meeting dates and times are tentative. Visit our web site at www.wsgc.wa.gov and select public meeting about ten days before the meeting to confirm meeting date/location/start time.
Date of Intended Adoption: July 14 or 15, 2016.
Submit Written Comments to: Susan Newer, P.O. Box 42400, Olympia, WA 98504-2400, e-mail Susan.Newer@wsgc.wa.gov, fax (360) 486-3625, by July 1, 2016.
Assistance for Persons with Disabilities: Contact Julie Anderson by July 1, 2016, TTY (360) 486-3637 or (360) 486-3453.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: In March 2016, the commissioners approved rule changes that required distributors of group 12 amusement games to be licensed. Staff realized upon passage of the rule change that the rules would have required Class B and above amusement game licensees who would like to own and/or lease group 12 amusement games to have a distributor's license in addition to, or in place of, the license they currently have. This was not the intent of the original rule change. Rules are needed to clearly define the activities of a manufacturer and distributor of group 12 amusement games, Class A amusement game licensees, Class B and above amusement game licensees, and who needs a distributor license.
Statute Being Implemented: Not applicable.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Washington state gambling commission, governmental.
Name of Agency Personnel Responsible for Drafting: Tina Griffin, Assistant Director, Lacey, (360) 486-3546; Implementation: David Trujillo, Director, Lacey, (360) 486-3512; and Enforcement: Josh Stueckle, Acting Agent-in-Charge, Lacey, (360) 325-7909.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Small Business Economic Impact Statement
Proposed Changes to Rules: Amending WAC 230-03-185 Applying for a manufacturer license, 230-03-190 Applying for a distributor license and 230-06-110 Buying, selling, or transferring gambling equipment; and new WAC 230-06-112 Buying, selling, renting and leasing amusement games.
Businesses will need a:
Involvement of Small Businesses: We filed the CR-101 on April 4, 2016, under WSR 16-08-057.
On [In] July 2015, the commissioners approved a new type of amusement game, group 12 amusement games with the passage of a new rule, WAC 230-13-067.
In October 2015, operators began putting group 12 amusement games into play and a number of questions arose regarding the operation, licensure, recordkeeping, and regulatory controls for this [these] new type[s] of amusement games. In an effort to address the questions and get information out to stakeholders timely, we started posting information on our website under "Breaking News" on group 12 amusement games.
On November 9, 2015, we sent an e-mail to the Class B and above amusement game licensees that we had e-mail addresses for informing them that we had drafted rules for discussion on a number of different issues concerning group 12 amusement games. (These rules did not include this rule change.)
On November 12, 2015, we asked stakeholders that attended the study session, which is open to the general public, to submit any comments or rule change language, not limited to the rules staff drafted, to address the issues surrounding group 12 amusement games to commission staff by November 30, 2015.
On December 24, 2015, we sent notice to all commercial and amusement game licensees of the updated rule proposals based [on] the feedback we received during the comment period. We also posted the draft rules on our web site, which included licensing of manufacturers and distributors of group 12 amusement games.
Original rule changes to WAC 230-03-185, 230-03-190, and 230-06-110 to address group 12 amusement games were discussed at the study session, open to the general public, and the commission meetings, through discussion and public testimony, on January 14, 2016, February 11, 2016, meeting, and March 11, 2016.
On March 11, 2016, the commissioners approved the original rule changes to these three rules to incorporate group 12 amusement games; a small business economic impact statement (SBEIS) was prepared for this original rule change. Staff realized upon passage of the rule change that the rules would have required Class B and above amusement game licensees who would like to own and/or lease group 12 amusement games to have a distributor's license in addition to, or in place of, the license they currently have. This was not the intent of the original rule change.
This rules package was prepared to provide clarity of the type of license required, manufacturer, distributor or Class B or above amusement game license, based on who the licensee was selling or leasing the group 12 amusement game to.
On March 25, 2016, we posted in the special section of our web site for group 12 amusement game information that we would be holding a stakeholder meeting to discuss all group 12 amusement game rules pending on April 9, 2016, which included this new rules package and this specific rule.
On April 9, 2016, we held a stakeholder meeting to discuss all group 12 amusement game rules, which included all rules in this package and this specific rule.
At least one week prior to the April 14, 2016, commission meeting, we posted this rules package on our web site, which included this specific rule.
At the April 14, 2016, commission meeting, this rules package was discussed at the study session and commission meeting. On April 15, 2016, we posted in the special section of our web site for group 12 amusement games a summary of the rules discussed and action taken by the commissioners at the April commission meeting.
At least one week prior to the May 12, 2016, commission meeting, we posted this rules package on our web site, which included this specific rule.
At the May 12, 2016, study session, stakeholders were asked what costs they would incur if the rule proposal went into effect. Stakeholders provided feedback as indicated below.
In summary, these proposed rule changes were discussed at study sessions on the following dates: April 14 and May 12, 2016. It will also be discussed at the study session on July 14/15, 2016. The rule proposal was discussed and public comment taken at the commission meetings on April 14 and May 12, 2016. It will also be discussed and public comment will be taken at the July 14/15, 2016, commission meeting. Lastly, it was discussed at a stakeholder meeting on April 9, 2016.
This process provided small businesses opportunities in the development of the new rule.
1. Description of the Reporting, Recordkeeping and Other Compliance Requirements of the Proposed Rule: Businesses will need a:
Manufacturers, distributors and operators of group 12 amusement games are already required to be licensed. This rules package just clarifies the type of license required depending upon who the group 12 amusement game is bought or leased from and sold or leased to.
2. Kinds of Professional Services That a Small Business is Likely to Need in Order to Comply: No professional services are needed to comply with this rule because manufacturers, distributors and operators of group 12 amusement games are already required to be licensed. This rules package just clarifies the type of license required depending upon who the group 12 amusement game is bought or leased from and sold or leased to.
Additionally, commission staff are available to answer any licensure questions and help businesses determine what license they need under this rule.
3. The Actual Costs to Small Businesses of Compliance, Including Costs of Equipment, Supplies, Labor and Increased Administrative Costs: There should not be any additional costs to small businesses. Manufacturers, distributors and operators of group 12 amusement games are already required to be licensed. This rules package just clarifies the type of license required depending upon who the group 12 amusement game is bought or leased from and sold or leased to.
If a manufacturer, distributor, or amusement game licensee holds a current license but requires a different type of license because of these proposed rules, they will not be required to apply for the other license type. If there is a cost difference between the types of licenses a business currently holds and the license they are required to have based on this rule change, the business would get a refund or have to pay the difference for the remainder of their license year.
For example, if a Class B distributor needed a Class B amusement game license because of who they bought or leased the group 12 amusement games from and sold or leased them to, they would get a refund of $910 prorated based on the number of months remaining in their license year. If a Class B amusement game licensee needed a Class B distributor license, they would need to pay $910 prorated based on the number of months remaining in their license year.
Stakeholders did not indicate at the two study sessions, two commission meetings and stakeholder meeting any additional costs.
4. Whether Compliance with the Rule, Based on Feedback Received from Licensees, Will Cause Businesses to Lose Sales or Revenue: This rule should not cause a small business to lose sales or revenue. Stakeholders have not indicated at the two study sessions, two commission meetings and stakeholder meeting that this rule would cause them to lose sales or revenue.
5. A Determination of Whether the Proposed Rule Will Have a Disproportionate Impact on Small Businesses: This rule should not have a disproportionate impact on small businesses. Manufacturers, distributors and operators of group 12 amusement games are already required to be licensed. This rules package just clarifies the type of license required depending upon who the group 12 amusement game is bought or leased from and sold or leased to.
6. Steps Taken by the Agency to Reduce the Costs of the Rule on Small Businesses or Reasonable Justification for Not Doing So: Agencies "must consider, without limitation, each of the following methods of reducing the impact of the proposed rule on small businesses:"
a. Reducing, Modifying, or Eliminating Substantive Regulatory Requirements;
Manufacturers, distributors and operators of group 12 amusement games are already required to be licensed. This rules package just clarifies the type of license required depending upon who the group 12 amusement game is bought or leased from and sold or leased to. Without this rule change, some businesses might be required to hold a more costly license or hold two licenses, which would also be more costly.
b. Simplifying, Reducing, or Eliminating Recordkeeping and Reporting Requirements;
This rule change does not require any additional recordkeeping or reporting requirements.
c. Reducing the Frequency of Inspections;
This rule will not require additional inspections.
d. Delaying Compliance Timetables;
Delaying compliance is unnecessary because this rule clarifies the type of license required under the rule. Immediate implementation of this rule provides clarity and possibly saves some small businesses money by ensuring they obtain the correct license.
e. Reducing or Modifying Fine Schedules for Noncompliance; or
There is no fine schedule related to this rule. Any finding of noncompliance with this rule would be handled like all other amusement game violations, which is a progressive enforcement model that includes verbal warnings, written warnings, fines, suspension, and revocation. Our goal is to seek voluntary compliance with our licensees through education and training.
f. Any Other Mitigation Techniques Including Those Suggested by Small Businesses or Small Business Advocates.
Small business stakeholders have not requested or suggested any mitigation techniques for the implementation of this rule change. Stakeholders have been told at study sessions and the stakeholder meetings to contact us with any comments on the proposed rule changes. No comments have been received from stakeholders on this rule change.
7. A Description of How the Gambling Commission Will Involve Small Businesses in the Development of the Rule: In December 2015, we sent notices of rule making to all amusement game licensees regarding rules for group 12 amusement games.
Original rule changes to WAC 230-03-185, 230-03-190, and 230-06-110 to address group 12 amusement games were discussed at the study session, open to the general public, and the commission meetings, through discussion and public testimony, on January 14, February 11 meeting, and March 11, 2016.
On March 11, 2016, the commissioners approved the original rule changes to these three rules to incorporate group 12 amusement games, an SBEIS was prepared for this original rule change. Staff realized upon passage of the rule change that the rules would have required Class B and above amusement game licensees who would like to own and/or lease group 12 amusement games to have a distributor's license in addition to, or in place of, the license they currently have. This was not the intent of the original rule change.
This rules package was prepare[d] to provide clarity of the type of license required, manufacturer, distributor or Class B or above amusement game license, based on who the licensee was selling or leasing the group 12 amusement game to.
On March 25, 2016, we posted in the special section of our web site for group 12 amusement game information that we would be holding a stakeholder meeting to discuss all group 12 amusement game rules pending on April 9, 2016, which included this new rules package.
On April 9, 2016, we held a stakeholder meeting to discuss all group 12 amusement game rules, which included all rules in this package and this specific rule.
At least one week prior to the April 14, 2016, commission meeting, we posted this rules package on our web site, which included this specific rule.
At the April 14, 2016, commission meeting, this rules package was discussed at the study session and commission meeting. On April 15, 2016, we posted in the special section of our web site for group 12 amusement games a summary of the rules discussed and action taken by the commissioners at the April commission meeting.
At least one week prior to the May 12, 2016, commission meeting, we posted this rules package on our web site, which included this specific rule.
At the May 12, 2016, study session, stakeholders were asked what costs they would incur if the rule proposal went into effect. Stakeholders provided feedback as indicated below.
8. A List of Industries That Will Be Required to Comply with the Rule: 7132. (Leave this number here.)
9. An Estimate of the Number of Jobs That Will Be Created or Lost as the Result of Compliance with the Proposed Rule: There is no evidence that any jobs will be created or lost as a result of this rule change. Manufacturers, distributors, and operators of group 12 amusement games are already required to be licensed by rule. Stakeholders have not indicated any jobs would be created or lost as a result of compliance with this proposed rule change from the two study sessions and stakeholder meetings in which this rules package was discussed.
A copy of the statement may be obtained by contacting Susan Newer, Rules Coordinator, P.O. Box 42400, Olympia, WA 98504, phone (360) 486-3466, fax (360) 486-3625, e-mail susan.newer@wsgc.wa.gov.
A cost-benefit analysis is not required under RCW 34.05.328. The Washington state gambling commission is not an agency that is statutorily required to prepare a cost-benefit analysis under RCW 34.05.328.
May 31, 2016
Susan Newer
Rules Coordinator
AMENDATORY SECTION (Amending WSR 16-08-033, filed 3/30/16, effective 4/30/16)
WAC 230-03-185 Applying for a manufacturer license.
(1) You must apply for a manufacturer license if you:
(a) Make or assemble a completed piece or pieces of gambling equipment for use in authorized gambling activities; or
(b) Convert, modify, combine, add to, or remove parts or components of any gambling equipment for use in authorized gambling activities; or
(c) Manufacture group 12 amusement. Manufacturers of group 12 amusement games that were approved before the effective date of this rule must apply by May 1, 2016, and be licensed by December 31, 2016. Manufacturers of group 12 amusement games can sell or lease group 12 amusement games to a licensed distributor or a Class B or above amusement game licensee.
(2) You must demonstrate your ability to comply with all manufacturing, quality control, and operations restrictions imposed on authorized gambling equipment that you want to manufacture or market for use in Washington State.
(3) The licensing process may include an on-site review of your manufacturing equipment and process for each separate type of authorized gambling equipment to ensure compliance capability.
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 WSR 16-08-033, filed 3/30/16, effective 4/30/16)
WAC 230-03-190 Applying for a distributor license.
You must apply for a distributor license if you:
(1) Buy or otherwise obtain a finished piece of gambling equipment for use in authorized gambling activities ((or a group 12 amusement game)) from another person and sell or provide that gambling equipment to a third person for resale, display, or use; or
(2) Are a manufacturer who sells or provides gambling equipment you do not make to any other person for resale, display, or use; or
(3) Service and repair authorized gambling equipment. However, distributors must not add, modify, or alter the gambling equipment; or
(4) Modify gambling equipment using materials provided by manufacturers to upgrade equipment to current technology.
(5) Buy or lease a group 12 amusement game from another licensee and sell or lease the group 12 amusement game to a Class B and above amusement game licensee.
AMENDATORY SECTION (Amending WSR 16-08-033, filed 3/30/16, effective 4/30/16)
WAC 230-06-110 Buying, selling, or transferring gambling equipment.
(1) All licensees and persons authorized to possess gambling equipment must closely control the gambling equipment in their possession.
(2) Before selling gambling equipment, licensees must ensure that the buyer possesses a valid gambling license or can legally possess the equipment without a license.
(3) Before purchasing gambling equipment, licensees must ensure that the seller possesses a valid gambling license.
(4) Applicants for Class F or house-banked card room licenses may purchase and possess gambling equipment during the prelicensing process, but only after receiving written approval from us.
(5) Charitable and nonprofit organizations conducting unlicensed bingo games, as allowed by RCW 9.46.0321, may possess bingo equipment without a license.
(6) Group 12 amusement games can only be sold or leased to Class B and above amusement game licensees by a licensed manufacturer or distributor ((to a licensee)). Class B and above amusement game licensees can lease or rent group 12 amusement games to Class A amusement game licensees. Lease agreements entered into prior to the effective date of this rule may continue until the manufacturer is licensed or December 31, 2016, whichever occurs first.
(7) Licensees may transfer gambling equipment as a part of a sale of a business as long as a condition of the sale is that the buyer receives a gambling license before the sale is complete. Licensees must make a complete record of all gambling equipment transferred in this manner, including I.D. stamps. Licensees must report these transfers, including a copy of the inventory record, to us.
NEW SECTION
WAC 230-06-112 Buying, selling, renting and leasing amusement games.
(1) Class A amusement game licensees can rent or lease amusement games from Class B and above amusement game licensees.
(2) Class B and above amusement game licensees can:
(a) Own and operate group 1 through 12 amusement games at their licensed premises; and
(b) Buy or lease group 12 amusement games from a licensed manufacturer or distributor and lease or rent them to Class A amusement game licensees.
(c) Rent or lease group 1 through 11 amusement games to Class A amusement game licensees.
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