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In the absence of an established line of credit with terms, all bingo and pull-tab products and equipment must be made available on a cash basis; and

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Manufacturers must not dictate purchasing requirements to distributors, such as quantities and mix of products that must be purchased; and

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Any denial by a manufacturer to sell to a distributor must be detailed and provided in writing to the distributor with a copy provided to the commission.

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Absent an established line of credit with terms, all bingo and pull-tab products and equipment must be provided on a cash basis; and

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Manufacturers must not dictate purchasing requirements to distributors, such as quantities and mix of products that must be purchased; and

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Any denial by a manufacturer to sell to a distributor must be detailed and provided in writing to the distributor with a copy provided to the commission.

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The petitioner, John Lowmon, distributed form letters asking for support for the rule change. The form letter stated:

1.

Major pull-tab manufacturers are intentionally discriminating against Washington state pull-tab distributors by blocking access to their product lines without cause.

2.

This is an intentional and willful attempt to force some distributors out of business.

3.

This is wrong and blocks businesses and nonprofit organizations from access to the variety of products they want for their customers and could ultimately force them to deal with distributors they may not wish to do business with.

4.

Many business owners and nonprofit organizations are directly affected when they cannot get the available product to their customers and members due solely to discriminatory acts by these same manufacturers.

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It is only fair all licensed distributors can buy product licensed by the state because it is a state regulated product. Should be able to buy product just like other distributors. Arrow International has a monopoly on the market, and they decline product to certain manufacturers. The rule will put the market back on a level playing field. All licensed manufacturers should have to sell product to all licensed distributors. It's not a fair market when my competition can get product I can't.

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Arrow International said they would not sell to me because of a credit issue, and they have said this for ten years; it's false and defamatory. Arrow has discriminated and slandered my company for ten years.

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Testified several years ago opposing deregulation of the pull-tab industry and everything I predicted that would happen with deregulation has happened: Number of distributors has been reduced by more than fifty percent; predatory pricing by some distributors occurs regularly; manufacturers have greater control of whom and under what terms they sell product to.

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A distributor said he's been licensed since 1972. He was very concerned about potential negative impact and testified in the past in opposition to changing the rules. Nine years later since deregulating Washington state gambling commission (WSGC) oversight of the credit and pricing rules, his concerns "turned out to be unfounded as I have experienced no negative impact to my business." His company has six employees and in response to the questions about the small business economic impact, he cannot predict what may happen if the rule change is adopted. He has witnessed the "detailed investigation and exhaustive public debate the WSGC has committed to this subject in previous years," and wonders "why we are still being asked to comment on this issue, now for the fourth time in nine years, since the original discussion." Enough time and energy has been spent on this subject and "I would prefer the rules be maintained as they are currently written."

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The proposal is bad business. "What smart businessperson would continue to sell to someone who owes him/her money? What smart businessperson would charge the same price to a customer that buys 10,000 items as he/she charges another person that buys just 1 of the same item?" The proposal will hurt manufacturers, bingo players and the charities, organizations and taverns relying on our products. Will require manufacturer to sue or write-off outstanding debt owed. Manufacturer's reputation and brand value would be seriously hurt because it is the manufacturer's name and logo players see on the product, not the distributor's. A bad distributor can tarnish a manufacturer's name and reputation, and choosing who it does business with, helps prevent that. By working with a select few distributors, a manufacturer can better handle inventory needs for a more efficient and cheaper business operation. Requiring a manufacturer to sell to every distributor in the state will cause more paperwork and administrative costs handling and coordinating returns.

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The proposed rule is a "throw-back to an earlier time, but without the safeguards that existed during that earlier time." Nothing has happened in the past seven years that "would make restrictions on the business relationship between a bingo and/or pull-tab manufacturer and distributor a part of the Commission's core mission." The proposal is similar to previous proposals brought forward in 2006 and 2007 and is unfair and unworkable. There is no rational basis for singling out bingo and pull-tab manufacturers for regulation, but leaving other manufacturers and distributors free to set their own prices and terms. The proposal should be rejected by the commission for all the same reasons the rule was repealed in 2005, and similar proposals were rejected in 2006 and 2007. If the commission adopts the proposal, it must reinstate the rules prohibiting extension of credit between manufacturers and distributors for over sixty days, and allow a manufacturer to refuse to sell to any distributor delinquent on its account.

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Forcing manufacturers to sell to every distributor is beyond the scope of the gambling commission's duties. Manufacturers and distributors should do whatever legal business practices are required to ensure the viability of their business. WSGC would need additional staff to police the changes, the agency already is facing budget issues, and the agency has reviewed this issue several times and realized they should not regulate commerce.

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The petitioner, John Lowmon, said as a distributor, he wasn't given access to certain products.

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Another distributor said he wanted to encourage adherence to the spirit of the rule if it passed.

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A manufacturer said the commission needed to decide whether it wanted to regulate business practices. Has seen the industry shrink nationwide, not just in Washington. Seems a few distributors are in a bad position and it is a capital intensive business. They've invested in certain distributors and should get to choose who represents their product.

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The petitioner, John Lowmon, said he's concerned about pull-tabs, not as concerned about bingo paper, and the problem is one licensee in Washington. If there is a state ID stamp on the product, then the commission should be involved with this.

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A distributor said his sister owned the company since 1972. He joined the company about two years ago. When Gasperetti's started, they did over $6 million in business a year. They started being "punished" in July 2012 and they have lost half of their sales since then. If Gasperetti's closes, nineteen employees will lose their jobs and there'll be impacts on several other businesses.

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A distributor said she's been in the industry for thirty-five years. Worked for Mr. Ed's for twenty-five years. She's been dealing with this issue for 10 years. She was told at one point they stopped sales due to her credit worthiness. She discussed issues she's had about a bad check and some history related to that. She said she feels the gambling commission, attorney general's office, and Arrow have made this bad debt follow her even though she was not the owner of the company that issued the bad check.

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Manager of a manufacturing plant in Lynnwood said he has been involved in the business since 1983. If distributors will be representing their brand, they should have some say in who does. Doesn't believe these types of business relationships are part of the commission's business. Doesn't see the harm done.

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A distributor/manufacturer said the rules were taken out because it was a regulatory nightmare for the gambling commission and for distributors.

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Thinks it has been fine without the rules. The commission's role is to make sure that gambling is safe for the public. This rule proposal is not related to this.

(1)

Manufacturers shall make all bingo and pull-tab products and equipment available to all distributors for the same price and terms. Credit terms are between the manufacture [manufacturer] and distributor and are not to be monitored by the commission.

(2)

Absent an established line of credit with terms, all bingo and pull-tab products and equipment must be provided on a cash basis.

(3)

Manufacturers shall not dictate purchasing requirements to distributors; such [as] the quantity of items and product mix to be purchased.

(4)

Any denial by a manufacture [manufacturer] to sell to a distributor must be detailed and provided in writing to the distributor and reported to the commission.

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One manufacturer states there will be an increase in paperwork and administrative work, and "costly and time-consuming litigation" costs associated with collecting on past due amounts for being forced to sell to a distributor with "a large accounts receivable balance." The manufacturer states it will be a "costly and time-consuming process" to deal with returns of product from distributors spread out all over the state, rather than from a select few distributors.

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A distributor anticipates increased costs of product passed on to distributors by the manufacturers.