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NEW JERSEY REGISTER
VOLUME 35, NUMBER 11
MONDAY, JUNE 2, 2003
RULE PROPOSAL
LAW AND PUBLIC SAFETY
DIVISION OF CONSUMER AFFAIRS
LEGALIZED GAMES OF CHANCE CONTROL COMMISSION
AMUSEMENT GAMES

Proposed Readoption with Amendments: N.J.A.C. 13:3

Proposed Repeal: N.J.A.C. 13:3-2.5

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

Authority: N.J.S.A. 5:8-6.
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
Proposal Number: PRN 2003-201.

Submit written comments by August 1, 2003 to:

William J. Yorke, Executive Director

Legalized Games of Chance Control Commission

PO Box 46000

Newark, New Jersey 07101

The agency proposal follows:

Summary

Pursuant to the sunset provisions of Executive Order No. 66(1978), the Legalized Games of Chance Control Commission (Commission) has evaluated the amusement games rules at N.J.A.C. 13:3, which are scheduled to expire on October 21, 2003, pursuant to N.J.S.A. 52:14B-5.1c. An amusement game by definition is a game played for amusement or entertainment and the outcome is not controlled by the operator of the game. A player must actively participate in the game. The games may be played at a recognized amusement park, at a seashore resort or an agricultural fair or exhibition. Amusement games have been part of the New Jersey tourism industry since construction of the first boardwalk in the late 1800's and continue to be popular in amusement parks, resort areas, and agricultural fairs. After completing its review of the amusement games rules, the Commission has determined that they are still necessary, reasonable and proper for their intended purpose, which is to license and regulate the operation of amusement games in the State of New Jersey. The Commission proposes the readoption of N.J.A.C. 13:3, with minor amendments. The Commission also proposes to repeal and delete those portions of the rules which are no longer applicable.

The following is a summary discussion of the rules contained in N.J.A.C. 13:3 which are proposed for readoption.

Subchapter 1 deals with the municipal issuance of amusement games licenses, including where the games may be held, who is eligible to hold a license, how a license may be amended and the responsibilities of municipalities in issuing licenses. The Amusement Games Licensing Law, N.J.S.A. 5:8-100 et seq., provides for a joint municipal and State procedure for licensing. A technical amendment is proposed to N.J.A.C. 13:3-1.7 to improve grammar and clarity. The proposed amendment to N.J.A.C. 13:3-1.16 provides that an amusement game operator who has applied for an amended license is not permitted to operate any game other than that for which the operator was originally licensed until the operator has been issued an amended license certificate from the Commission and has posted the amended license certificate in accordance with N.J.A.C. 13:3- 3.1. Technical amendments are proposed to N.J.A.C. 13:3-1.18 to improve grammar and clarity. N.J.A.C. 13:3-1.18(b) is added to make clear that this section on reporting changes in application information does not apply to proposed changes in the type or location of a licensed game, which shall be made pursuant to N.J.A.C. 13:3-1.16.

Subchapter 2 contains rules which set forth the manner in which the Commission issues amusement games licenses, including licensing fees, the duration of the licenses, and the cancellation of licenses. The rules specify that municipal approval of a license is not operative until the Commission has issued a State license certificate. A technical change is proposed to N.J.A.C. 13:3-2.3 in order to delete the unnecessary subsection codification. The Commission proposes to repeal N.J.A.C. 13:3-2.5 concerning the reporting of information which has changed from submission of the initial application because this subject matter is covered by N.J.A.C. 13:3-1.18.

Subchapter 3 deals with the conduct of licensees and how licensees must operate the games. The rules in this subchapter specify the maximum price that may be set to play the games, prize values and the types of prizes that may be awarded. The proposed amendment to N.J.A.C. 13:3-3.8 is made to clarify the rule.

Subchapter 4 deals with the financial reporting obligations of licensees, as well as which records must be available for inspection. The Commission proposes to readopt this subchapter without amendment.

Subchapter 5 sets forth the procedures that must be followed by licensees and the procedures which the Commission will follow in conducting disciplinary proceedings that may be brought against licensees. The Commission proposes to readopt this subchapter without amendment.

Subchapter 6 deals with a licensee's right to appeal in a disciplinary proceeding as well as with the Commission's powers throughout the appeal process. The Commission proposes to readopt this subchapter without amendment.

Subchapter 7 addresses the certification process of permissible games, criteria for certification, information that must be supplied and the amendment and decertification process for amusement games. Before any amusement game not already covered by an existing certification can be introduced in the State, application must be made to the Commission for a certification of permissibility. This process and the requirements for a certification of permissibility are contained in the subchapter. The Commission proposes to readopt this subchapter without amendment.

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

Amusement games have been part of the New Jersey tourism industry since construction of the first boardwalk in the late 1800's. Since passage of the Amusement Games Licensing Law in 1959, the industry has become a significant part of and draw for the State's overall multi-billion dollar tourism industry. The Commission is satisfied that readoption of the rules will have a positive social impact upon both the public and the industry by maintaining the balance of a viable amusement games industry and a family-oriented activity in the various resort areas of the State, recognized amusement parks and agricultural fairs and exhibitions which are sponsored by organizations approved by the State Department of Agriculture. The rules proposed for readoption with amendments and repeal effectively maintain this balance and will continue to offer the best value for the entertainment dollar of the citizens of New Jersey as well as the State's visitors and tourists.

Economic Impact

N.J.A.C. 13:3 provides effective procedures for licensing and regulating amusement games in the State while encouraging the continued viability of the industry. The Amusement Games Licensing Law provides for a joint municipal and State procedure for licensing. The rules have maintained the balance between ensuring that specific local economic and social needs are addressed and maintaining Statewide uniformity of licensing and regulation of the industry. The Commission finds upon review of the rules that they continue to maintain the necessary economic balance of ensuring a viable industry and at the same time addressing the local social and economic factors in each particular community. Therefore, readoption of the rules will have a continuing positive economic impact on the industry. Failure to readopt the rules would cause the annual licensing of industry members and certification of games to be delayed, if not prevented. This failure would cause a major negative economic disruption not only to the industry but also to local communities and the citizens of and visitors to the State of New Jersey.

The rules proposed for readoption with amendments and repeal impact economically on members of the amusement games industry by setting forth the application processes for individual games certificates and municipal and State licensure, including fees for each. Subchapter 3 sets maximum fees for participation in games, limits the type and value of prizes permitted, prohibits redemption of prizes for money, and requires the posting of signs for game rules and instructions. No person other than the licensee, and no police officer, may hold an interest in an amusement games business. Licensees are required under Subchapter 4 to maintain true books of account to be made available for inspection, to retain for one year invoices for merchandise to be awarded as prizes, and to annually file with the Commission a report of the conduct of games for the preceding year. The costs of compliance with these requirements will vary with the nature and extent of the licensee's amusement games business and are related to the administrative costs of applying for licenses, bookkeeping, and report production, and the costs of record storage and sign production.

Federal Standards Statement

A Federal standards analysis is not necessary since no Federal standards or requirements are applicable. The rules proposed for readoption with amendments and repeal find their authority in the Commission's power to enact rules pursuant to N.J.S.A. 5:8-79.

Jobs Impact

The Commission does not expect that the rules proposed for readoption will result in the generation or loss of jobs. However, the failure to readopt these rules would result in the loss of several hundred jobs as the amusement games industry in the State would not be permitted to operate. The Commission proposes to readopt the rules with amendments and repeal to continue to foster the efficient working of the amusement games industry and to protect the citizens of New Jersey as well as its visitors and tourists.

Agriculture Industry Impact

The rules proposed for readoption with amendments and repeal 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 rules proposed for readoption and amendments will apply. When each license is looked at individually, all of the more than 1,000 licensees 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 proposed for readoption and amendments 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 rules proposed for readoption and amendments 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.

There are ongoing reporting requirements associated with the rules proposed for readoption. In Subchapter 4, licensees are obligated to submit to the Commission a report of the conduct of the games for the previous license year or period, in a form prescribed by the Commission.

The main recordkeeping requirements associated with the rules proposed for readoption relate to the books of account which each licensee is obligated to maintain pursuant to Subchapter 4. In addition, N.J.A.C. 13:3-4.2 requires every licensee to retain all delivery slips, invoices, manifests, waybills or similar documents received from suppliers of merchandise which are to be awarded as prizes. Licensees are also obligated to maintain a copy of an employee list pursuant to N.J.A.C. 13:3-3.9. The list must contain the name, telephone number and address of each individual authorized to operate the amusement game.

The compliance requirements associated with the rules proposed for readoption relate to the licensing requirements contained in Subchapters 1 and 2. In order to introduce a new game, individuals who wish to have a game certified by the Commission are required to apply for a certification of permissibility as detailed in N.J.A.C. 13:3-7.2. The proposed readopted rule sets forth a detailed list of information which the applicant is obligated to produce.

The cost of compliance associated with these requirements will vary with the nature and extent of the licensee's amusement games business, and will be related to the administrative costs of record storage and bookkeeping. A licensee may employ a bookkeeper or accountant to maintain its books, which will represent an ongoing professional service.

The proposed readoption and amendments minimize adverse impact on small businesses by setting forth only those requirements that are necessary to ensure the efficient operation of the amusement games industry for the benefit and enjoyment of the public.

Because the Commission has designed the rules to further the welfare and safety of the public, the rules must be applied uniformly to all licensees.

There are no additional reporting, recordkeeping or compliance requirements associated with the proposed amendments.

Smart Growth Impact

The Commission believes that the rules proposed for readoption with amendments and repeal 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 proposed readoption may be found in the New Jersey Administrative Code at N.J.A.C. 13:3.

Full text of the amendments and repeal follows:

<< NJ ADC 13:3-1.7 >>

13:3-1.7 Premises with alcoholic beverage license

No <<+amusement game+>> license shall be issued for any premises <<- licensed under any->> <<+which holds an+>> alcoholic beverage license.

<< NJ ADC 13:3-1.16 >>

13:3-1.16 Amendment to license; notice

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

(c) No licensee who has applied for an amended license shall operate a game other than that which has been <<+originally+>> licensed by the Commission until an amended license certificate has been issued <<+by the Commission and posted in accordance with N.J.A.C. 13:3-3.1+>>.

<< NJ ADC 13:3-1.18 >>

13:3-1.18 Reporting change in application <<-facts->> <<+information+>>

<<+(a) +>>Whenever any change, including, but not limited to, a change of seasonal or permanent address, <<-shall->> occur<<+s+>> in the <<- facts->> <<+information+>> as set forth in any <<-application for a->> license <<+application+>>, the licensee shall file with the Commission and the municipal governing body a notice in writing of such change within 10 days <<-after the occurrence->> <<+of such change in information+>>.

<<+(b) This section does not apply to proposed changes in the type or location of a licensed game, which shall be made pursuant to N.J.A.C. 13:3- 1.16.+>>

<< NJ ADC 13:3-2.3 >>

13:3-2.3 Separate application and fee for specific games and separate premises

<<-(a)->> A separate application shall be made, and separate fee paid, for each specific kind of game to be authorized to be held, operated and conducted by the applicant pursuant to municipal and State license and for each place at which the applicant seeks authorization to hold, operate and conduct such game or games, except that a single license may be issued for all games classified under Certification No. 2 pursuant to N.J.A.C. 13:3-7.9(a)2 and operated in an arcade at a single location.

<< NJ ADC 13:3-2.5 >>

13:3-2.5 <<-Reporting change of application facts->> <<+(Reserved)+>>

<<-Whenever any change, including, but not limited to, a change of seasonal or permanent address, shall occur in the facts as set forth in any application for State license, the licensee shall file with the Commission a notice in writing of such change within 10 days after the occurrence.->>

<< NJ ADC 13:3-3.8 >>

13:3-3.8 Deceptive, fraudulent or misleading advertising or practice; conduct of games

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

(c) <<-All prizes that are available to be won shall be displayed, and requirements to win such prizes shall be clearly stated.->> <<+Licensees shall display all prizes that are available to be won and all prizes that are displayed shall be available to be won. All requirements which a player must meet in order to win such prizes shall be clearly posted.+>> If multiple wins are required for a prize, such requirements shall <<+also+>> be clearly posted.


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Posted June 2, 2003