WSR 08-03-062

PERMANENT RULES

GAMBLING COMMISSION


[ Order 623 -- Filed January 14, 2008, 11:57 a.m. , effective February 14, 2008 ]


Effective Date of Rule: Thirty-one days after filing.

Purpose: The gambling commission has rewritten its rules manual using plain English techniques which became effective [January] 1, 2008. This filing includes rule changes that were inadvertently missed during the rewrite process as well as some house-keeping changes to correct inconsistent usage of words.

Citation of Existing Rules Affected by this Order: Amending 6 [WAC 230-06-125, 230-07-140, 230-10-350, 230-14-080, 230-14-120, and 230-16-015].

Statutory Authority for Adoption: RCW 9.46.070.

Adopted under notice filed as WSR 07-23-086 on November 20, 2007, and published December 5, 2007.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 11, Amended 6, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 11, Amended 6, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 11, Amended 6, Repealed 0.

Date Adopted: January 14, 2008.

Susan Arland

Rules Coordinator

OTS-1162.1


NEW SECTION
WAC 230-03-018   One annual change of bingo premises allowed.   (1) Once each license year, a bingo licensee may apply to play bingo at a different location (special property bingo).

(2) The bingo activity is limited to:

(a) Three consecutive days; and

(b) Sixteen consecutive hours each day.

(3) The application must include the following information and fee, at least fifteen days before the first date, which includes:

(a) Name and address of the proposed location and dates of activity; and

(b) Names and addresses of all persons who have an interest of any kind in those premises; and

(c) Amount of rent, if any, that would be paid for the use of the premises; and

(d) Rent calculation.

(4) The special property bingo permit must be posted on the premises during the event.

[]

OTS-1163.3


NEW SECTION
WAC 230-06-007   Licensed employees must wear nametags.   (1) Licensed employees must wear a nametag when working or playing cards at their place of employment.

(2) Off-duty card room employees do not have to wear a nametag while playing if the card room operator clearly posts a sign stating, "Employees of this card room may participate in the card games while off-duty as players. Upon your request, the card room floor person will identify any employee playing cards."

(3) The nametag must:

(a) Be provided by the operator; and

(b) Be a minimum of three inches by two inches; and

(c) Display at least the employee's first name; and

(d) Display the employer's name; and

(e) Be worn on the employee's chest; and

(f) Be clear and visible to the players in the gambling activity.

(4) The employee and operator are equally responsible to ensure the nametag is properly displayed.

[]


NEW SECTION
WAC 230-06-106   Limited transfers of ownership allowed.   Gambling licenses must not be transferred to another person or entity until the licensee requesting the transfer has received written approval from us. All requests to transfer a license must be in the format we require. Licensees may request to transfer a gambling license under the following conditions:


Commercial businesses


(1) A commercial business may request to transfer their license to another business when:

(a) The ownership is exactly the same for both businesses, for example a partnership becomes a limited liability company (LLC); and

(b) The licensed gambling activity will be conducted at the same business premises.


Charitable or nonprofit organizations


(2) A bona fide charitable or nonprofit organization may request to transfer their gambling license to another bona fide charitable or nonprofit organization after a completed merger or consolidation.


Partnerships


(3) If one partner in a partnership leaves and is not replaced, the remaining partner(s) must submit a transfer application to document the transfer of ownership to the remaining partner(s).


Sole proprietorship


(4) A sole proprietor may request to transfer their license to a partnership, corporation or LLC, which is solely owned by the same person.


Death, bankruptcy and other special circumstances


(5) A licensed operator may transfer their license when proven incapacity, death, receivership, bankruptcy or assignment for benefit of creditors to a court-appointed or court-confirmed guardian, executor or administrator, receiver, trustee, or assignee for the benefit of creditors occurs. The person to whom the license is transferred may continue to operate under the license.

(a) Transfers are allowed when:

(i) A transfer fee is paid; and

(ii) The person to whom the license is transferred is qualified to hold a gambling license; and

(iii) We give prior written approval.

(b) The license is renewable based on the original expiration date of the license; and

(c) Any transferred license will be void when the person to whom the license was transferred no longer holds the court-appointed, or court-confirmed, position.

[]


NEW SECTION
WAC 230-06-107   Ownership changes -- Allowed.   A licensee must report any change in ownership when the change would result in any person or organization becoming a substantial interest holder. Changes in ownership are allowed under the following conditions:


Ownership changes to be reported


(1) The following changes must be reported to us when:

(a) A person or organization becomes a substantial interest holder when they were not a substantial interest holder immediately before the transaction; or

(b) A substantial interest holder purchases any additional stock.


Reporting requirements


(2) Each notification must:

(a) Be submitted in writing on a form provided by us within thirty days of the close of a change of ownership; and

(b) Include the required fee; and

(c) Include:

(i) For corporations -- A copy of the meeting minutes detailing the change of ownership; or

(ii) For limited liability companies (LLC) -- An amended LLC agreement that includes the new member(s).


New owners must qualify for a license


(3) The gambling license(s) of any corporation or LLC in which a person holds or acquires a substantial interest may be revoked if the new person is not qualified to hold a gambling license.


Review and investigation


(4) An investigation of each transaction will be conducted by us to determine the details of the transaction and the qualifications of each substantial interest holder.

[]


NEW SECTION
WAC 230-06-108   Ownership changes -- Prohibited.   All gambling licenses held by a business will become void when the following changes in ownership occur and a new license must be obtained before operating any gambling activities:

(1) A person or business becomes the owner of more than fifty percent of corporate stock or limited liability membership shares/units, when the person or business did not have at least the following substantial interest in the business immediately before the transaction:

(a) Ten or more percent ownership in a privately held corporation or limited liability company (LLC); or

(b) Five or more percent ownership in a publicly traded corporation or LLC; or

(2) The business is sold; or

(3) A sole proprietorship brings in a new person and forms a partnership, corporation or LLC; or

(4) A partnership adds another partner or changes partners; or

(5) A change in a person's ownership, together with ownership of any members of his or her immediate family, who are under the age of eighteen years of age, results in the person having more than fifty percent interest in the business when the person did not have at least the following substantial interest in the business:

(a) Ten or more percent ownership in a privately held corporation or LLC; or

(b) Five or more percent ownership in a publicly traded corporation or LLC.

[]

OTS-1169.1


AMENDATORY SECTION(Amending Order 601, filed 8/22/06, effective 1/1/08)

WAC 230-06-125   Renew your license in a timely manner.   (1) Licensees must ensure a properly completed renewal application and all applicable fees are received at our ((headquarters)) administrative office in Lacey at least fifteen days before the expiration date on their license.

(2) If licensees do not submit a properly completed application and all fees((,)) and their license expires, ((and)) they must immediately stop the gambling activity covered by their license.

(3) If your license expires, you must submit ((a new)) an application and you must not operate any gambling activity until a new license is issued.

[Statutory Authority: RCW 9.46.070. 06-17-132 (Order 601), 230-06-125, filed 8/22/06, effective 1/1/08.]

OTS-1176.2


NEW SECTION
WAC 230-07-051   Accumulating excessive reserves.   A charitable or nonprofit organization must not accumulate excessive reserves. Organizations accumulating excessive reserves may be deemed as organized primarily for purposes of gambling. Reserves must be computed by using the financial data most recently filed with us. Funds transferred to an endowment or specifically restricted trust fund will not be treated as excessive reserves if the following restrictions are met:

(1) The endowment or dedicated trust fund is either legally irrevocable or restricted in a manner that approval is required by a majority of the membership prior to use or transfer of the endowment or dedicated trust principal; and

(2) The funds are expressly dedicated for funding new programs, capital projects, or to endow service-providing activities; and

(3) The funds are saved according to a plan that includes the amount to be reserved, the purpose for which the funds are being reserved, and the estimated time the reserves will be used; and

(4) The plan is approved by the organization's officers or board of directors and documentation for the endowment or trust fund is submitted to us for review and approval; and

(5) The total amount of net gambling income that is transferred to endowment or trust funds may exceed two million dollars only if the organization petitions the director to exceed this limitation and the director approves the petition. The director may disapprove with written comments or approve a modified level based on facts presented. The director's decision may be appealed to the commission. Appeal of this decision will be heard at a regular public meeting of the commission. The commission's decision shall be final. Petitions for relief must include:

(a) The reason for the request, including whether the increased reserves are for charitable or nonprofit purposes and planned timelines for use; and

(b) The total amount of reserves requested; and

(c) The impact on programs if the petition is denied; and

(d) Alternative sources of funding available.

[]

OTS-1170.1


AMENDATORY SECTION(Amending Order 609, filed 4/24/07, effective 1/1/08)

WAC 230-07-140   Minimum accounting records for Class D and above bingo licensees and licensees with combined activities over five hundred thousand dollars.   Class D and above bingo licensees and licensees who are authorized for more than five hundred thousand dollars gross gambling receipts from combined gambling activities during any fiscal year must keep accounting records necessary to document all receipts, costs, and disbursements, including, at least, those related to gambling activities.


Requirements for accounting records


For these accounting records, licensees must:

(1) Conform to generally accepted accounting principles (GAAP) except as modified by other commission rules; and

(2) Include, at least:

(a) A cash disbursements journal and/or check register;

(b) A cash receipts and/or sales journal;

(c) A list of all assets the licensee paid for;

(d) A listing of all liabilities;

(e) A complete general ledger system; and

(f) A list of all donated items valued at more than two hundred fifty dollars; and

(g) Bank statements, related deposit slips, and canceled checks or facsimiles of canceled checks; and


Donated items


(3) Document donated items. Licensees must:

(a) Use the fair market value at the time of donation;

(b) Add items to the list no later than thirty days after receiving them;

(c) Remove items when they no longer have legal ownership; and

(d) Not remove an item from the list, even if it has become obsolete or completely depreciated, until management has completed and documented appropriate review. A depreciation schedule for all capitalized items is sufficient; and

(e) Add items to the list when they convert items from gambling merchandise prize inventory to licensee use. This list must include, at least:

(i) A description of the item;

(ii) The date purchased, acquired by donation, or converted from the gambling prize pool;

(iii) The cost at the time of purchase or, if donated, the fair market value at the time received; and

(iv) The date and method of disposition of the item; and


Method of accounting


(4) Use the accrual method of accounting; and

(5) The cash, modified cash, or tax basis accounting methods may be used only if that method accurately represents the licensee's financial position, the results of operations, and the licensee does not have substantial liabilities or expenses, such as depreciation or amortization expenses, which require a current outlay of cash; and


Expenditures for nongambling activities


(6) Sufficiently document all expenditures relating to nongambling activities in order to provide a satisfactory audit trail and to allow us to verify that the funds were used for the licensee's stated purpose(s); and


Expenditures for gambling activities


(7) Sufficiently document all of the licensee's expenditures relating to gambling activities. Canceled checks or facsimiles of canceled checks, and bank statements are not sufficient documentation for expenditures without additional support. Licensees must provide additional support for expenditures, including:

(a) Invoices or other supporting documents from commercial vendors or service agencies with at least:

(i) The name of the person or entity selling the goods or providing the services;

(ii) A complete description of goods or services purchased;

(iii) The amount of each product sold or services provided;

(iv) The price of each unit;

(v) The total dollar amount billed; and

(vi) The date of the transaction.

(b) Documentation, in the form of checks and other written records of disbursements in excess of twenty-five dollars made directly to individuals who do not furnish normal, business type, invoices or statements. The written records must indicate at least:

(i) The name of the person receiving the payment;

(ii) The amount;

(iii) The date; and

(iv) The purpose; and

(8) Document allocated expenditures that relate to more than one function to the various functions. Licensees must document their methods of allocation and make them available for our review; and


Capitalizing assets


(9) Include a capitalization policy based on materiality and expected life of operating assets. To determine a minimum level for capitalizing assets, licensees must:

(a) Capitalize and depreciate, or amortize over the useful life of the asset, any assets of more than two thousand dollars that have a useful life of more than one year; and

(b) Capitalize and depreciate, or amortize over sixty months, beginning with the first month that bingo games are conducted, preoperating start up costs related to bingo games of more than six thousand dollars; and

(c) Amortize, over a period not longer than the life of the lease, any leasehold improvements related to gambling activities that are more than six thousand dollars. Licensees may extend the amortization period to include any lease option periods if the licensee's management states a reasonable expectation that they will use the lease option; and

(d) Charge all unamortized leasehold improvements as an expense of the gambling activities in the year that the lease expires.

[Statutory Authority: RCW 9.46.070. 07-10-032 (Order 609), 230-07-140, filed 4/24/07, effective 1/1/08.]

OTS-1168.1


NEW SECTION
WAC 230-09-007   Canceling, changing time, date, or location of fund-raising events.   (1) If a fund-raising event (FRE) licensee cancels an FRE, they must:

(a) Notify us and local law enforcement in advance; and

(b) Return the original license to us.

(2) If a licensee changes the time, date, or location of an FRE, they must:

(a) Notify us in writing at least ten days in advance. The notice must include a signed statement from the chief executive officer that the appropriate law enforcement agency has been notified of the change; and

(b) Pay the appropriate fee; and

(c) Return the original license to us.

[]

OTS-1171.2


AMENDATORY SECTION(Amending Order 610, filed 4/24/07, effective 1/1/08)

WAC 230-10-350   Recording bingo winners.   Organizations conducting bingo under the provisions of RCW 9.46.0321, and bingo activities conducted at a qualified agricultural fair, and Class A and B bingo licensees do not have to follow this rule if they meet the requirements for lower volume charitable or nonprofit organizations in WAC 230-07-125. All other bingo licensees must report all prize payments for bingo games and drawings for prizes, good neighbor prizes, and second element of chance prizes at bingo games and record payment on a prize receipt.

(1) Licensees must use prize receipts printed by a commercial printer. The receipts must:

(a) Be two-part, self-duplicating paper that provides for an original and a duplicate copy; and

(b) If the licensee is Class F or above, be imprinted with the name of the licensee and a consecutive ascending number that does not repeat in at least 100,000 occurrences; and

(c) If the licensee is Class E or below, the receipt is not required to be imprinted with the licensee's name and the consecutive ascending number may repeat in 1,000 occurrences; and

(d) Provide space for the licensee to record the information we require.


Prize receipt


(2) ((Licensees may receipt merchandise prizes with a cost or fair market value of fifteen dollars or less on a single merchandise prize receipt log sheet. Licensees must:

(a) Maintain a separate merchandise prize receipt log for each session; and

(b) Retain the receipt log as a part of the bingo daily records.

(3))) Operators must complete the prize receipt including, at least:

(a) Date; and

(b) Game number; and

(c) Complete name ((and address)) of the winner; and

(d) Complete address of the winner, if the prize is over twenty dollars; and

(e) Dollar amount of the prize or the operator's cost, if noncash prize; and

(((e))) (f) Full description of all noncash prizes; and

(((f))) (g) Check number, if any portion of the prize is paid by check; and

(((g))) (h) Initials of the bingo worker making the payout; and

(((h))) (i) Initials of the cashier making the payment.


Prize log


(3) Licensees may receipt prizes of twenty dollars or less on a single prize log. Licensees must:

(a) Maintain a separate prize log for each session; and

(b) Record the same information required on prize receipts; and

(c) Retain the prize log as a part of the bingo daily records.


Linked bingo prizes

(4) Except for linked bingo prizes, licensees may omit an address for the winner if:

(a) ((The prize is greater than $300; and

(b))) The licensee pays all prizes greater than $300 by check or a combination of cash and check; and

(((c))) (b) Checks are drawn on the licensee's gambling bank account; and

(((d))) (c) Checks used are of a type that provides a duplicate copy. The copies must be kept as a part of the daily bingo records; and

(((e))) (d) Checks are made payable only to the winner. Licensees may make checks for prizes won by players under age eighteen payable to the guardian or immediate family member accompanying the player; and

(((f))) (e) Licensees note the game number and prize receipt number on the check; and

(((g))) (f) The bank returns all original checks to the licensee. Licensees must have the original checks available for our inspection on demand; and

(((h))) (g) The licensee does not cash or otherwise redeem prize checks.

(5) Licensees must record the complete name and address of the winner of linked bingo prizes.

(6) Licensees must:

(a) Issue prize receipts ((sequentially)) consecutively in an ascending order; and

(b) Void and retain with the daily records any prize receipts bearing a lower number than the highest number issued during a session; and

(c) Give the original of each prize receipt to the winner; and

(d) Keep a duplicate copy as a part of their records for not less than three years; and

(e) Account for and document all prize receipts purchased or otherwise obtained on a vendor's invoice; and

(f) Keep the vendor's invoice, or a photocopy of it, on the premises and have it available for our inspection. The purchase invoice must document, at least:

(i) Name of the vendor;

(ii) Name of the purchasing organization;

(iii) Date of purchase;

(iv) Number of receipts purchased; and

(v) The beginning and ending receipt number.

[Statutory Authority: RCW 9.46.070. 07-10-033 (Order 610), 230-10-350, filed 4/24/07, effective 1/1/08.]

OTS-1164.1


NEW SECTION
WAC 230-10-446   Defining "linked bingo prize."   "Linked bingo prize" means a prize that is awarded to a player who is competing against players from multiple participating bingo halls. The categories of prizes are:

(1) The main prize, which is the prize paid each time the game is played to the first verified winner(s);

(2) The consolation prize, which is the prize paid at each participating licensed bingo hall after the main prize has been determined; and

(3) The bonus prize, which is a prize awarded when a player achieves the winning pattern in a predetermined number of calls or on a specific predetermined number.

[]

OTS-1172.1


AMENDATORY SECTION(Amending Order 614, filed 8/10/07, effective 1/1/08)

WAC 230-14-080   Prize limits and percentage of winners required.   Punch board or pull-tab operators must not possess, display, put out for play, sell, or otherwise transfer punch boards or pull-tab series that:

(1) Have a total payout of less than sixty percent of the total gross gambling receipts of the board or series; or

(2) Offer boards or series, except for progressive series or carry-over jackpots, with a single cash prize that is more than((:

(a) Five)) twenty-five hundred dollars ((in cash for pull-tabs under a dollar; or

(b) If we have approved it before, seven hundred fifty dollars for one dollar pull-tabs)); or

(3) Offer a single merchandise prize that is more than ((seven hundred fifty)) twenty-five hundred dollars including markup; or

(4) Have a single pull-tab or punch with multiple winning combinations that are more than the prize limit; or

(5) Offer prizes for purchasing the last pull-tab or last punch (last sale) that are more than:

(a) One hundred dollars cash; or

(b) Merchandise that costs the licensee more than one hundred dollars; or

(c) The highest prize offered, whichever is less; or

(6) Series that have a key to any winning numbers or symbols.

[Statutory Authority: RCW 9.46.070. 07-17-058 (Order 614), 230-14-080, filed 8/10/07, effective 1/1/08.]


AMENDATORY SECTION(Amending Order 614, filed 8/10/07, effective 1/1/08)

WAC 230-14-120   Permanently ((removing)) reserving punch boards or pull-tab series.   Operators may permanently reserve a series for a player who leaves the premises, but intends to return and play the game. The operator must:

(1) Prominently post house rules that are clear in meaning and with criteria for reserving a series and the length of time players may reserve a series; and

(2) Ensure that the player meets the criteria in the house rules; and

(3) Contain all of the reserved series in a secure manner, clearly identifying it as permanently reserved, and store it in the immediate vicinity of the pull-tab area; and

(4) Not reserve a board or series for a player without play for more than seven days and not be more than a total reserve time of fourteen days; and

(5) Not have more than twenty-five boards or series permanently reserved for players at one time; and

(6) Maintain adequate accounting records showing the status of all reserved boards or series; and

(7) Not place reserved boards or series out for public play after the reserving player finishes playing them.

[Statutory Authority: RCW 9.46.070. 07-17-058 (Order 614), 230-14-120, filed 8/10/07, effective 1/1/08.]

OTS-1165.2


NEW SECTION
WAC 230-14-266   Location of unplayed punch boards and pull-tab series.   (1) Punch board and pull-tab operators must retain unplayed punch board and pull-tab series:

(a) On the licensed premises; or

(b) Off premises, if the operator provides them to us when requested.

(2) Operators must make these items available on the licensed premises to those persons listed in RCW 9.46.130 and to local taxing authorities to inspect.

[]

OTS-1166.2


NEW SECTION
WAC 230-15-553   Defining "cash equivalent."   "Cash equivalent" means a:

(1) Treasury check; or

(2) Personal check; or

(3) Traveler's check; or

(4) Wire transfer of funds; or

(5) Money order; or

(6) Certified check; or

(7) Cashier's check; or

(8) Check drawn on the licensee's account payable to the patron or to the licensee; or

(9) Voucher recording cash drawn against a credit card or debit card.

[]

OTS-1173.2


AMENDATORY SECTION(Amending Order 615, filed 9/17/07, effective 1/1/08)

WAC 230-16-015   Punch board and pull-tab sales restrictions.   (1) Manufacturers, distributors, and manufacturer and distributor representatives must sell or distribute punch boards, pull-tabs, pull-tab dispensers, or related equipment only to other distributor, distributor representative, or punch board and pull-tab licensees.

(2) Distributor and distributor representatives must buy punch boards, pull-tabs, pull-tab dispensers, or related equipment only from other licensed manufacturer, distributor, or distributor representatives.

(3) Manufacturers must not sell any punch board or pull-tab series unless the winning punches or pull-tabs are randomly distributed and mixed among all other punches or pull-tabs in that board or series.

(4) Manufacturers, distributors, and manufacturer and distributor representatives must not make sales promotion statements, demonstrations, or implications ((must not)) that imply:

(a) One portion of a pull-tab series contains more winners than other portions; or

(b) ((Some series sell more pull-tabs before winning pull-tabs are reached in the distribution.)) Operators can sell pull-tabs in some manner that would give the operator an advantage in selling more pull-tabs before having to pay out winners.

[Statutory Authority: RCW 9.46.070. 07-19-069 (Order 615), 230-16-015, filed 9/17/07, effective 1/1/08.]

OTS-1167.2


NEW SECTION
WAC 230-16-052   Standards for flares.   Flares must clearly display the:

(1) Manufacturer of the punch board or pull-tab series. A stamp, seal or label identifying the manufacturer may be substituted if we have been informed; and

(2) Manufacturer assigned series number; and

(3) I.D. stamp; and

(4) Cost of each punch or pull-tab; and

(5) Total number of punches or pull-tabs in the series. For any newly designed flare or any previously designed flare for pull-tab series with a ticket count over six thousand, which has not yet been packaged, the number of pull-tabs must be printed in one-half inch size lettering; and

(6) Prizes available and the winning number or symbols. For prizes over twenty dollars, the winning numbers or symbols must be printed so each can be permanently and conspicuously deleted off the flare as each prize is won. A progressive jackpot meter board, for progressive jackpot series, is a supplement to the flare.

[]

Washington State Code Reviser's Office