AN ACT Relating to promotional contests of chance; amending RCW 9.46.0355, 9.46.070, 9.46.075, 9.46.150, 9.46.160, and 9.46.300; adding a new section to chapter 9.46 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 9.46 RCW to read as follows:

"Promotional contest of chance" means a scheme in which a person, association, or organization may distribute money or property among individuals who have agreed to participate in a contest of chance equally with other participants, providing participation is limited to the allowable methods of entry authorized under the provisions of RCW 9.46.0355.

Sec. 2. Section 35, chapter 4, Laws of 1987 andRCW 9.46.0355 are each amended to read as follows:

(1) The legislature hereby authorizes promotional contests of chance conducted in this state, or partially in this state((~~, in which a person is required, in order to participate in the contest equally with other participants, to~~)): PROVIDED, That participation in such contests shall be limited to participants who do only one or more of the following:

(a) Listen to or watch a television or radio program or subscribe to a cable television service;

(b) Fill out and return a coupon or entry blank or facsimile which is received through the mail, or published in a bona fide newspaper or magazine, or in a program sold in conjunction with and at a regularly scheduled sporting event, or the purchase of such newspaper, magazine, or program;

(c) Send a coupon ((or)), entry blank, or stampted self-addressed envelope by United States mail to a designated address;

(d) Visit a business establishment to obtain or deposit a coupon or entry blank;

(e) Merely register((~~, without the purchase of goods or services~~)) or receive an entry with the purchase of goods or services: PROVIDED, That such purchase is not a requirement for entry;

(f) Expend time, thought, attention, and energy in perusing promotional material;

(g) Place or answer a telephone call in a prescribed manner or otherwise make a prescribed response, guess, or answer;

(h) Furnish the container of a product as packaged by the manufacturer, or a particular portion thereof, but only if furnishing a plain piece of paper or card with the name of the manufacturer or product handwritten thereon is acceptable in lieu thereof; ((or))

(i) Pay an admission fee to gain admission to any bona fide exposition, fair, or show for the display or promotion of goods, wares, or services, or any agricultural fair authorized under chapter 15.76 or 36.37 RCW, if (i) the scheme is conducted for promotional or advertising purposes, not including the promotion or advertisement of the scheme itself; and (ii) the person or organization conducting the scheme receives no portion of the admission fee either directly or indirectly and receives no other money for conducting the scheme either directly or indirectly, other than what might be received indirectly as a result of the success of the promotional or advertising aspect of the scheme; or

(j) Pay an admission fee to gain admission to a regularly scheduled sporting event: PROVIDED, That the admission fee does not reflect the costs incurred in sponsoring the promotional contest of chance.

(2) Notwithstanding any other provision of this section, where any contest of chance is conducted by or on behalf of in-state retail grocery outlets in connection with business promotions, no such in-state retail grocery outlet may conduct more than one such contest of chance during each calendar year and the period of the contest of chance and its promotion shall not extend for more than fourteen consecutive days: PROVIDED, That if the sponsoring organization has more than one outlet in the state, such contests of chance must be held in all such outlets at the same time except that a sponsoring organization with more than one outlet may conduct a separate contest of chance in connection with the initial opening of any such outlet: PROVIDED FURTHER, That such contests of chance may be conducted on an ongoing basis if the prizes awarded or accumulated to award do not exceed thirty dollars a day or five thousand dollars a year in the aggregate for all outlets of the sponsoring organizations. Nothing in this subsection applies to contests of chance conducted by or in connection with business promotions by manufacturers.

For purposes of this chapter, in-state retail grocery outlet includes any establishment or recognized grocery department thereof in which more than twenty percent of the gross receipts result from the sale of food items for off-premises preparation. These food items include such products as meat, poultry, fish, bread, cereals, vegetables, fruit, dairy products, coffee, tea, cocoa, carbonated and uncarbonated beverages, candy, condiments, spices, and canned goods, and like products; but not including prepared hot foods or hot food products ready for immediate consumption.

(3) For the purposes of this chapter, radio and television broadcasting is hereby declared to be preempted by applicable federal statutes and the applicable rules of the federal communications commission. Broadcast programming, including advertising for others and station promotion, that complies with federal statutes and regulations is hereby authorized.

(4) Pursuant to RCW 9.46.070(20), promotional contests of chance, where the total retail value of the prizes offered is in excess of five thousand dollars, shall be registered with the commission, at least thirty days before commencement of such contests.

(5) Any person who violates this subsection shall be guilty of a gross misdemeanor and upon conviction shall be punished by imprisonment in the county jail for not more than one year or by a fine of not more than five thousand dollars.

Sec. 3. Section 3, chapter 139, Laws of 1981 as amended by section 38, chapter 4, Laws of 1987 andRCW 9.46.070 are each amended to read as follows:

The commission shall have the following powers and duties:

(1) To authorize and issue licenses for a period not to exceed one year to bona fide charitable or nonprofit organizations approved by the commission meeting the requirements of this chapter and any rules and regulations adopted pursuant thereto permitting said organizations to conduct bingo games, raffles, amusement games, and social card games, to utilize punch boards and pull-tabs in accordance with the provisions of this chapter and any rules and regulations adopted pursuant thereto and to revoke or suspend said licenses for violation of any provisions of this chapter or any rules and regulations adopted pursuant thereto: PROVIDED, That the commission shall not deny a license to an otherwise qualified applicant in an effort to limit the number of licenses to be issued: PROVIDED FURTHER, That the commission or director shall not issue, deny, suspend or revoke any license because of considerations of race, sex, creed, color, or national origin: AND PROVIDED FURTHER, That the commission may authorize the director to temporarily issue or suspend licenses subject to final action by the commission;

(2) To authorize and issue licenses for a period not to exceed one year to any person, association, or organization operating a business primarily engaged in the selling of items of food or drink for consumption on the premises, approved by the commission meeting the requirements of this chapter and any rules and regulations adopted pursuant thereto permitting said person, association, or organization to utilize punch boards and pull-tabs and to conduct social card games as a commercial stimulant in accordance with the provisions of this chapter and any rules and regulations adopted pursuant thereto and to revoke or suspend said licenses for violation of any provisions of this chapter and any rules and regulations adopted pursuant thereto: PROVIDED, That the commission shall not deny a license to an otherwise qualified applicant in an effort to limit the number of licenses to be issued: PROVIDED FURTHER, That the commission may authorize the director to temporarily issue or suspend licenses subject to final action by the commission;

(3) To authorize and issue licenses for a period not to exceed one year to any person, association, or organization approved by the commission meeting the requirements of this chapter and meeting the requirements of any rules and regulations adopted by the commission pursuant to this chapter as now or hereafter amended, permitting said person, association, or organization to conduct or operate amusement games in such manner and at such locations as the commission may determine;

(4) To authorize, require, and issue, for a period not to exceed one year, such licenses as the commission may by rule provide, to any person, association, or organization to engage in the selling, distributing, or otherwise supplying or in the manufacturing of devices for use within this state for those activities authorized by this chapter;

(5) To establish a schedule of ((~~annual license~~)) fees for carrying on specific gambling activities upon the premises, and for such other activities as may be licensed or registered by the commission, which fees shall provide to the commission not less than an amount of money adequate to cover all costs incurred by the commission relative to licensing and registration under this chapter and the enforcement by the commission of the provisions of this chapter and rules and regulations adopted pursuant thereto: PROVIDED, That all licensing or registration fees shall be submitted with an application therefor and such portion of said fee as the commission may determine, based upon its cost of processing and investigation, shall be retained by the commission upon the withdrawal or denial of any such license or registration application as its reasonable expense for processing the application and investigation into the granting thereof: PROVIDED FURTHER, That if in a particular case the basic license or registration fee established by the commission for a particular class of license is less than the commission's actual expenses to investigate that particular application, the commission may at any time charge to that applicant such additional fees as are necessary to pay the commission for those costs. The commission may decline to proceed with its investigation and no license or approval shall be issued until the commission has been fully paid therefor by the applicant: AND PROVIDED FURTHER, That the commission may establish fees for the furnishing by it to licensees of identification stamps to be affixed to such devices and equipment as required by the commission and for such other special services or programs required or offered by the commission, the amount of each of these fees to be not less than is adequate to offset the cost to the commission of the stamps and of administering their dispersal to licensees or the cost of administering such other special services, requirements or programs;

(6) To prescribe the manner and method of payment of taxes, fees and penalties to be paid to or collected by the commission;

(7) To require that applications for all licenses and registrations contain such information as may be required by the commission: PROVIDED, That all persons (a) having a managerial or ownership interest in any gambling activity, or the building in which any gambling activity occurs, or the equipment to be used for any gambling activity, or (b) participating as an employee in the operation of any gambling activity, shall be listed on the application for the license and the applicant shall certify on the application, under oath, that the persons named on the application are all of the persons known to have an interest in any gambling activity, building, or equipment by the person making such application: PROVIDED FURTHER, That the commission may require fingerprinting and background checks on any persons seeking licenses under this chapter or of any person holding an interest in any gambling activity, building, or equipment to be used therefor, or of any person participating as an employee in the operation of any gambling activity;

(8) To require that any license holder maintain records as directed by the commission and submit such reports as the commission may deem necessary;

(9) To require that all income from bingo games, raffles, and amusement games be recorded and reported as established by rule or regulation of the commission to the extent deemed necessary by considering the scope and character of the gambling activity in such a manner that will disclose gross income from any gambling activity, amounts received from each player, the nature and value of prizes, and the fact of distributions of such prizes to the winners thereof;

(10) To regulate and establish maximum limitations on income derived from bingo: PROVIDED, That in establishing limitations pursuant to this subsection the commission shall take into account (i) the nature, character, and scope of the activities of the licensee; (ii) the source of all other income of the licensee; and (iii) the percentage or extent to which income derived from bingo is used for charitable, as distinguished from nonprofit, purposes;

(11) To regulate and establish the type and scope of and manner of conducting the gambling activities authorized by this chapter, including but not limited to, the extent of wager, money, or other thing of value which may be wagered or contributed or won by a player in any such activities;

(12) To regulate the collection of and the accounting for the fee which may be imposed by an organization, corporation or person licensed to conduct a social card game on a person desiring to become a player in a social card game in accordance with RCW 9.46.0281(4);

(13) To cooperate with and secure the cooperation of county, city, and other local or state agencies in investigating any matter within the scope of its duties and responsibilities;

(14) In accordance with RCW 9.46.080, to adopt such rules and regulations as are deemed necessary to carry out the purposes and provisions of this chapter. All rules and regulations shall be adopted pursuant to the administrative procedure act, chapter 34.04 RCW;

(15) To set forth for the perusal of counties, city-counties, cities and towns, model ordinances by which any legislative authority thereof may enter into the taxing of any gambling activity authorized by this chapter;

(16) To establish and regulate a maximum limit on salaries or wages which may be paid to persons employed in connection with activities conducted by bona fide charitable or nonprofit organizations and authorized by this chapter, where payment of such persons is allowed, and to regulate and establish maximum limits for other expenses in connection with such authorized activities, including but not limited to rent or lease payments.

In establishing these maximum limits the commission shall take into account the amount of income received, or expected to be received, from the class of activities to which the limits will apply and the amount of money the games could generate for authorized charitable or nonprofit purposes absent such expenses. The commission may also take into account, in its discretion, other factors, including but not limited to, the local prevailing wage scale and whether charitable purposes are benefited by the activities;

(17) To authorize, require, and issue for a period not to exceed one year such licenses or permits, for which the commission may by rule provide, to any person to work for any operator of any gambling activity authorized by this chapter in connection with that activity, or any manufacturer, supplier, or distributor of devices for those activities in connection with such business. The commission shall not require that persons working solely as volunteers in an authorized activity conducted by a bona fide charitable or bona fide nonprofit organization, who receive no compensation of any kind for any purpose from that organization, and who have no managerial or supervisory responsibility in connection with that activity, be licensed to do such work. The commission may require that licensees employing such unlicensed volunteers submit to the commission periodically a list of the names, addresses, and dates of birth of the volunteers. If any volunteer is not approved by the commission, the commission may require that the licensee not allow that person to work in connection with the licensed activity;

(18) To publish and make available at the office of the commission or elsewhere to anyone requesting it a list of the commission licensees, including the name, address, type of license, and license number of each licensee;

(19) To establish guidelines for determining what constitutes active membership in bona fide nonprofit or charitable organizations for the purposes of this chapter; ((~~and~~))

(20) To register every person, association, or organization conducting promotional contests of chance in accordance with RCW 9.46.0355 where the total retail value of the prizes offered exceeds five thousand dollars; and

(21) To perform all other matters and things necessary to carry out the purposes and provisions of this chapter.

Sec. 4. Section 12, chapter 166, Laws of 1975 1st ex. sess. as amended by section 4, chapter 139, Laws of 1981 andRCW 9.46.075 are each amended to read as follows:

The commission may deny an application, or suspend or revoke any license, registration, or permit issued by it, for any reason or reasons, it deems to be in the public interest. These reasons shall include, but not be limited to, cases wherein the applicant or licensee, or any person with any interest therein:

(1) Has violated, failed or refused to comply with the provisions, requirements, conditions, limitations or duties imposed by chapter 9.46 RCW and any amendments thereto, or any rules adopted by the commission pursuant thereto, or when a violation of any provision of chapter 9.46 RCW, or any commission rule, has occurred upon any premises occupied or operated by any such person or over which he or she has substantial control;

(2) Knowingly causes, aids, abets, or conspires with another to cause, any person to violate any of the laws of this state or the rules of the commission;

(3) Has obtained a license or permit by fraud, misrepresentation, concealment, or through inadvertence or mistake;

(4) Has been convicted of, or forfeited bond upon a charge of, or pleaded guilty to, forgery, larceny, extortion, conspiracy to defraud, wilful failure to make required payments or reports to a governmental agency at any level, or filing false reports therewith, or of any similar offense or offenses, or of bribing or otherwise unlawfully influencing a public official or employee of any state or the United States, or of any crime, whether a felony or misdemeanor involving any gambling activity or physical harm to individuals or involving moral turpitude;

(5) Denies the commission or its authorized representatives, including authorized local law enforcement agencies, access to any place where a licensed activity is conducted or who fails promptly to produce for inspection or audit any book, record, document or item required by law or commission rule;

(6) Shall fail to display its license on the premises where the licensed activity is conducted at all times during the operation of the licensed activity;

(7) Makes a misrepresentation of, or fails to disclose, a material fact to the commission;

(8) Fails to prove, by clear and convincing evidence, that he, she or it is qualified in accordance with the provisions of this chapter;

(9) Is subject to current prosecution or pending charges, or a conviction which is under appeal, for any of the offenses included under subsection (4) of this section: PROVIDED, That at the request of an applicant for an original license, the commission may defer decision upon the application during the pendency of such prosecution or appeal;

(10) Has pursued or is pursuing economic gain in an occupational manner or context which is in violation of the criminal or civil public policy of this state if such pursuit creates probable cause to believe that the participation of such person in gambling or related activities would be inimical to the proper operation of an authorized gambling or related activity in this state. For the purposes of this section, occupational manner or context shall be defined as the systematic planning, administration, management or execution of an activity for financial gain;

(11) Is a career offender or a member of a career offender cartel or an associate of a career offender or career offender cartel in such a manner which creates probable cause to believe that the association is of such a nature as to be inimical to the policy of this chapter or to the proper operation of the authorized gambling or related activities in this state. For the purposes of this section, career offender shall be defined as any person whose behavior is pursued in an occupational manner or context for the purpose of economic gain utilizing such methods as are deemed criminal violations of the public policy of this state. A career offender cartel shall be defined as any group of persons who operate together as career offenders.

For the purpose of reviewing any application for a license and for considering the denial, suspension or revocation of any license the gambling commission may consider any prior criminal conduct of the applicant or licensee and the provisions of RCW 9.95.240 and of chapter 9.96A RCW shall not apply to such cases.

Sec. 5. Section 15, chapter 218, Laws of 1973 1st ex. sess. andRCW 9.46.150 are each amended to read as follows:

(1) Any activity conducted in violation of any provision of this chapter may be enjoined in an action commenced by the commission through the attorney general or by the prosecuting attorney or legal counsel of any city or town in which the prohibited activity may occur.

(2) When a violation of any provision of this chapter or any rule or regulation adopted pursuant hereto has occurred on any property or premises for which one or more licenses, registrations, permits, or certificates issued by this state, or any political subdivision or public agency thereof are in effect, all such licenses, registrations, permits and certificates may be voided and no license, registration, permit, or certificate so voided shall be issued or reissued for such property or premises for a period of up to sixty days thereafter.

Sec. 6. Section 16, chapter 218, Laws of 1973 1st ex. sess. as amended by section 9, chapter 166, Laws of 1975 1st ex. sess. andRCW 9.46.160 are each amended to read as follows:

Any person who conducts any activity for which a license is required by this chapter, or by rule of the commission, without the required license or registration issued by the commission shall be guilty of a felony and upon conviction shall be punished by imprisonment for not more than five years or by a fine of not more than one hundred thousand dollars, or both. If any corporation conducts any activity for which a license or registration is required by this chapter, or by rule of the commission, without the required license or registration issued by the commission, it may be punished by forfeiture of its corporate charter, in addition to the other penalties set forth in this section.

Sec. 7. Section 17, chapter 326, Laws of 1977 ex. sess. andRCW 9.46.300 are each amended to read as follows:

All applications for licenses or registrations made to the commission, with the exception of any portions of the applications describing the arrest or conviction record of any person, and all reports required by the commission to be filed by its licensees on a periodic basis concerning the operation of the licensed activity or concerning any organization, association, or business in connection with which a licensed or registered activity is operated, in the commission files, shall be open to public inspection at the commission's offices upon a prior written request of the commission. The staff of the commission may decline to allow an inspection until such time as the inspection will not unduly interfere with the other duties of the staff. The commission may charge the person making a request for an inspection an amount necessary to offset the costs to the commission of providing the inspection and copies of any requested documents.