WSR 97-21-043

PERMANENT RULES

GAMBLING COMMISSION

[Filed October 10, 1997, 4:40 p.m.]

Date of Adoption: October 10, 1997.

Purpose: These rules implement statutory changes authorizing the increase in the house banked card games; requires public card room licensees who wish to operate under the more permissive conditions (allowed by the statutory changes) to participate in a pilot study. Amended rules, WAC 230-04-110 and 230-04-120, add card room gambling equipment to the licensing requirements for manufacturers and distributors.

Citation of Existing Rules Affected by this Order: Repealing WAC 230-40-999; and amending WAC 230-04-110 and 230-04-120.

Statutory Authority for Adoption: RCW 9.46.070 (2), (4), (12) and (20).

Adopted under notice filed as WSR 97-18-030 on August 26, 1997.

Changes Other than Editing from Proposed to Adopted Version: In WAC 230-40-900, a provision was added to clarify that each new agreement shall be submitted to the commission for a review and approval prior to commencing operations. Another added provision states that deposits submitted pursuant to WAC 230-40-999 shall remain in effect through December 31, 1997, but new deposits will be submitted in accordance with the schedule set forth in WAC 230-40-900.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 1, amended 2, repealed 1.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 1, amended 0, repealed 1.

Number of Sections Adopted on the Agency's own Initiative: New 0, amended 2, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.

Number of Sections Adopted using Negotiated Rule Making: New 1, amended 2, repealed 1; Pilot Rule Making: New 1, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.

Effective Date of Rule: Thirty-one days after filing.

October 10, 1997

Soojin Kim

Rules and Policy Coordinator

AMENDATORY SECTION (Amending WSR 95-12-052, filed 6/2/95, effective 7/3/95)

WAC 230-04-110 Licensing of manufacturers. Except as authorized by WAC 230-04-115, a license must be obtained from the commission prior to manufacturing, selling, or supplying gambling equipment to any person(s) within this state, or for use within this state. The following definitions and requirements apply to certification and licensing of manufacturers:

(1) For (([the])) purposes of this title, "gambling equipment" includes at least the following devices:

(a) Punchboards and pull tabs;

(b) Devices for the dispensing of pull tabs;

(c) Bingo equipment, as defined by WAC 230-02-250; and

(d) Any gambling equipment, patented or otherwise restricted gaming schemes, or paraphernalia for use in connection with licensed ((fund-raising events)) gambling activities, recreational gaming activities, ((tribal gaming activities)) or class III tribal gaming activities, including table games, chips, cards, and dice.

(2) The applicant shall include upon the application form supplied by the commission, the following information, as well as all other information and materials required elsewhere in these rules:

(a) The full name and address of the applicant;

(b) The full name and address of each location where such devices are manufactured or stored;

(c) The name, home address, and share of ownership of all owners of the manufacturing business if the business is not a corporation. If the business is a corporation, the name, address, and share of ownership of the officers, the directors, and substantial interest holders;

(d) A full description of each separate type of gambling equipment or device that an applicant seeks to manufacture or to market in this state;

(e) The brand name under which each type of gambling device or equipment is sold;

(f) If the applicant is incorporated under laws other than the laws of Washington state, then the full name and business and home address of the resident agent designated by the applicant pursuant to WAC 230-12-300; and

(g) A list of all distributors receiving gambling equipment and all businesses or organizations located within the state of Washington in which the applicant has any financial interest and the details of that financial interest. For the purpose of this subsection, the term financial interest shall include all arrangements through which a person directly or indirectly receives any portion of the profits of the licensed manufacturer and indebtedness between the licensee and any other person, other than a regulated financial institution, in excess of five thousand dollars.

(3) An applicant must demonstrate the ability to comply with all manufacturing, quality control, and operational restrictions imposed on authorized gambling equipment, patented or otherwise restricted gaming schemes, or equipment that it seeks to manufacture or market for use within the state of Washington. The licensing process shall include an on-site review of the applicant's manufacturing equipment and process for each separate type of authorized gambling device, equipment, or scheme to ensure capability to comply with all regulatory requirements of this title and state/tribal compacts;

(4) The following information shall be included as an attachment to the application form:

(a) A list of all affiliated businesses or corporations in which the applicant, officers, directors, or substantial interest holders of the applicant, either directly or indirectly, own or control:

(i) As a sole proprietor; or

(ii) As a partner; or

(iii) More than fifty percent of the voting stock of a privately held or closed corporation; or

(iv) At least five percent of the voting stock of a publicly traded corporation.

(b) A list of all businesses or corporations licensed to conduct gambling activities or to supply gambling-related equipment, supplies, or services in which the applicant, officers, directors, or substantial interest holders of the applicant have any interest;

(c) A list of all jurisdictions in which the applicant or any of the officers, directors, or substantial interest holders of the applicant have been licensed regarding gambling-related activities at any level during the preceding ten years;

(d) A statement regarding whether the applicant or officers, directors, or substantial interest holders have ever had a license for gambling-related activities denied, revoked, or suspended by any jurisdiction for a period longer than thirty days. All details of such must be provided as a part of the application; and

(e) A statement acknowledging that all records related to the ownership or operation of the business shall be made available for review at the time and place requested by commission staff. In addition to other records requested, the following shall be available:

(i) Personal financial records of all substantial interest holders;

(ii) All records related to the scope of activity, including sales of product, purchases of raw materials and parts, and any contracts, franchises, patent agreements, etc., related to sales or purchases; and

(iii) Records related to any financial or management control of or by customers and suppliers.

(5) The applicant shall notify the commission within thirty days of any change in the information submitted on or with the application form; and

(6) The applicant shall comply with all applicable laws of the United States and the state of Washington and all applicable rules of this commission.

[Statutory Authority: RCW 9.46.070. 95-12-052, 230-04-110, filed 6/2/95, effective 7/3/95; 94-01-033, 230-04-110, filed 12/6/93, effective 1/6/94. Statutory Authority: RCW 9.46.070 and 9.46.0331. 91-19-093 (Order 227), 230-04-110, filed 9/18/91, effective 10/19/91. Statutory Authority: RCW 9.46.070 (4), (11) and (14). 89-24-002 (Order 201), 230-04-110, filed 11/27/89, effective 12/28/89. Statutory Authority: RCW 9.46.070 (4) and (6). 79-07-019 (Order 90), 230-04-110, filed 6/14/79; Order 12, 230-04-110, filed 2/14/74; Order 9, 230-04-110, filed 12/19/73 at 1:26 p.m.; Order 5, 230-04-110, filed 12/19/73 at 1:25 p.m.]

AMENDATORY SECTION (Amending WSR 96-09-071 and 96-11-126, filed 4/16/96 and 5/21/96, effective 7/1/96)

WAC 230-04-120 Licensing of distributors. Prior to selling, renting, or otherwise supplying gambling equipment, supplies, or related paraphernalia, including service of such, to any person within the state of Washington or for use within the state of Washington, a distributor shall first obtain a license from the commission. The following definitions and requirements apply to certification and licensing of distributors:

(1) For purposes of this title, a license is required to sell, rent, or otherwise provide to any person the following items and/or services:

(a) Punchboards and pull tabs;

(b) Devices for the dispensing of pull tabs;

(c) Bingo equipment, as defined by WAC 230-02-250;

(d) Any gambling equipment or paraphernalia for use in connection with licensed ((fund-raising events)) gambling activities, recreational gaming activities, or Class III gaming activities, including table games, chips, cards, and dice; and

(e) Organizing and conducting recreational gaming activities on behalf of persons as defined by WAC 230-02-505.

(2) The applicant shall include upon the application form supplied by the commission, the following information, as well as all other information and materials required elsewhere in these rules:

(a) The full name and address of the applicant;

(b) The business name and address of each location operated by the distributor or where records or inventory will be located;

(c) The name, home address, and share of ownership of all owners of the business if the business is not a corporation. If the business is a corporation, the name, address, and share of ownership of the officers, the directors, and substantial interest holders;

(d) A full description of each separate type of gambling equipment or related supplies that the distributor intends to market in this state or for use in this state;

(e) The brand name under which each type of gambling equipment will be sold;

(f) If the applicant does not maintain a business office within the state or is incorporated in another state or county, then the full name and business and home address of the resident agent designated by the applicant pursuant to WAC 230-12-300; and

(g) A list of all manufacturers of gambling equipment and all businesses or organizations located in the state of Washington in which the applicant has any financial interest and the details of that financial interest. For the purposes of this subsection, the term financial interest shall include all arrangements through which a person directly or indirectly receives any portion of the profits of the licensed distributor and indebtedness between any other person and the applicant, other than a regulated financial institution, in excess of five thousand dollars.

(3) The following information shall be included as an attachment to the application form:

(a) A list of all affiliated businesses or corporations in which the applicant, officers, directors, or substantial interest holders of the applicant, either directly or indirectly, own or control:

(i) As a sole proprietor; or

(ii) As a partner; or

(iii) More than fifty percent of the voting stock of a privately held or closed corporation; or

(iv) At least five percent of the voting stock of a publicly traded corporation.

(b) A list of all businesses or corporations licensed to conduct business related to gambling activities in which the applicant, officers, directors, or substantial interest holders of the applicant have any interest;

(c) A list of all jurisdictions in which the applicant or any of the officers, directors, or substantial interest holders of the applicant have been licensed for gambling-related activities at any level during the preceding ten years;

(d) A statement regarding whether the applicant or officers, directors, or substantial interest holders of the applicant have ever had a license for gambling-related activities denied, revoked, or suspended by any jurisdiction for a period longer than thirty days. All details of such must be provided as a part of the application; and

(e) A statement acknowledging that all records related to the ownership or operation of the business shall be made available for review at the time and place requested by commission staff. In addition to other records requested, the following shall be available:

(i) Personal financial records of all substantial interest holders;

(ii) All records related to the scope of activity, including suppliers, customers, and any contracts related to sales or purchases; and

(iii) Records related to any financial or management control of or by customers and suppliers.

(4) The applicant shall notify the commission within thirty days of any change in the information submitted on or with the application form; and

(5) The applicant shall comply with all applicable laws of the United States and the state of Washington and all applicable rules of this commission.

[Statutory Authority: RCW 9.46.070 (4), (11), (14), (17) and (20). 96-09-071 and 96-11-126, 230-04-120, filed 4/16/96 and 5/21/96, effective 7/1/96. Statutory Authority: RCW 9.46.070(4) and 9.46.215. 95-19-071, 230-04-120, filed 9/18/95, effective 1/1/96. Statutory Authority: RCW 9.46.070. 94-01-033, 230-04-120, filed 12/6/93, effective 1/6/94. Statutory Authority: RCW 9.46.070 and 9.46.0331. 91-19-093 (Order 227), 230-04-120, filed 9/18/91, effective 10/19/91. Statutory Authority: Chapter 9.46 RCW. 91-15-040 (Order 224), 230-04-120, filed 7/17/91, effective 8/17/91. Statutory Authority: RCW 9.46.070 (4), (11) and (14). 89-24-002 (Order 201), 230-04-120, filed 11/27/89, effective 12/28/89. Statutory Authority: RCW 9.46.070 (1), (4), (5), (6), (7), (11), (14) and (17) and 9.46.310. 85-01-065 (Order 145), 230-04-120, filed 12/18/84; Order 80, 230-04-120, filed 12/28/77; Order 23, 230-04-120, filed 9/23/74; Order 14, 230-04-120, filed 3/27/74; Order 5, 230-04-120, filed 12/19/73.]

REPEALER

The following section of the Washington Administrative Code is repealed:

WAC 230-40-999 Public card room enhancement program--Pilot study and test.

NEW SECTION

WAC 230-40-900 Public card room enhancement program--Pilot study. The 1996 and 1997 legislature enacted changes to the definition of a social card game, set forth in RCW 9.46.0281. The commission finds it to be in the public interest to continue and expand the pilot study enacted in 1996 to test and develop regulatory provisions implementing the recent legislative changes. The statutory changes authorized: An increase in the number of card tables from five to fifteen; player-supported progressive prize contests; the collection of fees through the rake and per hand methods; player funded banked card games; and house banked card games. In order to utilize the above referenced changes, a public card room licensee must participate in the study subject to the following terms and conditions:

(1) The study commenced July 1, 1996, shall continue and will conclude when permanent rules are adopted. The staff shall brief the commission on a monthly basis on the progress of the study and shall develop rules for formal implementation by January 1, 1999, or such earlier or later date to be determined by the commission.

(2) The licensee must have been operating a class "E-1" through "E-5" card room for at least six months before implementing test scope of activities; and a tribal operation must have been operating at class 2 or class 3 level for at least six months before implementing test scope of activities: Provided, That the director can waive the six-month requirement in this section based on demonstrable experience.

(3) Each new agreement shall be submitted to the commission for a review and approval prior to commencing operations. In addition, each agreement that allows for player funded and/or house banked card games, shall be accompanied by a satisfactory preoperation inspection report.

(4) If the agreement is approved by the commission, the terms and conditions of the agreement shall be binding on the licensee.

(5) The licensee shall pay an annual preliminary nonrefundable license fee deposit required to participate in the study. The amount of the deposit shall be based on the commission's cost to conduct the study. During the study, participants may be assessed additional amounts to cover the costs incurred by the commission. As part of the application to participate in the study, the licensee shall make the following deposits:

(a) The deposit for an increased number of tables shall be those set forth in WAC 230-04-203 (three thousand three hundred thirty dollars), plus:

(i) Six through ten tables: One thousand two hundred dollars per table; or

(ii) Eleven through fifteen tables: Six thousand dollars, plus one thousand five hundred dollars per table;

(b) The deposit for player-supported progressive prize contests shall be one thousand twenty dollars plus:

(i) One through three prize contest: Two hundred forty dollars per contest; or

(ii) Greater than three contests: Seven hundred twenty dollars plus one hundred twenty dollars per contest;

(c) The deposit to study fee collection methods other than fees based on a period of time shall be one thousand twenty dollars plus:

(i) One through five tables: One hundred twenty dollars per table;

(ii) Six through ten tables: Six hundred dollars plus two hundred forty dollars per table; or

(iii) Greater than ten tables: One thousand eight hundred dollars plus three hundred sixty dollars per table;

(d) The deposit for studying player banked and house banked card games shall be equal to the amount set forth in (a) of this subsection plus five thousand dollars;

(e) In addition to the deposit set forth above, the licensee shall be responsible for all costs incurred by the commission involving investigations for violations of the agreement and/or any complaints by players resulting in investigations of the agreement;

(f) Deposits submitted pursuant to WAC 230-40-999, shall remain in effect through December 31, 1997. A new deposit shall be submitted on or before January 1, 1998, in accordance with the deposit schedule set forth in this section.

(6) In the event a licensee violates the terms of its agreement or fails to pay additional assessments within seven days of billing, the director shall have the authority to remove that licensee from participation in the study. Upon removal from the study, the licensee will return to its prestudy scope of activities.

(7) The director's decision to remove a licensee from participation shall be subject to review by the commission at the next regularly scheduled commission meeting. The decision of the commission shall be final and not be subject to further review.

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