WSR 02-01-096

PROPOSED RULES

GAMBLING COMMISSION


[ Filed December 17, 2001, 1:03 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 01-21-064.

Title of Rule: Pull-tabs, amending WAC 230-30-033 Event pull-tab series -- Definitions -- Restrictions, 230-30-045 Pull-tab series with carry-over jackpots -- Definitions -- Requirements, and 230-30-072 Punchboard and pull-tab inventory control -- Retention requirements -- Audit adjustments.

Purpose: To clarify requirements related to pull-tab games and allow alternative methods of selling event pull-tabs.

Statutory Authority for Adoption: RCW 9.46.070.

Summary: Language was added to allow bingo floor workers to sell event pull-tab tickets while they are working the floor of the bingo hall, for example, from an apron. The proposed amendment is to clarify how a carry-over jackpot will be handled in the event a licensee sells or closes their business. This ensures the advertised prize is awarded and enables staff to track carry-over jackpot funds. Currently, commercial pull-tab licensees are required to retain pull-tab games for at least ninety days after the game is pulled if any prize won in that game was over the amount of $20. Language was added to clarify that in addition to the winning punches or pull-tabs, the flare must also be retained for the ninety-day period. This procedure ensures that all aspects of pull-tab games are available when audited by staff.

Reasons Supporting Proposal: See Purpose and Summary above.

Name of Agency Personnel Responsible for Drafting: Susan Arland, Lacey, (360) 486-3466; Implementation: Rick Day, Lacey, (360) 486-3446; and Enforcement: Bob Berg, Lacey, (360) 486-3452.

Name of Proponent: Staff, governmental.

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.

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: WestCoast Hotel Olympia, 2300 Evergreen Park Drive S.W., Olympia, WA 98502, (360) 943-4000, on February 15, 2002, at 9:30 a.m.

Assistance for Persons with Disabilities: Contact Shirley Corbett by February 1, 2002, TDD (360) 486-3637, or (360) 486-3447.

Submit Written Comments to: Susan Arland, Rules Coordinator, P.O. Box 42400, Olympia, WA 98504-2400, (360) 486-3466, fax (360) 486-3625, by February 1, 2002.

Date of Intended Adoption: February 15, 2002.

December 14, 2001

Susan Arland

Rules Coordinator

OTS-5342.1


AMENDATORY SECTION(Amending Order 398, filed 2/9/01, effective 3/12/01)

WAC 230-30-033   Event pull-tab series -- Definitions -- Restrictions.   Charitable or nonprofit bingo operators may use event pull-tab series under the following definitions and restrictions.


Definitions.


(1) The following definitions apply to this section:

(a) "Event pull-tab series" means a pull-tab series that includes a predetermined number of pull-tabs which allow a player to advance to an event round;

(b) "Event round" means a secondary element of chance where the prizes are determined based on pull-tabs which match specific winning numbers drawn in a bingo game. The winning numbers must fall within numbers 1 through 75.


Manufacturing restrictions.


(2) The following manufacturing restrictions apply to this section:

(a) An event pull-tab series shall be manufactured meeting all standards of construction included in WAC 230-30-103;

(b) An event pull-tab series may include instant winning prizes in addition to event round prizes;

(c) The flare shall clearly set out the following:

(i) All prizes available, in accordance with WAC 230-30-106;

(ii) The number of chances available to advance to the event round;

(iii) How the event round winner is to be determined; and

(iv) The number of winning pull-tabs at the instant winner level, and the number of winning pull-tabs at the event round level.


Operational restrictions.


(3)(a) The event pull-tab series must be played in a charitable or nonprofit bingo hall and must be played and completed within one bingo session;

(b) Prior to putting an event pull-tab series into play, the operator must fully disclose, in plain view, when the event round (which involves the second element of chance) will take place;

(c) Event pull-tab series must be available for purchase until immediately prior to the event round, unless the game has been completely sold out;

(d) A licensed manager must be present at all times an event pull-tab series is in play, including sales of tickets and selection of winners;

(e) Event pull-tab tickets may be sold by floor workers (for example, from aprons). This method of selling pull-tabs only applies to an event pull-tab series. Detailed accounting records shall be maintained as prescribed by commission staff to track the event pull-tab tickets issued to each floor worker.

(f) The following are prohibited for use with event pull-tab series:

(i) Substitute flares;

(ii) Bonus pull-tab series; and

(iii) Carry-over jackpots.

[Statutory Authority: RCW 9.46.070. 01-05-018 (Order 398), 230-30-033, filed 2/9/01, effective 3/12/01.]

OTS-5343.1


AMENDATORY SECTION(Amending Order 368, filed 12/1/98, effective 1/1/99)

WAC 230-30-045   ((Pull-tab series with)) Carry-over jackpot((s)) pull-tab series -- Definitions -- Requirements.   Operators may utilize pull-tab series that are specifically designed to include carry-over jackpots. The following definitions and requirements shall apply to these series:


Definitions.


(1) The following definitions ((which)) apply to pull-tab series with carry-over jackpots:

(a) "Carry-over jackpot" means a prize pool that is composed of accumulated contribution amounts from pull-tab series which, if not won, are carried over to other pull-tab series;

(b) "Contribution amount" means the amount from each series which is added to the carry-over jackpot; and

(c) "Guaranteed prizes" means all prizes available to be won, excluding the contribution amount or carry-over jackpot;


Prize payout requirements.


(2) The following requirements apply to prizes and prize payout calculations for carry-over jackpots ((prizes and prize payout calculations)):

(a) Guaranteed prizes must be 60% or more of gross receipts available from the pull-tab series;

(b) The contribution amount for each series may not be more than five hundred dollars;

(c) The contribution amount and the method of play shall be determined by the manufacturer and disclosed on the flare;


Maximum jackpot amount.


(d) At no time shall an accumulated carry-over jackpot exceed two thousand dollars. ((Once it reaches this amount, the two thousand dollars))


Jackpot must be carried over until won.


(e) Accumulated carry-over jackpot shall be carried over to subsequent series until won; ((and))


Jackpot must be paid out.


(((e))) (f) The carry-over jackpot must be awarded. Failure to have sufficient funds available, or any attempt by an operator to utilize carry-over jackpots for personal or organizational purposes, shall be prima facie evidence of defrauding the players in violation of RCW 9.46.190;


Maximum advance-level and consolation prize amount.


(((f) If the jackpot is awarded, the sum of the advance-level prize and the jackpot prize shall not exceed two thousand dollars.)) (g) If the jackpot is not awarded during a specific series and is carried over to a new series, the sum of the advance-level prize and the consolation prize for such series shall not exceed five hundred dollars;


Distribution of jackpots when a licensee ceases to operate.


(3) If a licensee ceases to operate gambling activities due to a sale, closure, or failure to maintain a valid gambling license, the carry-over jackpot shall be:

(a) Transferred to the new licensee, which has a valid gambling license. The new licensee shall operate the carry-over jackpot game until the prize is awarded;

(b) Awarded to a player by playing out the game prior to closure;

(c) Distributed to the Washington state council on problem gambling; or

(d) Distributed to a charitable or nonprofit organization licensed by the Washington state gambling commission;


Bonus pull-tab series.


(4) The following additional requirements apply to bonus pull-tab series with carry-over jackpots:

(a) If ((bonus pull-tab series are used:

(i))) the odds of winning the carry-over jackpot shall not exceed one winner out of ten chances, or the probability of winning the carry-over jackpot shall be .10 or higher, at the jackpot level;

(((ii))) (b) There may only be one advance level on the flare;

(((iii))) (c) There shall be at least one guaranteed chance to win the carry-over jackpot;

(((iv))) (d) All chances that are included on the flare shall be covered in a manner that prevents determination of the concealed numbers or symbols prior to being opened by the player. If perforated windows are used, the numbers or symbols must be covered by latex, foil, or other approved means; and

(((v))) (e) Standards for bonus pull-tab flares, as set forth in WAC 230-30-106, shall apply;


Maximum number of tickets.


(((b))) (5) The maximum ticket count for pull-tab series with carry-over jackpots shall be six thousand tickets; ((and))


Secondary win codes.


(((c))) (6) The secondary win codes on pull-tab series with carry-over jackpots must not repeat within a three-year period;

(((4) The following operating and recordkeeping requirements apply to pull-tab series with carry-over jackpots:

(a) If the chances of winning the carry-over jackpot are obtained and the carry-over jackpot is not won, the series shall be removed from play within seven operating days;

(b)))


Replacing series.


(7) Once it has been determined that no chances to win the carry-over jackpot remain in a series and the jackpot has not been won, the series shall be removed from play and replaced with a new series within seven operating days;


Transferring a jackpot to another game.

(8) If a carry-over jackpot is not won prior to removing a series from play, it shall be carried over to a new series within one operating day from when the series was removed from play. The accrued contribution amounts from all previous series shall be added to the contribution amount from the new series, up to two thousand dollars;

(((c) The following additional records must be maintained for pull-tab series with carry-over jackpots:))


Record names of winners.


(((i))) (9) For carry-over jackpots in the amount of 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;


Retention requirements.


(((ii))) (10) Each pull-tab series contributing to a specific carry-over jackpot must be retained as one series. The retention period for these series shall be as required by WAC 230-30-072(3): Provided, That the retention period shall start on the last day of the month in which the carry-over jackpot was awarded rather than when the series was removed from play; and

(((iii))) Operators are required to maintain a separate record documenting the flow of carry-over jackpots from one game to another in a format prescribed by the commission;


Recordkeeping on cash basis only - exception.


(((d))) (11) For the purposes of monthly records set forth in WAC 230-08-010, all operators shall record carry-over jackpots on a cash basis. This means that carry-over jackpot contribution amounts shall not be recorded on monthly records until the prize is awarded: Provided, That punch board/pull-tab licensees who also hold a Class F or above bingo license may accrue carry-over jackpot contribution amounts on their monthly records if the following conditions are met:

(((i))) (a) Prior approval is received from the director;

(((ii))) (b) The contribution amounts, up to the point where the jackpot reaches the maximum, shall be recorded as prizes paid on the monthly records;

(((iii))) (c) When the jackpot is awarded, only amounts not previously accrued, if any, shall be recorded as a prize paid;

(((iv))) (d) No more than five carry-over jackpot series shall be in play at once; and

(((v))) (e) If the contribution amount is not deposited with the net receipts (required by WAC 230-12-020), a proper audit trail and adequate security over the funds must be maintained; and


Director approval required.


(((5))) (12) The director shall approve the following aspects of all pull-tab games with carry-over jackpots prior to sale in Washington state:

(a) The design, payout, method of play, and flare for each pull-tab series;

(b) The manufacturing process for the pull-tab series and flares; and

(c) The secondary win code system for the pull-tab series.

[Statutory Authority: RCW 9.46.070. 98-24-089 (Order 368), 230-30-045, filed 12/1/98, effective 1/1/99; 98-15-074 (Order 359), 230-30-045, filed 7/15/98, effective 1/1/99. Statutory Authority: RCW 9.46.070 (2), (11) and (14). 97-19-083, 230-30-045, filed 9/16/97, effective 1/1/98.]

OTS-5333.1


AMENDATORY SECTION(Amending WSR 97-14-012, filed 6/20/97, effective 7/21/97)

WAC 230-30-072   ((Punch board and pull-tab)) Inventory control for punch boards and pull-tabs -- Retention requirements -- Audit adjustments.   Each punch board and pull-tab series purchased or otherwise obtained by an operator shall be controlled and accounted for. Each operator shall closely monitor punch board and pull-tab series purchased to assure that Washington state identification and inspection service stamp numbers are correctly entered in all records and each device purchased is properly recorded. The following control procedures apply:


Delivery of new games.


(1) The delivery/receipt of punch boards and pull-tab series shall be recorded as follows:


Invoice record.


(a) All purchases of punch boards or pull-tab series shall be recorded on a standard distributor's invoice, which will be used by the operator as a record to account for the punch board or pull-tab series between the time it is purchased and removed from play. Each invoice shall include space for the operator to attach the records entry label from the device and the date the device was placed out for play: Provided, That in lieu of the distributor's invoice recording system, licensees utilizing a computerized recordkeeping system may use a separate inventory record to account for purchases and uses of punch boards and pull-tabs as long as all necessary information is recorded. For these records, a computer generated facsimile of the stamp number may be imprinted on the inventory record in lieu of a records entry label.


Operator to review data and check ID stamps.


(b) At the time a punch board or pull-tab series is delivered, each operator will assure that all required data is correctly recorded by the distributor by comparing the actual Washington state identification and inspection services stamp number attached to each punch board and pull-tab series to the number recorded on the purchase invoice;


Invoice/inventory record - placing new games into play.


(2) At the time a punch board or pull-tab series is placed into play, each operator shall record in the allotted space on the distributor's invoice or the inventory record the following:

(a) Date placed into play; and

(b) Washington state identification and inspection services stamp number by attaching a records entry label.


Retention requirements.


(3) Each punch board or pull-tab series which is removed from play, together with the prize flare, all unplayed tabs, and all winning punches or tabs, shall be retained by the operator and made available for inspection, on the licensed premises, by commission agents and/or local law enforcement and taxing agencies. If devices are stored off premises, they must be produced for inspection upon demand. The minimum retention time for devices removed from play shall be:


Charitable.


(a) Charitable or nonprofit licensees - at least four months following the last day of the month in which the device was removed from play;


Commercial.


(b) Commercial stimulant licensees - at least two months following the last day of the month in which the device was removed from play: Provided, That the flare and all winning punches or pull-tabs in excess of twenty dollars shall be retained for at least ninety days following the day the device was removed from play: Provided further, That any commercial stimulant licensee who fails to comply with all recordkeeping requirements of this title or who misstates gross gambling receipts by more than one percent during any calendar quarter shall be required, after written notification by the director, to retain all devices for at least four months following the last day of the month in which it was removed from play. Any licensee so restricted may petition the director to remove the increased retention requirement imposed after a minimum of one year. Any such petition shall include documentation of the steps taken to correct recordkeeping deficiencies. For purposes of computing gross gambling receipts for determining compliance with the recording accuracy requirement, the procedures in subsection (6) of this section apply; and


Specially authorized games.


(c) Specially authorized pull-tab games may have retention requirements in addition to those set forth in subsections (a) and (b) of this ((subsection, additional retention requirements may apply to specially authorized pull-tab series;)) section.


Storage requirements.


(4) Each punch board or pull-tab series which is not placed out for play ((or returned to the distributor or manufacturer from whom it was originally purchased,)) must be retained on the licensed premises and made available for inspection by the commission and/or local law enforcement and taxing agencies: Provided, That devices may be stored off premises if they are produced for inspection upon demand;


Returning a game to the distributor or manufacturer.


(5) Each punch board or pull-tab series which has been placed out for play and is subsequently returned to a distributor or manufacturer is exempt from the retention requirements in subsection (3) of this section. The operator must retain a copy of the quality control report for the retention period normally applicable and must record each game on its monthly record required by WAC 230-08-010. If a device is returned to a distributor for any reason, including commission required recall, the operator shall record the date, invoice or credit memo number, and "returned" on the original purchase invoice or inventory record on the corresponding entry for the device;


Adjusting gross gambling receipts.


(6) For purposes of compliance with the requirements of this section and license class compliance, gross gambling receipts from the operation of punch boards and pull-tabs shall be adjusted for commission staff audit findings by using the following procedures:

(a) Unrecorded devices - gross gambling receipts shall be increased to account for any unrecorded devices purchased by an operator by adding the maximum amount that could be generated from the device, as determined by multiplying the total number of chances available by the price of a single chance. The adjustment shall be made to the records for the month in which the device was purchased; and

(b) Recording errors - gross gambling receipts shall be increased or decreased by an adjustment factor that is based upon the results of an audit of a sample of at least five devices randomly selected by the commission staff. The adjustment factor shall be determined by dividing the audited amount for the sample group of devices by the recorded amount for the same devices. The resulting product of this equation shall be applied to the total recorded gross gambling receipts for the calendar quarter from which the sample was taken and to the immediately preceding three quarters.

[Statutory Authority: RCW 9.46.070 (5), (6), (11), (14). 97-14-012, 230-30-072, filed 6/20/97, effective 7/21/97. Statutory Authority: Chapter 9.46 RCW. 94-24-054 (Order 261), 230-30-072, filed 12/5/94, effective 1/5/95. Statutory Authority: RCW 9.46.070. 94-07-084 (Order 250), 230-30-072, filed 3/16/94, effective 4/16/94. Statutory Authority: RCW 9.46.070 (7), (8), (9) and (17). 93-13-063 (Order 241), 230-30-072, filed 6/17/93, effective 7/18/93. Statutory Authority: RCW 9.46.070(6). 89-21-069 (Order 198), 230-30-072, filed 10/17/89, effective 11/17/89. Statutory Authority: RCW 9.46.070 (8), (11) and (14). 88-13-060 (Order 179), 230-30-072, filed 6/14/88.]

Washington State Code Reviser's Office