A licensed class 1 racing association may operate a handicapping contest at which the participants may be charged an entry fee. All paid-entry handicapping contests must be conducted in accordance with the provisions of this rule. The executive secretary may approve handicapping contests provided they meet the following criteria:

(1) A handicapping contest is defined as a competitive event, where participants, using individual skill to evaluate a variety of factors including the past performance of horses to determine the relative qualities and abilities of horses in a race, attempt to outperform other participants in selecting the finish of horses. Participants who are most successful in selecting horses become eligible to win prizes as prescribed in the official rules of the contest. Prizes and format are predefined and at the discretion of the class 1 racing association.

(2) A class 1 racing association desiring to offer a paid-entry handicapping contest must first apply for and receive approval from the commission to conduct a handicapping contest. The class 1 racing association must apply to the commission for approval of each and every contest. The class 1 racing association must include with its application the proposed rules for conducting the handicapping contest and the determination of prizes. The class 1 racing association will obtain written approval to operate the handicapping contest prior to the acceptance of any entry fees regarding said contest.

(3) The class 1 racing association approved to operate a handicapping contest will distribute at least ninety-five percent of the entry fees as prizes to the winners. Nothing in this section will preclude an operator from providing additional prizes or promotions.

(4) The entry fee to enter a handicapping contest will be set by the class 1 racing association. The entry fee and a description of all goods and services to be awarded as part of the handicapping contest must be fully disclosed to each participant prior to paying the entry fee. In addition, all prizes, including amenities such as airfare, meals and lodging, will also be fully disclosed to each participant prior to paying the entry fee.

(5) Races that are the subject of a handicapping contest must be races on which the class 1 racing association is authorized to conduct parimutuel wagering.

(6) The officers and employees of the class 1 racing association operating a handicapping contest, and their immediate families are prohibited from participating in any handicapping contest unless approved under this subsection. Commissioners and employees of the commission are also prohibited from participating in any handicapping contest in Washington. Employees of the class 1 racing association may participate in a handicapping contest, provided it is for promotional purposes only and are not eligible for any prizes awarded. Participation must be approved by the executive secretary.

(7) The class 1 racing association will provide the commission a report on every handicapping contest including a record of all entry fees collected, the number of participants for each contest, the amount the class 1 racing association paid in prizes, and the name and address of each winning participant.

(8) Any violation of this section will be referred to the executive secretary. The executive secretary will have sole authority to ensure compliance with this rule, conduct hearings on violations, and determine penalties. Any decision of the executive secretary may be challenged as provided in WAC 260-08-675.