WASHINGTON STATE LOTTERY

[Filed March 29, 2019, 12:55 p.m.]

Preproposal statement of inquiry was filed as WSR 18-23-040.

Title of Rule and Other Identifying Information: WAC 315-38-020 Mega Millions definitions, changes language to align with national Mega Millions guidelines and eliminates player confusion; WAC 315-38-040 Ticket price, corrects the ticket price of a Mega Millions ticket; WAC 318-38-050 Play characteristics and restrictions, adds language to include lottery's mobile application; WAC 315-38-080 Prize structure and odds, eliminates the outdated prize structure table and includes the current one; WAC 315-38-090 Jackpot prize payments, updates annuity language from twenty-six annual installment payments to thirty graduated annual installment payments; and WAC 315-38-100 Second through ninth level prizes, eliminates unnecessary language related to the outdated prize structure table and provides language related to the current prize structure.

Hearing Location(s): On June 27, 2019, at 8:30 a.m., at Washington's Lottery, 814 4th Avenue East, Olympia, WA 98506.

Date of Intended Adoption: June 27, 2019.

Submit Written Comments to: Kristi Weeks, P.O. Box 4300, Olympia, WA 98504-3000, email KWeeks@walottery.com, fax 360-515-0416, by June 20, 2019.

Assistance for Persons with Disabilities: Contact Debbie Robinson, phone 360-791-3045, TTY 360-586-0933, email DRobinson@walottery.com, by June 20, 2019.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Proposed changes to WAC 315-38-020 will eliminate language that no longer applies to current definitions and replaces it with language that coincides with national Mega Millions rules.

Proposed changes to WAC 315-38-040 corrects the ticket price to reflect current national Mega Millions tickets, keeping language in alignment and eliminating confusion.

Proposed changes to WAC 315-38-050 removes redundant information and adds pertinent language regarding lottery's mobile application to reflect future and present technology.

Proposed changes to WAC 315-38-080 removes the prize structure table that is invalid and replaces it with the updated version. This will eliminate confusion for any individual who views the table for either prizes or odds.

Proposed changes to WAC 315-38-090 provides clarifying language regarding annuity prize payments and their frequency.

Proposed changes to WAC 315-38-100 removes irrelevant information pertaining to the removed prize structure table and provides clarifying language in relation to the new table.

Reasons Supporting Proposal: The current definition language in WAC 315-38-020 contains information that is no longer relevant to the updated definitions and also includes incorrect language. By clarifying the language[,] confusion will be eliminated in both players in [and] employees reading this section.

The current language in WAC 315-38-040 lists ticket prices that are no longer accurate. Changing the wording to reflect ticket prices that are in alignment with the correct national prices is necessary to remain transparent and truthful to lottery players.

The current language in WAC 315-38-050 does not allow for the lottery's mobile application to be included as a method of creating a digital barcode. By including this terminology[,] technological advancements in this area will be permitted.

The current prize structure table that is in WAC 315-38-080 is outdated and contains incorrect prize information and odds. Replacing this invalid table with a current one will reflect present prize levels, prize payout amounts, and odds.

The current annuity language in WAC 315-38-090 contains incorrect information regarding the amount of annuity installment payments that a claimant will receive. By updating this language to reflect current guidelines players will acquire pertinent information when choosing which payout method to select for their winnings.

The current language in WAC 315-38-100 comprises of information related to the outdated prize structure table that is no longer relevant or accurate. Removing this language that no longer applies and clarifying language on current prize structures will eliminate confusion both with players and employees.

Statutory Authority for Adoption: RCW 67.70.040 (1), (3).

Statute Being Implemented: RCW 67.70.040.

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

Name of Proponent: Washington's lottery, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation, and Enforcement: Kristi Weeks, 814 4th Avenue East, Olympia, WA, 360-810-2881.

A school district fiscal impact statement is not required under RCW 28A.305.135.

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

The proposed rule does not impose more-than-minor costs on businesses. Following is a summary of the agency's analysis showing how costs were calculated. [No further information supplied by agency.]

Legal Services Director

AMENDATORY SECTION(Amending WSR 05-11-050, filed 5/13/05, effective 6/13/05)

WAC 315-38-020Definitions.

Words and terms set forth below, when used herein, shall have the following meaning unless otherwise indicated:

(1) Annual/annuitized/annuity option: The manner in which the Mega Millions jackpot prize may be paid in ((twenty-six))thirty consecutive graduated annual installments. ((In order to allow for the efficient purchase of securities, the first installment may be of a different value from the second through the twenty-sixth installment. The second through the twenty-sixth installments shall be of equal value.))Payments shall escalate by a factor of five percent annually, and annual payments shall be rounded to the nearest even $1,000 increment to facilitate the purchase of securities.

(2) Authorized claim center: Any Mega Millions agent or retailer, or party lottery office, in the state where the winning official Mega Millions ticket was purchased.

(3) Cash option: The manner in which the Mega Millions jackpot prize may be paid in a single payment. ((The cash option amount shall be the proceeds of the sale of investments purchased to fund the particular winner's share of the annuitized jackpot prize. At the director's discretion, an initial payment of a portion of the cash option prize may be paid to the winner at the time the prize is claimed.))

(4) Claimant: Any person or entity submitting a claim form within the required time period to collect a prize for an official Mega Millions ticket. A claimant may be the purchaser, the person or entity named on a signed official Mega Millions ticket, the bearer of an unsigned official Mega Millions ticket, or any other person or entity who may seek entitlement to a Mega Millions prize payment in accordance with the Mega Millions rules and party lottery governing laws, policies and rules. No claimant may assert rights different from the rights acquired by the original purchaser at the time of purchase.

(5) Director(s): The chief officers of the party lotteries or any other persons to whom the directors' authority is lawfully delegated.

(6) Multistate agreement: The amended and restated multistate agreement regarding the Mega Millions game, or any subsequent amended agreement, signed by the party lotteries and including the Mega Millions official game rules, finance and operations procedures for Mega Millions, and online drawing procedures for Mega Millions.

(7) Official Mega Millions ticket: A game ticket, produced on official paper stock by a Mega Millions agent or retailer in an authorized manner, bearing player or computer selected numbers, game name, drawing date, amount of wager, and validation data.

(8) Party lottery or lotteries: One or more of the state lotteries ((established and operated pursuant to the laws of California, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Texas, Virginia, Washington state or any other state lottery)) authorized to become a member of Mega Millions.

(9) Parimutuel: Total amount of sales allocated to pay prize claimants at the designated prize level, divided among the number of winning official Mega Millions tickets at the designated prize level.

(10) Prize fund: That portion of Mega Millions gross sales ((in the party lottery states)) set aside for the payment of prizes. The prize fund for any drawing is expected to be fifty percent of sales, but may be higher or lower based upon the number of winners at each set prize level, as well as the funding required to meet the advertised jackpot.

(11) Purchaser(s): Player(s) of Mega Millions who purchase tickets in accordance with Mega Millions rules and party lottery governing laws, policies, and rules.

(12) Quick-pick, auto-pick or easy pick: A player option in which Mega Millions number selections are determined at random by computer software.

(13) Total prize liability: ((For any one Mega Millions drawing, total prize liability is calculated as all lower tier prizes won, plus the total sales for that drawing multiplied by 31.8% (allocation to the jackpot prize pool). The California state lottery's sales and prizes are excluded for purposes of this calculation.))The liability of the participating states in any Mega Millions game prize, or any Mega Millions add-on game prize, will be in accordance with the finance and operations procedures for Mega Millions.

(14) Subscription/season ticket: An extended, multidraw purchase option, which may be offered in Washington state at the discretion of the director of the Washington state lottery, wherein the same set(s) of numbers may be played for a specified number of consecutive drawings (for example, 26, 52 or 104), effective on a future date. Subscription/season tickets are distinguished from multidraw tickets which are effective for specified future drawings and are sold at the retailer level.

(15) Mega Millions agent, sales agent or retailer: A location in one of the states which are party lotteries and which is licensed or contracted and equipped by its respective state lottery to sell official Mega Millions tickets.

(16) Mega Millions panel or play area: That area of an official Mega Millions ticket identified by an alpha character and containing one field of five one-digit or two-digit player or computer selected numbers, and a second field of one one-digit or two-digit player or computer selected number.

(17) Mega Millions play/bet slip: A computer-readable form, printed and issued by each party lottery, used in purchasing an official Mega Millions ticket, with each play area consisting of two fields. ((The first))One field contains ((56))seventy areas/spaces numbered ((1))one through ((56; the second))seventy; and one field contains ((46))twenty-five areas/spaces numbered ((1))one through ((46))twenty-five.

(18) Mega Millions winning numbers - Five ((one-digit))one or ((two-digit))two digit numbers((,)) from ((1))one through ((56))seventy, and one ((one-digit)) or ((two-digit))two digit number from ((1 through 46))one to twenty-five, randomly selected at each Mega Millions drawing, which shall be used to determine winning Mega Millions plays contained on official Mega Millions tickets.

(19) Add-on game: A game that may provide prize amounts in addition to the Mega Millions prizes, other than the Mega Millions jackpot prize.

AMENDATORY SECTION(Amending WSR 02-15-122, filed 7/19/02, effective 8/19/02)

WAC 315-38-040Ticket price.

(1) Official Mega Millions tickets may be purchased for ((one))two dollars per play, or multiples thereof, at the discretion of the purchaser, in accordance with the number of game panels and inclusive drawings. The purchaser receives one play for ((each one))every two dollars wagered in Mega Millions.

(2) Subject to the laws and regulations governing each party lottery, the directors may collectively authorize the sale of official Mega Millions tickets at a discount for promotional purposes.

(3) Individual directors may authorize sale of official Mega Millions tickets at a discount for promotional purposes within their respective jurisdictions, provided that such discounted sales shall be reported to the party lotteries at full gross sales value.

AMENDATORY SECTION(Amending WSR 02-15-122, filed 7/19/02, effective 8/19/02)

WAC 315-38-050Play characteristics and restrictions.

(1) Official Mega Millions tickets may only be sold to persons eighteen years of age or older, providing such persons are not prohibited from playing Mega Millions in a party lottery state by the governing law, policies or rules of that party lottery, or any contract executed by that party lottery.

(2) Official Mega Millions tickets may not be purchased in any other party lottery state by any party lottery board member or commissioner; or any officer or employee; or any spouse, child, brother, sister or parent residing as a member of the same household in the principal place of residence of any such person.

(3) Under no circumstances will a claim be paid ((for either the jackpot prize or the second prize)) without an official Mega Millions ticket matching all game play, serial number, and other validation data residing in the selling party lottery's online gaming system computer, and such ticket shall be the only valid proof of the wager placed and the only valid receipt for claiming or redeeming any prize.

(4) Official Mega Millions tickets cannot be canceled.

(5) Purchasers may submit a manually completed Mega Millions play slip to a Mega Millions agent or retailer to have issued an official Mega Millions ticket. Mega Millions play slips shall be available at no cost to the purchaser and shall have no pecuniary or prize value, and shall not constitute evidence of purchase or number selections. The use of mechanical, electronic, computer generated or any other nonmanual method of marking play slips is prohibited, provided, however, that use of the official Washington state lottery mobile application to create a digital barcode is not prohibited.

(6) Purchasers may orally convey their selections to a Mega Millions agent or retailer to have issued an official Mega Millions ticket. Such selections shall be manually entered into the computer terminal by the Mega Millions agent or retailer.

(7) If player operated sales terminals or self-service terminals are available, purchasers may use such terminals for the purchase of official Mega Millions tickets.

AMENDATORY SECTION(Amending WSR 05-11-050, filed 5/13/05, effective 6/13/05)

WAC 315-38-080Prize structure and odds.

Winning number matches ((for the Field 1 of 5 of 56 and Field 2 of 1 of 46)) shall win prizes as set forth below, based on an estimated anticipated prize fund of fifty percent of gross sales and estimated percents of prize fund, as defined in WAC 315-38-020(10) and the Mega Millions multistate agreement:

((PRIZE LEVEL	FIELD 1 MATCH FIVE WHITE BALLS 1-56	FIELD 2 MATCH MEGA BALL 1-46	PRIZE	ODDS (per $1 play)	PERCENT OF PRIZE FUND
Jackpot Prize	5	1	Jackpot	1:175,711,536.00	63.60
Second	5	0	$250,000*	1:3,904,700.80	12.80
Third	4	1	$10,000*	1:689,064.85	2.90
Fourth	4	0	$150*	1:15,312.55	1.96
Fifth	3	1	$150*	1:13,781.30	2.18
Sixth	2	1	$10	1:843.75	2.38
Seventh	3	0	$7	1:306.25	4.58
Eighth	1	1	$3	1:140.63	4.26
Ninth	0	1	$2	1:74.80	5.34
Overall odds of winning: 1:40

Should total prize liability, exclusive of jackpot prize rollover from previous drawings, exceed three hundred percent of draw sales or fifty percent of draw sales plus $50,000,000, whichever is less, (both hereinafter referred to as the "liability cap"), the second through fifth prizes shall be paid on a parimutuel rather than set prize basis, provided, however, that in no event shall the parimutuel prize be greater than the set prize. The amount to be used for the allocation of such parimutuel prizes shall be the liability cap less the amount paid for the jackpot prize and prize levels six through nine.))

PRIZE LEVEL	MATCH (Field 1 + Field 2)	ODDS	PRIZE
Jackpot	5 numbers + mega ball	1 in 302,575,350	Jackpot
Second	5 numbers	1 in 12,607,306	$1,000,000
Third	4 numbers + mega ball	1 in 931,001	$10,000
Fourth	4 numbers	1 in 38,792	$500
Fifth	3 numbers + mega ball	1 in 14,547	$200
Sixth	3 numbers	1 in 606	$10
Seventh	2 numbers + mega ball	1 in 693	$10
Eighth	1 number + mega ball	1 in 89	$4
Ninth	Mega ball only	1 in 37	$2

AMENDATORY SECTION(Amending WSR 18-17-086, filed 8/14/18, effective 9/14/18)

WAC 315-38-090Jackpot prize payments.

(1) Prior to each drawing, the directors shall determine the estimated annuitized jackpot prize amount to be advertised. The advertised jackpot prize amount shall be the basis for determining the amount to be awarded for each Mega Millions panel matching all five of the five Mega Millions winning numbers drawn for Field 1 and the one Mega Millions winning number drawn for Field 2. No annuitized jackpot prize, when there is only one jackpot prize winning ticket, shall be less than $12 million.

(2) If, in any Mega Millions drawing, there are no Mega Millions panels that qualify for the jackpot prize category, the portion of the prize fund allocated to such jackpot prize category shall remain in the jackpot prize category and be added to the amount allocated for the jackpot prize category in the next consecutive Mega Millions drawing.

(3) If the annuitized jackpot prize divided by the number of Mega Millions panels matching all five of the five Mega Millions winning numbers for Field 1 and the one Mega Millions winning number for Field 2, is equal to or greater than $1,000,000, the jackpot prize(s) will be paid under the annuity option unless a cash option was selected by the winner(s), as follows:

(a) Cash option: When a player claims a jackpot prize or a share of a jackpot prize, the player may elect to be paid a one-time single cash option payment as defined by WAC 315-38-020(3), provided:

(i) The player must elect this cash option within sixty days of the presentation of his or her winning ticket, by following the procedure required by the lottery;

(ii) If the federal tax code is interpreted by federal authorities to require that this cash option be exercised within sixty days of the drawing for the prize, then (a)(i) of this subsection will not apply and instead, the player must elect this cash option within sixty days of the date of the drawing for the prize;

(iii) The player's choice of payment method as designated by signing the appropriate lottery form is final and may not be changed by the player at a later date;

(iv) Cash option jackpot prizes shall be paid in a single payment in accordance with the internal validation procedures and settlement procedures pursuant to the multistate agreement and the Washington state lottery. At the director's discretion, an initial payment of a portion of the cash option prize may be paid to the winner at the time the prize is claimed.

(b) Annuity: A player who chooses not to elect the cash option or who does not elect the cash option within the sixty-day limit will be paid his or her prize in ((twenty-six))thirty graduated annual installment payments. The initial payment shall be paid in accordance with the internal validation procedures and settlement procedures established by the multistate agreement and the Washington state lottery. The subsequent ((twenty-five))twenty-nine payments shall be paid annually to coincide with the month of the federal auction date at which the bonds were purchased. All such payments shall be made within seven days of the anniversary of the actual auction date. This date of payment of the subsequent payments is subject to the discretion of the director of the Washington state lottery, acting in the best interest of the lottery.

(4) After the player has made his or her choice of payment method, the lottery will validate the claim, including a debt check pursuant to WAC 315-06-125, and pay the prize as appropriate.

(5) In the event multiple Mega Millions panels match all five of the five Mega Millions winning numbers for Field 1 and the one Mega Millions winning number for Field 2, and the annuitized Mega Millions jackpot prize divided by the number of winning game panels is less than $1,000,000, each Mega Millions jackpot prize winner shall be paid an amount equal to the "cash equivalent grand/jackpot prize," as defined by the multistate agreement, divided equally by the number of jackpot prize winners. Each such jackpot prize winner will be paid in a single cash payment.

AMENDATORY SECTION(Amending WSR 05-11-050, filed 5/13/05, effective 6/13/05)

WAC 315-38-100Second through ninth level prizes.

(1) Each Mega Millions ((panels matching five of the five Mega Millions winning numbers drawn for Field 1, but not matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a second prize of $250,000 subject to subsection (5) of this section.

(2) Mega Millions panels matching four of the five Mega Millions winning numbers drawn for Field 1 and the Mega Millions winning number drawn for Field 2 shall be entitled to receive a third prize of $10,000 subject to subsection (5) of this section.

(3) Mega Millions panels matching four of the five Mega Millions winning numbers drawn for Field 1 but not matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a fourth prize of $150 subject to subsection (5) of this section.

(4) Mega Millions panels matching three of the five Mega Millions winning numbers drawn for Field 1 and the Mega Millions winning number drawn for Field 2 shall be entitled to receive a fifth prize of $150 subject to subsection (5) of this section.

(5)))second through ninth prize shall be paid in one payment.

(2) Should total prize liability, exclusive of jackpot prize rollover from previous drawings, exceed three hundred percent of draw sales or fifty percent of draw sales plus $50,000,000, whichever is less, (both hereinafter referred to as the "liability cap"), the second ((through fifth))and third prizes shall be paid on a parimutuel rather than ((set))fixed prize basis, provided, however, that in no event shall the parimutuel prize be greater than the set prize. The amount to be used for the allocation of such parimutuel prizes shall be the liability cap less the amount paid for the jackpot prize and prize levels ((six))four through nine. The California state lottery's sales and prizes are excluded for purposes of the liability cap calculation.

(((6) Mega Millions panels matching two of the five Mega Millions winning numbers drawn for Field 1 and matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a sixth prize of $10.

(7) Mega Millions panels matching three of the five Mega Millions winning numbers drawn for Field 1 but not the Mega Millions winning number drawn for Field 2 shall be entitled to receive a seventh prize of $7.

(8) Mega Millions panels matching one of the five Mega Millions winning numbers drawn for Field 1 and the Mega Millions winning number drawn for Field 2 shall be entitled to receive an eighth prize of $3.

(9) Mega Millions panels matching no numbers of the five Mega Millions winning numbers drawn for Field 1 but matching the Mega Millions winning number drawn for Field 2 shall be entitled to receive a ninth prize of $2.

(10) Each Mega Millions second through ninth prize shall be paid in one payment.))