Hearing Location(s): On January 14, 2021, at 9:00 a.m., at Washington State Gambling Commission, 4565 7th Avenue S.E., Lacey, WA 98503. Public hearings will take place at scheduled commission meetings. The meeting dates, times, and locations are tentative. Visit our website at www.wsgc.wa.gov approximately seven days prior to the meeting, select "The Commission," and then select "Public Meetings" to confirm hearing date, location, start time, and agenda items.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The gambling commission is considering amending its rules to increase certain pull-tab prize limits, specifically single cash prizes, merchandise prizes, and carry-over jackpot prize limits. Rule making will also consider payout and cash reserve requirements as it pertains to pull-tab prizes.

Reasons Supporting Proposal: Under current rules, single prize and merchandise prizes are limited at $2,500 and carry-over jackpot prizes are limited at $5,000. The gambling commission received a petition requesting an increase of the current limits on single cash and merchandise prizes to $5,000 and an increase of current limits on carry-over jackpot prizes to $10,000. The petition was accepted as this change would complement SB 6357, which was passed by the legislature this year and increased the single chance pull-tab price from $1 to $5.

Name of Agency Personnel Responsible for Drafting: Brian Considine, Attorney, 4565 7th Avenue S.E., Lacey, WA 98503, 360-486-3469; Implementation: David Trujillo, Director, 4565 7th Avenue S.E., Lacey, WA 98503, 360-486-3512; and Enforcement: Tina Griffin, Assistant Director, 4565 7th Avenue S.E., Lacey, WA 98503, 360-486-3546.

The proposed rule does not impose more-than-minor costs on businesses. Following is a summary of the agency's analysis showing how costs were calculated. The proposed rule change was requested by WHA to compliment SB 6357, now codified in RCW 9.46.110 (2)(b), that increased the single chance pull-tab price/wager limit from $1 to $5. The WHA made this request stating that it believed this change would help pull-tab businesses in the state by increasing gambling activity and business revenue with higher prizes along with the new higher wager limits authorized by the legislature. Under the proposed change, pull-tab operators may, but are not required to, increase single cash prize limits, merchandise prize limits, and/or carry-over jackpot prize limits. Therefore, a licensee does not need to incur any costs under these proposed rules unless it determines that increasing prize limits is in its best business interests. The implementation of this option may impose some minor costs to businesses if they choose to offer higher limit pull-tab games. However, any increased cost, including a higher cost-point for operators as manufacturers will need to build in the additional risk into their sale price, should be offset by increased revenue through new sales of pull-tab games. Therefore, the commission expects this rule change would ultimately not impose anything more than minor costs, if any cost at all. Instead, the result should be positive net revenue, or the business would not decide to offer it, which is still an option. Consequently, a small business economic impact statement is not 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, except in cumulative prize pool pull-tab games. In cumulative prize pool pull-tab games, the sixty percent prize payout requirement will be calculated based on the total amount of prizes from the cumulative prize pool board and the instant winners from each series, divided by the number of series contained in the game; and

(2) Offer boards or series, except for progressive series or carry-over jackpots, with a single cash prize that is more than ((twenty-five hundred))five thousand dollars; or

(3) Offer a single merchandise prize that is more than ((twenty-five hundred))five thousand 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

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

(1) To calculate sixty percent of total gross for merchandise prizes, operators take the amount actually paid for the prize and add to it no more than fifty percent of that cost as markup.

(2) Gift certificates from a licensee's own establishment may be used as merchandise prizes for pull-tab games but must not be included in the sixty percent payout calculation.

(3) The total cost to the operator for the purchase of a prize must not exceed ((twenty-five hundred))five thousand dollars.

Operators may use pull-tab series which include carry-over jackpots. Operators must use the following calculations for prizes and prize payouts for carry-over jackpots:

(1) Guaranteed prizes must be sixty percent or more of gross gambling receipts available from the pull-tab series. "Guaranteed prizes" means all prizes available, excluding the contribution amount or carry-over jackpot; and

(2) The manufacturer determines the contribution amount and the method of play and discloses both on the flare; and

(3) The contribution amount for each series must not be more than five hundred dollars; and

(4) An accumulated carry-over jackpot must not be more than ((five))ten thousand dollars; and

(5) If the carry-over jackpot is awarded, the sum of the advance-level prize and the carry-over jackpot prize combined must not be more than ((five))ten thousand dollars; and

(6) If the operator carries over the jackpot to a new series, the total of the advance-level prize and the consolation prize must not be more than five hundred dollars.

Punch board and pull-tab operators must:

(1) Protect players from fraud and game manipulation.

(2) Award all prizes won.

(3) Only award cash or merchandise as prizes. A player who has won a cash prize may make a request to the person redeeming the winning pull-tab that the player be given additional pull-tabs instead of cash. An operator may agree to such a request.

(4) Not offer to pay cash instead of merchandise prizes.

(5) Not award additional punches or tabs as a prize. Prizes, however, may involve the opportunity to advance and win a larger prize on the same punch board or pull-tab series. Operators must award an immediate additional opportunity to advance called a bonus prize when offered in a bonus pull-tab series or a step-up prize when offered on a punch board.

(6) Immediately pay out a minimum of two thousand five hundred dollars for verified cash prizes won and pay the remaining balance within twenty-four hours by check. The winner may request that the operator pay up to the entire prize balance by check. Operators must then issue a check for the entire prize balance within twenty-four hours.

(7) Have funds available to pay out all cash prizes offered. A licensee's failure to pay out all cash prizes as required by this rule is prima facie evidence of defrauding the public and a violation of RCW 9.46.190.