WSR 06-24-030

PERMANENT RULES

GAMBLING COMMISSION


[ Order 605 -- Filed November 29, 2006, 2:37 p.m. , effective January 1, 2008 ]


Effective Date of Rule: January 1, 2008.

Purpose: Gambling service suppliers: Clarifies which type of financiers need to be licensed and which do not; requires businesses that analyze gambling equipment be licensed; and requires businesses that enter into ongoing financial relationships with manufacturers to provide "gambling related software" to be licensed. "Gambling related software" affects the results/outcome of games or directly interfaces with, or controls, the operation of the gambling equipment.

Citation of Existing Rules Affected by this Order: Amending WAC 230-03-210.

Statutory Authority for Adoption: RCW 9.46.070.

Adopted under notice filed as WSR 06-17-084 on August 14, 2006, with a published date of September 6, 2006.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 2, Amended 1, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 2, Amended 1, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 2, Amended 1, Repealed 0.

Date Adopted: November 29, 2006.

Susan Arland

Rules Coordinator

OTS-9014.2


NEW SECTION

WAC 230-03-212   Defining "regulated lending institution."   (1) "Regulated lending institution" means any state or federally regulated organization primarily in the business of lending money for investment purposes.

(2) "Regulated lending institutions" must:

(a) Register with the Securities and Exchange Commission or any United States federal or state governmental banking or financial regulatory agency.

(b) Be actively regulated by the Securities and Exchange Commission or any other United States federal or state governmental banking or financial regulatory agency. "Active regulation" means:

(i) Reporting annually on lending activities to the regulatory agency; and

(ii) Receiving regular audits or inspections by the regulatory agency.

(c) Act as passive investors in the licensee. "Passive investors" mean investors who have no actual or potential influence over the operations of the licensee. A "passive investor" does not:

(i) Appoint or have the right to appoint officers, directors, consultants, or other positions with the licensee;

(ii) Require the licensee to seek approval or authorization in making business decisions;

(iii) Have full access to the records of the licensee;

(iv) Have the ability to convert debt into shares which would result in the lender becoming a substantial interest holder in the licensee; or

(v) Have any other influence or control over the licensee.

(d) Have nongambling-related businesses as a majority of their outstanding loans receivable.

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OTS-9013.2


NEW SECTION

WAC 230-03-211   Defining "lending agent," "loan servicer," or "placement agent."   (1) "Lending agent," "loan servicer," or "placement agent" means any person or entity, other than a regulated lending institution, that finds, administers, facilitates, or services loans for a licensee.

(2) The services of lending agents, loan servicers, or placement agents include, but are not limited to:

(a) Charging an ongoing fee for their services;

(b) Maintaining rights as the lender;

(c) Determining when the loan is in default; and/or

(d) Maintaining access to collateral.

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OTS-9012.6


AMENDATORY SECTION(Amending Order 457, filed 3/22/06, effective 1/1/08)

WAC 230-03-210   Applying for a gambling service supplier license.   (1) You must apply for a gambling service supplier license if you perform any of the following gambling-related services for compensation:

(a) Consulting or advisory services regarding gambling activities; or

(b) Gambling management services; or

(c) Financing for purchases or leases of gambling equipment or financing for providing infrastructure or facilities, or equipment that supports gambling operations for more than one licensee; or

(d) Acting as a lending agent, or loan servicer, or placement agent; or

(e) Providing the assembly of components for gambling equipment under a contract with a licensed manufacturer or entering into an ongoing financial arrangement for gambling related software with a licensed manufacturer; or

(((e))) (f) Installing, integrating, maintaining, or servicing digital surveillance systems that allow direct access to the operating system; or

(((f))) (g) Training individuals to conduct authorized gambling activities; or

(((g))) (h) Providing any other service or activity where influence may be exerted over any gambling activity licensed by the commission; or

(i) Performing the testing and certification of tribal lottery systems in meeting requirements specified in the tribal-state compact.

(2) You do not need a gambling service supplier license if you are:

(a) A bank, mutual savings bank, or credit union regulated by the department of financial institutions or any federally regulated commercial lending institution; or

(b) A university or college regulated by the Washington state board of community and technical colleges and the higher education coordinating board that trains individuals to conduct authorized gambling activities; or

(c) An attorney, accountant, or governmental affairs consultant whose primary business is providing professional services that are unrelated to the management or operation of gambling activities; or

(d) A person ((that)) who only provides nonmanagement-related recordkeeping services for punch board and pull-tab operators, when the combined total gross billings from such services ((does)) do not exceed twenty-five thousand dollars during any calendar year; or

(e) A person who provides names, images, artwork or associated copyrights, or trademarks, or patent use, or other features that do not affect the results or outcome of the game, for use in gambling equipment; or

(f) Regulated lending institutions.

[Statutory Authority: RCW 9.46.070. 06-07-157 (Order 457), 230-03-210, filed 3/22/06, effective 1/1/08.]

Washington State Code Reviser's Office