Date of Adoption: March 12, 2004.

     Purpose: Relief from adjusted cash flow requirements for bingo operators, the amendment changes the measurement period from once a quarter, to once a year. A 25% reduction to required adjusted cash flow would be available to licensees once every four years, if they maintain a positive cash flow.

     Citation of Existing Rules Affected by this Order: Amending WAC 230-20-059.

     Statutory Authority for Adoption: RCW 9.46.070.

      Adopted under notice filed as WSR 03-24-048 on November 26, 2003.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 1, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.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: Thirty-one days after filing.

March 16, 2004

Susan Arland

Rules Coordinator

OTS-6745.2

AMENDATORY SECTION(Amending Order 419, filed 5/15/03, effective 6/30/03)

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)) year:

     (a) For gross receipts above (($375,000)) $1,500,000 up to (($625,000)) $2,500,000 - 3% of gross receipts over (($375,000)) $1,500,000;

     (b) For gross receipts above (($625,000)) $2,500,000 up to (($875,000)) $3,500,000 - (($7,500)) $30,000 plus 4% of gross receipts over (($625,000)) $2,500,000;

     (c) For gross receipts above (($875,000)) $3,500,000 up to (($1,125,000)) $4,500,000 - (($17,500)) $70,000 plus 5% of gross receipts over (($875,000)) $3,500,000; and

     (d) For gross receipts above (($1,125,000 - $30,000)) $4,500,000 - $120,000 plus 6% of gross receipts over (($1,125,000)) $4,500,000.

     ((Failure to meet the requirements of this subsection for any single calendar quarter shall not result in sanctions against the licensee.)) (e) If the licensee does not operate for a full year, the requirements shall be prorated based on full quarters operated.

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, snack bar, retail sales activities, 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.)) To ensure a licensee maintains a positive cash flow and is not operating primarily for gambling purposes, adjusted cash flow shall be measured quarterly. If a licensee does not maintain a positive cash flow from the bingo operation during any two consecutive calendar quarters, measured independently, the director shall summarily suspend the organization's bingo license.

Sanctions for failing to meet adjusted cash flow requirements - relief.

     (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.)) If a bingo licensee fails to meet the adjusted cash flow requirements of subsection (1) of this section for any calendar year, administrative action shall be taken to revoke the organization's bingo license: Provided, That if a licensee fails to meet the minimum adjusted cash flow requirements for any calendar year and has maintained a positive cash flow as required by subsection (3) of this section. The director shall automatically grant relief allowing a twenty-five percent reduction to the annual dollar amount of required adjusted cash flow in subsection (1) of this section, for the year in which the licensee is out of compliance;

     (b) No organization granted relief under (a) of this subsection, shall be eligible to receive relief for any of the four calendar years following the calendar year for which the relief was granted; and

     (c) Relief may be granted under (a) of this subsection for the calendar year beginning January 1, 2003.

[Statutory Authority: RCW 9.46.070. 03-11-040 (Order 419), § 230-20-059, filed 5/15/03, effective 6/30/03; 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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