WSR 17-24-068 PROPOSED RULES GAMBLING COMMISSION [Filed December 4, 2017, 2:09 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 17-20-017.
Title of Rule and Other Identifying Information: Amending chapter 230-06 WAC submission of electronic or mechanical gambling equipment during rule making.
Hearing Location(s): On January 11, 2018, at 1:00 p.m., at the Hampton Inn and Suites, 4301 Martin Way East, Olympia, WA 985016 [98506]. Hearing will take place at the January commission meeting. The meeting dates and times are tentative. Visit our web site at www.wsgc.wa.gov about seven days before the meeting, select "January commission meeting" to confirm the hearing date, location, and start time.
Date of Intended Adoption: January 11, 2018.
Submit Written Comments to: Rules Coordinator, P.O. Box 42400, Olympia, WA 98504-2400, email rules.coordinator@wsgc.wa.gov, fax 360-486-3453, by January 3, 2018.
Assistance for Persons with Disabilities: Contact Julie Anderson, phone 360-486-3453, TTY 360-486-3637, email Julie.anderson@wsgc.wa.gov, by January 3, 2018.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rule would add a new section to chapter 230-06 WAC requiring a manufacturer or its designee to submit electronic or mechanical gambling equipment for evaluation during rule making.
Reasons Supporting Proposal: This rule change would allow staff to request and evaluate equipment during the rule-making process. The manufacturer would not be required to submit an application or fees for this evaluation during the rule-making process.
Statutory Authority for Adoption: RCW 9.46.070.
Statute Being Implemented: RCW 9.46.070.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Gambling commission staff, governmental.
Name of Agency Personnel Responsible for Drafting, Implementation, and Enforcement: Brian Considine, Legal and Legislative Manager, 4565 7th Avenue S.E., Lacey, WA 98503, 360-486-3469.
A school district fiscal impact statement is not required under RCW 28A.305.135.
A cost-benefit analysis is not required under RCW 34.05.328.
The proposed rule does impose more-than-minor costs on businesses.
Small Business Economic Impact Statement
Proposed Changes to Rules: WAC 230-17-192, submission of electronic or mechanical gambling equipment during rule making.
This new rule requires manufacturers or their designee to submit electronic or mechanical gambling equipment for evaluation during rule making, if the equipment submission is requested by gambling commission staff. The manufacturer would not be required to submit an application or fees for this evaluation during the rule-making process.
Allowing staff to evaluate the gambling equipment during the rule-making process will ensure:
The evaluation of the equipment may include an understanding of interoperability, communication, security, and player protection issues. The intent is to put rules into place during the rule-making process to set parameters for the authorization of the use of the equipment rather than after new rules are in place and the equipment deployed. Thereby, this process should save stakeholders money by not putting equipment into the marketplace and then having it pulled back because of subsequent changes in rules limiting the operation of the equipment because staff did not know how the equipment worked.
1. Description of the Reporting, Recordkeeping and Other Compliance Requirements of the Proposed Rule: There are no new reporting or recordkeeping requirements. The new rule solely creates a mechanism to require gambling equipment manufacturers or their designee to submit electronic or mechanical gambling equipment for evaluation during rule making to authorize the use of such gambling equipment.
This new rule is only applicable during rule making to authorize new gambling equipment. The gambling equipment review and approval process set out in WAC 230-06-050 will not be changed.
The manufacturer would be required to submit the following to our office in Lacey, Washington, for inspection within thirty days of our request:
The manufacturer would be responsible for costs associated with the above information and installing, configuring, and supporting the equipment/software to allow us to fully evaluate its operation.
The manufacturer would not be required to submit an application or any fees related to the evaluation during the rule-making process. The agency will assume all evaluation/inspection-related costs.
2. Kinds of Professional Services That a Small Business is Likely to Need in Order to Comply: Manufacturers seeking rule making to authorize new gambling equipment through a rule change may need to solicit transportation support to get their proposed gambling equipment to our Lacey office.
No other professional services are needed to comply with this new rule.
3. The Actual Costs to Small Businesses of Compliance, Including Costs of Equipment, Supplies, Labor and Increased Administrative Costs: The actual costs cannot be determined because of the following variables:
4. Whether Compliance with the Rule, Based on Feedback Received from Licensees, Will Cause Businesses to Lose Sales or Revenue: No small business should lose sales or revenue because the rule relates to gambling equipment/software not currently authorized under the Gambling Act or by gambling commission rules. A card room licensee testified he feared increased costs to small manufacturers would prevent new gambling equipment coming into the state and being used by card room licensees. The licensee misunderstood that the equipment evaluation under this new rule only applied when a manufacturer is seeking a rule change to authorize the use of the new equipment.
Gambling commission staff explained to the licensee there should be no costs preventing distribution of equipment for currently approved devices and software, and the licensee felt comfortable there would be no additional costs. The licensee also understood how this new rule would provide more transparency and be more economical for manufacturers. In the past, manufacturers have made financial investments by placing gambling equipment in the state after a rule change to authorize the equipment. Later, further rules had to be implemented, which required costly modifications to the equipment, as staff gained an understanding of how the equipment operated.
This new rule could cause a small business to delay sales or revenue on the one piece of gambling equipment they submit to us for evaluation during the rule-making process. Overall, we anticipate this new rule will save manufacturers from making investments in gambling equipment in the state and then having to change the functionality of the equipment, thereby costing the manufacturers money to make the changes to the equipment and possible loss of revenue, because of future rule changes to how the equipment will operate.
5. A Determination of Whether the Proposed Rule Will Have a Disproportionate Cost Impact on Small Businesses: The cost on small businesses and the cost for the largest ten percent of manufacturers is indeterminate because shipping of the equipment/software and the value of the equipment/software and costs for installation, configuration, and support for the equipment is variable depending on type of equipment and complexity of equipment and software that will be evaluated. However, this rule should not have a disproportionate cost because the cost should be the same because the possible aforementioned costs are equipment/software specific and should not vary between manufacturers.
6. Steps Taken by the Agency to Reduce the Costs of the Rule on Small Businesses or Reasonable Justification for Not Doing So. Agencies "must consider, without limitation, each of the following methods of reducing the impact of the proposed rule on small businesses:"
a. Reducing, modifying, or eliminating substantive regulatory requirements: This rule change does not add any new substantive regulatory requirements to licensees or potential licensees. Instead, it adds a process during the agency's rule-making consideration when it is considering rules authorizing and regulating new gambling equipment and/or software. The agency will incur most of the costs for inspection/evaluation of the gambling equipment and manufacturers will not be required to pay for our inspection/evaluation of the equipment during the rule-making process.
This should reduce manufacturer costs in the long run because staff and commissioners will understand the full functionality of the equipment during the rule-making process and then can ensure that the rules contain all necessary regulatory requirements to ensure effective implementation of the new equipment/software. This should prevent situations that have occurred in the past where equipment has been approved without review by the commission's lab and then additional rules are enacted to address regulatory concerns with how the equipment is being operated after its initial approval.
b. Simplifying, reducing, or eliminating recordkeeping and reporting requirements: This rule change does not require any additional recordkeeping or reporting requirements.
c. Reducing the frequency of inspections: This rule change will not impact the number of inspections.
d. Delaying compliance timetables: A delay is not necessary because it could provide a financial benefit for manufacturers seeking a rule change to allow the gambling equipment they manufacture in Washington.
e. Reducing or modifying fine schedules for noncompliance; or reduction or modification is unnecessary because there is no fine schedule related to this rule.
f. Any other mitigation techniques including those suggested by small businesses or small business advocates: A mitigation analysis is unnecessary because of the positive impact to manufacturers. We have not received any feedback from stakeholders requesting changes to the proposed rule.
7. A Description of How the Gambling Commission Will Involve Small Businesses in the Development of the Rule: Notice of this rule making followed the gambling commission's standard procedure. It was included in the September 2017 commission materials posted on our web site. On September 15, 2017, staff presented the new rule to the commissioners for discussion and possible filing. The commissioners filed the new rule for further discussion after taking comment from the public.
The new rule was included in the October 2017 commission materials posted on our web site. Prior to the start of the October 2017 commission meeting, we held an informal "Question and Answer" session for stakeholders to ask questions and discuss with staff proposed rules. The new rule was discussed at the commission meeting and the public comment was taken.
In October 2017, we posted the new rule on our agency's web site under "Breaking News." ("Breaking News" is in the middle of our main web site, www.wsgc.wa.gov.)
On October 27, 2017, we sent an email to all licensed manufacturers giving them notice of the new rule and a copy of the proposed rule language.
The new rule will be discussed at future commission meetings until the commissioners take final action, which is anticipated to be at the January 2018 meeting. Public comment is taken at each meeting. The new rule and this small business economic impact statement will be made available on our web site for each commission meeting that the rule will be heard. Lastly, the new rule will remain posted under "Breaking News" on our main web site until the commissioners take final action.
This process provided small businesses several opportunities to provide feedback in the development of the new rule.
8. A List of Industries That Will Be Required to Comply with the Rule: 7132.
9. An Estimate of the Number of Jobs That Will Be Created or Lost as the Result of Compliance with the Proposed Rule: No jobs will be impacted based on the information provided above.
A copy of the statement may be obtained by contacting Brian Considine, Legal and Legislative Manager, P.O. Box 42400, Olympia, WA 98504-2400, or 4565 7th Avenue S.E., Lacey, WA 98503, phone 360-486-3469, fax 360-486-3453, email brian.considine@wsgc.wa.gov.
December 4, 2017
Brian J. Considine
Legal and Legislative Manager
NEW SECTION
WAC 230-17-192 Rule making that involves new or novel electronic or mechanical gambling equipment.
(1) A manufacturer or its designee is required to submit electronic or mechanical gambling equipment for evaluation during rule making when:
(a) The equipment is new or novel in Washington state; and
(b) The commission has taken action to adopt, change, or repeal a rule in order to authorize use of the gambling equipment.
(2) When we are ready to begin our equipment evaluation, we will notify the manufacturer or its designee in writing. The manufacturer or its designee will have thirty days from the date of our written request to submit the requested electronic or mechanical gambling equipment to our headquarters, directly or through a designee, or we may administratively close our review and deny the requested rule change.
(3) Manufacturers or their designee must submit:
(a) The gambling equipment, including all relevant software, that is identical or substantially similar to what will be marketed, distributed, and deployed in Washington;
(b) A copy of detailed technical materials and diagrams associated with the equipment and software, and all of the operational procedures and manuals, including relevant hardware and software manuals; and
(c) Other technical specifications as requested by the commission.
(4) The manufacturer or its designee must install, configure, and support the equipment/software to allow us to fully evaluate its operation. Evaluation may include, but is not limited to, interoperability, communication, security, and player protection issues.
(5) We will notify the manufacturer or their designee in writing if we require additional equipment or information for our evaluation. The manufacturer or its designee must provide us with the requested equipment or information within thirty days from the date of our written request or we may administratively close our review and deny the requested rule change.
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