316 Neb. Admin. Code, 35, § 318 - MANUFACTURER OF PICKLE CARDS: LICENSE; REQUIREMENTS; AND DUTIES

318.01 Any individual or business which manufactures pickle cards and intends to sell or otherwise provide such pickle cards in this state must first obtain a manufacturer's license from the Department. A manufacturer's license shall only be issued to those applicants doing business in Nebraska or authorized to do business in Nebraska.

318.01A Authorization to do business in Nebraska requires:

318.01A(1) A domestic corporation to file Articles of Incorporation with the Nebraska Secretary of State's office;

318.01A(2) A domestic limited liability company to file Articles of Organization with the Nebraska Secretary of State's office;

318.01A(3) A foreign corporation or limited liability company to obtain a certificate of authority to transact business in Nebraska from the Nebraska Secretary of State's office or to become domesticated by filing the required documents with the Nebraska Secretary of State's office and paying any required fees; or

318.01A(4) A domestic partnership, foreign partnership, or limited liability partnership to file any forms that may be required by the Nebraska Secretary of State's office.

318.01B Applicants seeking a manufacturer's license and who intend to be engaged in business in this state as defined in section 77-2702.06 of the Nebraska Revised Statutes, as amended, shall also submit a Nebraska Tax Application, Form 20, to obtain a Nebraska Sales and Use Tax Permit.

318.01B(1) A licensed manufacturer engaged in business in this state as defined in section 77-2702.06 may accept a properly completed Resale Certificate, Section A, of the Nebraska Resale and Exempt Sale Certificate, Form 13, from a licensed distributor in Nebraska, in lieu of charging and collecting sales tax from the distributor.

318.02 An individual or business shall apply for and obtain a manufacturer's license from the Department prior to supplying any pickle cards or pickle card units in this state, or engaging in any interstate activities relating to such pickle cards or pickle card units. The applicant shall include with the application form prescribed by the Department the statutorily required license fee and, at a minimum, the following information:

318.02A The business name and address of the applicant and the name and address of each of the applicant's separate locations at which manufacturing, warehousing, selling, or promotion of pickle cards occurs;

318.02B The type of ownership of the business and the name, social security number, home address, and date of birth of:

318.02B(1) If a sole proprietorship, the individual owner;

318.02B(2) If a partnership, each partner and spouse;

318.02B(3) If a limited liability company, each member and spouse;

318.02B(4) If a corporation, each officer and spouse, each director or board member, and each individual or entity holding ten percent or more of the debt or equity of the corporation. If an entity holding ten percent or more of the debt or equity of the applicant corporation is a partnership, limited liability company, or corporation, the information required in Regulation 35-318.02B must be supplied for each partner of the partnership, each member of the limited liability company, or each officer of the corporation and every individual or entity holding ten percent or more of the debt or equity of the partnership or corporation.

318.02C If the applicant is not a resident or a corporation, the full name, business address, and home address of an individual who is a resident of and living in this state who is 19 years of age or older, to act as the manufacturer's resident agent for the purpose of receipt and acceptance of service of process and other communications on behalf of the manufacturer;

318.02D Upon request, a current list of all Nebraska-licensed distributors in which the applicant has some financial interest and the details of such interest. For purposes of this regulation, financial interest shall include, among all other interests, any indebtedness from the applicant to another individual or business or from another individual or business to the applicant in excess of $ 500.00;

318.02E A completed and notarized Personal History Record and Background Disclosure form supplied by the Department for each person listed pursuant to Regulation 35-318.02B, except for spouses who have completed and had notarized the Affidavit by Spouse for Waiver of Fingerprinting and/or Personal History Record and Background Disclosure form; and

318.02F Two sets of fingerprints on cards supplied by the Department and the requisite fees established by the Nebraska State Patrol and Federal Bureau of Investigation for each person listed pursuant to Regulation 35-318.02B, except for spouses who have completed and had notarized the Affidavit by Spouse for Waiver of Fingerprinting and/or Personal History Record and Background Disclosure form. Fingerprint cards and the required fees must be submitted to the Nebraska State Patrol, Criminal Investigation Division.

318.03 The applicant or licensee shall notify the Department within thirty (30) days of any changes in the information submitted on or with the application form.

318.03A Changes must be reported in writing, and the Department may require the filing of a new application.

318.03B Changes shall be confirmed by the signatures of an owner, officer, member, or partner of the manufacturer. Any individual signing the most current application shall obligate the licensee to comply with the Nebraska Pickle Card Lottery Act and accompanying regulations for that licensing period.

318.03C A manufacturer's license shall expire on September 30 of every odd-numbered year and may be renewed biennially. An application for license renewal shall be due August 15 of each odd-numbered year. A manufacturer's license is not transferable.

318.03D A manufacturer is not considered licensed until it has physical possession of the printed license issued by the Department.

318.03D(1) A manufacturer which has had its license lost, stolen, or destroyed must notify the Department as soon as possible. The manufacturer shall send a written statement to the Department signed by an owner, officer, member, or partner confirming the loss, theft or destruction of the license. A duplicate license will be issued for no additional fee under such circumstances.

318.03E Any individual or business licensed as a manufacturer pursuant to section 9-255.09 of the Nebraska Bingo Act may act as a manufacturer pursuant to the Nebraska Pickle Card Lottery Act without submitting an additional licensing fee. Such individual or business shall comply in every other respect with the Nebraska Bingo Act, the Nebraska Pickle Card Lottery Act, and all rules and regulations adopted and promulgated pursuant to such Acts.

318.03F A manufacturer which no longer desires to be licensed shall notify the Department, in writing, of its intention to cancel its license. Such notification shall be signed by an owner, officer, member, or partner of the manufacturer. A notification of cancellation shall be accompanied by the original license issued by the Department.

318.03G A licensed manufacturer, or any person having a substantial interest therein, is prohibited from holding any other licenses issued pursuant to the Nebraska Bingo Act, the Nebraska Pickle Card Lottery Act, the Nebraska Lottery and Raffle Act, or the Nebraska County and City Lottery Act, except as provided in section 9-255.09 of the Nebraska Bingo Act, and section 9-632 of the Nebraska County and City Lottery Act.

318.03G(1) A licensed manufacturer or employee or spouse of a licensed manufacturer shall not have a substantial interest as defined in Regulation 35-309.09 in any other manufacturer, distributor, manufacturer-distributor, licensed organization, or lottery operator conducting gaming activities under the Nebraska Bingo Act, the Nebraska Pickle Card Lottery Act, the Nebraska Lottery and Raffle Act, or the Nebraska County and City Lottery Act.

318.03H A licensed manufacturer or employee or spouse of a licensed manufacturer shall not participate in the operation or conduct of any kind of gaming activity regulated under Chapter 9 of the Nebraska Revised Statutes, except to the exclusive extent of his or her duties as a licensed manufacturer or employee thereof.

318.04 A licensed manufacturer shall not sell or otherwise provide pickle cards or pickle card units to anyone in Nebraska other than a licensed distributor. A licensed manufacturer must sell or provide pickle cards to licensed distributors only in the form of pickle card units.

318.04A A licensed manufacturer shall report immediately to the Department any pickle card unit which has been shipped but reported not received by a licensed distributor.

318.05 The price charged by a licensed manufacturer for pickle card units shall not be fixed or set by agreement among licensed manufacturers in any manner, either expressed or implied.

318.05A No manufacturer shall offer or agree to offer anything of value to any individual or licensee in exchange for an agreement or commitment by such individual or licensee to exclusively buy, sell, or use pickle card units from such manufacturer.

318.05B No individual or licensee shall accept or agree to accept anything of value from a manufacturer in exchange for an agreement or commitment by such individual or licensee to exclusively buy, sell, or use pickle card units from that manufacturer.

318.06 No manufacturer or any other person shall affix to any pickle card, pickle card unit, flare card, or any promotional material, any statement indicating any endorsement by the State of Nebraska, the Department, or any division thereof. Additionally, no other statement indicating any such endorsement shall be made verbally or in writing.

318.07 No person other than a licensed manufacturer shall produce by assembling from raw materials or subparts a whole or partial pickle card or pickle card unit. A licensed manufacturer must actually assemble raw materials or parts and may not simply act as an intermediary for another person, organization, firm, or corporation which conducted the actual assembling of the pickle card or pickle card unit.

318.08 Each manufacturer must receive departmental approval for each type of pickle card unit which they intend to market for resale in this state.

318.09 No pickle card unit shall be approved for resale in this state:

318.09A Which offers total prizes of less than 65 percent or more than 80 percent of the gross proceeds, or which is designed to have a prize pay-out structure which may vary;

318.09B Which has a card or play count exceeding 6,000;

318.09C Which contains an individual pickle card with a purchase price greater than $ 1.00;

318.09D Which contains a single pickle card that awards a prize or prizes exceeding $1, 000.00; or

318.09E Which has not been authorized by the Department.

318.09F Manufacturers seeking approval to market a pickle card unit in Nebraska shall submit the following information for each game:

318.09F(1) The flare card;

318.09F(2) The payout slip identifying the game's payout structure;

318.09F(3) No less than ten pickle cards for the game, five of which must be winning pickle cards.

318.09F(4) Relative to punchboards, a complete cover sheet and payout slip for each punchboard. Punchboards which contain play features such as seals, cards, straws, etc., must include these features with the sample submitted.

318.10 All pickle card units marketed to Nebraska distributors by licensed manufacturers, entering this state for transfer or resale to a licensed organization in Nebraska, shall have a unique form number which shall indicate that such units meet the standards imposed on pickle cards marketed in Nebraska set out in this regulation. Such form number shall be printed on each punchboard, each individual pickle card, each flare card for each pickle card unit, and on each accompanying payout slip showing the pickle card unit's fixed payout structure.

318.10A Each pickle card in a pickle card unit and the accompanying flare card for that unit shall contain a game serial number printed on the face or information side of the pickle card and flare card. The serial number for a punchboard must be imprinted or otherwise permanently affixed to the back side of each punchboard. The same game serial number shall not be repeated on the same pickle card or punchboard form number for a minimum of three years.

318.11 No manufacturer shall market, sell, or otherwise furnish any pickle card unit to a distributor to be sold or marketed in this state unless each individual pickle card in that unit or, in the case of a punchboard, each board is conspicuously printed with the manufacturer's name or logo.

318.12 Manufacturing Standards.

318.12A Pickle card units shall be manufactured, assembled, and packaged in such a manner that neither winning nor losing pickle cards, or the location or approximate location of either winning or losing pickle cards can be determined in advance of opening the pickle cards in any manner or by any device including, but not limited to, any pattern in manufacture, assembly, packaging, marking, or by the use of a light.

318.12B Winning pickle cards shall be randomly distributed and mixed among all other pickle cards in a unit. The unit shall be assembled and packaged with special care so as to eliminate any pattern between units or portions of units, from which the location or approximate location of any of the winning pickle cards may be determined.

318.12C When a single pickle card unit is packaged in more than one package, box, or other container, the entire unit shall be mixed in such a manner that no person can determine the position or approximate location of any of the winning pickle cards or determine if any one package, box, or other container contains a larger or smaller percentage of winning pickle cards than the balance of the unit. If the unit is comprised of more than one box, each box shall be numbered as a set, for example, one of two and two of two.

318.12D Pickle cards shall be constructed so that it is impossible to determine the covered or concealed number, letter, symbol, set of symbols, or game protection on the pickle card until such is dispensed to and opened by the player, by any method or device including, but not limited to, the use of a marking, variances in size, variances in paper fiber, or use of a light.

318.12E The back or tab side of a pickle card shall contain perforated openings centered over the symbols or numbers imprinted on the back side of the face sheet or information side of the pickle card, in such a manner as to allow easy opening by the purchaser, while at the same time not permitting the pickle card to be opened prematurely in normal handling. Perforations shall exist on both horizontal lines of the opening and on the vertical or elliptical line where the tab must be grasped for opening after bending the edge of the ticket down.

318.12F Pickle cards shall be glued or sealed on all four edges and between each window. The glue must be of sufficient strength so as to prevent the separation of the laminations of the tickets, so that it is impossible to determine the covered or concealed numbers, symbol, or set of symbols on the pickle card until it has been dispensed to and opened by a player.

318.12G All pickle cards within the same pickle card unit shall be the same size and thickness.

318.12H All pickle cards shall be constructed to ensure that, when offered for sale to the public, the pickle card is opaque and free of security defects so that neither winning nor losing combinations can be determined prior to the opening of the tabs through the use of a high intensity lamp or any other method. Such protection shall be provided by using opaque paper stock or an aluminum foil laminate.

318.12I Each manufacturer shall establish its own game protection for each pickle card game, unit, or series of games. The game protection shall be a method of identifying winning pickle cards, after they have been purchased and opened, from nonwinning, altered, or forged pickle cards. The manufacturer may use special numbers, colors, designs, ink, or any combination to establish the game protection. Upon request, a manufacturer shall submit to the Department a letter explaining the game protection. This provision shall not apply to pickle cards known as jar tickets or to punchboards.

318.13 In addition to the information required by Regulation 35-318.10 and 35-318.11, the following information shall be printed by the manufacturer on all pickle cards wider than one inch or longer than two and one-half inches marketed in this state:

318.13A The name of the game;

318.13B The price per individual pickle card;

318.13C The number of winners, and respective winning numbers, symbols, or winning combinations and prize amounts.

318.14 Each pickle card unit's package, packages, box, or other container shall be sealed at the manufacturer's factory with a seal including a warning to the distributor that the game may have been tampered with if the package(s), box, or container was received by the purchaser with the seal broken.

318.14A The manufacturer's name or logo and the pickle card unit's form number and serial number shall be clearly and legibly visible on the outside of the game's package(s), box, or other container.

318.14B Each pickle card unit shall contain a flare card which shall be imprinted with the following information:

318.14B(1) The name of the game;

318.14B(2) The form number of the game;

318.14B(3) The price per play;

318.14B(4) The unit count and serial number of the game;

318.14B(5) The prize structure of the game, to include the number of winners by denomination with their respective winning combinations; and

318.14B(6) The manufacturer's name or distinctive logo.

318.15 A manufacturer shall issue an invoice to the licensed distributor for each purchase, exchange, or return of pickle card units by the licensed distributor. Every such invoice shall contain the following information:

318.15A The name and complete address of the licensed distributor;

318.15B The date of the transaction;

318.15C A description of each pickle card unit and the serial number and form number of each pickle card unit;

318.15C(1) The information in this subsection may be provided on a supplemental listing or attachment accompanying the invoice;

318.15D The quantity of each type of pickle card unit;

318.15E The price of the pickle card units, taxes collected (if applicable), and the total amount paid, exchanged, or returned by the distributor; and

318.15F The manner of delivery or shipment, including the name, address, and telephone number of the individual, firm, or corporation with whom shipment is made.

318.16 A licensed manufacturer shall ship or deliver pickle card units only to the licensed distributor's business address. Pickle card units may not be drop shipped in Nebraska directly to any licensed organization, sales agent, pickle card operator, or any other person.

318.16A Nothing in this regulation shall prohibit a manufacturer from:

(1) using a common carrier service to ship pickle card units to a licensed distributor, or

(2) drop shipping pickle card units billed to a Nebraska licensed distributor and reported on the manufacturer's monthly report to the Department, to a warehouse or location outside of Nebraska, or to a federally recognized Indian reservation.

318.17 Licensed manufacturers shall not be prohibited from selling pickle card units which have not been approved by the Department to licensed distributors. With respect to any transaction involving pickle card units which have not been approved, the following information shall be recorded and maintained by the manufacturer and made available to the Department upon request:

318.17A The name and complete address of the Nebraska distributor;

318.17B The date of the invoice;

318.17C The type of unit and serial number of each unit sold, transferred, or exchanged. For the purposes of this section, "type of unit" shall mean the form number, game name, and unit count of the particular type of pickle card unit; and

318.17D The method of shipment, including the name, address, and telephone number of the person, business, or corporation transporting the units or boards.

318.18 Licensed manufacturers shall collect payment for pickle card units and punchboards sold to Nebraska licensed distributors by check or automatic bank transfer within thirty (30) days of delivery. A licensed distributor may, by check, set up a deposit with a licensed manufacturer upon which the manufacturer can draw payment for pickle card units ordered by the distributor.

318.18A It shall be the responsibility of the licensed manufacturer to notify the Department of any licensed distributor who fails to pay for pickle card units within thirty (30) days from the date of delivery. Such notification shall be in writing.

Notes

316 Neb. Admin. Code, 35, § 318

Section 77 - 2702.06, R.R.S., 2003. Sections 9 - 313, 9 - 332, 9 - 332.01, 9 - 334, 9 - 335, 9 - 336, 9 - 337, 9 - 340, and 9 - 341, R.R.S. 1997. Sections 9 - 1,104, 9 - 322, 9 - 331, 9 - 338, and 9 - 346, R.S.Supp., 2004. September 5, 2005.