Original Notice.

     Preproposal statement of inquiry was filed as WSR 03-04-065.

     Title of Rule: Equipment review and approval process: Amending WAC 230-12-315 Request for services related to gambling activities -- Fees, 230-02-412 Gambling equipment defined and 230-04-110 Licensing by manufacturers; and new section WAC 230-12-316 Electronic or mechanical equipment -- Approval.

     Purpose: The Gambling Commission is authorized to control equipment used in conjunction with activities authorized under chapter 9.46 RCW. Currently, staff reviews new equipment as part of the initial licensing process of a manufacturer. However, commission rules focus the reviews on ownership and manufacturing issues; security and compliance of the equipment are not addressed in the rules. Procedures for reviewing equipment for integrity and compliance are currently set by policy.

     Statutory Authority for Adoption: RCW 9.46.070.

     Summary: This rules package sets forth a regulatory framework to support staff's efforts in reviewing and testing equipment used in conjunction with activities authorized under chapter 9.46 RCW. Electronic and mechanical gambling equipment will require approval from staff before it can be operated to ensure it is functioning properly. Currently, staff provide two free hours to review gambling related equipment. The "two free hours" is proposed to be removed and require all staff time spent to review to be reimbursed.

     Reasons Supporting Proposal: See Purpose above.

     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: See Purpose and Summary above.

     Proposal Changes the Following Existing Rules: See Purpose and Summary 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, an SBEIS 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: Red Lion Hotel, 1225 North Wenatchee Avenue, Wenatchee, WA 98801, (509) 663-0711, on May 9, 2003, at 9:30 a.m.

     Assistance for Persons with Disabilities: Contact Shirley Corbett by May 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 May 1, 2003.

     Date of Intended Adoption: May 9, 2003.

March 19, 2003

Susan Arland

Rules Coordinator

OTS-6257.2

AMENDATORY SECTION(Amending WSR 97-14-012, filed 6/20/97, effective 7/21/97)

WAC 230-12-315   Request for review services ((related to gambling activities)) -- Fees.   Any person ((requesting commission staff review, inspection, and/or evaluation of)) submitting equipment, paraphernalia, services, or schemes ((related to licensed gambling activities shall reimburse the commission the cost to conduct such. If the requestor is currently licensed or has applied for a license, there will be no assessment of cost for the first two hours of service: Provided, That this two-hour exemption does not apply to any review conducted as part of a prelicensing investigation)) for review, inspection, and/or evaluation by commission staff shall reimburse the commission the cost of services performed. A deposit of the estimated cost may be required prior to performance of such service. If a deposit is required, it shall be received by the commission prior to the performance of any substantial work on the request.

[Statutory Authority: RCW 9.46.070 (5), (6), (11), (14). 97-14-012, § 230-12-315, filed 6/20/97, effective 7/21/97.]

OTS-6242.1

NEW SECTION
WAC 230-12-316   Electronic or mechanical equipment -- Approval.   Approval from the director must be obtained prior to the sale, lease or operation of electronic or mechanical gambling equipment, including gambling equipment used in conjunction with a promotional contest of chance. The equipment shall meet technical standards for compliance, accuracy, security and integrity.

     (1) Manufacturers may be required to submit electronic or mechanical gambling equipment for review.

     (a) To allow for continued testing and training, any equipment that is submitted for approval under this section may be kept by the director for as long as the equipment remains out for play in the state of Washington.

     (b) The gambling commission and staff are not liable for any damage to equipment while in their possession.

     (2) Fees for review shall be as set forth in WAC 230-12-315.

     (3) Equipment operated in Washington state must be identical to the version approved by the director.

     (4) Equipment in operation on July 1, 2003, may continue in operation pending review by the director.

Removing approved equipment from operation.

     (5) Once equipment is approved, the director shall not revoke the approval without providing written notice. The licensee shall be afforded an opportunity to object to the director's decision. If an objection is filed, an administrative law judge shall review the director's decision utilizing the brief adjudicative procedures set forth in WAC 230-50-010.

Procedures if approval is denied.

     (6) The licensee shall be notified in writing when the director denies a request for equipment approval. The notification shall include reasons for the denial. The licensee shall be afforded an opportunity to object to the director's decision. If an objection is filed, an administrative law judge shall review the director's decision utilizing the brief adjudicative procedures set forth in WAC 230-50-010.

[]

OTS-6240.1

AMENDATORY SECTION(Amending Order 385, filed 7/14/00, effective 1/1/01)

WAC 230-02-412   Gambling equipment defined.   For purposes of this title, gambling equipment means any device, gambling related software, expendable supply or any other paraphernalia used in conjunction with or to facilitate gambling. Gambling equipment includes, but is not limited to:

     (1) Amusement games;

     (2) Punch boards and pull-tabs;

     (3) Devices for dispensing pull-tabs;

     (4) Electronic devices for conducting, facilitating or accounting for the results of gambling activities, including, but not limited to:

     (a) Components of a tribal lottery system;

     (b) Electronic devices for reading and displaying outcomes of ((pull-tabs defined by WAC 230-02-260)) gambling activities; and

     (c) Accounting systems that are a part of, or directly connected to, a gaming system including, but not limited to:

     (i) Bet totalizers; ((or))

     (ii) Progressive jackpot meters; or

     (iii) Keno systems;

     (5) Bingo equipment, as defined in WAC 230-02-250;

     (6) Equipment or machinery utilized for the manufacture of gambling equipment when such equipment is designed primarily for such purpose;

     (7) Devices and supplies used to conduct card games, fund-raising events, recreational gaming activities, or Class III gaming activities, as defined in the Indian Gaming Regulatory Act at U.S.C. 25 chapter 29 § 2703 and in Tribal-State compacts, including, but not limited to:

     (a) Gaming chips;

     (b) Cards;

     (c) Dice;

     (d) Card shuffling devices;

     (e) Graphical game layouts for table games;

     (f) Ace finders or ((no-peak)) no-peek devices;

     (g) Roulette wheels; ((and))

     (h) Keno equipment; and

     (i) Tables manufactured exclusively for gaming purposes.

[Statutory Authority: RCW 9.46.070. 00-15-039 (Order 385), § 230-02-412, filed 7/14/00, effective 1/1/01.]

OTS-6241.1

AMENDATORY SECTION(Amending Order 385, filed 7/14/00, effective 1/1/01)

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: Provided, That amusement game manufacturers and manufacturers operating under a special sales permit (WAC 230-04-115) do not require a manufacturer's license. The following requirements apply to certification and licensing of manufacturers:

Information required on an application.

     (1) The following information shall be submitted on an application form supplied by the commission:

     (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.

Information to be included with an application.

     (2) 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;

     (ii) As a partner;

     (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.

Additional information may be required from applicant.

     (3) The following records shall also be available for inspection by commission staff:

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

     (b) 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

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

Applicant to demonstrate ability to comply with rules.

     (4) 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 (also referred to as proprietary games), 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;

Notifying commission staff of changes on an application.

     (5) The applicant shall notify the commission within thirty days of any change in the information submitted on or with the application form, including changes that occur after the license has been issued; and

Applicant to comply with all laws and rules.

     (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. 00-15-039 (Order 385), § 230-04-110, filed 7/14/00, effective 1/1/01. Statutory Authority: RCW 9.46.070 (2), (4), (12) and (20). 97-21-043, § 230-04-110, filed 10/10/97, effective 11/10/97. 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.]

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