WSR 97-20-041

PROPOSED RULES

GAMBLING COMMISSION

[Filed September 24, 1997, 9:02 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 97-17-030 dated August 12, 1997.

Title of Rule: Raffle rule, WAC 230-20-325 Manner of conducting a raffle and 230-08-070 Raffle records.

Purpose: Change raffle rules to allow one free raffle ticket when a certain number of tickets (numbered to be determined by licensee) are purchased by customer.

Statutory Authority for Adoption: RCW 9.46.070 (3), (8), (11), and (14).

Summary: See Purpose above.

Reasons Supporting Proposal: Rule change would allow nonprofits to sell raffle tickets at a discount, thereby stimulating sales.

Name of Agency Personnel Responsible for Drafting: Soojin Kim, Lacey, (360) 438-7654 ext. 310; Implementation: Ben Bishop, Lacey, (360) 438-7654 ext. 302; and Enforcement: Carrie Tellefson, Lacey, (360) 438-7654 ext. 373.

Name of Proponent: James H. Williams, private.

Agency Comments or Recommendations, if any, as to Statutory Language, Implementation, Enforcement, and Fiscal Matters: Agency may develop an alternative rule to address concern.

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

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

Proposal Changes the Following Existing Rules: The existing rule, WAC 230-20-325, states "Each raffle ticket must be sold for the same price as every other raffle ticket being used for that particular raffle."

The proposed change would allow a raffle license to offer one free ticket based on a predetermined number of tickets purchased.

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.

RCW 34.05.328 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: Shilo Inn, 707 Ocean Shores Boulevard N.W., Ocean Shores, WA 98569, on November 14, 1997, at 10:00 a.m.

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

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

Date of Intended Adoption: November 14, 1997.

September 22, 1997

Soojin Kim

Rules and Policy Coordinator

AMENDATORY SECTION (Amending WSR 95-07-093, filed 3/17/95, effective 7/1/95)

WAC 230-08-070 Raffle records. A detailed record shall be prepared for each raffle conducted. Unless otherwise noted in this section, organizations licensed to conduct raffles at Class "D" or below and organizations conducting unlicensed raffles under the authority of RCW 9.46.0315 or 9.46.0321 are authorized to use reduced recordkeeping requirements as set out in WAC 230-08-015. Organizations licensed to conduct raffles at or above Class "E" or conducting raffles under any class of license by utilizing alternative drawing formats, as authorized by WAC 230-20-325, shall comply with the following recordkeeping procedures:

(1) All data required shall be recorded in a standard format prescribed by the commission;

(2) At least the following data shall be recorded:

(a) Beginning and ending ticket numbers;

(b) The total number of unsold tickets with ticket numbers that are below the highest ticket number sold;

(c) Total gross gambling receipts;

(d) A description of each prize including the cost, or if contributed to the organization, the fair market value;

(e) The name, address, and telephone number of each winner of a prize with a cost or fair market value in excess of twenty dollars;

(f) Except as authorized by WAC 230-20-335, details of disbursement to and return of tickets from sellers. Minimum details shall include:

(i) The name of the person receiving the tickets;

(ii) The number of tickets disbursed;

(iii) The number of tickets returned; ((and))

(iv) The number of tickets given under the one free ticket method; and

(v) All funds returned;

(3) In addition to the prescribed format, the following records shall be maintained:

(a) Validated deposit receipts for each deposit of raffle proceeds;

(b) All winning tickets;

(c) All ticket stubs for raffles that participants are not required to be present at the drawing;

(d) All unsold tickets for individual raffles for which gross gambling receipts exceed five thousand dollars;

(e) Invoices and other documentation recording the purchase or receipt of prizes; and

(f) Invoices and other documentation recording the purchase of tickets and other expenses of the raffle;

(4) Except as authorized by WAC 230-20-335, these records shall be maintained for a period of not less than three years from the end of the licensee's fiscal year in which the raffle was completed;

(5) Records for each individual raffle shall be completed and available for review by commission staff and local law enforcement or taxing authorities no later than thirty days following the drawing: Provided, That this subsection shall not restrict commission staff or local law enforcement authorities from review of any required records prior to the allowed completion date; and

(6) Records shall be maintained at the main administrative or business office of the organization that is located within Washington state and available for commission review or audit upon request. Organizations that do not have an administrative or business office located within Washington state structured to include more than one chapter or other subdivided unit that conducts raffles under the parent organization's license, shall designate records custodians that reside in Washington state. Such custodians shall be responsible for retaining all original records and making such available for review or audit at any reasonable location within seven days of a request by commission staff: Provided, That the director may authorize an organization to maintain records at alternative locations if the organization has demonstrated the ability and desire to comply with all commission requirements. Records maintained under such an agreement shall be made available for commission review and audit at any designated location within seven days. The director may revoke this authority at any time by providing written notice. A request to maintain records at alternative locations shall include at least the following:

(a) The conditions that preclude or restrict compliance with normal records maintenance requirements of this subsection, including costs;

(b) The address of the location where all records will be maintained;

(c) If such records are retained outside the state of Washington, the name, address, and telephone number of a resident of the state of Washington who is authorized by the organization to accept a request for records;

(d) The name, address, and telephone number of a primary and alternate records custodian; and

(e) A notarized statement by the chief executive officer of the organization acknowledging responsibility for providing records and that failure to comply with a request for records within the allotted time may result in suspension or revocation of all licenses held by the organization.

[Statutory Authority: RCW 9.46.070. 95-07-093, 230-08-070, filed 3/17/95, effective 7/1/95. Statutory Authority: RCW 9.46.070 (11) and (14). 89-07-045 (Order 188), 230-08-070, filed 3/14/89. Statutory Authority: RCW 9.46.070 (8) and (11). 83-11-034 (Order 133), 230-08-070, filed 5/16/83.]

AMENDATORY SECTION (Amending Order 303, filed 11/21/96, effective 12/22/96)

WAC 230-20-325 Manner of conducting a raffle.

What are the general requirements for conducting a raffle?

(1) All raffles shall be conducted by selling individual chances for not more than twenty-five dollars and awarding prizes by selecting winners by a random drawing from among all chances sold;

(2) All raffle chances shall be consecutively numbered tickets or other objects imprinted with letters or symbols that are not repeated within the population of all chances sold for a specific raffle;

(3) No person shall be required to obtain more than one chance to enter a raffle;

What additional requirements apply to raffles offered to the general public and raffles that do not require the winner to be present at the drawing?

(4) Raffle chances sold to the general public or for raffles that do not require the winner to be present at the drawing shall consist of a ticket that includes a stub or other detachable section bearing a duplicate number, letter, or symbol corresponding to the number, letter, or symbol on the ticket or object representing the player's chance. The portion retained by the raffle operator shall include the participant's name, complete address, telephone number, and/or other information necessary to notify the winner;

What information must be provided to raffle participants and when must such information be provided?

(5) All participants in a raffle must be informed of all rules by which such prizes may be won at the time of sale of a chance. This information shall be provided by either imprinting such on the participant's portion of the ticket or otherwise providing such to each participant in writing. The following information shall be provided to each participant:

(a) The cost of each chance;

(b) All prizes available, whether cash or merchandise;

(c) Date and time of drawing;

(d) Location of drawing;

(e) Whether an entrant is required to be present at a raffle drawing in order to be eligible to win a prize; and

(f) Name of organization conducting raffle;

What are the restrictions on raffle entry fees and ticket prices?

(6) No person shall be required to pay, directly or indirectly, more than twenty-five dollars in order to enter any raffle: Provided, That the sale of more than a single ticket to a single participant or the sale of a booklet of tickets under approval of the director, as authorized by subsection (7) of this section, shall not be deemed a violation of this section;

(7) ((Each raffle ticket must be sold for the same price as every other raffle ticket being used for that particular raffle: Provided, That)) The director may authorize a licensee to sell tickets at a discount if:

(a) A petition for approval for discount sales is received at the Lacey headquarters office at least thirty days prior to beginning the raffle for which such approval is requested. Each petition for approval to sell discounted raffle tickets shall include at least the following:

(i) A full description of the discount scheme;

(ii) The accounting controls and records to be used; and

(iii) A facsimile of the tickets and booklet cover planned for the raffle.

(b) Any licensee requesting approval for this activity shall reimburse the commission for all costs in reviewing and approval of such under the guidelines set forth in WAC 230-08-017;

(c) The organization has a Class E or higher raffle license;

(d) Participants must be allowed to purchase a single ticket;

(e) Discounted tickets must be bundled into booklets that:

(i) Contain not more than five tickets;

(ii) Are not removed from the booklet and sold individually; and

(iii) The booklet cover of each ticket booklet is imprinted with a control number that meets the requirements of subsection (1) of this section.

(f) The maximum discount for a ticket bundled into a booklet is twenty percent of the single ticket price;

(g) The value of each ticket sold, net of the discount, shall be imprinted on the ticket; and

(h) Accounting procedures must be established that provide controls necessary to allow commission staff the ability to audit gross gambling receipts from such tickets;

What are the limits on what may be offered as a prize or reward for either selling or purchasing tickets?

(8) The raffle licensee may implement a raffle ticket selling method of offering one free ticket based on a predetermined number of tickets purchased, e.g., raffle ticket cost five dollars each or three raffle tickets for ten dollars or raffle ticket cost one dollar each or five raffle tickets for four dollars: Provided, That the following requirements are complied with:

(a) The one free ticket selling method must be printed on the ticket portion retained by the purchaser, e.g., "Raffle ticket cost: Five dollars each or five for twenty dollars";

(b) The method of accountability for each ticket sold must be printed on the ticket portion retained by the purchaser and on the stub retained by the raffle operator, e.g., "Ticket of";

(c) When the raffle tickets are purchased, the raffle operator will complete the ticket accountability. "Ticket of" that is printed on each ticket will be completed, e.g., "Ticket one of five" "Ticket two of five" "Ticket three of five" etc.;

(d) If the one free ticket offer is not accepted by the raffle ticket purchaser then one of one will be used to identify the ticket purchased, e.g., "Ticket one of one";

(e) A raffle ticket seller does not have to use this method, but if the one free ticket method is used then strict accountability of tickets sold must be maintained.

(9) No free tickets, or any opportunity to participate in the drawing of any raffle, shall be awarded or given to a person as a prize or reward for selling raffle tickets ((or for purchasing a certain number of raffle tickets)): Provided, That noncash incentive awards may be provided to members selling tickets if:

(a) Individual awards do not exceed a fair market value of ten dollars;

(b) The awards are based on the number of chances sold; and

(c) The fair market value of the total amount awarded for an individual raffle does not exceed two percent of the gross gambling receipts of the raffle;

What are the procedures for handling sold tickets?

(((9))) (10) Each ticket seller shall return to the licensee the stubs or other detachable section of all tickets sold. The licensee shall then place each stub or other detachable section of each ticket sold into a receptacle from which the winning tickets are to be drawn;

What are the procedures for conducting a raffle drawing?

(((10))) (11) The raffle license issued by the commission or a copy of the license shall be posted in plain view at the location at all times during the occasion when a drawing is being conducted.

(((11))) (12) The ticket collection receptacle shall be designed so that each ticket has an equal opportunity to be drawn: Provided, that an alternative drawing format to determine the winner may be utilized if such format is approved by the director before tickets are sold and the following requirements are complied with:

(a) The organization must have a current raffle license;

(b) The alternate format must meet the definition of a drawing as defined by WAC 230-02-500;

(c) The random selection process used in the alternative format shall be fully disclosed to each player prior to selling a ticket;

(d) Any alternate format utilized to determine the winners must be closely controlled by the licensee; and

(e) The written request to utilize an alternative drawing format shall contain, at a minimum, the following information:

(i) The time, date and location of the drawing;

(ii) The type of random selection process to be used and complete details of its operation;

(iii) The name and telephone number of the raffles manager; and

(iv) The signature of the organization's chief executive officer.