Md. Code Regs. 36.03.10.39

Current through Register Vol. 51, No. 24, December 2, 2024

Section 36.03.10.39 - Annuity Jackpot

A. Definitions.

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

(2) Terms Defined.

(a) "Annuity jackpot" means a video lottery terminal or table game jackpot in which a player wins the right to receive fixed cash payments at specified intervals; and

(b) "Discount rate" means a discount rate equal to the United States Treasury constant maturity rate for 20-year United States government securities for the week ending prior to the date of the jackpot, as identified in the applicable H.15 Statistical Release issued by the Federal Reserve Board plus 0.5 percent.

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

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

(1) The specific terms of:

(a) The annuity; and

(b) Any cash payout option;

(2) The written trust agreement supporting the trust fund used to make future cash payments on the annuity jackpot, including details pertaining to:

(a) Administration and funding of the trust agreement;

(b) Liability for payments owed to a player; and

(c) Designation of a trustee;

(3) Internal controls addressing the offer and award of an annuity jackpot in accordance with §G of this regulation; and

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

D. A facility operator that offers an annuity jackpot payable over 10 years or more may offer a player the option to be paid in a single cash payout provided that payout is equal to the present value of the annuity jackpot as calculated in §E of this regulation.

E. The present value of a cash payout option on an annuity jackpot shall be determined by:

(1) Applying the discount rate to each of the future annuity jackpot payments;

(2) Multiplying the number of years until each jackpot payment would otherwise have been received; and

(3) Adding to that amount the amount of the first cash payment that would otherwise have been received.

F. A facility operator shall pay a cash payout requested by a player in lieu of an annuity jackpot in accordance with Regulation .39 of this chapter.

G. A facility operator shall develop and include in the internal controls submitted to and approved under Regulation .05 of this chapter procedures addressing the offer and award of an annuity jackpot.

H. 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 an annuity jackpot.

Md. Code Regs. 36.03.10.39

Regulations .39 adopted as an emergency provision effective 40:6 Md. R. 470, eff.3/1/2013 ; emergency action expired effective July 20, 2013
Regulations .39 adopted effective adopted effective 40:16 Md. R. 1347, eff.8/19/2013