BILL REQ. #: H-3076.1
State of Washington | 62nd Legislature | 2012 Regular Session |
Read first time 02/16/12. Referred to Committee on State Government & Tribal Affairs.
AN ACT Relating to the authorization and regulation of electronic scratch ticket machines for house-banked card room establishments and providing funding for education, health and human services, and public safety; amending RCW 67.70.040, 67.70.330, and 9.46.291; creating a new section; adding a new chapter to Title 67 RCW; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 This act may be known and cited as the
electronic gaming revenue act of 2012.
NEW SECTION. Sec. 2 (1) The purpose of this act is to authorize
electronic scratch ticket devices to house-banked card room licensees
in the same form and manner as provided under the provisions in
Appendix X2 to the state-tribal gaming compact as allowed by the
federal Indian gaming regulatory act of 1988. The legislature declares
that house-banked card rooms operating at least five card games may use
the types of electronic scratch ticket games, devices, and player
terminals authorized under this chapter.
(2) The legislature further declares that electronic scratch
tickets are a legal form of gambling in the state of Washington. This
chapter is intended to grant specific authority to the Washington state
lottery commission to regulate electronic scratch ticket gambling by
house-banked card rooms.
(3) The legislature finds this chapter will assist in job creation
and retention. The legislature further finds that this chapter is
necessary for the immediate preservation of public health and safety
and the support of state government and its existing public
institutions as it is intended to generate revenue appropriated in the
2011-2013 biennium. Programs dependent upon the additional revenue
forecasted under this chapter provide for the health, education, and
welfare of the citizens of the state of Washington.
(4) The legislature finds that agencies adopting rules under this
act should do so in an expedited manner to generate funds to the state
as soon as practicable.
NEW SECTION. Sec. 3 The definitions in this section apply
throughout this chapter unless the context clearly requires otherwise.
(1) "Central accounting and auditing computer system" means a
computer system owned and operated by the Washington state lottery
commission that provides a secure means to monitor, receive, store, and
access data, and record critical functions and activities of the player
terminals.
(2) "Central computer" has the same meaning as provided in Appendix
X2 to the state-tribal gaming compact, as it exists on the effective
date of this section or as hereinafter amended.
(3) "Electronic scratch ticket" has the same meaning as provided in
Appendix X2 to the state-tribal gaming compact, as it exists on the
effective date of this section or as hereinafter amended.
(4) "Electronic scratch ticket game" has the same meaning as
provided in Appendix X2 to the state-tribal gaming compact, as it
exists on the effective date of this section or as hereinafter amended.
(5) "Electronic scratch ticket game set" has the same meaning as
provided in Appendix X2 to the state-tribal gaming compact, as it
exists on the effective date of this section or as hereinafter amended.
(6) "Electronic scratch ticket game subset" has the same meaning as
provided in Appendix X2 to the state-tribal gaming compact, as it
exists on the effective date of this section or as hereinafter amended.
(7) "House-banked card room" means the holder of a house-banked
card room license from the gambling commission.
(8) "Manufacturing computer" has the same meaning as provided in
Appendix X2 to the state-tribal gaming compact as it exists on the
effective date of this section or as hereinafter amended.
(9) "Net win" means gross wagers received from gambling activities
minus the:
(a) Amount paid to players for winning wagers; and
(b) Accrual of prizes for progressive jackpot contests; and
(c) Repayment of amounts used to seed guaranteed progressive
jackpot prizes.
(10) "Player terminals" has the same meaning as provided in
Appendix X2 to the state-tribal gaming compact, as it exists on the
effective date of this section or as hereinafter amended.
NEW SECTION. Sec. 4 (1)(a) All electronic scratch ticket
systems, games, and player terminals approved for operation by the
gambling commission as a tribal lottery system under tribal-state class
III gaming compacts in the state pursuant to RCW 9.46.360 may be put
into use by house-banked card rooms operating at least five card games
under this chapter to the same extent and in the same manner as
electronic scratch tickets are regulated under the tribal-state gaming
compact. All computers and player terminals and the combination and
components thereof in each system must conform to this chapter and the
rules adopted under this chapter.
(b) Electronic scratch ticket systems, games, and player terminals
approved for operation by the gambling commission under the tribal-state class III gaming compact in the state may be put to use by
house-banked card rooms meeting the requirements of this act after
approval is obtained from the Washington state lottery commission under
the requirements of this chapter and rules adopted under this chapter.
(2) The electronic scratch ticket game consists of a finite number
of electronic scratch tickets, a certain number of which, if drawn,
entitle a player to prize awards at various levels. The scratch
tickets are designed from a template in conformity with this chapter
and are created in game sets on a manufacturing computer from which
scratch tickets are randomly selected and placed into scratch ticket
subsets. Each game set has a predetermined number of winners and
values and is designed so as to assure players of an at least seventy-five percent payback of the amounts paid in the aggregate for all
tickets in the set. As a game set's tickets are placed into subsets,
the pool of tickets available from that game set for placement into
subsets diminishes, until each ticket in the game set has been placed
into a subset.
(3)(a) Electronic scratch ticket game subsets are transmitted to
the central computer, where they are stored until dispensed
electronically on demand to player terminals. Scratch tickets are
electronically dispensed from the central computer in the order within
each subset in which the tickets were received. Players compete
against each other to draw winning tickets. As subsets are used, they
are replaced by additional subsets that have been created and delivered
to the central computer in the same manner, until the game set has been
depleted, ending that particular game. Different games based on
different game sets may be offered simultaneously through the central
computer.
(b) Each game set must be consistent with the provisions of
Appendix X2 as adopted under the most current tribal-state class III
gaming compact in Washington state or as hereafter amended and meet the
following minimum requirements:
(i) Each game set must be made up of a finite number, that cannot
be limited by rule, of electronic scratch tickets;
(ii)(A) All scratch tickets in a particular game set must be of the
same purchase price, but a single ticket may offer more than one
opportunity to win a prize on the same wager.
(B) As of the effective date of this section, all scratch tickets
in a particular game set must be set at a price not to exceed five
dollars; however, the Washington state lottery commission must adjust
the dollar threshold in this subsection (3)(b)(ii) annually based upon
changes in the consumer price index during that period. For the
purposes of this subsection "consumer price index" means, for any
calendar year, that year's annual average consumer price index, for
Washington state, for wage earners and clerical workers, all items,
compiled by the bureau of labor and statistics, United States
department of labor. If the bureau of labor and statistics develops
more than one consumer price index for areas within the state, the
index covering the greatest number of people, covering areas
exclusively within the boundaries of the state, and including all items
must be used for the adjustments for inflation in this section. The
Washington state lottery commission must calculate the new dollar
threshold and transmit it to the office of the code reviser for
publication in the Washington State Register at least one month before
the new dollar threshold is to take effect;
(iii) The payout percentage for the entire game set must be no less
than seventy-five percent of the total purchase price of all tickets in
the set combined;
(iv) Each game set must be assigned a unique serial number; and
(v) Each ticket must have a specific outcome and prize level
associated with it.
(4) For the purpose of assuring the integrity, security, honesty,
and fairness in the operation and administration of electronic scratch
ticket games, a central accounting and auditing computer system must
monitor the electronic scratch ticket games and their related systems.
This central accounting and auditing computer system must be:
(a) Controlled, owned, and operated by the Washington state lottery
commission; and
(b) Connected to electronic scratch ticket systems operated by
licensees to communicate a licensee's electronic scratch ticket game
system information.
(5) The maximum number of electronic scratch ticket game player
terminals is limited to two hundred per licensed location with a
maximum number of terminals for all licensed locations limited to seven
thousand eight hundred seventy-five.
(6) Video and/or electronic surveillance is required by electronic
scratch ticket game licensees.
(7) The Washington state lottery commission must adopt rules
defining the remaining electronic scratch ticket system operating
requirements including rules regarding internal controls, software
auditing, player terminals, the standards for random number generators,
accounting, security, reporting, storage requirements, testing, and
auditing of system operations that must be consistent with the
provisions of Appendix X2 as adopted under the most current tribal-
state class III gaming compact in Washington state or as hereafter
amended.
NEW SECTION. Sec. 5 (1) Play of all electronic scratch ticket
games is restricted to players who are twenty-one years of age or
older.
(2) Placement of player terminals for electronic scratch ticket
games are allowed only:
(a) On premises and in areas of premises meeting the liquor control
board's requirements for barrier and signage as contained in WAC 314-02-025(3) as it exists on the effective date of this section; and
(b)(i) On premises located within a facility that is in its
entirety designated as having entry restricted to only persons age
twenty-one or older; or
(ii) In the designated areas of the premises that have entry
restricted to only persons age twenty-one or older, if such premises
are located within a facility that is not restricted in its entirety to
persons age twenty-one or older.
(3) Duties of employees who are eighteen, nineteen, and twenty must
comply with the provisions of chapter 66.44 RCW and the rules adopted
by the liquor control board under that chapter.
NEW SECTION. Sec. 6 (1) In order to be eligible for an
electronic scratch ticket license, the Washington state lottery
commission must require the applicant to demonstrate that the applicant
is:
(a) A house-banked card room licensee who is operating at least
five card games on the effective date of this section; or
(b) A house-banked card room licensee who obtained the license
after the effective date of this section and who has operated at least
five card games for at least five years after the effective date of
this section.
(2) Electronic scratch ticket licensees may lease and/or revenue-share with persons or entities, including route operators,
distributors, and manufacturers licensed by the Washington state
lottery commission to engage in such activity for the purposes of
obtaining and operating scratch ticket devices. Contracts between a
route operator and a licensee must be in writing, signed by the
parties, and submitted to the Washington state lottery commission
before the installation of the leased or revenue-shared player
terminals.
(3)(a) Except as provided in (b) of this subsection, nothing in
this section prohibits the sale of a house-banked social card game
business operating electronic scratch ticket games, sale of nongambling
assets of a house-banked social card game business, or change of
location of a house-banked social card game business.
(b) If a house-banked social card game business ceases to operate,
the following are prohibited:
(i) Sale of the business, other than a sale in connection with a
change of location outside the jurisdiction; and
(ii) A change of location of the business within the jurisdiction.
(c) For the purposes of this subsection "ceases to operate" means
a business does not owe any taxes imposed under RCW 9.46.110 for twelve
consecutive months.
NEW SECTION. Sec. 7 Individual licensees may electronically
interconnect the player terminals on separate licensed locations.
However, capacity for remote access or control of any player terminal
from a remote device without written Washington state lottery
commission approval is not allowed. All communications to and from the
player terminals that constitute a wide area network system must be
encrypted for security purposes and coverage and must comply with the
encryption scheme of the electronic accounting system.
Sec. 8 RCW 67.70.040 and 2006 c 290 s 3 are each amended to read
as follows:
The commission ((shall have)) has the power((, and it shall be
its)) and duty:
(1) To adopt rules governing the establishment and operation of a
state lottery as it deems necessary and desirable in order that such a
lottery be initiated at the earliest feasible and practicable time, and
in order that such lottery produce the maximum amount of net revenues
for the state consonant with the dignity of the state and the general
welfare of the people. Such rules ((shall)) include, but ((shall)) are
not ((be)) limited to, the following:
(a) The type of lottery to be conducted which may include
electronic scratch tickets as defined in section 2 of this act, and the
selling of tickets or shares, but such tickets or shares may not be
sold over the internet. The use of electronic or mechanical devices or
video terminals which allow for individual play against such devices or
terminals ((shall be)) is prohibited. An affirmative vote of sixty
percent of both houses of the legislature is required before offering
any game allowing or requiring a player to become eligible for a prize
or to otherwise play any portion of the game by interacting with any
device or terminal involving digital, video, or other electronic
representations of any game of chance, including scratch tickets, pull-tabs, bingo, poker or other cards, dice, roulette, keno, or slot
machines. Approval of the legislature ((shall be)) is required before
entering any agreement with other state lotteries to conduct shared
games;
(b) The price, or prices, of tickets or shares in the lottery;
(c) The numbers and sizes of the prizes on the winning tickets or
shares;
(d) The manner of selecting the winning tickets or shares, except
as limited by (a) of this subsection;
(e) The manner and time of payment of prizes to the holder of
winning tickets or shares which, at the director's option, may be paid
in lump sum amounts or installments over a period of years;
(f) The frequency of the drawings or selections of winning tickets
or shares. Approval of the legislature is required before conducting
any online game in which the drawing or selection of winning tickets
occurs more frequently than once every twenty-four hours;
(g) Without limit as to number, the type or types of locations at
which tickets or shares may be sold;
(h) The method to be used in selling tickets or shares, except as
limited by (a) of this subsection;
(i) The licensing of agents to sell or distribute tickets or
shares, except that a person under the age of eighteen ((shall)) may
not be licensed as an agent;
(j) The manner and amount of compensation, if any, to be paid
licensed sales agents necessary to provide for the adequate
availability of tickets or shares to prospective buyers and for the
convenience of the public;
(k) The apportionment of the total revenues accruing from the sale
of lottery tickets or shares and from all other sources among: (i) The
payment of prizes to the holders of winning tickets or shares, which
((shall)) may not be less than forty-five percent of the gross annual
revenue from such lottery, (ii) transfers to the lottery administrative
account created by RCW 67.70.260, and (iii) transfer to the state's
general fund. Transfers to the state general fund ((shall)) must be
made in compliance with RCW 43.01.050;
(l) Such other matters necessary or desirable for the efficient and
economical operation and administration of the lottery and for the
convenience of the purchasers of tickets or shares and the holders of
winning tickets or shares.
(2) To ensure that in each place authorized to sell lottery tickets
or shares, on the back of the ticket or share, and in any advertising
or promotion there ((shall)) must be conspicuously displayed an
estimate of the probability of purchasing a winning ticket.
(3) To amend, repeal, or supplement any such rules from time to
time as it deems necessary or desirable.
(4) To advise and make recommendations to the director for the
operation and administration of the lottery.
Sec. 9 RCW 67.70.330 and 1987 c 511 s 15 are each amended to read
as follows:
(1) The director ((shall have)) has the power to enforce this
chapter and the penal laws of this state relating to the conduct of or
participation in lottery activities and the manufacturing, importation,
transportation, distribution, possession, and sale of equipment or
paraphernalia used or for use in connection therewith. The director,
the deputy director, assistant directors, and each of the director's
investigators, enforcement officers, and inspectors ((shall)) have the
power to enforce this chapter and the penal laws of this state relating
to the conduct of or participation in lottery activities and the
manufacturing, importation, transportation, distribution, possession,
and sale of equipment or paraphernalia used or for use in connection
therewith. They ((shall)) have the power and authority to apply for
and execute all warrants and serve process of law issued by the courts
in enforcing the penal provisions of this chapter and the penal laws of
this state relating to the conduct of or participation in lottery
activities and the manufacturing, importation, transportation,
distribution, possession, and sale of equipment or paraphernalia used
or for use in connection therewith. They ((shall)) have the power to
arrest without a warrant, any person or persons found in the act of
violating any of the penal provisions of this chapter and the penal
laws of this state relating to the conduct of or participation in
lottery activities and the manufacturing, importation, transportation,
distribution, possession, and sale of equipment or paraphernalia used
or for use in connection therewith. To the extent set forth in this
section, the office of the director ((shall be)) is a law enforcement
agency of this state with the power to investigate for violations of
and to enforce the provisions of this chapter and to obtain information
from and provide information to all other law enforcement agencies.
(2)(a) The gambling commission has primary responsibility with
regard to enforcement of chapter 67.--- RCW (the new chapter created in
section 13 of this act), relating to the conduct of and participation
in electronic scratch ticket games.
(b) The director has sole responsibility with regard to licensing
and rule making under chapter 67.--- RCW (the new chapter created in
section 13 of this act).
Sec. 10 RCW 9.46.291 and 1982 2nd ex.s. c 7 s 39 are each amended
to read as follows:
(1) Except as specified by subsection (2) of this section, the
provisions of this chapter ((shall)) do not apply to the conducting,
operating, participating, or selling or purchasing of tickets or shares
in the "lottery" or "state lottery" as defined in RCW 67.70.010 when
such conducting, operating, participating, or selling or purchasing is
in conformity to the provisions of chapter 67.70 RCW and to the rules
adopted thereunder.
(2) The commission must enforce compliance with state law with
regard to the conduct of and participation in electronic scratch ticket
games as defined by chapter 67.--- RCW (the new chapter created in
section 13 of this act) by house-banked card rooms.
NEW SECTION. Sec. 11 (1) The Washington state lottery commission
must develop a compensation system for house-banked card rooms from the
net win of electronic scratch ticket games. The remaining net win not
retained by the Washington state lottery commission under subsection
(2) of this section must be returned to the house-banked card room as
agent compensation.
(2) The Washington state lottery commission must retain thirty-five
percent of the net win from electronic scratch ticket games and deposit
the proceeds in the gaming revenue account hereby created in the
custody of the state treasurer. Expenditures from the account must be
used as specified in this section. The legislature may not appropriate
funds from the account inconsistent with this section unless approved
by an affirmative vote of at least sixty percent of the members of each
house of the legislature.
(3) The money in the gaming revenue account must be expended as
follows:
(a) Up to two percent of the proceeds may be used to reimburse the
state gambling commission and the Washington state lottery commission
for their reasonable expenses for administration and enforcement of
chapter 67.--- RCW (the new chapter created in section 13 of this act);
(b) One-half of one percent of the proceeds must be used only for
problem gambling prevention, youth education, public awareness,
training, help-line services, and treatment;
(c) Five percent of the proceeds must be distributed proportionally
to local governments in which a house-banked card room is located,
based on the total net win attributable to any card room within such
local government's boundaries; and
(d) The remaining proceeds must be spent as follows:
(i) Fifty percent for K-12 education;
(ii) Thirty percent for health and human service programs; and
(iii) Twenty percent for public safety programs.
NEW SECTION. Sec. 12 The Washington state gambling commission
and the Washington state lottery commission must adopt rules and
policies to fully implement the provisions of this act as expeditiously
as possible.
NEW SECTION. Sec. 13 Sections 1 through 7 and 11 of this act
constitute a new chapter in Title
NEW SECTION. Sec. 14 This act is necessary for the immediate
preservation of the public peace, health, or safety, or support of the
state government and its existing public institutions, and takes effect
immediately.