WSR 97-14-014

PROPOSED RULES

GAMBLING COMMISSION

[Filed June 20, 1997, 11:36 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 96-15-020.

Title of Rule: Pull tab rule, WAC 230-30-106 Standards for flares made by manufacturers, distributors or operators.

Purpose: To require pull tab flares to prominently display the initial odds of winning the top prize with a single ticket purchase.

Statutory Authority for Adoption: RCW 9.46.070 (2), (11), (14).

Statute Being Implemented: See above.

Summary: See Purpose above.

Reasons Supporting Proposal: (1) Changes in Type of Games Offered to the Public: Over the past few years there have been many changes in the types, sizes and prizes of pull tab games. Each new generation of games has become a little more complex and sometimes more confusing than the earlier games. In addition, either by design or accident, many of the newer games offer the player less of a chance to win the top prize (Illustrated examples are attached to this petition [no information supplied by agency]).

Basically, as the ticket count increased the odds of winning, the top prize decreased. When $200 was the top prize allowed and 4000 tickets was the maximum, the odds were 1 in 1000. With the introduction of games with 6000 tickets we saw the odds go to 1 in 1500 and today we have games where your chances of winning $210 are 1 in 2000. The odds against the player in the $500 games have increased even more dramatically. When first introduced they were generally 1 in 3000, but with the advent of 10,000 ticket games and step-ups the odds increased to as high as 1 in 30,000. It is a fact that some games have been produced that have good odds for the player, but these are not the games that the operators are buying. The simple reason being; you make more money if you don't pay out the top prize!

(2) Sixty Percent Payout Rule is Meaningless: It is a well-known fact that the 60% payout rule does not really reflect the actual market because less than 1% of all games are bought out and total state-wide payouts are closer to 68%. The only real use of this rule is by operators to appease their customer when they complain of losing too much in a game.

"It pays out 60%!" Was a common defense of step-up games when they were first introduced and people bought games out without getting the top prize. If a customer asked for a game with four $500 winners and used the line, "It pays out 60%" he wouldn't get far because the operator knows the true measure of a profitable game; the odds of that top prize coming out. A game with one $500 winner has much less chance of having the winner coming out than a game with four; even though they both have a theoretical payout of 60%.

(3) Odds on Flares Will Bring Equality to all Games in the Market: Putting odds on the flares will create an internal marketing tool that will require all games to be fair to the player. No matter how complex or confusing a game is, if one game's odds of winning the top prize is 5000 to 1 and another game is 10,000 to 1; then that second game better have twice the prize or the marketplace won't accept it. This means the player will have more say as to what will go into the market. Since, he is the consumer, he should have that right.

(4) Most Other Forms of Gambling in this State Gives the Odds: Whether it's fairness to the players, state regulations, or just good marketing sense this state does have an excellent record of telling the consumer the odds. It doesn't matter whether you play the Lotto, scratch tickets, the horse races or McDonalds' Monopoly game; the odds are given to you. The odds are also given to you, for your protection, with every junk mail contest that comes your way.

(5) Conclusion: The purpose of this proposed rule is plain and simple, fair labeling for the player. The complex nature of today's game makes it extremely difficult to make an informed purchase. The player[s] need help.

When this industry started a player could look into a window on a wall machine and practically count all of the tickets that were left. Standing in front of the flare he could read the number of tickets the game started with, and looking at a flare he knew he could win everything that was not marked off. From there we moved the games away from him to where he couldn't read the number of tickets: We put them in all shapes of bowls where he really couldn't count the tickets, we added several thousand tickets to the bowls; we then started not marking everything off the flare; we invented games that he could but [buy] out and not get the top prizes; and now we are considering carryover progressive games where on a prorated prize scale the player has a less chance of winning than he does of winning the Lotto. And we wonder why we have a problem selling pull tabs!

Name of Agency Personnel Responsible for Drafting: Soojin Kim, Lacey, (360) 438-7654 ext. 310; Implementation: Frank Miller, Lacey, (360) 438-7654 ext. 302; and Enforcement: Ben Bishop, Lacey, (360) 438-7654 ext. 370.

Name of Proponent: Dennis Zaborac of Totem Tab-Service, private.

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

Explanation of Rule, its Purpose, and Anticipated Effects: See Purpose, Summary and Reasons Supporting Proposal above.

Proposal Changes the Following Existing Rules: See Purpose, Summary and Reasons Supporting Proposal above.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Proposal is exempt under RCW 19.85.025(2), therefore, a small business economic impact statement is not required.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. This agency does not choose to make section 201, chapter 403, Laws of 1995, apply to this rule adoption.

Hearing Location: WestCoast Wenatchee Center Hotel, 201 North Wenatchee Avenue, Wenatchee, WA 98801, on August 14, 1997, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Susan Green by August 1, 1997, TDD (360) 438-7638, or (360) 438-7654 ext. 302.

Submit Written Comments to: Soojin Kim, Mailstop 42400, Olympia, WA 98504-2400, FAX (360) 438-8652, by July 31, 1997.

Date of Intended Adoption: August 15, 1997.

June 20, 1997

Soojin Kim

Rules and Policy Coordinator

[AMENDATORY SECTION (Amending WSR 95-23-109, filed 11/22/95)]

WAC 230-30-106 Standards for flares made by manufacturers, distributors or operators. (1) Except as set forth in subsection (2) of this section, the flare advertising prizes available from the operation of any punchboard, or any series of pull tabs shall be made by the manufacturer only. Except as set forth below, flares shall not be altered by any operator or distributor, and shall:

(a) Be placed as follows:

(i) Only upon the upper face, or on the top, of any such punchboard; or

(ii) In plain view and in the vicinity of any pull tab dispensing device or container, provided if the flare is not attached to the dispensing device or container, a numerical or alphabetical reference shall be included directly on the flare and dispensing device or container clearly indicating which flare corresponds to which series; and

(b) Clearly set out each of the prizes available and the number or symbol which wins prizes; and

(c) Set out the winning numbers or symbols for prizes of twenty dollars or more in cash, or merchandise worth twenty dollars or more at retail, in such a manner that each may be easily and clearly deleted or marked off as each prize is won and awarded. For the purposes of this subsection the retail value of a merchandise prize shall be the amount actually paid by the licensed operator plus 50 percent of that actual cost.

(d) For all pull tab series, the initial odds of winning the top prize shall be prominently displayed in one-half inch size lettering on the flare. Odds, for the purpose of this subsection, shall be defined as the actual mathematical change of winning the top prize with a single ticket purchase, e.g., one in five-thousand.

(2) Substitute flares

(a) Distributors may make and apply substitute flares to punchboards and pull tab series provided that the conditions set forth in (c) of this subsection are satisfied;

(b) Licensed operators may make and use substitute flares on punchboards and pull tab series which offer merchandise or combination merchandise-cash prizes provided that the conditions set forth in (c) of this subsection are satisfied;

(c) Use of substitute flares:

(i) The substitute flare must comply with the requirements of subsection (1)(a), (b) and (c) of this section;

(ii) Substitute flares must meet the requirements of WAC 230-30-015;

(iii) The winning numbers or symbols on the substitute flare are selected from the winning numbers or symbols on the flare made by the manufacturer, or from the optional numbers placed on the back of the board by the manufacturer. Provided flares and games which offer merchandise, or combination merchandise/cash prizes, in excess of $100.00 actual costs, must utilize numbers, not symbols to denote winners. Prizes must be assigned to the winning numbers consecutively starting with the highest value prize being assigned the lowest available winning number; and

(iv) The substitute flare is stapled to the manufacturer's flare and the manufacturer's flare is defaced so that it is unusable, but the identification and inspection services stamp is readable and visible.

(3) Spindle-type pull tab series when played in the manner set out in WAC 230-30-070(9) are exempt from this section.

[Statutory Authority: RCW 9.46.070 (1)-(4), (7), (8), (11), (12), (14), (20) and 9.46.110 (3), (4). 95-23-109, 230-30-106, filed 11/22/95, effective 1/1/96. Statutory Authority: RCW 9.46.070(8), 9.46.0325 and 9.46.070. 93-10-005 (Order 238), 230-30-106, filed 4/21/93, effective 7/1/93. Statutory Authority: RCW 9.46.070 (8), (11) and (14). 89-11-048 (Order 192), 230-30-106, filed 5/16/89. Statutory Authority: RCW 9.46.070 (11) and (14). 87-24-016 (Order 173), 230-30-106, filed 11/23/87. Statutory Authority: RCW 9.46.070(10). 79-09-029 (Order 91), 230-30-106, filed 8/14/79; Order 43, 230-30-106, filed 11/28/75.]

Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.