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NEW JERSEY REGISTER
VOLUME 37, NUMBER 8
MONDAY, APRIL 18, 2005
RULE PROPOSAL

LAW AND PUBLIC SAFETY
DIVISION OF CONSUMER AFFAIRS
LEGALIZED GAMES OF CHANCE CONTROL COMMISSION
RAFFLES AND BINGOS

Proposed Amendments: N.J.A.C. 13:47-1.1, 2.5, 3.3, 4.1, 4.2, 4.3, 5.3, 6.3, 6.10, 7.8, 7.9 and 7.18

Authorized By: Legalized Games of Chance Control Commission, William J. Yorke, Executive Director.

Authority: N.J.S.A. 5:8-6, 5:8-51 and 5:8-61.
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
Proposal Number: PRN 2005-128.

Submit comments by June 17, 2005 to:

William J. Yorke, Executive Director

Legalized Games of Chance Control Commission

124 Halsey Street

PO Box 46000

Newark, New Jersey 07101

The agency proposal follows:

Summary

The Legalized Games of Chance Control Commission (the Commission) has determined that amendments are necessary to the Raffles and Bingos rules at N.J.A.C. 13:47-1.1, 2.5, 3.3, 4.1, 4.2, 4.3, 5.3, 6.3, 6.10, 7.8, 7.9 and 7.18.

The Commission proposes to amend the definition section at N.J.A.C. 13:47- 1.1 by adding the terms "authorized municipal clerk," "capital improvements," "card" and "issuing authority." In addition, the Commission proposes to amend the definition of "authorized purpose." "Authorized municipal clerk" is defined as a person to whom a municipal governing body has delegated by ordinance the authority to approve the granting of raffle and bingo licenses. "Capital improvements" is defined as the improvement, maintenance or repair of a facility. "Card" is defined as a non-reusable card upon which "Bingo" is played which is indelibly marked by the player. "Issuing authority" is defined as the governing body of a municipality or an authorized municipal clerk. The definition of "authorized purpose" is amended to include capital improvements to a facility owned by the licensee.

The proposed amendment to N.J.A.C. 13:47-2.5 replaces "governing body" with "issuing authority" as the party with the authority to grant municipal approval to hold, operate, or conduct a game of chance so as to enable the municipality to establish a process by which a designated employee could grant approval without awaiting action by the governing body should they choose.

The proposed amendment to N.J.A.C. 13:47-3.3 replaces "governing body" with "issuing authority" as the party who will grant or deny a license to hold, operate, or conduct a game of chance.

The proposed amendment to N.J.A.C. 13:47-4.1 replaces "governing body" with "issuing authority" as the party responsible to investigate and pass upon a license application or amendment. The proposed amendment also removes the requirement that seven days pass from when the application is filed before a determination can be made on whether or not to approve the application. Proposed new text relates that the "governing body" remains the party with the authority to investigate and pass on a suspension or revocation of a license.

The proposed amendment to N.J.A.C. 13:47-4.2 provides that the "issuing authority" is to ensure that the Commission receives the issuing authority's findings and determination prior to the holding of the first game of chance authorized in a license.

The proposed amendment to N.J.A.C. 13:47-4.3(a) replaces "governing body" with "issuing authority" as the party who makes the findings and determinations as to the eligibility for licensure of the applicant. The proposed amendment further provides at N.J.A.C. 13:47-4.3(b) that an application is deemed approved if the Commission has not taken action on an application within 15 business days of the mailing of the application by the issuing authority. Previously, 14 days were to have lapsed before a license was issued. The proposed amendment to N.J.A.C. 13:47-4.3(c) replaces the "governing body" with "issuing authority" as the party who is required to notify the Commission when a license is denied.

The proposed amendment to N.J.A.C. 13:47-5.3 replaces the term "governing body" with the term "issuing authority" as the body that approves amendments to a license, as well as clarifying that the license holder is to return the original license to the issuing authority.

The proposed amendment to N.J.A.C. 13:47-6.3 provides the standards that a licensee who is a bona fide organization or association of veterans of any war in which the United States has been engaged, church or religious congregation or religious organization, charitable, educational or fraternal organization, civic or service club, officially recognized volunteer fire company, or officially recognized volunteer first aid or rescue squad licensed to hold and operate games of chance must meet before the licensee may use the net proceeds of games of chance for capital improvements to a facility owned by the licensee as required by N.J.S.A. 5:8-25.3 and 51.4.

A licensee who owns a facility that is devoted full-time to an authorized purpose may pay for all the capital improvements to the facility entirely from the net proceeds of games of chance. If only a portion of a facility owned by a licensee is used full-time for an authorized purpose, any capital improvements to that portion of the facility used full-time for an authorized purpose may be paid for entirely from the net proceeds of games of chance. For example, if 75 percent of a facility is used full-time for an authorized purpose and the remaining 25 percent is not used at all for an authorized purpose, then 75 percent of the cost of replacing the roof on the facility may be paid from the net proceeds of games of chance. The remaining 25 percent of the capital improvement cost must be paid for from a revenue source other than games of chance.

If all or part of a facility is used part-time for an authorized purpose, the percentage of net proceeds that can be used for capital improvements is equal to the number of days in the preceding calendar year that the facility was used for an authorized purpose. For example, if all of the facility was used for an authorized purpose for 75 days in the prior year, the percentage is 21 percent. Therefore, 21 percent of the cost of capital improvements to the facility can be paid from the net proceeds of games of chance.

If only half of a facility was used for an authorized purpose for 75 days, the licensee can pay for 21 percent of the cost of capital improvements to the half of the facility used for an authorized purpose from the net proceeds of games of chance.

N.J.A.C. 13:47-6.3(c) provides that the net proceeds from games of chance can be used for capital improvements to facility space used full-time for administrative or operational activities provided that the amount used to fund these improvements is no more than 25 percent of the total cost of the capital improvements and that the space is located in a facility at least half of which was devoted to an authorized purpose for at least 70 days in the previous calendar year.

N.J.A.C. 13:47-6.3(d) provides that in order for a facility to be considered in use for a day, that the facility, or a portion thereof, must have been used for an authorized purpose for at least three hours of the day.

The proposed amendment to N.J.A.C. 13:47-6.10(b) would allow persons under 18 years of age to serve or sell food and beverages while a game of chance is being held. Because of shortages of volunteers, many organizations have requested the Commission amend its regulations to allow minors to assist in food service.

The proposed amendment to N.J.A.C. 13:47-7.8(b) removes the prohibition on a person under the age of 18 from assisting in the conduct of bingo by permitting them to sell food or beverages in the room or area where bingo games are to be played after the room or area is open to players.

The proposed amendment to N.J.A.C. 13:47-7.9 requires all bingo games to be played on non-reusable cards which are to be indelibly marked when played. The Commission intends to have this amendment take effect six months after its effective date to allow licensees who are still using reusable cards time to switch over to non-reusable cards.

The proposed amendment to N.J.A.C. 13:47-7.18(d) would permit a person between the ages of 13 and 18 who has the express written permission of his or her parent or legal guardian to serve or sell food or beverages, to be physically present in any room or area where bingo is held, operated or conducted.

As the Commission has provided a 60-day comment period on this notice of proposal, this notice is exempted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The Commission anticipates a positive social impact from these proposed amendments to the rules. The proposed amendments to N.J.A.C. 13:47-2.5, 3.3, 4.1, 4.2, 4.3 and 5.3 streamline the licensing approval process, so that prospective licensees should see a shorter period from application to license issuance while still maintaining review of the prospective licensee at the local level.

The proposed amendments to N.J.A.C. 13:47-6.3 benefit veteran's organizations, church or religious congregations, religious organizations, charitable organizations, educational organizations, fraternal organizations, civic or social clubs, and officially recognized volunteer fire companies or first aid/rescue squads by allowing them, within the provisions set forth in the rule, to use the net proceeds from games of chance for capital improvements to facilities that they own. This rule change allows many organizations that have no other funds available to maintain their facilities using the proceeds from raffles and bingos.

The proposed amendments to N.J.A.C. 13:47-6.10(b), 7.8(b) and 7.17(d) benefits organizations who are facing shortages of volunteers to conduct bingo games by permitting minors to serve food and beverages while bingo is being played. The organizations who opt to allow minors to serve food and beverages would then be able to use the adult volunteers who are currently serving food and beverages to conduct the bingo games.

The proposed amendment to N.J.A.C. 13:47-7.9, which requires all bingo games to be played on non-reusable cards, will work to eliminate one of the most frequent complaints received by the Commission regarding bingo games, which is the reserving of specific cards for players.

Economic Impact

Revenues generated from legalized games of chance enable qualified organizations to continue their support of educational, charitable, religious and community programs. The proposed amendments do not impose any new fees on licensees. The proposed amendments to N.J.A.C. 13:47-2.5, 3.3, 4.1, 4.2, 4.3 and 5.3 should shorten the time period for prospective licensees from application to license issuance in communities which adopt the new standard, which will positively benefit the licensees as they will be able to more quickly schedule fundraising events. The proposed amendment to N.J.A.C. 13:47-6.3 will have a positive economic impact on licensees, as those who meet the standards set by statute and regulation will now be permitted to use the net proceeds of games of chance for capital improvements to facilities owned by the licensee. The proposed amendment to N.J.A.C. 13:47-7.9 will have an economic impact on licensees who are still using reusable cards as they will have to switch to non-reusable cards within six months of the adoption of the regulation. The impact on the licensee is outweighed by the benefit received by bingo players and the Commission, as one of the most frequent complaints related to bingo games is the reserving of cards, which is not allowed by N.J.A.C. 13:47-7.23(c).

Federal Standards Statement

A Federal standards analysis is not required because there are no Federal laws or standards applicable to the proposed amendments.

Jobs Impact

The Commission does not expect that the proposed amendments will result in the generation or loss of jobs in New Jersey.

Agriculture Industry Impact

The proposed amendments will not have any impact on the agriculture industry in the State.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (the Act), N.J.S.A. 52:14B-16 et seq., requires the Commission to give a description of the types and an estimate of the number of small businesses to which the proposed amendments will apply. When each license is looked at individually, all of the more than 7,000 registered organizations come within the Regulatory Flexibility Act's definition of "small business" as defined in N.J.S.A. 52:14B-17.

The Act requires the Commission to set forth the reporting, recordkeeping and other compliance requirements of the rules and amendments proposed including the kinds of professional services likely to be needed to comply with the requirements. The Act further requires the Commission to estimate the initial and annual compliance costs of the proposed amendments to the rules with an indication of the varying impact on small businesses of differing types and sizes. In addition, the Act requires the Commission to outline the manner in which it has designed the rules to minimize any adverse economic impact upon small businesses.

The proposed amendments do not impose any reporting or recordkeeping requirements. The following compliance requirements are imposed; costs are discussed in the Economic Impact above.

The proposed amendment to N.J.A.C. 13:47-6.3 sets forth the requirements, discussed above, that a licensee must meet in order to use the net proceeds of games of chance for capital improvements to facilities owned by the licensee.

The proposed amendment to N.J.A.C. 13:47-7.9 requires all licensees, within six months of the adoption of this amendment, to conduct all bingo games on non-reusable cards.

The Commission does not anticipate that any professional services will be necessary for licensees to comply with the proposed amendments.

The Commission has designed the proposed amendments to minimize adverse economic impact upon licensees, while at the same time ensuring that the consumer is protected. Because the Commission has designed the proposed amendments to protect the consumer as well as to benefit licensees, the rules must be applied uniformly to all licensees.

Smart Growth Impact

The Commission believes the proposed amendments will not have any impact upon the achievement of smart growth or upon the implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows :

<< NJ ADC 13:47-1.1 >>

13:47-1.1 Words and phrases defined

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise:

<<+"Authorized municipal clerk" means a person to whom a municipal governing body has delegated by ordinance the authority to approve the granting of raffle and bingo licensees.+>>

"Authorized purpose" means an educational, charitable, patriotic, religious or public-spirited purpose, which terms are defined to be the purpose of benefiting an indefinite number of persons either by bringing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering, or constraint, by assisting them to establish themselves in life or by erecting or maintaining public buildings or works, or otherwise lessening the burden of government or, in the case of a senior citizen association or club, the support of such organization. <<+Authorized purpose includes capital improvements to a facility owned by the licensee as limited by N.J.A.C. 13:47-6.3.+>> <<-Such terms do->> <<+Authorized purpose does+>> not include the erection<<-,->> <<+or+>> acquisition<<-, improvement, maintenance or repair->> of property, real, personal or mixed, unless such property is and shall be used exclusively for one or more of the purposes hereinabove stated. ...

<<+"Capital improvements" means the improvement, maintenance or repair of a facility.+>>

<<+"Card" means a non-reusable card which is indelibly marked by the player upon which bingo is played.+>>

... <<+"Issuing authority" means the governing body of a municipality or an authorized municipal clerk.+>>

...

SUBCHAPTER 2. REGISTRATION AND IDENTIFICATION

<< NJ ADC 13:47-2.5 >>

13:47-2.5 Municipal approval

Neither registration nor the assignment of an identification number shall entitle any organization to hold, operate or conduct, or assist in the holding, operating or conducting of, any game or games of chance without the approval of the <<-governing body->> <<+issuing authority+>> of the municipality in which the game or games are to be held, operated or conducted.

SUBCHAPTER 3. APPLICATIONS

<< NJ ADC 13:47-3.3 >>

13:47-3.3 Filing

License applications shall be filed in quadruplicate with the municipal clerk. One copy shall be retained by the municipal clerk, the second copy shall be returned to the applicant after a license has been granted or denied by the <<-governing body->> <<+issuing authority+>>. The third copy shall be forwarded to the Control Commission by the municipal clerk and the fourth copy shall be delivered to the Law Enforcement Agency in the municipality.

SUBCHAPTER 4. LICENSE ISSUANCE

<< NJ ADC 13:47-4.1 >>

13:47-4.1 Findings and determination

(a) Upon <<-investigating->> <<+reviewing+>> and <<-passing upon->> <<+determining whether to approve or deny+>> a license application or an amendment <<+to a license+>>, <<-suspension or revocation of license,->> the <<-governing body->> <<+issuing authority+>> shall record its findings and determination as to each of the conditions established by law.

(b) <<-At least seven days shall elapse between the time the application is filed and the time when the governing body makes its findings and determination.->> <<+Upon investigating and passing upon a suspension or revocation of license, the governing body shall record its findings and determination as to each of the conditions established by law.+>>

(c) (No change.)

<< NJ ADC 13:47-4.2 >>

13:47-4.2 Transmittal of copies of findings and determination

Upon making its findings and determinations, the <<-governing body->> <<+issuing authority+>> shall <<-forthwith (->>within three days<<-)->> transmit <<-one copy thereof->> <<+a copy of its findings and determination+>> to the Control Commission. <<-Said copy->> <<+The findings and determination+>> together with the third copy of the application as provided in <<-Section 3.3 (Filing) of this Chapter, must->> <<+ N.J.A.C. 13:47-3.3 shall+>> be received by the Control Commission <<-at least seven days->> prior to the holding of the first game authorized.

<< NJ ADC 13:47-4.3 >>

13:47-4.3 Duties of municipal clerk; computation of fees; notice of denial; license issuance

(a) Upon receiving the finding and determination of the <<-governing body->> <<+issuing authority,+>> the municipal clerk shall, if the license is granted, compute the fee payable by law, collect any fee due the municipality or the State from the applicant organization and forward any fee due the State together with the application to the Control Commission.

(b) <<-At least 14 days shall have elapsed between the time the municipality forwards the application and licensing fee to the Control Commission and the license is issued by the municipality.->> <<+If the Control Commission has not taken action on the application within 15 business days after the municipality has mailed the application and licensing fee to the Control Commission, the application is deemed approved.+>>

(c) If the license is denied, the municipal clerk shall forward a copy of the application marked denied, together with a copy of the findings and determinations of the <<-governing body->> <<+issuing authority+>> to the Control Commission and notify the applicant by regular mail. The notification <<-of->> <<+to+>> the Control Commission and the applicant shall be made within three days of the <<-governing body's->> <<+issuing authority's+>> decision to deny the license.

SUBCHAPTER 5. LICENSE AMENDMENT

<< NJ ADC 13:47-5.3 >>

13:47-5.3 Approval

When the <<-governing body->> <<+issuing authority+>> approves an amendment of a license, the original license shall be returned <<+by the license holder+>> and exchanged for the amended license, upon payment of any additional fee required.

SUBCHAPTER 6. GENERAL CONDUCT OF GAMES OF CHANCE

<< NJ ADC 13:47-6.3 >>

13:47-6.3 Use of proceeds<<+; capital improvements+>>

<<+(a)+>> The entire net proceeds of the games of chance must be devoted to authorized purposes.

<<+(b) A bona fide organization or association of veterans of any war in which the United States has been engaged, church or religious congregation or religious organization, charitable, educational or fraternal organization, civic or service club, officially recognized volunteer fire company, or officially recognized volunteer first aid or rescue squad licensed to hold and operate games of chance may use the net proceeds of games of chance for capital improvements to a facility owned by the licensee only if:+>>

<<+1. The facility is devoted full-time to an authorized purpose;+>>

<<+2. A portion of the facility is devoted full-time to an authorized purpose, in which case all of the net proceeds may be used for capital improvements to that portion of the facility so devoted; or+>>

<<+3. All or a portion of the facility is devoted part-time to an authorized purpose, in which case a percentage of the net proceeds may be used for capital improvements to the facility or to that portion of a facility so devoted. The percentage of the net proceeds which may be used for capital improvements under this paragraph shall be equal to the percentage that represents the number of days of the preceding calendar year during which the facility or portion thereof was devoted to an authorized purpose.+>>

<<+(c) In determining the amount of net proceeds a licensee may use for capital improvements pursuant to (b) above, an amount not to exceed 25 percent of the total cost of the capital improvement shall be allowed for facility space used full-time for administrative or operational activities of the licensee, provided the space is located in a facility at least half of which was devoted to an authorized purpose for at least 70 days in the previous calendar year.+>>

<<+(d) The use of a facility or a portion thereof for an authorized purpose for at least three hours in any one day shall be sufficient to substantiate that the facility or portion thereof was devoted that day to an authorized purpose.+>>

<< NJ ADC 13:47-6.10 >>

13:47-6.10 Player age limitation

(a)-(b) (No change.)

(c) <<-No->> <<+Except for the serving or selling of food and beverages, no+>> person under the age of 18 years shall hold, operate or conduct or assist in the holding, operating or conducting of any game of change held, operated or conducted under any license issued pursuant to the Bingo Licensing Law, N.J.S.A. 5:8-24 et seq. or the Raffles Licensing Law, N.J.S.A. 5:8- 50 et seq., and the rule<<+s+>> set forth in this chapter.

(d) (No change.)

SUBCHAPTER 7. CONDUCT OF BINGO

<< NJ ADC 13:47-7.8 >>

13:47-7.8 Person conducting bingo; restriction; minimum age

(a) (No change.)

(b) No licensed organization shall permit any person under the age of 18 years to conduct or assist in the conduct of bingo including the sale or distribution of any bingo card, merchandise or service, <<-including->> <<+except for+>> food or beverages<<+,+>> at any time after the room or area where bingo games are to be played is open to the players.

<< NJ ADC 13:47-7.9 >>

13:47-7.9 Equipment; general operation of bingo

(a) (No change.)

<<+(b) Effective (six months from the effective date of this amendment), all bingo games shall be played on non-reusable cards which are to be indelibly marked when played.+>>

Recodify existing (b)-(m) as <<+(c)-(n)+>> (No change in text.)

<< NJ ADC 13:47-7.18 >>

13:47-7.18 Physical presence

(a)-(c) (No change.)

(d) No person under the age of 18 years shall be physically present in any room or area where bingo is held, operated or conducted<<+, except for a person between the ages of 13 and 18 years of age who has the express written permission of his or her parent or legal guardian to serve or sell food and beverages+>>.



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