[Filed May 13, 1997, 1:30 p.m.]
Preproposal statement of inquiry was filed as WSR 97-05-015.
Title of Rule: Manufacturer and distributor credit/pricing rules, WAC 230-04-125, 230-12-320, 230-12-330, 230-12-340, and 230-12-350. CR-101 WSR 97-05-015.
Purpose: These rules limit promotional gifts, protect consumers from the effects of undue influence in the distribution of gambling equipment, and set parameters regarding the terms by which gambling equipment can be purchased and sold.
Statutory Authority for Adoption: RCW 9.46.070 (5), (6).
Statute Being Implemented: See above.
Summary: See Purpose above.
Manufacturer and Distributor Credit/Pricing Rules:
Amendatory section WAC 230-04-125 Distributor's representative license ((may be reissued when changing distributors))--Restrictions and procedures for changing employment. Summary: Allow staff to assure that distributor's representatives who are changing employment still qualify for a license and are in good standing. Clarifies that the license becomes void instead of suspended, as currently stated.
New section WAC 230-12-320 Manufacture and distribution of gambling equipment and services--Prohibited practices--Gifts, promotional activities, and loans--Exceptions. Summary: To codify current policies regarding gifts and promotional activities related to the distribution of gambling-related products or services. The prohibition against gifts is currently in WAC 230-12-200. This rule allows limited promotional activities.
New section WAC 230-12-330 Availability of gambling equipment and related products and services--Prices--Contracts--Discounts--Restrictions--Exceptions. Summary: To codify current policies regarding the sale and availability of gambling-related products and services. Will facilitate enforcement of current provisions to assure equal access to gambling products by licensees. Allows limited exceptions to provisions previously in WAC 230-12-200.
New section WAC 230-12-340 Sale of gambling devices, equipment, supplies, paraphernalia, and related services--Credit prohibited--Exceptions. Summary: Clarifies use of credit for the purchase of gambling products and services. Authorizes exceptions and codifies procedures for making payments. The general credit prohibition is currently in WAC 230-12-200.
New section WAC 230-12-350 Use of checks to purchase gambling equipment, products, and services--Restrictions. Summary: Prevents the use of checks as a means of granting or receiving credit related to the sale of gambling-related products or services. Imposes the same restrictions on checks for payments for sales between manufacturers and distributors as is currently in effect for distributors and operators (currently WAC 230-30-200). Companion rule to WAC 230-12-340.
Repealed sections WAC 230-12-200 and 230-30-200. Summary: WAC 230-12-200 replaced by WAC 230-12-320; and WAC 230-30-200 replaced by WAC 230-12-350.
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: Staff, in conjunction with representatives from manufacturers and distributors, private.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: See Purpose and Summary above.
Proposal Changes the Following Existing Rules: See Purpose and Summary 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: Silverdale on the Bay Hotel/WestCoast, 3037 Bucklin Hill Road, Silverdale, WA 98310, on July 11, 1997, at 10:00 a.m.
Assistance for Persons with Disabilities: Contact Susan Green by July 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 June 30, 1997.
Date of Intended Adoption: July 11, 1997.
May 13, 1997
Rules and Policy Coordinator
AMENDATORY SECTION (Amending Order 262, filed 12/5/94)
WAC 230-04-125 Distributor(('s)) representative license ((may be reissued when changing distributors))--Restrictions and procedures for changing employment. All licensed distributor representatives shall abide by the following restrictions and procedures when changing employers:
What happens if I leave the employment of the distributor I represent?
(1) In the event that a licensed distributor(('s)) representative ceases to represent the distributor under which a license was granted for any reason, the license shall ((be automatically suspended)) immediately become void and shall be returned to the commission((: Provided, That a person may apply to have the remaining term of a license represent a different distributor. The fee for this transfer shall be as required by WAC 230-04-204. The distributor which the distributor's representative wishes to represent shall sign the application for transfer acknowledging that the applicant for will be representing the distributor with the distributor's knowledge and consent)).
What steps must I complete prior to beginning employment to represent another distributor?
(2) Prior to beginning employment to represent any other distributor, a previously licensed distributor representative shall reapply for a new license. The distributor employing the distributor representative shall sign the application. Prior to granting a license to a previously licensed individual, the commission may conduct an investigation to determine the continued qualification of the individual. Such investigation may include inquiries to the previous employer.
What is the fee for obtaining a license to represent another distributor?
(3) The fee for a license to represent a different distributor shall be the same as a license renewal, as set forth in WAC 230-04-204. The expiration date for such license shall be as set forth in WAC 230-04-190.
[Statutory Authority: Chapter 9.46 RCW. 94-24-056 (Order 262), § 230-04-125, filed 12/5/94, effective 1/5/95. Statutory Authority: RCW 9.46.070 (5), (7), (8), (9), (11), (14) and (19). 84-13-038 (Order 140), § 230-04-125, filed 6/15/84; Order 14, § 230-04-125, filed 3/27/74; Order 9, § 230-04-125, filed 12/19/73.]
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.
WAC 230-12-320 Manufacture and distribution of gambling equipment and services--Prohibited practices--Gifts, promotional activities, and loans--Exceptions. Manufacturers and distributors shall not seek to control the distribution of gambling equipment, devices, related supplies or paraphernalia, or services by any means other than those authorized by this title. The following restrictions and procedures apply to the distribution of gambling equipment, devices, related supplies or paraphernalia, and services:
Can licensees offer gifts or similar items to other licensees?
(1) Other than promotional activities as authorized by this section, no licensee or employee thereof selling or offering to sell gambling products or services shall directly or indirectly provide or offer any gift, free merchandise or service, credit or loan of money, premium, or rebate to any person or employee thereof who is licensed to purchase or operate such;
Can licensees solicit gifts or similar items from other licensees?
(2) No licensed operator or distributor, or employee thereof, shall directly or indirectly solicit any gift, free merchandise or service, credit or loan of money, premium, or rebate from any licensed manufacturer or distributor, or employee thereof;
What types of activities are allowed for manufacturers to promote their goods or services with operators?
(3) Manufacturers may provide promotional merchandise of nominal value, such as tee shirts, caps, cups, pens, calendars, etc. to licensed operators, and operators shall be allowed to accept such, under the following guidelines:
(a) The cost of such promotions shall not exceed fifteen dollars in value per item. Each manufacturer is responsible for establishing the value of each type of promotional merchandise and shall maintain records supporting such;
(b) Each item shall promote the manufacturer or a specific product or line of products made by the manufacturer;
(c) Such promotions shall not be based on past sales or a level of business; and
(d) Such promotions may not be contingent on the purchase of more than one case of a specific product.
What types of activities are allowed for manufacturers to promote their goods or services with distributors?
(4) Manufacturers may provide promotional merchandise, entertainment, or travel to distributors, and distributors shall be allowed to accept such, under the following guidelines:
(a) Promotional merchandise and services, such as tee shirts, caps, pens, calendars, etc. may be provided to distributors if:
(i) The value is limited to thirty-five dollars for each individual item; and
(ii) The total amount of promotional merchandise and services offered to a distributor and employees thereof shall not exceed a collective value of one thousand dollars during any calendar year.
(b) Entertainment such as meals, recreational or sporting events, etc. may be provided to distributors, or employees thereof, without limits, if:
(i) The distributor is accompanied by a licensed manufacturer's representative, owner, partner, officer, or substantial interest holder of a corporate licensee;
(ii) The entertainment is provided within the state of Washington; and
(iii) Written documentation of the business purpose of the entertainment is maintained.
(c) Trips to the factory location of a manufacturer, including transportation, meals, and lodging may be provided to distributors and/or their licensed representatives once each calendar year;
What additional requirements apply to authorized "promotional activities"?
(5) The following restrictions and procedures apply to promotional activities between manufacturers and distributors:
(a) All "promotional activities" shall be directly related to promotion of the manufacturer's products and in no way related to past sales;
(b) Promotional activities shall not include the direct or indirect transfer of cash, negotiable instruments, or cancellation or remittance of debts to a licensee or employee thereof. All costs related to "promotional activities" shall be initially paid for by the manufacturer rather than providing reimbursement to the distributor;
(c) Manufacturers shall be responsible for maintaining detailed records for all "promotional activities" and making such records available to the commission upon request. These records shall include at least the following:
(i) The product or service being promoted;
(ii) The name of the licensed distributor and the name of any person directly or indirectly benefiting from a "promotional activity";
(iii) The value of any gift or service provided. The value shall be based on the cost to the manufacturer to provide such;
(iv) The date a "promotional activity" was provided;
(v) The place the "promotional activity" occurred, if applicable; and
(vi) The name of the owner, partner, officer, or other representative of the manufacturer who authorized the "promotional activity."
Can a manufacturer or distributor loan equipment to a distributor or operator?
(6) A manufacturer or distributor may loan gambling equipment to licensed distributors or operators subject to the following restrictions:
(a) Equipment loans may be made for the following reasons:
(i) To a distributor for displaying the manufacturer's products, limited to one such loan, per product, per calendar year;
(ii) To a licensed distributor or operator for training of employees, limited to one such loan, per calendar year; or
(iii) For use as a replacement by a licensed operator while awaiting delivery of a product that has been purchased, leased, or removed for repair.
(b) Equipment loans shall be limited to ninety days per loan.
(7) This section shall not apply to transactions conducted with tribal governments operating class III casinos under tribal/state compacts or with management companies operating such casinos on the behalf of tribal governments.
WAC 230-12-330 Availability of gambling equipment and related products and services--Prices--Contracts--Discounts--Restrictions--Exceptions. Manufacturers and distributors shall make their products and services available to all licensees without discrimination. Except as authorized by this section, gambling equipment, devices, related paraphernalia or supplies, and services shall be offered to any licensee wishing to purchase such, for the same price and terms. The following restrictions, procedures, and exceptions apply to prices and terms related to sales of gambling-related products or services:
What are the restrictions on prices of gambling products and services?
(1) Discriminatory prices are prohibited. Prices are considered discriminatory when identical or similar items or services are offered to different persons for a different price or under different terms or conditions: Provided, That prices set under the following criterion shall not be considered discriminatory:
(a) Prices that are established in advance and available for every licensee's review prior to accepting a sales order utilizing such. For purposes of this section, prices are deemed to be established and available when they have been mailed or transmitted by facsimile to the commission at least forty-eight hours prior to completing sales transactions or accepting orders for products or services;
(b) Separate and different price schedules established by manufacturers or distributors for transactions conducted with licensees at different marketing levels;
(c) Prices that are based upon the delivery location of an item or service. If the price of an item or service is based upon "free on board" (FOB) terms at a specific location, such price may be varied based upon delivery at a different location, if such is justified by objective evidence. The burden of proof regarding such price differentiation is borne by the seller. Such prices are subject to all other requirements of this section; and
(d) Short-term price reductions or "sales" are authorized when:
(i) Every licensee and the commission are given notice of prices and terms prior to completing any sales transaction, and every licensee is afforded an opportunity to participate. Licensees and the commission will be considered to have received notice when full details of the sale, including price and terms, have been mailed or transmitted by facsimile to every licensee and the commission at least forty-eight hours prior to accepting orders for products or services that are being offered at the sale price; and
(ii) Any limitations or conditions must be clearly stated in the sale advertisement or notice.
Can licensees enter into contracts that either require or restrict use of gambling-related products or services?
(2) Except as set forth in WAC 230-12-230, licensees shall not enter into contracts that directly or indirectly restrict the distribution of gambling equipment, devices, paraphernalia, supplies, or services. The following transactions are prohibited:
(a) Any operator or distributor shall not agree to deal in, purchase, sell, lease, or operate any particular brand or brands of gambling device or equipment to the exclusion of any other brand of gambling device or equipment; and
(b) No manufacturer or distributor, or licensed representative or employee thereof, shall sell or offer to sell, lease, or loan any gambling-related product, service, or merchandise contingent upon the purchase or order of another product, service, or merchandise.
Are discounts allowed?
(3) Manufacturers and distributors may offer discounts of base prices that are authorized by this section when such discounts are nondiscriminatory. For purposes of this title, discounts will be deemed to be nondiscriminatory when:
(a) Offered to all licensees on the same terms;
(b) The scheme upon which the discount is based is in writing and submitted to the commission at least forty-eight hours prior to being offered;
(c) The discount applies only to a single sales transaction and does not relate to a level of sales made over a period of time; and
(d) The level of a discount is based only upon any of the following criteria:
(i) The amount of product sold or the dollar value of the sale;
(ii) Whether the purchaser makes full payment in cash at time of sale;
(iii) Whether the purchaser makes final payment for a transaction within a predetermined time period for sales made under "trade account" terms; and
(iv) Any other structure or terms, subject to pre-approval by the director. The manufacturer shall pay for the approval process and any additional requirements necessary to assure compliance with this section.
Can manufacturers or distributors elect to limit their sales to a specific market level?
(4) A licensed manufacturer or distributor may elect to limit sales of products and services to licensees at any marketing level. For purposes of this section, marketing levels are defined as manufacturer, distributor, and operator. If a manufacturer or distributor elects to make sales to any licensee at a marketing level, sales must be made to all licensees at the same level: Provided, That transactions between a manufacturer and distributor, when both are owned and operated by the same persons, are considered internal to that business. For purposes of this section, internal transactions are not considered sales at a different marketing level. All other restrictions of this section apply to such sales. For example:
(a) A licensed manufacturer may elect to sell or provide products and services only to distributors; or
(b) A licensed distributor may elect to sell or provide products and services only to operators.
Can manufacturers or distributors establish minimum purchase requirements?
(5) Manufacturers or distributors shall not set minimum purchase requirements for any product or service, except as authorized below:
(a) Minimum purchase requirements are not allowed for purchases made under prepaid or cash on delivery (COD) terms: Provided, That manufacturers may establish and charge a fee for services to handle an order for products or services below a specified level, if such policy is in writing and provided to distributors prior to accepting orders;
(b) Minimum purchase restrictions may be set for transactions between manufacturers and distributors that are conducted using trade account terms, as authorized by WAC 230-12-340;
(c) Discounts may be set based upon a minimum purchase amount as authorized by subsection (3) of this section; and
(d) Minimum purchase restrictions may be placed on products being offered for a bargain or "sale" price if a bargain or "sale" price is established for any and all levels of purchases under such terms.
Are there restrictions on the sale of nongambling products or services sold to licensees by manufacturers or distributors?
(6) A manufacturer or distributor shall not grant licensees, nor shall such licensees accept, more favorable prices, credit terms, or other arrangements than those extended to nonlicensed persons purchasing identical or similar nongambling goods or services. The price of nongambling goods or services sold to licensees shall be in conformity with the open market price in the locality where sold. The terms of such sales shall not exceed those normally granted in accordance with the customary business practice of the particular trade in the locality where such sales are made.
Do the restrictions set forth in this section apply to class III transactions?
(7) This section shall not apply to transactions conducted with tribal governments operating class III casinos under tribal/state compacts or with management companies operating such casinos on the behalf of tribal governments.
WAC 230-12-340 Sale of gambling devices, equipment, supplies, paraphernalia, and related services--Credit prohibited--Exceptions. The use of credit in the sale of gambling equipment, devices, related supplies or paraphernalia, and services is prohibited. Except as authorized by this section, all sales of such shall be transacted on a cash basis. The following definitions, restrictions, and procedures apply to this section:
What definitions apply to this section?
(1) For purposes of this section, the following definitions apply:
(a) A "cash basis" means full payment is received by the seller on or before actual delivery of the product or service to the purchaser;
(b) A "trade account" is a payment system that allows distributors to place orders for inventory or services from manufacturers or distributors and to make payment for such within a specific period of time after shipment of the product or completion of the service;
(c) "Prescribed time period" is the maximum period of time a distributor has to pay for purchases of goods or services made under trade account terms prior to being restricted to cash basis terms. The time period begins when a product is shipped or service completed and ends on the date payment is actually delivered to the manufacturer or distributor, or if delivered by the U.S. mail, the postmark date of the envelope containing the payment. For purposes of this section, prescribed time period means:
(i) No later than sixty days after shipment of the products or completion of the services for all sales made on or after the effective date of this section and before October 1, 1998; and
(ii) No later than thirty days after shipment of the products or completion of the services for all sales made on or after October 1, 1998.
What transactions are exempt from the requirements of this section?
(2) For purposes of this WAC title, the following transactions are authorized and shall not be deemed as credit or loans of money when applicable requirements are met:
(a) Purchases of goods and services from manufacturers or distributors when paid for by checks that meet the requirements of WAC 230-12-350;
(b) Purchases of goods or services by distributors from manufacturers or other distributors when utilizing trade account terms and the requirements of subsection (3) of this section are followed;
(c) Promissory notes between manufacturers and distributors for payment of debts incurred prior to the effective date of this section when such notes are issued under the conditions set forth in this section;
(d) Purchases made under capital lease agreements when the requirements of this section are followed;
(e) All transactions between manufacturers or distributors and tribal governments or companies certified to manage class III gambling activities operated under a tribal/state compact are exempt from all provisions of this section; and
(f) The sales of nongambling equipment, fixtures, supplies, or commodities to licensees are exempt from all provisions of this section when the requirements of WAC 230-12-330 are met.
Can distributors purchase gambling-related inventory or services on other than a cash basis?
(3) Manufacturers and distributors may allow distributors to establish "trade accounts" to purchase gambling-related inventory or services without making immediate payment under the following conditions:
What restrictions apply to trade accounts?
(a) Trade account terms, if offered to any distributor, shall be made available to all distributors without discrimination: Provided, That trade accounts may be restricted to distributors that:
(i) Meet objective credit criterion established by a manufacturer or distributor. Such criterion must be in writing, available to the commission for review, and provided to any distributor upon request. A manufacturer or distributor may include a distributor's payment history as a part of the trade account approval criterion;
(ii) Meet minimum purchase requirements established by the manufacturer: Provided, That the minimum purchase requirement shall not be greater than five hundred dollars per transaction;
(b) Trade account terms shall not allow a manufacturer or distributor to gain any ownership or financial interest in a licensee. This section is not intended to prohibit or restrict a manufacturer or distributor from gaining a security interest in inventory sold for credit, as authorized by the Uniformed Commercial Code: Provided, That this section shall not allow a manufacturer to obtain an interest in inventory sold by any other manufacturer under trade account terms;
(c) A distributor shall make full payment for all goods or services purchased under trade account terms within the prescribed time period. Failure to pay within the prescribed time period may be deemed solicitation of credit by the distributor.
What must a manufacturer or distributor do when a distributor fails to make payments for trade account purchases within the prescribed time period?
(4) When a distributor fails to pay for goods or services purchased under trade account terms within the prescribed time period, the debtee manufacturer or distributor shall comply with the procedures set forth below. Failure to comply with these procedures may result in the manufacturer or distributor being deemed to have extended credit to the distributor. The following procedures must be followed when a distributor fails to make required payments:
(a) Notify the delinquent distributor and the commission of failure to pay by telephone no later than the end of the next business day;
(b) Place the delinquent distributor on a cash basis for all purchases of goods and services no later than the end of the third business day after the default;
(c) Notify the commission in writing no later than the end of the fifth business day after default. Written notification shall include at least the following:
(i) The distributor's name;
(ii) The invoice or shipping order numbers involved in the transaction;
(iii) The dollar amount of the delinquent account;
(iv) The date the item was shipped or service was provided;
(v) A statement of whether the distributor has filed a complaint regarding billings and whether the amount owed is in dispute;
(vi) Any agreements between the parties to clear the debt, including terms, payment schedule, and any third party guarantors of the debt;
(vii) The interest rate or service charge, if such is charged;
(viii) Whether a security interest in the inventory or any other assets of the licensed distributor or individual owners of the distributor has been obtained or is in effect; and
(ix) Any other information requested by the commission.
What action will the commission take after being notified in writing that a distributor has failed to make timely payment on a trade account?
(5) If the director does not receive notice that the debtor distributor has corrected the conditions which caused the default prior to the end of the seventh business day after initial notice was received, all licensed manufacturers and distributors will be notified that such distributor has been restricted to cash basis terms. Initial notification shall be by telephone or facsimile on the next business day, followed by written notification within ten days. The manufacturer or distributor shall immediately notify the commission by telephone or facsimile upon receipt of payment. If notified prior to the end of the seventh business day after initially notifying the commission, the director will stop all proceedings and allow the reporting manufacturer or distributor to continue trade account terms without taking further action;
What action shall manufacturers and distributors take after notification by the director that a distributor has been restricted?
(6) Upon receipt of notification from the commission that a distributor has been restricted, manufacturers and distributors shall immediately cease sales, shipments of products, and providing of services to the delinquent distributor on other than a cash basis;
How long will the restrictions last?
(7) Any distributor that has been restricted by the director under this section shall remain restricted until all delinquent accounts with any reporting manufacturer or distributor are current and the director has been notified of such. The director shall utilize the following guidelines and procedures for removing trade account sales restrictions:
(a) First delinquent payment within a calendar year - The director shall notify all manufacturers by telephone or facsimile no later than the next business day after receiving notification that a delinquent distributor is current and that trade account sales may continue. Written notification shall be made within ten days; or
(b) Second and subsequent violations within a calendar year - The director may restrict a distributor to a cash basis for a period not to exceed sixty days beginning on the date of notification that a delinquent distributor is current. In this event, the director shall notify the delinquent distributor and all manufacturers and distributors in writing of the date when trade account terms may be continued.
What are the procedures and restrictions for gambling-related purchases occurring prior to the effective date of this section?
(8) Gambling-related products or services purchased by distributors prior to the effective date of this section shall be paid in full no later than ninety days after the effective date of this section. Any distributor failing to comply with this requirement shall be restricted to making purchases on a cash basis until all such accounts are paid in full. The director shall utilize the procedures set forth in subsections (5), (6), and (7) of this section to impose or remove restrictions imposed under this subsection: Provided, That debtor manufacturers and distributors may convert amounts owed by distributors at the effective date of this section into a promissory note utilizing the procedures and restrictions set forth in this section:
What are the procedures and restrictions for conversion of trade debt outstanding at the effective date of this section to a promissory note?
(9) Manufacturers and distributors who elect to convert amounts owed from distributors at the effective date of this section to a promissory note shall utilize the following procedures and restrictions:
(a) Written notification of conversion to a promissory note, including a copy of such note, must be received by the commission no later than ninety days after the effective date of this section;
(b) The promissory note shall not grant the manufacturer the ability to influence the management of the distributor's business: Provided, That in the case of legal bankruptcy, the terms and conditions of a bankruptcy order shall govern;
(c) The promissory note shall amortize the balance owed over a certain period that does not exceed sixty months;
(d) Terms of the promissory note shall require the following:
(i) Minimum monthly payment of the principal;
(ii) Interest rate, if any is imposed;
(iii) Full definition of all collateral; and
(iv) Adequate details of the procedures to be followed for late payments and/or default.
(e) A debtor manufacturer or distributor shall immediately notify the commission if a distributor fails to abide by the terms of the note and the process being pursued to correct the situation. The director may, depending upon circumstances, impose restrictions on purchases under trade account terms for the delinquent distributor.
What are the restrictions and procedures governing the use of capital lease agreements?
(10) Licensed manufacturers and distributors may sell gambling equipment such as dispensers, bingo blowers, roulette wheels, etc. and gambling-related support equipment such as scales, counters, computers, computer software, tables, chairs, signs, etc. through capital lease agreements or other financing arrangements to operators subject to the following conditions and requirements:
(a) The cost of a single item, or group of similar and related items included in the sale, exceeds one thousand dollars;
(b) The term of the contract does not exceed forty-eight months;
(c) All terms of the contract are in writing and copies of such agreements are provided to the commission within thirty days of execution;
(d) The manufacturer or distributor retains only a security interest in the item sold and cannot obtain any ownership interest in the licensee, or exercise any control over the use of the item in the licensed activity;
(e) The amount of payments is not based on the size or level of gambling activity and is determined by use of a standard amortization schedule for the term and stated interest rate;
(f) The interest rate charged by the contract is set at the time of sale and does not vary during the term of the contract; and
(g) The contract does not require the purchaser to directly or indirectly purchase any other products or services from the seller.
Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
WAC 230-12-350 Use of checks to purchase gambling equipment, products, and services--Restrictions. Checks may be used by licensed operators and distributors to purchase gambling equipment, devices, related supplies or paraphernalia, and services in lieu of cash under the following conditions:
What are the restrictions on checks utilized for payment of gambling products or services?
(1) Checks must be drawn on the licensee's business account: Provided, That personal checks drawn on the account of an owner, partner, or officer or substantial interest holder of a corporate licensee may be accepted;
(2) Checks received by distributors from operators must be negotiable and dated on or before the delivery date of the product or service. Checks shall not be postdated;
When must a check be deposited?
(3) Checks shall not be held and must be presented for payment at the manufacturer's or distributor's bank within the prescribed time frames. Failure to present checks within the prescribed time period shall be prima facie evidence of extension of credit to the drawer licensee by the manufacturer or distributor. Prescribed time frames are as follows:
(a) Checks received from operators shall be deposited within ten calendar days after the date the product or service was delivered; and
(b) Checks received from distributors shall be deposited within ten days of the date received or, if delivered by mail, thirteen days from the postmark of the envelope containing the payment.
What are the procedures for handling a dishonored check presented to a distributor by an operator?
(4) Checks from licensed operators that are initially returned by a bank for lack of sufficient funds may be deposited again if within five banking days after return by the bank. If dishonored by the bank a second time, the distributor shall:
(a) Deliver dishonored checks to an owner, manager, or officer of the licensee within seven banking days after return from the bank and demand payment in cash. If unable to deliver such checks to an owner, manager, or officer of the licensee within seven days, the distributor shall notify the commission; and
(b) Upon being presented with a check returned by the bank, licensees shall immediately replace such check with cash or a cash equivalent such as a money order, certified check, or other guaranteed negotiable instrument; or
(c) Failure of an operator to replace a check returned by a distributor with cash or a cash equivalent shall be prima facie evidence of solicitation of credit and must be reported to the commission by the distributor within seven days.
What are the procedures for handling a dishonored check presented to a manufacturer or distributor by a distributor?
(5) Checks from distributors that are initially returned by a bank for lack of sufficient funds shall be processed by manufacturers or distributors using the following procedures:
(a) Checks received for payment for a prepaid or COD transaction may be deposited again if within five banking days after return by the bank. If dishonored by the bank a second time, the manufacturer or distributor shall:
(i) Contact an owner, manager, or officer of the distributor within seven banking days by telephone or facsimile and demand payment by a certified check, postal money order, or other cash equivalent. If unable to contact an owner, manager, or officer within seven days, the manufacturer shall notify the commission;
(ii) Upon receipt of a cash equivalent to replace the dishonored check, the manufacturer or distributor shall return the check to the distributor by mail;
(iii) If a distributor that is presented a dishonored check does not immediately replace such check, the manufacturer or distributor shall cease all sales to the distributor and notify the commission within seven days. Failure to replace a dishonored check with cash or cash equivalent shall be prima facie evidence of solicitation of credit by the distributor.
(b) If payment is for a transaction completed with trade account terms, the manufacturer:
(i) May deposit the check again if the prescribed time period for payment has not passed; or
(ii) May contact an owner, manager, or officer of the distributor by telephone or facsimile and demand payment by a cash equivalent such as a certified check or postal money order;
(iii) If the bank clears the check or payment is otherwise received prior to the prescribed time period for payment, no further action is required; and
(iv) If the prescribed time period for payment has passed and the dishonored check is not replaced prior to such, the manufacturer shall comply with the procedures set forth in WAC 230-12-340 for failure to make timely payment under trade account terms.