WSR 05-03-115



[ Filed January 19, 2005, 11:35 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 04-17-123.

Title of Rule and Other Identifying Information: WAC 230-20-115 Gift certificates -- Restrictions.

Hearing Location(s): Red Lion Hotel - Olympia, 2300 Evergreen Park Drive, Olympia, WA 98502, (360) 943-4000, on February 11, 2005, at 9:30 a.m.; and at the DoubleTree Guest Suites, 16500 Southcenter Parkway, Seattle, WA 98188, on March 11, 2005, at 9:30 a.m.

Date of Intended Adoption: March 11, 2005.

Submit Written Comments to: Susan Arland, Rules Coordinator, P.O. Box 42400, Olympia, WA 98504, e-mail, fax (360) 486-3625, by March 1, 2005.

Assistance for Persons with Disabilities: Contact Shirley Corbett by March 1, 2005, TTY (360) 486-3637 or (360) 486-3447.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: During the 2004 legislative session, EHB 3036 was adopted. This new law, codified as chapter 19.240 RCW, prohibits expiration dates on gift certificates.

Currently, charitable and nonprofit licensees award gift certificates as prizes, and sell gift certificates, with expiration dates. WAC 230-20-115 requires licensees to imprint expiration dates on certificates with dates no later than three months from the date issued for awarded certificates, and one year for sold certificates. The rule also requires that certificates not redeemed by the expiration date to be properly accounted for as a donation.

Licensees requested clarification on whether the new law prohibiting expiration dates applies to them, and if so, what, if any, changes they need to make.

Reasons Supporting Proposal: The proposed rule change eliminates the requirement of expiration dates on gift certificates; however, the change does not explicitly prohibit expiration dates because the Gambling Commission does not enforce the provisions of chapter 19.240 RCW, and because there are exceptions to the prohibition that may apply to licensees. For example, licensees may use expiration dates on gift certificates awarded as part of an awards or loyalty program or in other instances where no money or other thing of value is given in exchange for the gift certificate. Licensees will need to check with the text of the new law to determine whether they meet the criteria for exceptions.

Statutory Authority for Adoption: RCW 9.46.070.

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

Name of Proponent: Washington State Gambling Commission, governmental.

Name of Agency Personnel Responsible for Drafting: Susan Arland, Rules Coordinator, Lacey, (360) 486-3466; Implementation: Rick Day, Director, Lacey, (360) 486-3446; and Enforcement: Neal Nunamaker, Deputy Director, Lacey, (360) 486-3452.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Not applicable.

A cost-benefit analysis is not required under RCW 34.05.328. Not applicable.

January 19, 2005

Susan Arland

Rules Coordinator


AMENDATORY SECTION(Amending Order 371, filed 5/18/99, effective 7/1/99)

WAC 230-20-115   Gift certificates(( -- Requirements)).   ((Gift certificates may be sold or issued as prizes during bingo games and such shall not be deemed sales of bingo cards for purposes of this title if licensees comply with the following restrictions:

(1) If sold, gift certificates shall be paid for in full at the time they are issued;

(2) Gross receipts from the sale of certificates shall be deposited separately into the gambling account no later than five banking days after receipt. The certificate numbers relating to the funds deposited shall be a part of the deposit record;

(3) For gift certificates awarded as prizes, the value of the certificate is recorded as a bingo prize on the daily bingo records for the sessions in which the certificate was issued. The certificate will be supported by a bingo prize receipt;

(4) Gift certificates shall be purchased from a commercial printer or licensed distributor and shall be prenumbered, consecutively issued, and have a predetermined value with the following information imprinted:

(a) The name of the organization issuing the certificate;

(b) The date issued and an expiration date no later than three months from the date issued for awarded certificates; and one year for sold certificates;

(c) The dollar value of the certificate; and

(d) Any conditions or contingencies related to redemption of the certificate;

(5) Gift certificates may only be awarded as prizes under the following conditions:

(a) No prize shall include more than fifty dollars U.S. currency in gift certificates; and

(b) Redemption of gift certificates shall not be limited to a specific gambling activity: Provided, That certificates may be specific for bingo;

(6) Certificates shall only be redeemed for bingo cards, food, drink, merchandise, punch boards or pull-tabs upon the licensed premises from which it was issued;

(7) Certificates redeemed shall be applied against bingo activity and daily bingo records shall be modified in the cash reconciliation section of the approved record format to document the number and dollar value of certificates redeemed;

(8) A reconciliation of gift certificate inventory to certificates issued shall be performed on a monthly basis and will include the following control features:

(a) Purchase invoices will be retained for gift certificates and they will include the organization name, date of purchase, and beginning and ending certificate numbers;

(b) Redeemed certificates will be maintained with the corresponding daily sales records;

(c) Sold certificates not redeemed the expiration date shall be properly accounted for as a donation;

(d) Certificates issued as prizes and not redeemed by the expiration date shall be accounted for by decreasing prizes paid expense by the value of the expired certificate and eliminating the corresponding liability. This adjusting entry shall be clearly documented in the licensee's monthly records; and

(e) A certificate log will be maintained and will include the following:

(i) Certificate number;

(ii) Certificate value;

(iii) Date of issue;

(iv) Expiration date;

(v) Date of redemption; and

(vi) If awarded as a prize, the session and date the prize is awarded.)) Bingo operators may award gift certificates as bingo prizes or sell certificates to their customers under the following conditions:

(1) Standards for gift certificates. Gift certificates must be purchased from a commercial printer or licensed distributor and have the following information printed on them:

(a) A predetermined certificate number;

(b) A predetermined dollar value;

(c) The name of the organization issuing the certificate; and

(d) Any conditions or contingencies related to the redemption of the certificate.

(2) Awarding gift certificates as bingo prizes. When gift certificates are awarded as bingo prizes:

(a) The certificates must be issued consecutively;

(b) The value of the certificates cannot exceed fifty dollars per bingo prize;

(c) The certificates cannot be issued exclusively for punch boards or pull-tabs;

(d) The value of each gift certificate must be recorded as a bingo prize in the daily bingo records, under the session awarded; and

(e) The bingo prize receipt for the certificate must be kept with the daily bingo records.

(3) Selling gift certificates to customers. When gift certificates are purchased by customers:

(a) The certificates must be issued consecutively;

(b) The certificates must be paid for in full at the time of purchase; and

(c) All funds collected by the bingo operator must be deposited separately into the gambling account within five banking days. Each gift certificate number must be included with the deposit record.

(4) Redeemed gift certificates:

(a) Redeemed certificates must be kept with the corresponding bingo daily sales records;

(b) Gift certificates redeemed for bingo cards will not be considered sales of bingo cards; and

(c) The dollar value and number of certificates redeemed must be recorded in the cash reconciliation section of the daily bingo records.

(5) A monthly reconciliation of gift certificate inventory to certificates issued is required and must include the following controls:

(a) A gift certificate inventory log, which includes the following:

(i) Certificate number;

(ii) Dollar value of each certificate;

(iii) Date the certificate was sold or awarded as a bingo prize; and

(iv) Date the certificate was redeemed;

(b) Purchase invoices, which must include the:

(i) Name of the organization;

(ii) Date the gift certificates were purchased; and

(iii) Beginning and ending numbers on the gift certificates.

[Statutory Authority: RCW 9.46.070. 99-11-078 (Order 371), 230-20-115, filed 5/18/99, effective 7/1/99. Statutory Authority: RCW 9.46.070 (1), (11), (14). 98-04-024, 230-20-115, filed 1/28/98, effective 7/1/98. Statutory Authority: RCW 9.46.070 (1), (8), (11), (14), (16) and (20). 97-09-072, 230-20-115, filed 4/22/97, effective 7/1/97. Statutory Authority: RCW 9.46.070 (1), (8) - (11), (14), (16), (20). 96-07-078, 230-20-115, filed 3/19/96, effective 7/1/96.]

Washington State Code Reviser's Office