WSR 10-09-020

PROPOSED RULES

WASHINGTON STATE LOTTERY


[ Filed April 13, 2010, 9:02 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 10-05-014.

Title of Rule and Other Identifying Information: WAC 315-04-095(4) Retailer credit criteria, describes credit ratings and significant incidents as these pertain to a lottery retailers ability to be licensed. The proposed rule change eliminates the word "any" significant incident to simply "significant incident," then describing what may be a significant incident.

Hearing Location(s): Washington's Lottery, 814 4th Avenue, Olympia, WA 98506, on May 25, 2010, at 0900.

Date of Intended Adoption: June 22, 2010.

Submit Written Comments to: Jana Jones, P.O. Box 43000, Olympia, WA 98506, e-mail jjones@walottery.com, fax (360) 586-1039, by May 20, 2010.

Assistance for Persons with Disabilities: Contact Debbie Robinson by May 20, 2010, TTY (360) 586-0933 or (360) 664-4815.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Proposed changes to the WAC will enable the lottery director to consider credit worthiness for lottery retailer license applicants by a more specific definition of significant incident. The director will be able to determine which credit history significant incidents prohibit lottery retailer licensing, rather than the current language requirement that all significant incidents create a bar.

Reasons Supporting Proposal: The current language requires that potential corporate licensees be denied a license if there are three significant incidents on its credit report. Some corporations may have minor incidents that are nevertheless defined as significant. The change in language will allow for the directors discretion in determining qualification under the credit criteria.

Statutory Authority for Adoption: RCW 67.70.040 (1), (3).

Statute Being Implemented: RCW 67.70.040.

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

Name of Proponent: Washington state lottery commission, governmental.

Name of Agency Personnel Responsible for Drafting: Jana Jones, Washington's Lottery, (360) 664-4833; Implementation: Washington's Lottery, (360) 664-; and Enforcement: Len Brudvik, Washington's Lottery, (360) 664-4742.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The only business allowed by law to sell lottery products are existing licensed lottery retailers.

A cost-benefit analysis is not required under RCW 34.05.328. The proposed WAC changes do not give rise to a cost-benefit analysis.

April 13, 2010

Jana L. Jones

Director of

Legal Services

OTS-2978.2


AMENDATORY SECTION(Amending WSR 07-11-154, filed 5/22/07, effective 6/22/07)

WAC 315-04-095   Retailer credit criteria.   (1) The director shall deny a lottery retailer license to any applicant whose credit is found to be poor.

(2) The director may grant a lottery retailer license to an applicant whose credit is rated as marginal or minimum as defined in this section. Provided, the director shall require:

(a) Applicants whose credit is rated as marginal as defined in this section to obtain a surety bond or savings certificate under terms and conditions established by the director prior to issuance of the license. Such surety bond must be secured from a company licensed to do business in the state of Washington. The bond or certificate shall be in the amount of three thousand five hundred dollars unless the director determines a higher amount is required.

(b) Applicants whose credit is rated as minimum as defined in this section may be required to obtain a surety bond or post cash in lieu of a bond under terms and conditions established by the director or submit three letters of credit to the lottery prior to issuance of ((the)) a lottery retailer license. Such surety bond must be secured from a company licensed to do business in the state of Washington. The bond or cash shall be in the amount of three thousand five hundred dollars unless the director determines a higher amount is required, based on sales volume and financial solvency of the retailer.

(3) In the event the retailer's credit is rated as poor or marginal subsequent to the issuance of the license the director may:

(a) Revoke or suspend a retailer's license; and/or

(b) Require such a retailer to secure a surety bond from a company licensed to do business in the state of Washington or post a savings certificate under terms and conditions established by the director. The surety bond or saving certificate shall be in the amount of three thousand five hundred dollars unless the director determines, based on sales volume and financial solvency of the retailer, a higher amount is required.

(4) Credit rating is defined as the ability to meet financial obligations when they become due. It includes current reporting accounts payable and public financial record information including, but not limited to, court records, other public records and reports from credit bureaus or other credit reporting agencies up to three years prior to the lottery's credit check request. A significant incident ((shall be defined as public financial record information which)) may include((s any)) a lien, judgment, bankruptcy, involuntary collection action or any similar incident which reflects on the individual's willingness and ability to pay creditors. A numerical rating of "one" represents excellent credit. A numerical rating of "nine" represents involuntary collection.

(a) A "poor" credit rating indicates public record showing three or more significant incidents within the past three years.

(b) A "marginal" credit rating indicates public record information showing one or more significant incidents within the past three years.

(c) A "minimum" credit rating indicates the information is insufficient for evaluation.

(d) An "acceptable" credit rating indicates that there have been no significant incidents in the public record within the past three years. Provided, at least three accounts must be evaluated in order to receive an "acceptable" rating.

(5) Credit rating checks shall be conducted as follows:

(a) Corporation business credit ratings shall be checked. Personal credit ratings of the corporate officers and owners of ten percent or more equity in the corporation may also be checked.

(b) Sole proprietors and partnership business credit ratings shall be checked. Personal credit ratings of:

(i) The sole proprietor and his or her spouse; or

(ii) All partners and their spouses shall also be checked.

(c) Findings shall be applied in accordance with subsections (1), (2) and (3) of this section.

[Statutory Authority: RCW 67.70.040 (1), (3) and 67.70.040. 07-11-154, 315-04-095, filed 5/22/07, effective 6/22/07. Statutory Authority: RCW 67.70.040. 98-20-013, 315-04-095, filed 9/25/98, effective 10/26/98.]

Washington State Code Reviser's Office