Section 99-01.3-03-04 - Restrictions and requirements1. An organization is allowed an expense limit according to subsection 2 of North Dakota Century Code section 53-06.1-11. The allowable expense amount may be used for any purpose that does not violate the gaming law or rules.2. An organization may not base an employee's compensation on a participatory percentage of gross proceeds, adjusted gross proceeds, or net proceeds. An organization may pay a fixed bonus through an incentive program.3. An organization may not pay or reimburse, nor may a lessor accept a payment or reimbursement from an organization, for any media advertising done by the lessor or any other person that is related to games at a site unless the organization's share of this expense is prorated to the benefit the organization receives and the media advertising is voluntary by the organization.4. An organization may not pay or reimburse a lessor or share in the cost, nor may a lessor accept a payment, reimbursement, or sharing of the cost from an organization, of any sign advertising related to games at a site unless the sign is not owned by the lessor. If a lessor rents an advertising sign from a vendor, the organization's share of this expense must be prorated to the benefit the organization receives and the sign advertising is voluntary to the organization.5. A player's uncollectible check is an expense. If an organization establishes a policy to reduce a player's cash prize by the amount of the player's uncollectible check and award the player the difference, if any, the organization shall post or make available to players that policy.6. If a door prize is awarded as a promotion of games, the cost of the door prize is an expense.7. A net cash short is an expense and a net cash long is other income for a quarter.8. Only an unopened pull tab, including unplayed electronic pull tabs, unopened set of stapled jar tickets, or set of banded jar tickets that has the band intact may be accounted for as unsold or defective when a game is reported on a tax return. An organization shall account for any single unsold or defective jar ticket at a proportional selling price of a stapled set of jar tickets.9. If foreign currency is exchanged into United States currency, any loss is an expense.10. The attorney general shall determine whether a theft of an organization's gaming funds can be deducted from gross proceeds and adjusted gross proceeds on its tax return and notify the organization. The attorney general shall consider whether the organization: a. Immediately reported the theft to a local law enforcement agency and the attorney general;b. Has documentation that substantiates the theft amount;c. Had physical security of the funds;d. Has an adequate system of internal control; ande. Incurred an identifiable theft.11. If an organization rents out gaming equipment, the income is nongaming income.12. All accounting records must be completed and initialed or signed with permanent ink. All signatures and initials on accounting records attesting to the information recorded must be handwritten and may not be digital images or computer generated. The use of correction fluid or correction tape to make changes to accounting records is prohibited. Changes must be made with a single strikethrough of the original amount, writing the correct amount, and initialed by the individual making the change.13. An organization shall maintain a register of all individuals who initial or sign a record or report, including outside service providers who provide auditing, accounting, and bookkeeping services. Any financial institution or bar employee who provides drop box cash count services is not required to be included on the register; however, the financial institution or bar employee shall legibly sign their full name on the daily report when providing drop box cash count services. The register must include each individual's name and the initials or signature as the individual normally writes them on a record or report. The initials or signature of an individual on a record or report attests that to the individual's best knowledge the information is true and correct.14. The fees charged to players to enter a twenty-one tournament and the prizes awarded, must be reported as other income on a tax return.15. For computing prizes on a tax return, a merchandise prize and a gift certificate are valued at an organization's actual cost, including sales tax, and a donated prize is valued at zero.16. An organization shall own and possess, have a contract to acquire, or be able to obtain a prize being offered for a game. A winning player may not be required to first pay for or buy something to receive a prize. However, an organization does not need to register or title an automobile or similar item.17. If a prize winner is ineligible to receive a merchandise prize, the organization may convert the prize to a cash prize or other merchandise prize of at least equal value, provided that the conversion of a raffle prize does not exceed the limits outlined in North Dakota Century Code section 53-06.1-10.1.18. If a gaming prize is not claimed by the winning player and has previously been reported on a tax return, an organization shall amend the applicable tax returns to account for the unredeemed prize.19. When a deal of pull tabs, club special, tip board, seal board, raffle board, prize board, sports-pool board, calcutta board, or a series of paddlewheel ticket cards is placed in play, an employee shall compare the game serial number on the pull tab, board, or card to the serial number on the state gaming stamp. If the two serial numbers are different, an employee shall immediately notify the distributor.20. If an organization pays a fee to an insurance company to insure a contingency cash or merchandise prize for bingo or a raffle, the fee is an expense. If the insurance company pays or provides a prize to a winning player, it is not reported as a prize on a tax return.21. If an organization temporarily releases its site authorization to allow another organization to conduct gaming at a site, the primary site holder shall provide the temporary organization with a signed statement of site release, include the duration which it is valid, and provide a copy to the attorney general's office at least fourteen days prior to the site release.22. If an organization does not intend to reapply for a license for the next fiscal year, its license is revoked or suspended for a period of more than six months, or its license application is denied, and it has net proceeds that are not disbursed, the organization shall file an action plan with the attorney general. The plan must be filed within thirty days of the expiration of the license or when the license is relinquished, revoked, suspended, or the license application is denied, and include a planned timetable for disbursing all the net proceeds and anticipated uses. If the action plan is not timely filed, net proceeds must be disbursed within ninety days of the expiration of the license or when the license is relinquished, revoked, suspended, or the license application is denied. The disbursement must be reported to the attorney general.
N.D. Admin Code 99-01.3-03-04
Effective May 1, 1998; amended effective July 1, 2000; July 1, 2002; July 1, 2004; July 1, 2010; July 1, 2012.Amended by Administrative Rules Supplement 2016-360, April 2016, effective 4/1/2016.Amended by Administrative Rules Supplement 369, July 2018, effective 7/1/2018.Amended by Administrative Rules Supplement 2022-387, January 2023, effective 1/1/2023.General Authority: NDCC 53-06.1-01.1
Law Implemented: NDCC 53-06.1-01.1, 53-06.1-06, 53-06.1-11