Preproposal statement of inquiry was filed as WSR [05-06-026] on February 23, 2005.

     Title of Rule and Other Identifying Information: Chapter 315-38 WAC, Mega Millions, with the states of California and Texas joining the multi-state Mega Millions game, the matrix, prize structure and the overall odds of winning a Mega Millions' prize will change.

     Hearing Location(s): Red Lion at the Park, West 303 North River Drive, Spokane, WA 98201, on May 12, 2005, at 10:00 a.m.

     Date of Intended Adoption: May 12, 2005.

     Submit Written Comments to: Ceil Buddeke, P.O. Box 43025, Olympia, WA 98504-3025, e-mail Cbuddeke@walottery.com, fax (360) 586-6586 by May 10, 2005.

     Assistance for Persons with Disabilities: Contact Joan Reuell by May 10, 2005, TTY (360) 586-0933.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Changes to the Mega Millions' rules allows the addition of the states of California and Texas joining the multi-state game, matrix changes from five (5) winning numbers from a field numbered one (1) to a fifty-two (52) and one winning number from a second field numbered one (1) through fifty-two (52) changed to five (5) winning numbers from a field numbered one (1) to fifty-six (56) and one winning number from a second field numbered one (1) to forty-six (46), prize structure change and the overall odds of winning a Mega Millions' prize will change.

     Reasons Supporting Proposal: The substantive changes to an [adding] additional states to the multi-state game, matrix change, prize structure change and the overall odds of winning change will not be reflected accurately in the current rules as they are now.

     Statutory Authority for Adoption: RCW 67.70.040.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Ceil Buddeke, governmental.

     Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Ceil Buddeke, 814 4th Avenue East, Olympia, WA 98507, (360) 664-4833.

     No small business economic impact statement has been prepared under chapter 19.85 RCW.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Ceil Buddeke, 814 4th Avenue East, Olympia, WA 98507, phone (360) 664-4833, fax (360) 586-6586, e-mail Cbuddeke@walottery.com.

April 1, 2005

Ceil Buddeke

Rules Coordinator

OTS-8014.1

AMENDATORY SECTION(Amending WSR 02-15-122, filed 7/19/02, effective 8/19/02)

WAC 315-38-010   General description.   Mega Millions is a game conducted by the Washington state lottery, pursuant to chapter 67.70 RCW and Title 315 WAC and pursuant to the requirements of the multistate agreement, Mega Millions official game rules, Mega Millions finance and operation procedures and Mega Millions line drawing procedures. The Mega Millions game awards prizes to ticket holders matching specified combinations of numbers randomly selected in regularly scheduled drawings. Chapter 315-38 WAC applies only to Mega Millions tickets purchased and redeemed in Washington state. Players who purchase Mega Millions tickets in other party lottery states must comply with the rules of the party lottery state in which the ticket was purchased.

[Statutory Authority: RCW 67.70.040. 02-15-122, § 315-38-010, filed 7/19/02, effective 8/19/02.]

     (1) Annual/annuitized/annuity option(( - )): The manner in which the Mega Millions jackpot prize may be paid in twenty-six annual installments. In order to allow for the efficient purchase of securities, the first installment may be of a different value from the second through the twenty-sixth installment. The second through the twenty-sixth installments shall be of equal value.

     (2) Authorized claim center(( - )): Any Mega Millions agent or retailer, or party lottery office, in the state where the winning official Mega Millions ticket was purchased.

     (3) Cash option(( - )): The manner in which the Mega Millions jackpot prize may be paid in a single payment. The cash option amount shall be the proceeds of the sale of investments purchased to fund the particular winner's share of the annuitized jackpot prize. At the director's discretion, an initial payment of a portion of the cash option prize may be paid to the winner at the time the prize is claimed.

     (4) Claimant: Any person or entity submitting a claim form within the required time period to collect a prize for an official Mega Millions ticket. A claimant may be the purchaser, the person or entity named on a signed official Mega Millions ticket, the bearer of an unsigned official Mega Millions ticket, or any other person or entity who may seek entitlement to a Mega Millions prize payment in accordance with the Mega Millions rules and party lottery governing laws, policies and rules. No claimant may assert rights different from the rights acquired by the original purchaser at the time of purchase.

     (5) Director(s): The chief officers of the party lotteries or any other persons to whom the directors' authority is lawfully delegated.

     (6) Multistate agreement: The amended and restated multistate agreement regarding the Mega Millions game, or any subsequent amended agreement, signed by the party lotteries and including the Mega Millions official game rules, finance and operations procedures for Mega Millions, and on-line drawing procedures for Mega Millions.

     (7) Official Mega Millions ticket: A game ticket, produced on official paper stock by a Mega Millions agent or retailer in an authorized manner, bearing player or computer selected numbers, game name, drawing date, amount of wager, and validation data.

     (8) Party lottery or lotteries: One or more of the state lotteries established and operated pursuant to the laws of California, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Texas, Virginia, Washington state or any other state lottery authorized to become a member of Mega Millions.

     (9) Parimutuel: Total amount of sales allocated to pay prize claimants at the designated prize level, divided among the number of winning official Mega Millions tickets at the designated prize level.

     (10) Prize fund: That portion of Mega Millions gross sales in the party lottery states set aside for the payment of prizes. The prize fund for any drawing is expected to be fifty percent of sales, but may be higher or lower based upon the number of winners at each set prize level, as well as the funding required to meet the advertised jackpot.

     (11) Purchaser(s): Player(s) of Mega Millions who purchase tickets in accordance with Mega Millions rules and party lottery governing laws, policies, and rules.

     (12) Quick-pick, auto-pick or easy pick: A player option in which Mega Millions number selections are determined at random by computer software.

     (13) Total prize liability: For any one Mega Millions drawing, total prize liability is calculated as all lower tier prizes won, plus the total sales for that drawing multiplied by 31.8% (allocation to the jackpot prize pool). The California state lottery's sales and prizes are excluded for purposes of this calculation.

     (14) Subscription/season ticket: An extended, multidraw purchase option, which may be offered in Washington state at the discretion of the director of the Washington state lottery, wherein the same set(s) of numbers may be played for a specified number of consecutive drawings (for example, 26, 52 or 104), effective on a future date. Subscription/season tickets are distinguished from multidraw tickets which are effective for specified future drawings and are sold at the retailer level.

     (((14))) (15) Mega Millions agent, sales agent or retailer: A location in one of the states which are party lotteries and which is licensed or contracted and equipped by its respective state lottery to sell official Mega Millions tickets.

     (((15))) (16) Mega Millions panel or play area: That area of an official Mega Millions ticket identified by an alpha character and containing one field of five one-digit or two-digit player or computer selected numbers, and a second field of one one-digit or two-digit player or computer selected number.

     (((16))) (17) Mega Millions play/bet slip: A computer-readable form, printed and issued by each party lottery, used in purchasing an official Mega Millions ticket, with each play area consisting of two fields. The first field contains ((52)) 56 areas/spaces numbered 1 through ((52)) 56; the second field contains ((52)) 46 areas/spaces numbered 1 through ((52)) 46.

     (((17))) (18) Mega Millions winning numbers - Five one-digit or two-digit numbers, from 1 through ((52)) 56 and one one-digit or two-digit number from 1 through ((52)) 46, randomly selected at each Mega Millions drawing, which shall be used to determine winning Mega Millions plays contained on official Mega Millions tickets.

[Statutory Authority: RCW 67.70.040. 02-15-122, § 315-38-020, filed 7/19/02, effective 8/19/02.]

PRIZE LEVEL	FIELD 1 MATCH FIVE WHITE BALLS ((1-52)) 1-56	FIELD 2 MATCH MEGA BALL ((1-52)) 1-46	PRIZE	ODDS (per $1 play)	PERCENT OF PRIZE FUND
Jackpot Prize	5	1	Jackpot	((1:135,145,920)) 1:175,711,536.00	((63.38)) 63.60
Second	5	0	$((175,000*)) 250,000*	((1:2,649,920)) 1:3,904,700.80	((13.21)) 12.80
Third	4	1	$((5,000*)) 10,000*	((1:575,089)) 1:689,064.85	((1.74)) 2.90
Fourth	4	0	$150*	((1:11,276)) 1:15,312.55	((2.66)) 1.96
Fifth	3	1	$150*	((1:12,502)) 1:13,781.30	((2.40)) 2.18
Sixth	2	1	$10	((1:833)) 1:843.75	((2.40)) 2.38
Seventh	3	0	$7	((1:245)) 1:306.25	((5.71)) 4.58
Eighth	1	1	$3	((1:152)) 1:140.63	((3.96)) 4.26
Ninth	0	1	$2	((1:88)) 1:74.80	((4.54)) 5.34
Overall odds of winning: ((1:43)) 1:40

*Should total prize liability, exclusive of jackpot prize rollover from previous drawings, exceed three hundred percent of draw sales or fifty percent of draw sales plus $50,000,000, whichever is less, (both hereinafter referred to as the "liability cap"), the second through fifth prizes shall be paid on a parimutuel rather than set prize basis, provided, however, that in no event shall the parimutuel prize be greater than the set prize. The amount to be used for the allocation of such parimutuel prizes shall be the liability cap less the amount paid for the jackpot prize and prize levels six through nine.

[Statutory Authority: RCW 67.70.040. 02-15-122, § 315-38-080, filed 7/19/02, effective 8/19/02.]

     (2) If, in any Mega Millions drawing, there are no Mega Millions panels that qualify for the jackpot prize category, the portion of the prize fund allocated to such jackpot prize category shall remain in the jackpot prize category and be added to the amount allocated for the jackpot prize category in the next consecutive Mega Millions drawing.

     (3) If the annuitized jackpot prize divided by the number of Mega Millions panels matching all five of the five Mega Millions winning numbers for Field 1 and the one Mega Millions winning number for Field 2, is equal to or greater than $1,000,000, the jackpot prize(s) will be paid under the annuity option unless a cash option was selected by the winner(s), as follows:

     (a) Cash option: After a player has claimed a jackpot prize or a share of a jackpot prize, and after the claim has been validated (including a debt check pursuant to WAC 315-06-125), the player may elect to be paid a one-time single cash option payment as defined by WAC 315-38-020(3), provided:

     (i) The player must elect this cash option within sixty days of the validation of his or her prize, by following the procedure required by the lottery;

     (ii) If the federal tax code is interpreted by federal authorities to require that this cash option be exercised within sixty days of the drawing for the prize, then (a)(i) of this subsection will not apply and instead, the player must elect this cash option within sixty days of the date of the drawing for the prize;

     (iii) The player's choice of payment method as designated by signing the appropriate lottery form is final and may not be changed by the player at a later date;

     (iv) Cash option jackpot prizes shall be paid in a single payment in accordance with the internal validation procedures and settlement procedures pursuant to the multistate agreement and the Washington state lottery. At the director's discretion, an initial payment of a portion of the cash option prize may be paid to the winner at the time the prize is claimed.

     (b) Annuity: A player who chooses not to elect the cash option or who does not elect the cash option within the sixty-day limit will be paid his or her prize in twenty-six annual installment payments. The initial payment shall be paid in accordance with the internal validation procedures and settlement procedures established by the multistate agreement and the Washington state lottery. The subsequent twenty-five payments shall be paid annually to coincide with the month of the federal auction date at which the bonds were purchased. All such payments shall be made within seven days of the anniversary of the actual auction date. This date of payment of the subsequent payments is subject to the discretion of the director of the Washington state lottery, acting in the best interest of the lottery.

     (4) In the event multiple Mega Millions panels match all five of the five Mega Millions winning numbers for Field 1 and the one Mega Millions winning number for Field 2, and the annuitized Mega Millions jackpot prize divided by the number of winning game panels is less than $1,000,000, each Mega Millions jackpot prize winner shall be paid an amount equal to the "cash equivalent grand/jackpot prize," as defined by the multistate agreement, divided equally by the number of jackpot prize winners. Each such jackpot prize winner will be paid in a single cash payment.

[Statutory Authority: RCW 67.70.040. 02-15-122, § 315-38-090, filed 7/19/02, effective 8/19/02.]

     (2) Mega Millions panels matching four of the five Mega Millions winning numbers drawn for Field 1 and the Mega Millions winning number drawn for Field 2 shall be entitled to receive a third prize of (($5,000)) $10,000 subject to subsection (5) of this section.

     (3) Mega Millions panels matching four of the five Mega Millions winning numbers drawn for Field 1 but not matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a fourth prize of $150 subject to subsection (5) of this section.

     (4) Mega Millions panels matching three of the five Mega Millions winning numbers drawn for Field 1 and the Mega Millions winning number drawn for Field 2 shall be entitled to receive a fifth prize of $150 subject to subsection (5) of this section.

     (5) Should total prize liability, exclusive of jackpot prize rollover from previous drawings, exceed three hundred percent of draw sales or fifty percent of draw sales plus $50,000,000, whichever is less, (both hereinafter referred to as the "liability cap"), the second through fifth prizes shall be paid on a parimutuel rather than set prize basis, provided, however, that in no event shall the parimutuel prize be greater than the set prize. The amount to be used for the allocation of such parimutuel prizes shall be the liability cap less the amount paid for the jackpot prize and prize levels six through nine. The California state lottery's sales and prizes are excluded for purposes of the liability cap calculation.

     (6) Mega Millions panels matching two of the five Mega Millions winning numbers drawn for Field 1 and matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a sixth prize of $10.

     (7) Mega Millions panels matching three of the five Mega Millions winning numbers drawn for Field 1 but not the Mega Millions winning number drawn for Field 2 shall be entitled to receive a seventh prize of $7.

     (8) Mega Millions panels matching one of the five Mega Millions winning numbers drawn for Field 1 and the Mega Millions winning number drawn for Field 2 shall be entitled to receive an eighth prize of $3.

     (9) Mega Millions panels matching no numbers of the five Mega Millions winning numbers drawn for Field 1 but matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a ninth prize of $2.

     (10) Each Mega Millions second through ninth prize shall be paid in one payment.

[Statutory Authority: RCW 67.70.040. 02-15-122, § 315-38-100, filed 7/19/02, effective 8/19/02.]

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