WSR 16-17-141 PROPOSED RULES GAMBLING COMMISSION [Filed August 23, 2016, 4:48 p.m.]
Supplemental Notice to WSR 16-12-108.
Preproposal statement of inquiry was filed as WSR 16-06-130.
Title of Rule and Other Identifying Information: Amending WAC 230-13-075 Assigning and reporting group numbers of authorized amusement games, 230-13-170 Recordkeeping for commercial amusement games, 230-13-005 Amusement games authorized, and 230-07-125 Recordkeeping requirements for lower volume charitable or nonprofit organizations.
Hearing Location(s): Heathman Lodge Vancouver, 7801 N.E. Greenwood Drive, Vancouver, WA 98662, on September 8-9, 2016; and at the DoubleTree by Hilton Spokane Center, 322 North Spokane Falls Court, Spokane, WA 99201, on October 13 or 14, 2016, at 11:00 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: October 13 or 14, 2016.
Submit Written Comments to: Rules Coordinator, P.O. Box 42400, Olympia, WA 98504-2400, e-mail rules.coordinator@wsgc.wa.gov, fax (360) 486-3625 by October 1, 2016.
Assistance for Persons with Disabilities: Contact Julie Anderson by October 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 July 2015, the commissioners authorized group 12 amusement games to be played by persons twenty-one and over. These rules address recordkeeping and the nontransferability of tokens. Currently, amusement game operators are only required to notify us once a year of the amusement games they have. They are also only required to report their overall amusement game gross receipts. These rule changes will help staff know where group 12 amusement games are being operated and the gross receipts they are bringing in. The rule changes also address not commingling coupons, tickets, tokens or tokens on an electronic token card to other gambling related redemption systems to help ensure cash is not indirectly awarded as prizes. At the July meeting, the commissioners voted to file additional changes to three of the rules.
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, (509) 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: WAC 230-13-075 Assigning and reporting group numbers of authorized amusement games, 230-13-170 Recordkeeping for commercial amusement games, 230-07-125 Recordkeeping requirements for lower volume charitable or nonprofit organizations, and 230-13-005 Amusement games authorized.
This rules package would:
Involvement of Small Businesses: We filed the code revisor's [reviser's] CR-101 on March 2, 2016, under WSR 16-06-130.
In July 2015, the commissioners approved a new type of amusement game, group 12 amusement games with the passage of a new rule.
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 new type of amusement game. In an effort to address the questions and get information out to stakeholders timely, we started posting information on our web site 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.
In February 2016, while other group 12 amusement game rules were being considered, staff put this rules package together, which included this specific rule, to address some other regulatory concerns with group 12 amusement games.
At least one week prior to the March 11, 2016, commission meeting, we posted this rules package on our web site.
On March 25, 2016, we posted information on this rules package as filed by the commissioners at their March 11, 2016, commission meeting in the special "Breaking News" section of our web site for group 12 amusement games. We also posted that we would be holding a stakeholder meeting to discuss all group 12 amusement game rules pending on April 9, 2016, to include this rules package, which included 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, which included 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.
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.
A meeting was held on May 19, 2016, with the stakeholder that wanted to explore possible options to the rule language being proposed.
In summary, the proposed rule changes were discussed at study sessions on the following dates: March 11, 2016, April 14, 2016, 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 March 11, 2016, April 14, 2016, and May 12, 2016. It will also be discussed and public comment will be taken at the July 14/15, 2016, commission meeting. The proposed changes were discussed at a stakeholder meeting on April 9, 2016, and with one stakeholder on May 19, 2016, to discuss possible changes to the proposed language.
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: In July 2015, the commissioners authorized group 12 amusement games to be played by persons twenty-one and over with the passage of one rule. Since this time, numerous questions and concerns have been raised surrounding the operation and regulation of group 12 amusement games. We have discovered that more rules were needed with the new activity.
Reporting requirement - this rules package requires amusement game licensees to notify us within thirty days of placing a group 12 amusement game into play or removing it from play.
Currently, amusement game licensees are only required to report to us the amusement games they have in play once a year. Without this rule change, we have no way of knowing where these games, which have been of great interest and have been controversial, are placed. This will allow us to know, within a thirty day window, where and how many group 12 amusement games are in the state.
Recordkeeping requirement - this rules package requires licensees that operate group 12 amusement games to record gross gambling receipts of group 12 games separate from the gross gambling receipts of group 1 through 11 amusement games.
Currently, amusement game licensees must record the combined gross gambling receipts of amusement games regardless of the group or type of amusement game they operate.
Nontransferability of tokens awarded on group 12 amusement games – this rule package allows coupons, tickets, tokens or tokens on an electronic token card dispensed from a group 12 amusement game to be stored for redemption on a system that does not commingle the coupons, tickets, tokens or tokens on an electronic token card with anything else.
This will prevent group 12 amusement game licensees from circumventing the prohibition against gift cards/cash by allowing cash/gift cards to be awarded through a player tracking or customer reward system. By not allowing operators to transfer tokens awarded from a group 12 amusement game, licensees will be required to follow the redemption and operation requirements set out in RCW 9.46.0201 and WAC 230-13-005.
2. Kinds of Professional Services That a Small Business is Likely to Need in Order to Comply: Small businesses should not need any additional professional services other than those accounting services that may be currently used to assist with current reporting and recordkeeping requirements.
Reporting requirement – professional services will not be needed for small businesses to comply with this portion of the rule change. Licensees can provide the required information through the commission's My Account, which licensees are required to use to renew their license. My Account is an online account, customized for each licensee. For those licensees that do not have a computer, they will have to submit a form. The information required to be submitted to the commission to comply with this rule will likely be the name of licensee, name and address of the licensed location where the game is physically located, the approved group 12 amusement game(s) placed or removed, the date the game(s) was placed or removed, and the number of approved group 12 amusement games placed or removed.
Recordkeeping requirement – rules already require commercial and nonprofit amusement game licensees to record and report amusement game gross receipts. Licensees record and report the combined gross receipts from all group 1 through 11 amusement games they operate. Licensees may be using professional services to comply with the current rule. The proposed rule would require licensees to add to their records a separate line item for group 12 gross receipts and report that to us separate from their total group 1 through 11 amusement game gross receipts.
Nontransferability of tokens awarded from group 12 amusement games - professional services will not be required for group 12 amusement game operators to comply with this rule proposal. This portion of the rules package allow[s] coupons, tickets, tokens or tokens on an electronic token card dispensed from a group 12 amusement game to be stored for redemption under this rule on a system that does not commingle the coupons, tickets, tokens or tokens on an electronic token card with anything else. Conversely, it will not allow group 12 amusement game operators to transfer coupons, tickets, tokens or tokens on an electronic storage card awarded from a group 12 amusement game to another system, such as a player tracking or customer rewards system. Group 12 amusement game operators will have to redeem the actual coupons, tickets, tokens or tokens on an electronic storage card dispensed from the game.
The rule already requires group 12 amusement games to dispense coupons, tickets, tokens or tokens on an electronic token card to be redeemed for merchandise prizes. No modifications to the amusement games would be required to comply with this rule.
3. The Actual Costs to Small Businesses of Compliance, Including Costs of Equipment, Supplies, Labor and Increased Administrative Costs: Cost should be minimal, if any, to small businesses.
Reporting – the cost for complying with this portion of the rule change will be labor costs to do the reporting and any mailing costs if the licensee does not have a computer. The information most likely required to be reported will be the name of licensee, name and address of the licensed location where the game is physically located, the approved group 12 amusement game(s) placed or removed, the date the game(s) was placed or removed, and the number of approved group 12 amusement games placed or removed.
Small business licensees should be familiar with their obligations to report certain business information to us within thirty days from the event. All reporting will be done through My Account, a free online program that all licensees must use for other reporting and to renew their licenses. Those licensees that do not have a computer or that find it easier to fill out a form can do so and mail it in to us.
Recordkeeping – There should be minimal increased administrative costs to develop a new line item and record the gross receipts for group 12 amusement games separately from the group 1 through 11 amusement games they operate. Small business licensees already must track and record the gross receipts from group 12 activity with the other amusement game gross receipts for other state agencies. There should also be minimal increased administrative costs to report the total group 12 amusement game gross receipts. Small business licensees already must track and report all amusement game gross receipts to us. This rule change solely requires them to separate group 12 gross receipts from receipts from groups 1-11.
Nontransferability of coupons, tickets, tokens or tokens on an electronic token card dispensed by a group 12 amusement game – there should be no additional costs for compliance with the rule proposal. Currently, our rules require all group 12 amusement games to dispense coupons, tickets, tokens or tokens on an electronic token card. This rule proposal would allow coupons, tickets, tokens or tokens on an electronic token card dispensed from a group 12 amusement game to be stored for redemption under this rule on a system that does not commingle the coupons, tickets, tokens or tokens on an electronic token card with anything else.
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. One small business licensee with forty-nine group 12 amusement games in operation at ten licensed locations in Washington indicated that he spent at least $7,500 on a software program allowing him to store group 12 amusement game tokens on his player tracking system. This licensee indicated he will close down all of his group 12 amusement games in the state if this rule is passed. However, he did not share how sales or revenue would be affected by this rule change.
No other small business stakeholders indicated any possible loss of sales or revenue at the April 9, 2016, stakeholder meeting; the April 14, 2016, study session or commission meeting; or at the May 12, 2016, study session or commission meeting.
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. All licensees with group 12 amusement games in play will have to comply with this rule regardless of the size of their business.
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: Group 12 amusement games were approved by the commissioners in July 2015 with the passage of one rule to allow the games. Since that time, we have determined that more rules are necessary to regulate the activity.
The commission kept the reporting timeline, thirty days from placing into or removing from play, the same as it has for all other reportable information. We also will make the form available on our My Account to make reporting as easy as possible for licensees.
Licensees could allow coupons, tickets, tokens or tokens on an electronic token card dispensed from a group 12 amusement game to be stored for redemption under this rule on a system that does not commingle the coupons, tickets, tokens or tokens on an electronic token card with anything else.
b. Simplifying, Reducing, or Eliminating Recordkeeping and Reporting Requirements: The commission is only requiring licensees to separately report group 12 amusement game gross receipts. The reporting requirement is simplified by allowing group 12 gross receipts to be reported online through My Account, which is available to licensees when they report their amusement game gross receipts now. Licensees are still allowed to report their combined group 1 through 11 gross receipts.
Additionally, reporting the placement or removal of group 12 amusement games can simply be done online through My Account. The commission is only requiring limited information, such as the name of licensee, name and address of the licensed location where the game is physically located, the approved group 12 amusement game(s) placed or removed, the date the game(s) was placed or removed, and the number of approved group 12 amusement games placed or removed.
c. Reducing the Frequency of Inspections: This rule will not require additional inspections. Verification of compliance with these rules can be done during routine inspections to verify licensure, identification stamp, and other operational requirements.
d. Delaying Compliance Timetables: Delaying compliance is unnecessary because the cost for compliance is minimal and these rules are necessary for monitoring and regulating these new electronic amusement games.
e. Reducing Or Modifying Fine Schedules for Noncompliance: There is no fine schedule related to this rule. Any finding of noncompliance with this rule would likely 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: Only one small business licensee has requested or suggested any mitigation techniques for the implementation of this rule change. This licensee's suggestion was to withdraw the rule change regarding nontransferability of tokens dispensed from a group 12 amusement game. The licensee did not suggest an alternative rule that would mitigate any cost the rule would have to his small business.
The commission considered changes to the original proposed rule language and has changed the language to allow coupons, tickets, tokens or tokens on an electronic token card dispensed from a group 12 amusement game to be stored for redemption under this rule on a system that does not commingle the coupons, tickets, tokens or tokens on an electronic token card with anything else.
The commission has a responsibility to prevent amusement game licensees from circumventing the prohibition against gift cards/cash by allowing cash/gift cards to be awarded through a player tracking or customer reward system. By not allowing operators to transfer tokens awarded from a group 12 amusement game, licensees will be required to follow the redemption and operation requirements set out in RCW 9.46.0201 and WAC 230-13-005.
7. A Description of How the Gambling Commission Will Involve Small Businesses in the Development of the Rule: 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.
In February 2016, while other group 12 amusement game rules were being considered, staff put this rules package together to address some other regulatory concerns with group 12 amusement games.
At least one week prior to the March 11, 2016, commission meeting, we posted this rules package on our web site.
On March 25, 2016, we posted information on this rules package as filed by the commissioners at their March 11, 2016, commission meeting in the special section of our web site for group 12 amusement games. We also posted that we would be holding a stakeholder meeting to discuss all group 12 amusement game rules pending on April 9, 2016, to include this 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.
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.
A meeting was held on May 19, 2016, with the stakeholder that provided an e-mail in opposition to one of the rule changes.
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 only evidence that one full-time and one part-time job will be lost as a result of the proposed rule changes. One small business licensee that has forty-nine group 12 amusement games in operation at ten licensed locations in Washington and spent at least $7,500 on a software program to store tokens dispensed on the player tracking system indicated that they will stop operating all of their group 12 amusement games in the state. This action will result in the loss of one full-time bookkeeper, a part-time technician, and it will terminate the use of an on-call technician that flies in from California when his service is needed.
No other small business licensees have indicated that any jobs would be created or lost as a result of compliance with this proposed rule change.
A copy of the statement may be obtained by contacting Rules Coordinator, P.O. Box 42400, Olympia, WA 98504, phone (360) 486-3447, fax (360) 486-3625, e-mail rules.coordinator@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.
August 23, 2016
Michelle Rancour
Acting Rules Coordinator
AMENDATORY SECTION (Amending WSR 07-10-032, filed 4/24/07, effective 1/1/08)
WAC 230-07-125 Recordkeeping requirements for lower volume charitable or nonprofit organizations.
(1) Organizations operating without a license under RCW 9.46.0315 or 9.46.0321 and lower volume charitable or nonprofit licensees must keep a set of permanent monthly records of the gambling activities. Lower volume licensees include:
(a) Fund-raising events;
(b) Bingo (Classes A, B, and C);
(c) Raffles (Classes A, B, C, and D);
(d) Amusement games (Classes A, B, C, and D); and
(e) Card games (Classes A, B, and C).
(2) The monthly records must include, at least:
(a) The gross gambling receipts from each activity;
(b) The gross gambling receipts from group 12 amusement games;
(c) The total amount of cash prizes actually paid out;
(((c))) (d) The total of the cost to the licensee of all merchandise prizes actually paid out for each activity;
(((d))) (e) A summary of all expenses related to each of the activities; and
(((e))) (f) The net income received from the activity, the purpose(s) for which the net income was raised, and the amount paid to each recipient.
(3) Licensees must keep these records for three years from the end of the license year for which the record was created.
AMENDATORY SECTION (Amending WSR 16-09-045, filed 4/15/16, effective 7/15/16)
WAC 230-13-005 Amusement games authorized.
(1) We authorize the approved groups of amusement games set forth in this chapter. Operators must only operate amusement games that meet the standards of at least one of the authorized groups.
(2) Commercial businesses or nonprofit or charitable organizations may apply for licenses for amusement games.
(3) Charitable or nonprofit organizations also may conduct group 1 through 11 amusement games without a license when authorized to do so under RCW 9.46.0321 and 9.46.0331.
(4) Operators must operate amusement games as either:
(a) An attended amusement game.
(i) An "attended amusement game" means an amusement game that requires the presence or assistance of a person (attendant) in the regular operation of the game; and
(ii) These games must award a merchandise prize to players if players achieve the objective with one cost of play; and
(iii) An attendant accepts cash, check, tickets or scrip to play the amusement game. The tickets and scrip are not redeemable for cash and must show the name of the operator or sponsor; or
(b) A coin or token activated amusement game.
(i) A "coin or token activated amusement game" means an amusement game that uses a mechanical, electronic, or electro-mechanical machine to allow the player to activate the game by inserting coins, cash, tokens, or tokens on an electronic token card; and
(ii) These games may dispense merchandise prizes, or coupons, tickets, tokens, or tokens onto an electronic token card redeemable for merchandise prizes; and
(iii) Coupons, tickets, tokens or tokens on an electronic token card can be electronically stored for redemption under this section as long as the coupons, tickets, tokens or tokens on an electronic token card are:
(A) Deposited into, and tracked on, a separate amusement game accounting system; and
(B) Not commingled with any tracking, reward, or other gambling related redemption systems; and
(C) Redeemed only for merchandise prizes.
(5) Amusement games must not:
(a) Award additional plays as prizes; or
(b) Allow coupons, tickets, tokens or tokens on electronic token cards that are awarded to be replayed; or
(c) Result in any cash payment being awarded.
(6) Amusement games must only award merchandise prizes.
(a) Merchandise prizes mean noncash prizes including toys, novelties, retail items such as electronic goods, clothing, accessories, as well as food, beverages and other items sold by the operator as a normal part of their business in compliance with all other state laws and regulations, except as provided in (b) of this subsection.
(b) Pull-tabs and other gambling activities, gift certificates or gift cards do not constitute merchandise prizes.
(7) Electronic token card means a card issued by the operator that stores purchased credits available to play the amusement game separate from the coupons, tickets, or tokens awarded or dispensed as prizes from the play of the amusement game. Coupons, tickets, or tokens awarded as prizes cannot be used to play amusement games and must only be redeemed for merchandise prizes.
AMENDATORY SECTION (Amending WSR 07-15-064, filed 7/16/07, effective 1/1/08)
WAC 230-13-075 Assigning and reporting group numbers of authorized amusement games.
(1) Amusement game licensees must determine the authorized group number of each game and prepare a list of all games they plan to operate during each license year. They must submit this list to us with their activity report. The list must contain, at least, the name and group number of each game.
(2) Amusement game licensees must notify us within thirty days of putting into play and removing from play a group 12 amusement game. Reporting must be in the format we require.
AMENDATORY SECTION (Amending WSR 07-15-064, filed 7/16/07, effective 1/1/08)
WAC 230-13-170 Recordkeeping for commercial amusement games.
(1) Amusement game licensees must prepare a detailed record for each location where they operate games. They must retain the records for at least three years. The records must include details necessary to determine:
(a) Gross gambling receipts received from players((; and)) from:
(i) Group 1 through 11 amusement games; and
(ii) Group 12 amusement games; and
(b) Value of prizes awarded to winners.
(2) Records must include, at least:
(a) The gross gambling receipts collected from amusement games at each location, with receipting records; and
(b) An entry for each withdrawal of receipts from the games. Coin or token activated amusement games only require an entry of the ending meter reading, the number of plays, and gross gambling receipts at the end of each month; and
(c) A summary of the operation of the activity. This includes, at least, coin-in meter readings and gross gambling receipts. Operators must provide these coin-in meter readings and gross gambling receipts to charitable or nonprofit organizations each time they service a game or disburse money.
(3) Licensees must report at least monthly the number and actual cost of merchandise prizes awarded for each location.
(4) For amusement games that issue tickets for the redemption of prizes, licensees must at least log the beginning and ending nonresettable ticket out meters or ticket numbers during each collection of funds from each game.
(5) Licensees must provide the full details for all amusement game operating expenses.
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