New Mexico Register / Volume XXXV, Issue 10 / May 21, 2024
This
is an amendment to 15.1.10 NMAC, Sections 7, 25, 32, and 45 effective,
5/21/2024.
15.1.10.7 DEFINITIONS: Unless otherwise defined below, terms used in
this rule have the same meanings as set forth in the Gaming Control Act:
A. “act” means the
Gaming Control Act;
B. “additional payout”
means a supplemental cash payout, based on a jackpot, that is not reflected in
the gaming machine pay table (e.g., double jackpot);
C. “affiliate”
means a corporation that is related to another corporation by shareholdings or
other means of control; a subsidiary, parent, or sibling corporation;
D. “allocate” means
the transfer of an allocating racetrack’s right to operate a
number of its authorized gaming machines to the receiving racetrack;
E. “allocation
agreement” means a written contract between an allocating racetrack and a
receiving racetrack;
F. “allocating
racetrack” means a racetrack gaming operator licensee that has allocated or
is proposing to allocate a number of its authorized
gaming machines to a receiving racetrack pursuant to a valid allocation
agreement;
G. “allowable gaming
expenses” means the following bona fide expenses in reasonable and
customary amounts:
[ (1) purchase
prices of non-cash prizes;
(2) security
and surveillance expenses;
(3) independent
accountant’s fees;
(4) ] license fees, including
renewals and gaming machine license fees;
[ (5) utilities
attributable to the licensed premises;
(6) installment
payments to an independent administrator or lease payments for licensed gaming
machines;
(7) gaming
device repair and maintenance;
(8) gaming
employee salaries and employment taxes;
(9) gaming
supplies;
(10) approved
management fees; and
(11) licensed
premises repair and maintenance;]
H. “balance of net take” means the amount
of net take remaining after the gaming operator licensee pays the gaming tax,
income and other applicable taxes, and allowable gaming expenses as set forth
in this rule;
I. “charitable purposes” means activities
that promote, directly or indirectly, the well-being of the public at large or
the benefit of an indefinite number of persons in the state; the term
“charitable purposes” does not include operating expenses of the organization
or any affiliated organization;
J. “control” means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of the licensee or to exercise significant influence over
management and policies due to financial investment, assumption of debts or expenses,
or other monetary or non-monetary considerations extended to the licensee;
K. “credit slip” means a cash-out ticket
for winnings earned on a gaming machine that provides for credit play;
L. “disciplinary action” means an action
by the board that limits, conditions, suspends or revokes a license,
registration, finding of suitability or prior approval issued by the board, or
an assessment of a fine by the board, or any combination of the foregoing;
M. “educational purposes”
means activities or uses that develop the capabilities of individuals by formal
instruction; the term “educational purposes” does not include the operating
expenses of the organization or any affiliated organization;
N. “gaming credit”
means an accumulation of awards on a gaming machine display screen rather than
from the dispensing of winnings from a hopper; one gaming credit equals the
denomination of the game being played;
O. “independent
administrator” means:
(1) a
bank licensed by the state or a national bank with an office in the state; or
(2) an
insurance company admitted to transact business in the
state with a best insurance rating of “A,” “A+” or “A-”; and
(3) one
that is not an affiliate of the gaming operator licensee;
P. “receiving
racetrack” means a racetrack gaming operator licensee that is proposing to
receive, or has received pursuant to a valid allocation agreement, allocated
gaming machines from an allocating racetrack;
Q. “management
contractor” means any person that has entered into
a management contract with a gaming operator licensee; a management contractor may not be an affiliate of the licensee;
R. “nonprofit operator
licensee” means a qualified nonprofit organization that has obtained a
gaming operator’s license pursuant to the provisions of the act and board
regulations;
S. “periodic payments”
means a series of payments that are paid at least annually and includes
annuities;
T. “person” means a
legal entity or individual;
U. “personal property
award” means an award of personal property based on gaming machine play;
V. “promotion”
means a short-term program designed to stimulate participation in gaming
activities by patrons through advertising and the award of cash and non-cash
prizes, not based on a jackpot; “promotion” includes the gift of nominal value
items, such as T-shirts and mugs; and includes player's clubs or similar
programs in which gaming patrons accumulate points, which can be exchanged for
cash, machine credits, merchandise or any other thing of value;
W. “state” means the
state of New Mexico;
X. “this title”
means Title 15, Chapter 1 of the state administrative code;
Y. “trust” means an
irrevocable fiduciary relationship in which one person is the holder of the
title to property subject to an equitable obligation to keep or use the
property for the benefit of another.
[15.1.10.7
NMAC - Rp, 15.1.10.7 NMAC, 1/29/2016; A, 5/21/2024]
15.1.10.25 PAYMENT OF WINNINGS:
A. No
gaming machine offered for play by a nonprofit operator licensee shall award a
prize that exceeds [four thousand dollars ($4,000)] ten thousand
dollars ($10,000). Nonprofit
operator licensees shall not offer periodic payments of cash or non-cash
winnings and shall remit the total winnings and non-cash prizes awarded to a
patron as the result of any licensed game upon validation of the win.
(1) Every
gaming machine offered for play by a nonprofit operator licensee shall have
affixed to it in a prominent fashion, a notice stating the maximum jackpot
possible for that machine.
(2) If
a gaming machine offered for play by a nonprofit operator awards a jackpot
exceeding the maximum jackpot set/posted for that machine, the gaming operator
shall immediately remove the machine from play and notify the operations and
enforcement divisions of the NMGCB and the licensee’s gaming machine
distributor. It shall be the
responsibility of the distributor to determine in five working days whether the
excessive jackpot is a machine malfunction or the result of failed programming
on the part of the distributor. A copy
of the distributor’s findings shall be returned to the licensee and the
operations and enforcement divisions of the NMGCB prior to being returned to
play on the nonprofit operator’s gaming floor.
It shall be an unsuitable method of operation for a distributor to put
into play a gaming machine with programming that exceeds the jackpot posted on
a gaming machine.
B. Except
as otherwise provided in this title, a racetrack gaming operator licensee shall
remit the total winnings and non-cash prizes awarded to a patron as the result
of any licensed game upon validation of the win.
C. If
a gaming operator licensee uses ticket-in/ticket out technology, a patron shall
be required to personally present the ticket for redemption at the licensee’s
premises. A licensee shall not redeem
tickets by mail or by any common carrier.
[15.1.10.25
NMAC - Rp, 15.1.10.25 NMAC, 1/29/2016; A, 5/21/2024]
15.1.10.32 USE OF GAMING RECEIPTS BY
NONPROFIT OPERATOR LICENSEE:
A. A
nonprofit operator licensee may utilize up to sixty five percent of net take,
after payment of the gaming tax, to pay allowable expenses in reasonable
amounts for conducting gaming activities on its licensed premises. If the nonprofit operator licensee has entered into a valid lease or other arrangement for
furnishing gaming machines, the sixty five percent maximum shall be distributed
as follows:
(1) the
maximum of forty percent of net take after gaming taxes or no greater than the
contract amount if less than forty percent for payment to licensed distributors
pursuant to a lease or other arrangement for furnishing a gaming machine;
(2) for
payment of other allowable gaming expenses, an amount equal to the difference
between sixty five percent of net take less the amount paid to the distributor
as described above.
B. The
percentage set forth in this section constitutes the maximum amount that may be
paid annually for allowable gaming expenses from net take. No other expenses related to or arising out
of gaming activities shall be paid from net take or gaming revenues, including
but not limited to supplies, fees for management and other services, and
repairs to and maintenance of licensed premises and gaming devices. These funds shall be transferred each month
to the licensed organization’s operating account.
C. A
nonprofit operator licensee shall not under any circumstances pay to any
distributor licensee the percentage payment allowed in this section, until the
required charitable and educational deposits have been made, gaming tax and
other applicable taxes have been paid and all taxes and fees are current.
D. The
nonprofit operator licensee shall distribute at least [sixty] twenty
percent of the balance of net take to charitable or educational purposes, which
purposes do not include gaming expenses.
All funds required to be spent for charitable or educational purposes
must be expended each year within 120 days after close of the nonprofit
operator licensee’s fiscal year end. The
maximum forty percent of net take, after gaming taxes, remaining after such
distribution may be used for other expenses at the discretion of the nonprofit
operator licensee, provided none of those expenses shall be incurred to
compensate a licensed distributor for the furnishing of gaming machines.
E. Distributions
for charitable purposes shall be made solely for benevolent, social welfare,
philanthropic, humane, public health, civic or other objectives or activities
to benefit the welfare of the public at large or an indefinite number of
persons.
(1) Charitable
distributions shall not be used to fund operating or capital expenses of any
nonprofit gaming operator or any affiliated organization of a nonprofit gaming
operator.
(2) A
charitable distribution shall be made to an organization outside the state of
New Mexico only if the organization is either a charitable organization under
Section 501(c)(3) of the Internal Revenue Code or the organization is the
nonprofit gaming operator’s national organization and
the distribution is used for charitable purposes.
F. Educational
distributions shall be expended solely to benefit an educational institution or
organization or to provide financial assistance to individuals in their pursuit
of educational goals.
G. The board shall
maintain and publish guidelines that establish the allowed and disallowed uses
for charitable and educational funds.
The nonprofit operator licensee shall comply with these guidelines in
making distributions from its charitable and educational account.
H. The executive
director of the board shall disallow any distribution for charitable and
educational purposes not in compliance with this rule. If a charitable or educational distribution
is disallowed by the executive director, the nonprofit gaming operator may
appeal that decision to the board pursuant to Section 60-2E-59 of the act.
[15.1.10.32
NMAC - Rp, 15.1.10.32 NMAC, 1/29/2016; A, 5/21/2024]
15.1.10.45 NONPROFIT CONTRACTS:
A. A
nonprofit gaming operator and distributor licensee jointly shall submit any
contract or lease agreement between the nonprofit gaming operator licensee or
distributor licensee and any other licensee to the board for review not less
than 30 calendar days before the contract or lease agreement goes into
effect. The term “contract or lease
agreement” shall include any amendment of an existing contract or lease
agreement.
B. Any contract or
lease agreement submitted for review shall include copies of any ancillary
agreement, shall state with specificity the beginning and expiration date of
the contract, shall state the maximum jackpot agreed upon by the parties for
each machine being installed, and shall include meeting minutes or other
evidence that the contract has been approved by the nonprofit gaming operator’s
governing body.
C. The contract or
lease agreement shall be deemed approved unless the board disapproves the
contract or lease agreement in writing prior to the effective date of the
contract or lease agreement. The board shall disapprove a contract or
lease agreement submitted for review if the contract or lease agreement was not
submitted in compliance with this rule or if it directly or indirectly permits
another licensee to manage or otherwise control the nonprofit gaming operator
licensee.
D. The factors that
may be considered by the board to be indicia of direct or indirect management
or control include, but are not limited to:
(1) whether the amount and terms of any loans made to the
nonprofit gaming operator licensee, including the principal amount, interest
rate, monthly payment and re-payment period, are
disproportionate to the assets of the nonprofit gaming operator licensee or
create an excessive debt to income ratio;
(2) whether the terms and conditions of any gift, donation
or other benefit conferred to the non-profit gaming operator licensee permit
another licensee to exercise any direct or indirect management or control over
the day-to-day operations of the nonprofit gaming operator licensee;
(3) whether the contract or agreement contains a provision
that calls for automatic renewal of the contract or agreement without notice,
(4) whether the term of the contract or agreement is
greater than five years,
(5) whether any other term or condition of the lease
agreement or contract permits any licensee to effectively exercise direct or
indirect management or control over any of the day-to-day operations of the
nonprofit gaming operator licensee.
[15.1.10.45
NMAC - Rp, 15.1.10.45 NMAC, 1/29/2016; A, 5/21/2024]