Effective Date of Rule: January 1, 2007.

     Purpose: The changes clarify that house-banked card room applicants and licensees must:

     (1) Maintain their accounting system in accordance with generally accepted accounting principles;

     (2) Include all income and expenses for the business entity in their accounting system;

     (3) Have their accounting system in place prior to licensure; and

     (4) Include receipts from all house-banked and nonhouse-banked card games when determining the type of financial statement they should submit to the commission.

     The changes also clarify what documents must be submitted (for example, balance sheet, income statement, and statement of cash flows) by licensees. This will provide consistency of information submitted by house-banked card rooms.

     Citation of Existing Rules Affected by this Order: Amending WAC 230-40-821 and 230-40-823.

     Statutory Authority for Adoption: RCW 9.46.070.

      Adopted under notice filed as WSR 06-13-076 on June 20, 2006, with a published date of July 5, 2006.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 2, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 2, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 2, Repealed 0.

     Date Adopted: August 11, 2006.

Susan Arland

Rules Coordinator

OTS-8840.3

AMENDATORY SECTION(Amending Order 424, filed 9/18/03, effective 1/1/04)

WAC 230-40-821   ((General accounting records -- House-banking.)) Accounting system -- House-banked card rooms.   Every licensee authorized to offer house-banked card games shall keep and maintain a complete set of records, which have been approved by commission staff prior to licensure. Such records shall include all ((details of activities related to the conduct of the licensed activity)) receipts and disbursements of the licensee, including, but not limited to, those related to gambling activities. The following requirements shall apply:

Revenue, costs, and expenses.

     (1) Each licensee shall maintain legible, accurate and complete records of all transactions relating to the revenues, and costs, and expenses of the gaming operation. These records shall be maintained in a format to ensure consistency, comparability, and effective disclosure of financial information.

((General accounting records)) Accounting system.

     (2) ((General)) The accounting ((records)) system shall be ((maintained on)) a double entry system of accounting with transactions recorded on an accrual basis and in conformity with generally accepted accounting principles, to include detailed, supporting, subsidiary records, sufficient to meet the requirements below.

Recordkeeping.

     (3) The detailed, supporting and subsidiary records shall include, but not necessarily be limited to:

     (a) Records of all patrons' checks initially accepted, deposited, and returned as "uncollected," and ultimately written off as "uncollectible";

     (b) Statistical game records to reflect drop and win amounts for each table, for each game, and for at least each period for which the drop boxes are removed, which shall be at the minimum, the end of each gaming day;

     (c) Records of investments in property, including, but not limited to, equipment used directly in connection with the gaming operation;

     (d) Records of amounts payable by the gaming operation;

     (e) Records which identify the purchase, receipt, and destruction of all cards and gaming chips used in wagering; and

     (f) Records of services provided for the operation of gaming activities.

Copies.

     (4) Whenever duplicate or triplicate copies are required of a form, record or document:

     (a) The original, duplicate, and triplicate copies shall be color-coded;

     (b) If under these standards, forms, records, and documents are required to be inserted in a locked dispenser, the last copy shall remain in a continuous unbroken form in the dispenser; and

     (c) If under these standards, forms or serial numbers of forms are required to be accounted for or copies of forms are required to be compared for agreement and exceptions noted, such exceptions shall be reported immediately to the commission for investigation.

Storing documents.

     (5) All forms, records, documents and stored data required to be prepared, maintained and controlled shall:

     (a) Have the title of the form, record, document, or stored data (such as "fill slip," "request for fill," "credit slip," "request for credit," "reconciliation," etc.), imprinted or preprinted thereon or therein; and

     (b) All records shall be maintained for a period of not less than three years. At least the past six months of gambling records must be available for inspection on premises.

Employee records.

     (6) Licensees shall maintain a records system that ensures all applicable employees have met licensing requirements. The system shall be maintained on the premises and include the following:

     (a) Employee names;

     (b) Gambling license numbers;

     (c) Gambling license expiration dates; and

     (d) Photocopies of all current employees' licenses.

Record of employees who have not yet received a license.

     (7) If an employee license has not yet been issued, the licensee shall maintain a copy of the following:

     (a) Temporary employment authorization;

     (b) Documentation that the required payment (license or transfer fee) has been made; and

     (c) Proof that the employee has adhered to the ten-day waiting period, if applicable.

Notification - new license not received.

     (8) The licensed card room operator shall ensure commission staff is notified if an employee license has not been received within sixty days of employment.

[Statutory Authority: RCW 9.46.070. 03-20-009 (Order 424), § 230-40-821, filed 9/18/03, effective 1/1/04; 01-13-091 (Order 403), amended and recodified as § 230-40-821, filed 6/19/01, effective 7/20/01. Statutory Authority: RCW 9.46.070 and 34.05.230. 01-01-016 (Order 396), § 230-08-027, filed 12/6/00, effective 1/6/01. Statutory Authority: RCW 9.46.070. 00-09-052 (Order 383), § 230-08-027, filed 4/14/00, effective 5/15/00.]

OTS-8841.3

AMENDATORY SECTION(Amending Order 426, filed 3/1/04, effective 4/1/04)

WAC 230-40-823   Financial ((audits and reviews)) statements required -- ((House-banking)) House-banked card rooms.   Each licensee ((operating)) authorized to offer house-banked card games shall prepare financial statements covering all financial activities of the licensee's establishment for each business year. The following definitions and requirements shall apply:

     (1) The following definitions shall apply to all subsections of this rule:

     (a) "Financial statements" shall include at least the following: Balance sheet, statement of income, statement of retained earnings or changes in equity, statement of cash flows, and all required notes or disclosures. All financial statements must be in accordance with the United States generally accepted accounting principles.

     (b) "Card room gross receipts" shall include receipts from all house-banked and nonhouse-banked card games offered by the house-banked card room.

     (c) "Independent" means there is no relationship that may influence a certified public accountant's impartiality and objectivity in rendering services.

Audited financial statements - gross receipts over three million dollars.

     (((1))) (2) Each licensee with ((house-banked card game)) card room gross receipts in excess of three million dollars for the business year shall engage an independent, certified public ((accountant)) accounting firm licensed by the Washington state board of accountancy who shall audit the licensee's financial statements in accordance with generally accepted auditing standards.

Reviewed financial statements - gross receipts of one to three million dollars.

     (((2))) (3) Each licensee with ((house-banked card game)) card room gross receipts of one to three million dollars for the business year shall engage an independent, certified public ((accountant)) accounting firm licensed by the Washington state board of accountancy who shall review the financial statements in accordance with the statements on standards for accounting and review services or audit the financial statements in accordance with generally accepted auditing standards.

Compiled financial statements - gross receipts of less than one million dollars.

     (((3))) (4) Each licensee with ((house-banked card game)) card room gross receipts of less than one million dollars for the business year shall engage an independent, certified public ((accountant)) accounting firm licensed by the Washington state board of accountancy who shall compile the financial statements in accordance with the statements on standards for accounting and review services in accordance with generally accepted accounting principles, including all required ((footnotes)) notes or disclosures on an accrual basis of accounting.

Financial statement presentation.

     (((4))) (5) The financial statements must be presented in the following manner:

     (a) Financial statements shall be submitted on a comparative basis: Provided, That the first year may be submitted for the current business year only; and

     (b) Gross revenues from each licensed activity should be reported by activity and separate and apart from all other revenues.

Consolidated financial statements.

     (((5))) (6) Consolidated financial statements may be filed by commonly owned or operated establishments. These statements must include consolidated schedules presenting separate financial statements for each licensed card room location.

Change in business year.

     (((6))) (7) If a licensee changes its business year, they shall notify the director within thirty days. The licensee shall submit financial statements for the period covering the end of the previous business year to the end of the new business year.

Filing with the commission.

     (((7))) (8) A copy of the report and the financial statements shall be submitted to the director within one hundred twenty days following the end of the licensee's business year. The director may authorize a sixty-day extension if a licensee submits a written request explaining the need for the extension.

((Effective date.

     (8) This rule will be effective for business years ending on or after July 1, 2004.))

[Statutory Authority: RCW 9.46.070. 04-06-058 (Order 426), § 230-40-823, filed 3/1/04, effective 4/1/04; 00-09-052 (Order 383), § 230-40-823, filed 4/14/00, effective 5/15/00.]

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