WSR 98-19-130

PERMANENT RULES

GAMBLING COMMISSION

[Order 362--Filed September 23, 1998, 11:24 a.m., effective January 1, 1999]



Date of Adoption: August 14, 1998.

Purpose: These rules define punchboard and pull-tab service businesses; clarifies that services involving the storage, counting, and/or specialized record-keeping services for punchboards and pull-tabs must pay the individual contract fees; specifies the accounting records to be maintained by a gambling service supplier; sets out requirements for gambling service supplier representatives who have an interest in a licensed manufacturer or distributor and provide services to any operator; and sets out procedures for the registration of businesses that provide services to punchboard and pull-tab operators.

Citation of Existing Rules Affected by this Order: Amending WAC 230-04-119, 230-04-124, and 230-08-025.

Statutory Authority for Adoption: RCW 9.46.070.

Adopted under notice filed as WSR 98-10-066 on May 1, 1998, with a publication date of May 20, 1998.

Changes Other than Editing from Proposed to Adopted Version: In the CR-102 version of these rules, businesses that provide storage, counting services, and/or specialized record-keeping services for gambling activities (punchboard and pull-tab service businesses) which had combined total gross billings that did not exceed $50,000 were specifically excluded from the definition of a gambling service supplier. In the final version of this rule, the combined total gross billings threshold was lowered from $50,000 to $20,000.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 3, amended 3, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 3, amended 3, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.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: January 1, 1999.

September 23, 1998

Susan Arland

Public Information Officer

OTS-2172.4

NEW SECTION



WAC 230-02-208  Punch board and pull-tab service business defined. "Punch board and pull-tab service business" is defined as a person that provides recordkeeping services for punch board and pull-tab operators for compensation and:

(1) The individuals are not employees of the operator;

(2) The recordkeeping services do not include recommendations or advice of a management nature;

(3) The combined total gross billings for such services during any calendar year does not exceed twenty thousand dollars; and

(4) The records completed are normally the responsibility of the operator. For purposes of this section, recordkeeping duties that are normally the responsibility of the operator include at least the following:

(a) Reconciling sales, prizes, and cash on hand for punch boards and pull-tab series;

(b) Completing mandatory records required by WAC 230-08-010: Provided, That recordkeeping services provided by a professional accounting business are exempt from these requirements when:

(i) The business performs services other than punch board and pull-tab records for the licensee;

(ii) The business has clients other than punch board and pull-tab licensees; and

(iii) The recordkeeping service only includes transcribing entries from the licensee into the required format; and/or

(c) Storing boards and series removed from play.



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OTS-2183.2

AMENDATORY SECTION (Amending WSR 97-24-031, filed 11/25/97, effective 1/1/98)



WAC 230-04-119  Licensing of gambling service((s)) suppliers. Prior to providing any type of gambling related service to any licensed operator ((or Class III tribal gaming facility)), a gambling service((s)) supplier shall first obtain a license or certification from the commission. The following requirements and restrictions apply to certification and licensing of gambling service((s)) suppliers:

(1) For purposes of this title, a license is required to provide any service related to licensed gambling activities as defined in WAC 230-02-205.

(2) The applicant shall ((include upon)) complete the application form supplied by the commission((, sufficient information to determine the types of services provided, personal and financial information to determine applicant identity and qualifications, as well as all other information and materials required elsewhere in these rules)). The applicant shall provide, on the application form or attached thereto, a full description of all services provided or planned to be provided to each licencee of the commission. Such description shall be in writing and include details necessary for commission staff to determine the scope of services provided to each licensee and the responsibilities of each party under the agreement.

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

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

(5) In no circumstance may a gambling service((s)) supplier assume ultimate responsibility for an operator's gambling activity.

(6) License fees for gambling service((s)) suppliers shall be (($575)) five hundred seventy-five dollars, plus one hundred twenty-five dollars per contract for gambling related services((: Provided, That services involving the storage, counting, and/or specialized recordkeeping services for punchboards and pulltabs are exempt from the individual contract fees)).

In addition to the annual fee, the commission will assess all applicants the actual costs incurred in conducting the investigation and inspection necessary for initial certification.

(7) A licensed gambling service supplier or substantial interest holder thereof that provides services to punchboard and pull tab operators shall not hold a substantial interest in a licensed manufacturer or distributor of punchboards and pull tabs: Provided, That for purposes of this section only, the director may determine that the spouse of an individual that is a substantial interest holder in a licensed gambling service supplier business will not be considered a substantial interest holder in the gambling service supplier business. In making such a determination, the director will assess the potential for involvement and/or influence in the gambling service supplier business and the manufacturer or distributor business and whether any potential influence is material. The director may impose additional requirements on either the gambling service supplier business and/or the manufacturer or distributor business. Such limitations may include, but are not limited to, prohibiting sales or providing services to an operator by the affected gambling service supplier business, or manufacturer or distributor business. At least the following documents may be considered by the director in a determination of potential influence:

(a) Community or marital property agreements;

(b) Separate property agreements;

(c) Prenuptial agreements; and

(d) Wills and codicils.



[Statutory Authority: RCW 9.46.070. 97-24-031, 230-04-119, filed 11/25/97, effective 1/1/98.]

OTS-2182.3

AMENDATORY SECTION (Amending WSR 97-24-031, filed 11/25/97, effective 1/1/98)



WAC 230-04-124  Licensing of manufacturer, distributor and gambling service((s)) supplier representatives. Prior to selling or supplying to any person gambling equipment, paraphernalia or related services ((for use)) in connection with licensed gambling activities, a representative or agent of a licensed manufacturer, distributor, or gambling service((s)) supplier shall first obtain a license from the commission. The following definitions and restrictions apply:

(1) A sole owner, partner, major officer and/or owner of a substantial interest in an entity licensed as a manufacturer ((or)), distributor, or gambling service supplier shall not be required to be additionally licensed as a representative to engage in the selling or supplying of the ((manufacturer's, distributor's, or gambling services supplier's)) entity's products or services. Office, clerical or warehouse personnel who have contact with the public and potential customers ((occasionally and)) only by telephone or at the manufacturer's, distributor's, or gambling service supplier's own premises when working under the immediate and direct supervision of ((the)) an owner, ((a)) partner, or major officer ((of a corporation,)) shall also be exempt from this licensing requirement. A manager or supervisor who is not a sole owner, partner or a major officer or owner of a substantial interest and whose duties and responsibilities include the supervision of selling, supplying and/or the promotion of products or services shall be licensed as required by this rule prior to performing such functions. A manufacturer, distributor, or gambling service((s)) supplier shall not allow an unlicensed person to represent them in such transactions and shall take all measures necessary to prevent an unlicensed person from doing so.

(2) The manufacturer, distributor, or gambling service((s)) supplier for which the representative will work shall sign the application ((of each such representative)) acknowledging that the applicant will be representing them with their full knowledge and consent.

(3) ((In addition to the above requirements,)) An applicant ((applying)) for a license as a distributor representative or gambling service((s)) supplier representative shall:

(a) Complete a training course for any activity being managed, as required and provided by the commission within ((30)) thirty days after the first day worked; and

(b) Represent only one licensed distributor or gambling service((s)) supplier at a time and shall not represent a manufacturer: Provided, That this rule shall not ((bar the distributor's)) prevent a licensed representative from representing ((his own distributor who is also licensed as a manufacturer)) both a manufacturer and distributor when both businesses are owned by the same person.

(4) If a licensed gambling service supplier representative has any interest in a licensed manufacturer or distributor and they provide services to any punch board, pull-tab, or bingo operator, they shall inform the commission, the operator, and the manufacturer or distributor of the relationship. Such manufacturer or distributor shall be prohibited from selling punch boards, pull-tabs, or disposable bingo cards to such operator.



[Statutory Authority: RCW 9.46.070. 97-24-031, 230-04-124, filed 11/25/97, effective 1/1/98. Statutory Authority: RCW 9.46.070 and 9.46.0331. 91-19-093 (Order 227), 230-04-124, filed 9/18/91, effective 10/19/91. Statutory Authority: RCW 9.46.070 (4), (11) and (14). 89-24-002 (Order 201), 230-04-124, filed 11/27/89, effective 12/28/89.]

OTS-2171.6

NEW SECTION



WAC 230-04-133  Punch board and pull-tab service business--Registration required--Procedures--Restrictions. It is in the public's interest to closely control gambling devices and records relating to the operation of a gambling activity. The commission must identify all individuals and businesses that have control over gambling devices, including punch boards and pull-tabs, and all records relating to the operation of gambling activities. Businesses that provide punch board and pull-tab record services, as defined by WAC 230-02-208, shall register with the commission and receive a permit prior to providing services to a licensee. The following procedures and restrictions apply to punch board and pull-tab service businesses:

(1) Each business seeking to register as a punch board and pull-tab service business shall submit a permit application on a form provided by the commission. Such application shall be complete in every respect, accompanied by proper fees, and signed by the applicant. The application shall include at least the following:

(a) A complete description of the services provided; and

(b) Personal and criminal history forms for all individuals involved in providing services.

(2) Permit fees as follows:

(a) Initial application for a business (includes up to two associates) = $200;



Note: When the business includes three or more individuals that are directly involved in providing record services, all additional individuals must register as associates to the business. Personnel that perform duties that are not directly involved in preparing records, such as security, pick-up and delivery, or general office duties, are not required to register.



(b) Initial application - For each additional associate = $125; and

(c) Annual renewal - Business and associates = $50.

(3) The permit shall be valid for a period not to exceed one year from the date approved.

(4) Any changes in information provided with the application must be submitted to the commission within thirty days of change.

(5) The permit becomes void and the business must apply for a gambling service supplier license to continue providing services if any of the conditions listed below occur:

(a) The nature of the business being provided changes to include services defined in WAC 230-02-205(1); or

(b) The combined total gross billings from providing services exceeds twenty thousand dollars during the permit period.

(6) The permit may be revoked by the director at any time for the following reasons:

(a) Reasons set forth in WAC 230-04-400 or RCW 9.46.075; or

(b) The permit holder has acted with gross negligence or intentionally misstated or manipulated a licensee's records or punch board/pull-tab games; or

(c) Failure to produce an operator's record or copies thereof, or punch board or pull-tab games when requested by a commission agent.

(7) Immediately upon request, a punch board and pull-tab service business shall provide the commission or any of its representatives a complete list of customers and the location where records of each are maintained.

(8) If a punch board and pull-tab service business or associate of such business has any interest in a licensed manufacturer or distributor, they shall inform the commission, any operator to which they provide services, and the manufacturer or distributor of the relationship. The director may restrict the manufacturer or distributor from selling punch boards or pull-tabs to such operator.

(9) Punch board and pull-tab service business permit holders shall follow the records requirements of WAC 230-08-026 (1)(a), (c), (d), (2), and (3). In addition, such businesses shall be familiar with minimum recordkeeping requirements and availability of records for services they provide, including but not limited to WAC 230-08-010, 230-12-010, and 230-30-072.



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OTS-2181.2

AMENDATORY SECTION (Amending WSR 97-24-031, filed 11/25/97, effective 1/1/98)



WAC 230-08-025  Accounting records to be maintained by distributors((,)) and manufacturers((, and gambling services suppliers)). Every licensed distributor((,)) and manufacturer((, and gambling services supplier)) shall keep and maintain a complete set of records which include all details of all activities of the licensee related to the conduct of the licensed activity.



((What system of accounting must I use and how long must I keep my records?))



(1) These records shall be recorded using the double entry accounting system and maintained in accordance with generally accepted accounting principles. This system shall be capable of being reconciled to the licensee's federal income tax return. All records shall be maintained for a period of not less than three years following the end of the licensee's fiscal year. These records shall be updated at least once a month and provide a monthly balance for each account.



((What are the minimum requirements that must be included in a record system?))



(2) Sales invoices - every manufacturer((,)) and distributor((, and gambling services supplier)) shall record every sale of equipment or services, any return or refund, or any other type of transfer of punch boards/pull-tabs, pull-tab dispensing devices or bingo equipment including cards, by completing a standard sales invoice or credit memo. Distributors shall use an invoice in a format prescribed and approved by the commission that includes a separate line for each identification and inspection services stamp number. This invoice shall provide space for the operator to either attach a records entry label or enter the identification and inspection services stamp number and the date the device was placed out for play. These spaces shall be adjacent to the written entry of the identification and inspection services stamp number made by the distributor. These invoices shall set out the following information:

(a) Each invoice must be prenumbered at the time of purchase. The numbering must be consecutive, using not less than four digits: Provided, That a computer generated numbering system may be utilized if the same system is used for all sales and specific numbers can not be input by use of a manual override function;

(b) The date of sale. For distributors only: If the date of delivery is different, then the delivery date must also be entered;

(c) The customer's name and an adequate business address;

(d) A full description of each item sold or service provided, including the identification and inspection services stamp number for each item, if attached, and all information required by WAC 230-08-040;

(e) The quantity and sales price of each individual item, including individual items of merchandise to be used as prizes on punch boards and pull-tabs;

(f) The gross amount of each sale to each customer including all discount terms and the total dollar amount of any discount;

(g) The sales invoice shall be prepared in at least three parts. Invoices shall be distributed and maintained as follows:

(i) The original shall be issued to the customer;

(ii) One shall be retained in an invoice file by customer name; and

(iii) One shall be retained in an invoice file by invoice number or in an alternative manner that accounts for each invoice numerically. This provision may be waived if the licensee receives written commission approval.

(h) Information documenting the sales of progressive jackpot pull-tabs must be separately tracked, invoiced, and maintained in its own filing system. Provided, that a computerized system, which is capable of separately tracking this information and providing immediate output of the data, is sufficient for this requirement.

(i) Credit memos for returned items shall be prepared in the same detail as (a) through (g) of this subsection.

(3) Sales journal - the sales journal shall contain at least, but not be limited to, the following by month:

(a) The date of the sale;

(b) The invoice number of the sale;

(c) The customer name or person remitting a payment;

(d) Sales shall be categorized at least by the following as applicable:

(i) Punch boards that pay out cash prizes;

(ii) Punch boards that pay out merchandise prizes;

(iii) Pull-tabs that pay out cash prizes;

(iv) Pull-tabs that pay out merchandise prizes;

(v) Pull-tab dispensing devices;

(vi) Merchandise that is intended for use as a prize on a punch board or pull-tab series;

(vii) Bingo equipment;

(viii) Other types of sales directly related to gambling activities, including but not limited to, equipment leases or sales((,)) and supplies((, and gambling related services)); and

(ix) Sales and leases of general purpose equipment and supplies indirectly related to gambling activities, including cash registers, scales, tables, chairs, glue sticks, souvenirs, etc.

(e) Total amount of the invoice.

(4) Cash disbursements book (check register) - this record shall include a recording of all checks issued by the licensee, cash payments made by the licensee, or payments made by any other means. All expenses by the licensee, both gambling and nongambling related, shall be documented by invoices or other appropriate supporting documents. Entries to this record shall contain at least, but not limited to, the following information by month:

(a) The date the check was issued or payment made;

(b) The number of the check issued;

(c) The name of the payee; and

(d) Each disbursement shall be categorized by type of expense.

(5) Cash receipts - all cash receipts shall be recorded in an original book of entry whether it be a sales journal, a check register, or a separate cash receipts journal, and at a minimum shall include a recording of not only cash sales, but also cash received from all sources, and shall contain at least, but not limited to, the following by month:

(a) The date the payment was received;

(b) The name of the person remitting the payment;

(c) The amount of payment received.

(6) General ledger - each licensee whose gambling related sales exceed (($500,000)) five hundred thousand dollars per year, shall have a general ledger which shall contain, in addition to all other accounts by month, a separate sales account for each type of sale;

(7) Bank reconciliation - a bank reconciliation shall be performed each month;

(8) Copies of all financial data which support tax reports to any and all governmental agencies;

(9) Copies of all agreements entered into regarding sales or leasing of ((gambling related services,)) gambling equipment or paraphernalia. These agreements shall fully disclose all terms and conditions;

(10) Manufacturer shall maintain records that provide an accountability trail for all identification and inspection services stamps purchased. These records shall include enough details to allow audit of all used, unused, and damaged stamps and includes the following minimum items:

(a) The name of the purchaser;

(b) The date of the sale; and

(c) The invoice number recording the sale.

(11) An alternative format may be used for subsections (2)(a), (2)(g)(ii), (2)(g)(iii), (2)(h), (3), and (4), of this section upon advance written approval from the commission.



[Statutory Authority: RCW 9.46.070. 97-24-031, 230-08-025, filed 11/25/97, effective 1/1/98. Statutory Authority: RCW 9.46.070, 9.46.120, 9.46.0273, 9.46.310 and 34.05.313. 96-24-006 (Order 305), 230-08-025, filed 11/21/96, effective 1/1/97. Statutory Authority: RCW 9.46.070. 94-01-033, 230-08-025, filed 12/6/93, effective 1/6/94; 92-19-107 (Order 231), 230-08-025, filed 9/18/92, effective 10/19/92. Statutory Authority: RCW 9.46.070 (4), (11) and (14). 89-24-002 (Order 201), 230-08-025, filed 11/27/89, effective 12/28/89. Statutory Authority: RCW 9.46.070 (8), (11) and (14). 88-13-060 (Order 179), 230-08-025, filed 6/14/88. Statutory Authority: RCW 9.46.070 (8) and (11). 83-10-002 (Order 132), 230-08-025, filed 4/21/83.]

OTS-2173.2

NEW SECTION



WAC 230-08-026  Accounting records to be maintained by gambling service suppliers. Gambling service suppliers shall maintain records that document services they provide and receipts for payment for such services. The following records shall be maintained and procedures followed:

(1) A minimum accounting system must be maintained that includes at least the following records:

(a) Sales invoices - sales invoices or a detailed monthly billing statement shall be issued to each customer. Copies of each invoice or billing statement must be maintained on the premises;

(b) Sales journal - the sales journal shall contain at least, but not be limited to, the following by month:

(i) The date of the sale;

(ii) The invoice number of the sale;

(iii) The customer name or person remitting a payment;

(iv) Sales shall be categorized at least by the type of service or activity provided; and

(v) Total amount of the invoice.

(c) Cash receipts - all cash receipts shall be recorded in an original book of entry whether it be a sales journal, a check register, or a separate cash receipts journal, and at a minimum shall include a recording of not only cash sales, but also cash received from all sources, and shall contain at least, but not limited to, the following by month:

(i) The date the payment was received;

(ii) The name of the person remitting the payment;

(iii) The amount of payment received.

(d) Bank statements which show all deposits along with copies of bank deposit slips and receipts;

(e) General ledger - each licensee whose gambling related activities exceed five hundred thousand dollars per year, shall have a general ledger which shall contain, in addition to all other accounts by month, a separate sales account for each type of activity;

(f) Copies of all financial data which support tax reports to any and all governmental agencies.

(2) If the gambling service(s) supplier enters into contracts with their customers, copies of such agreements which fully disclose all terms must be maintained.

(3) Records must be maintained for a period of three years following the end of the licensee's fiscal year.



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Washington State Code Reviser's Office