WSR 97-05-057

PROPOSED RULES

GAMBLING COMMISSION

[Filed February 19, 1997, 9:22 a.m.]

Original Notice.

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

Title of Rule: WAC 230-30-025 Progressive jackpot pull tabs.

Purpose: This rule establishes how progressive prizes are made, how progressive jackpots accrue, and the method for calculating the required percentage payout. In addition, changes were made to add new terms and definitions to make the rule easier to read and follow.

Statutory Authority for Adoption: RCW 9.46.070 (1), (2), (4), (8), (11), (14).

Summary: See Purpose above.

Name of Agency Personnel Responsible for Drafting: David Shaw, 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: Staff, in conjunction with pull tab industry representatives, private.

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

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

Proposal Changes the Following Existing Rules: See Summary and Purpose 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: The Inn at Semi-ah-moo, 9565 Semiahmoo Parkway, Blaine, WA 98230-9326, on April 11, 1997, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Susan Green by April 7, 1997, TDD (360) 438-7638, or (360) 438-7654, ext. 302.

Submit Written Comments to: David Shaw, Mailstop 42400, Olympia, Washington 98504-2400, FAX (360) 438-8652, by March 24, 1997.

Date of Intended Adoption: April 11, 1997.

February 18, 1997

David Shaw

Rules and Policy Coordinator

AMENDATORY SECTION (Amending Order 305, filed 11/21/96)

WAC 230-30-025 Progressive jackpot pull tab ((games)) series - Definitions - Restrictions - ((Manner of conducting - Record keeping - Approval)) Operating procedures. The Commission finds that the preservation of the public general welfare, and prevention of fraud against the player and gambling industry necessitates the immediate adoption of the following requirements.

For purposes of this title, the following definitions, restrictions, operating procedures, and record keeping requirements apply to ((such devices)) progressive jackpot pull tab series.

(1) Definitions:

(a) Progressive jackpot ((prize)) - A ((minimum)) prize that is comprised of a starting jackpot amount ((prize)) which increases by ((plus the accumulation of)) a predetermined ((dollar)) amount ((of)) for each pull tab ((sale)) sold ((. The jackpot shall increase for each pull tab sale)) until a player redeems the winning jackpot tab.

(b) Jackpot accrual rate - The rate at which a jackpot accrues. This rate shall determine the amount of each pull tab sold which will be added to the starting jackpot.

(c) Accrued portion of the progressive jackpot - The progressive jackpot at the time the game is pulled, less the starting jackpot amount.

(d) Bank system - a ((set)) group of ((up to ten)) dispensing devices networked together. These devices shall be linked to a computer system capable of calculating total sales and the accumulation of the progressive jackpot ((prize)).

What are the operating conditions governing dispensing devices used for progressive jackpot pull tabs?

(2) Progressive jackpot pull tab dispensing devices may be operated under the following conditions:

(a) All machines in a bank system must be located ((together)) in the same physical proximity on the license premises, so that players can observe all tabs in a series;

(b) Each bank system must be linked to a computer system which ((monitors)) records all sales and the accumulation of the progressive jackpot ((prize));

(c) A licensee may have more than one bank system operating at one time, but at no time shall a bank system exceed ten machines; and

(d) ((From the effective date of this rule, t)) The number of progressive pull tab dispensing devices per location shall be limited to ten machines for commercial stimulant licensees and twenty machines for charitable or nonprofit licensees. The director may approve an increase in the number of machines upon receipt of a written request by the licensee if the director determines that the licensee is in compliance with all regulations and approval would not be detrimental to the interests of the commission and/or the public;

In addition to all other rules governing pull tabs, what additional requirements apply to ((Under what conditions may)) progressive jackpot pull tab series ((games be operated))?

(3) Progressive jackpot pull tab ((games)) series shall be conducted in the same manner as other pull tab series ((games)). In addition, the following requirements apply:

(a) An owner or licensed commercial or charitable or non-profit gambling manager shall be on the premises at all times during the operation of progressive jackpot pull tab series ((games));

(b) Tabs shall be stored in secured locations with access limited to ((authorized)) owners and licensed individuals only;

(c) The licensee shall have sufficient funds available to pay all prizes upon redemption of winning tabs. Failure to have sufficient funds available shall be prima facie evidence of defrauding the public in violation of RCW 9.46.190;

(d) The current progressive jackpot ((prize)) total must be clearly displayed near the bank of machines at all times during the sale of progressive pull tabs; ((. The maximum jackpot prize amount shall also be disclosed near the bank of machines;))

(e) One flare shall be prominently displayed near the bank of machines;

(f) The following are prohibited for use with progressive jackpot pull tab series ((games)):

(i) Substitute flares;

(ii) Merchandise prizes; and

(iii) Last sale prizes((.));

(f) The operator must disclose the operating procedures regarding playing out a series or carrying over accrued prizes, as set forth in (4)(e) below; and

(g) After the retention period, unsold tabs shall be destroyed in such a manner that unopened winning tabs may not be found and used later.

What are the operating conditions governing prizes ((and the payout regiment))?

(4) The following conditions apply to ((the)) prizes ((and payout regiment)) for progressive jackpot pull tab series ((games)):

(a) The prize pool which includes the starting jackpot amount plus all other winners shall be equal to or greater than forty percent of total gross gambling receipts available from the series; ((Only the minimum possible jackpot prize shall be included in determining the sixty percent payout, as required by WAC 230-30-075;))

(b) The minimum jackpot accrual rate shall be determined by a formula whereby the starting jackpot will accrue to an amount which, when added to all other winners, will reach at least sixty percent of total gross gambling receipts available by the end of the series;

(c) The manufacturer shall determine the ((minimum)) starting jackpot amount and corresponding jackpot accrual rate needed to meet the sixty percent payout requirement in (4)(a) and (b) above. This information shall be packaged with each series;

(((c) Operators may increase the minimum jackpot amount prior to putting the game in play;))

(d) The ((maximum)) starting jackpot amount plus the accrued portion of the progressive jackpot ((prize)) for an individual series, not including the portion carried over from previous series, shall not exceed five thousand dollars; ((, as required by WAC 230-30-075(2). However, operators may elect to set the maximum jackpot at an amount less than five thousand dollars)); and

(e) The licensed operator shall set the amount to be added to the jackpot prize for each ticket sold. This amount will remain the same for each pull tab sold from a game; Provided, that the jackpot prize may not exceed the maximum jackpot prize detailed in (4)(d) above;))

(e) Operators shall not remove a progressive jackpot pull tab series from play prior to the progressive jackpot being won: Provided, That operators may elect to pull a series from play at the beginning or end of any business day only if the accrued portion of the progressive jackpot is carried over to a new series within twenty-four hours. The accrued portion of the progressive jackpot shall be added to the starting jackpot amount from the new series when it is placed out for play. The minimum starting jackpot of the subsequent series must be equal to or greater than the ending jackpot amount of the previous series.

How must winning tabs be redeemed?

(5) Winning tabs shall be redeemed in the same manner as required by WAC 230-30-070. The following requirements also apply:

(a) For jackpot prizes ((one thousand two hundred)) six hundred dollars and over, the winner's full name, address, and social security number shall be recorded on a separate form for income tax purposes;

(b) At least the ((minimum)) starting jackpot ((prize amount)) portion of the progressive jackpot shall be paid by check. The licensee shall record the check number in addition to the information required in WAC 230-30-070((-))(5). These checks may not be cashed on the licensed premises; and

(c) All jackpot winning tabs must be defaced immediately upon receipt((;)) instead of within twenty-four hours.

What records must I keep, and for how long must they be retained?

(6) All record keeping requirements outlined in WAC 230-08-010 must be followed, in addition to the following:

(a) All winning tabs and winner information for jackpot prizes, along with the ((game)) flares, must be retained for one year from the date in which the ((games)) series were removed from play; and

(b) Licensees shall record progressive jackpot ((games)) series on a separate monthly record in a format prescribed by the commission. ((This format must contain the following i)) In addition to the information required by WAC 230-08-010(9), the following must be recorded for each series:

(i) Starting jackpot amount;

(ii) Jackpot accrual rate;

(iii) The ((Dollar)) amount, stated in currency, of each pull tab sold ((sale)) which is contributed to the jackpot;

(((ii) Separate prizes paid figures for jackpot prizes and regular prizes; and))

(iv) Number of tabs sold out of each dispensing device;

(v) Progressive jackpot amount, if awarded;

(vi) Ending progressive jackpot amount, if the series was pulled prior to the jackpot being won;

(vii) Regular prizes awarded; and

(iii) (viii) Prizes paid by check;

(((c) Licensees are required to maintain records for each game/bank system detailing:

(i) The beginning jackpot prize amount;

(ii) The number of tickets sold out of each dispensing device; and

(iii) The ending jackpot prize amount;

(d) The above records must be maintained for a period of not less than three years from the end of the fiscal year for which the records are kept.))

What aspects of a progressive pull tab system require agency approval and what standards are applicable to this approval process?

(7) The director shall approve all progressive jackpot pull tab series, ((games and all)) progressive jackpot dispensing devices, and((. In addition, the director shall approve all)) computer software used to link dispensing devices, accrue jackpot prizes, and store data used in preparing records. Procedures for approval are as follows:

(a) Any costs related to ((the)) this approval ((of progressive jackpot pull tab games, progressive jackpot dispensing devices, and computer software used to link dispensing devices, accrue jackpot prizes, or store date used in preparing records)) shall be billed to the persons requesting approval((.));

(((a))) (b) The following progressive jackpot pull tab series requirements shall be approved prior to sale in Washington:

(i) ((The progressive jackpot dispensing device;

(ii))) The process used to manufacture the progressive jackpot series ((games)); and

(((iii))) (ii) The secondary win code system; and

(((b))) (c) Computer software requiring the approval of the ((D)) director shall be subject to the following standards;

(i) For each game, no person other than the maker of the software shall be able to alter data once it is input into the system; and

(((ii) The system must stop accruing when the jackpot amount reaches $5,000 or the maximum amount predetermined by the operator;

(iii))) (ii) A record of transactions for a game must be retained in memory until the transactions have been totaled, printed, and cleared by the operator regardless of whether the units primary power source is interrupted.

[Statutory Authority: RCW 9.46.070, 9.46.120, 9.46.0273, 9.46.310 and 34.05.313. 96-24-006 (Order 305), 230-30-025, filed 11/21/96, effective 1/1/97.]

Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.

Reviser's note: The typographical errors in the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.

Legislature Code Reviser

Register

Washington State Code Reviser's Office