WSR 03-05-088

PROPOSED RULES

GAMBLING COMMISSION


[ Filed February 19, 2003, 10:52 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 03-03-084.

Title of Rule: Adjusted cash flow petition and variance process for bingo licensees, amending WAC 230-20-059 Minimum cash flow requirements for bingo games -- Contributions to stated purpose -- Sanctions.

Purpose: At the November 2002 commission meeting, the commission discussed the petition and variance process. At the January 2003, commission meeting, the commission asked staff to remove the petition and variance language from WAC 230-20-059 and have the rule up for filing at the February commission meeting.

Statutory Authority for Adoption: RCW 9.46.070.

Summary: If this rule amendment is adopted, the licensee would still be able to come before the commission; however, this would occur after an administrative hearing before an administrative law judge (ALJ), rather than through the variance process before an ALJ hears the case.

Reasons Supporting Proposal: See Purpose above and Explanation of Rule below.

Name of Agency Personnel Responsible for Drafting: Susan Arland, Lacey, (360) 486-3466; Implementation: Rick Day, Lacey, (360) 486-3446; and Enforcement: Bob Berg, Lacey, (360) 486-3452.

Name of Proponent: Staff, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Also see Purpose and Summary above. RCW 9.46.070(10) requires that the commission regulate and establish limits on income derived from bingo and determine how much of the funds will be returned to a charity's stated purpose. WAC 230-20-059 sets forth the minimum gambling proceeds bingo licensees must return to their stated purpose. If a licensee fails to meet the minimum requirements, the director issues administrative charges revoking the gambling license. However, there is a provision in this rule to allow the licensee to petition the commission for a variance from the cash flow requirements. The commission may approve a variance if the licensee can show that the plan will bring the licensee back into compliance. If denied, the licensee would still have the right to a hearing before an ALJ and appeal rights to the commission. This is the same process used for other administrative cases.

Proposal Changes the Following Existing Rules: See Purpose, Summary, and Explanation of Rule above.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Proposal is exempt under RCW 19.85.025(2), therefore, a small business economic impact statement is not required.

RCW 34.05.328 does not apply to this rule adoption. This agency does not choose to make section 201, chapter 403, Laws of 1995, apply to this rule adoption.

Hearing Location: Hampton Inn/Foxhall, 3985 Bennett Drive, Bellingham, WA 98225, (360) 676-7700, on April 11, 2003, at 9:30 a.m.

Assistance for Persons with Disabilities: Contact Shirley Corbett by April 1, 2003, TDD (360) 486-3637 or (360) 486-3447.

Submit Written Comments to: Susan Arland, Rules Coordinator, P.O. Box 42400, Olympia, WA 98504-2400, (360) 486-3466, fax (360) 486-3625, by April 1, 2003.

Date of Intended Adoption: April 11, 2003.

February 19, 2003

Susan Arland

Rules Coordinator

OTS-6204.1


AMENDATORY SECTION(Amending Order 397, filed 2/9/01, effective 4/1/01)

WAC 230-20-059   Minimum cash flow requirements for bingo games--Contributions to stated purpose -- Sanctions.   Bingo shall be conducted only as a social pastime or for fund-raising to support the stated purpose(s) of a charitable or nonprofit organization. Organizations licensed to conduct bingo games shall comply with the following procedures and limitations:


Contributions.


(1) To ensure that organizations licensed to conduct bingo games meet the intent of RCW 9.46.010 and provide funds adequate to promote charitable and nonprofit programs, such organizations shall not allow their bingo operation to award prizes or pay expenses to conduct bingo games that are excessive and all capital expenditures for the bingo operation that exceed six thousand dollars shall be specifically approved by the governing board.

An organization licensed to conduct bingo games shall ensure that the adjusted cash flow from the bingo operation available for its charitable and nonprofit programs is at least the following amount during each calendar quarter:

(a) For gross receipts above $375,000 up to $625,000 - 3% of gross receipts over $375,000;

(b) For gross receipts above $625,000 up to $875,000 - $7,500 plus 4% of gross receipts over $625,000;

(c) For gross receipts above $875,000 up to $1,125,000 - $17,500 plus 5% of gross receipts over $875,000; and

(d) For gross receipts above $1,125,000 - $30,000 plus 6% of gross receipts over $1,125,000.

Failure to meet the requirements of this subsection for any single calendar quarter shall not result in sanctions against the licensee.


Definitions.


(2) The following definitions shall apply to this section:

(a) "Gross receipts" shall mean the combined gross gambling receipts from bingo, pull-tab and punch board activities.

(b) "Adjusted cash flow from the bingo operation" shall mean the combined gross income of the bingo operation less all prizes and expenses, whether paid or accrued. For the purposes of computing expenses, depreciation or amortization, shall not be considered an expense of the bingo operation.

(c) "Bingo operation" shall mean bingo games and all associated activities conducted in conjunction with bingo games at the same location including punch boards, pull-tabs, ((raffles,)) snack bar, retail sales activities ((and)), rental of the bingo premises and drawings authorized under WAC 230-20-242.


Sanctions for failing to maintain a positive adjusted cash flow.


(3) If a bingo licensee does not maintain a positive adjusted cash flow from the bingo operation during any two consecutive calendar quarters measured independently, it shall be deemed to be operating primarily for gambling purposes. In this event, the director shall summarily suspend the organization's bingo license.


Sanctions for failing to meet adjusted cash flow requirements.


(4)(a) If a bingo licensee fails to meet the adjusted cash flow requirements of subsection (1) of this section when averaged over a period of any two consecutive calendar quarters, the licensee shall:

(i) Develop a plan to gain compliance;

(ii) Take immediate steps to reduce expenses and prizes paid and to increase income from all activities conducted in conjunction with the bingo game; and

(iii) Report the plan and action taken to commission staff no later than sixty days after the end of the period. Such report shall be in writing and signed by the president or chief operating officer.

(b) If a bingo licensee fails to meet the adjusted cash flow requirements of subsection (1) of this section when averaged over a period of any four consecutive calendar quarters, administrative action shall be taken to revoke the organization's bingo license((: Provided, That adjusted cash flow requirements shall be adjusted for any variance granted under subsection (5) of this section.


Petitions for variance.


(5) A bingo licensee may petition the commission for a variance in the following circumstances:

(a) A licensee who fails to meet the adjusted cash flow requirements of subsection (1) of this section when averaged over a period of any four consecutive calendar quarters, but is within ten percent of those requirements, may petition the commission for a one-time variance based on their plans to gain compliance over the next four quarters.

(b) A licensee with long-term, legally binding financial obligations for its bingo facility as of the effective date of this rule, may petition the commission for a variance for a period of no more than two years based on their plans to gain compliance within the two years. This variance shall be in the form of a reduction to the dollar amount of adjusted cash flow required by subsection (1) of this section)).

[Statutory Authority: RCW 9.46.070. 01-05-020 (Order 397), 230-20-059, filed 2/9/01, effective 4/1/01. Statutory Authority: RCW 9.46.070, 9.46.0209, 9.46.0237, 9.46.0205 and 9.46.075. 96-24-008 (Order 303), 230-20-059, filed 11/21/96, effective 12/22/96.]

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