Sec. 36.03.10.40. Merchandise Jackpot

A. Definitions.

(1) In this regulation, the following terms have the meanings indicated.

(2) Terms Defined.

(a) “Merchandise” means goods, commodities, or other things of value; and

(b) “Merchandise jackpot” means a video lottery terminal or table game jackpot in which a player wins:

(i) Merchandise;

(ii) A combination of a cash payout and merchandise; or

(iii) An option to choose between a cash payout and merchandise.

B. A facility operator may not offer a merchandise jackpot without the prior written approval of the Commission.

C. A facility operator submitting a request for approval of a merchandise jackpot to the Commission shall submit details pertaining to the merchandise jackpot including:

(1) The specific terms of:

(a) The merchandise offer; and

(b) Any cash payout option;

(2) Documentation supporting the acquisition of the merchandise and its cash equivalent value under §D of this regulation;

(3) Internal controls addressing the offer and award of a merchandise jackpot in accordance with §H of this regulation; and

(4) Documentation supporting that the average payout percentage on the video lottery terminal offering the merchandise jackpot will comply with this subtitle.

D. If a facility operator offers a merchandise jackpot consisting of merchandise or an optional cash payout, the optional cash payout shall equal the cash equivalent value of the merchandise determined in accordance with §E of this regulation.

E. The cash equivalent value of merchandise shall be determined as follows:

(1) Merchandise that the facility operator sells directly to the public in the normal course of business shall be valued at an amount equal to the full retail price normally charged for the merchandise;

(2) Merchandise that the facility operator does not sell directly to the public in the normal course of business, but which is provided directly to a player by the facility operator, shall be valued at an amount equal to the actual cost to the facility operator of the merchandise;

(3) Merchandise that is provided directly or indirectly to a player on behalf of a facility operator by a third party not related to the facility operator shall be valued at an amount equal to the actual cost to the facility operator of having the third party provide the merchandise; and

(4) Merchandise that is provided directly or indirectly to a player on behalf of a facility operator by a third party who is related to the facility operator shall be valued as if the related party were the facility operator under §E(1) and (2) of this regulation.

F. For the purpose of determining proceeds, the cash equivalent value of any merchandise paid as, or as a portion of, a jackpot shall be included in total winnings paid.

G. A facility operator shall pay a cash payout portion of a merchandise jackpot and a cash payout requested by a player in lieu of a merchandise jackpot in accordance with Regulation .39 of this chapter.

H. A facility operator shall develop and include in the internal controls submitted to and approved by the Commission under Regulation .05 of this chapter procedures addressing the offer and award of a merchandise jackpot.

I. A facility operator’s internal controls shall include:

(1) Procedures to be followed by a player to exercise a cash payout option; and

(2) Procedures utilized to document payment of a merchandise jackpot.