Bill Text: DE HB389 | 2009-2010 | 145th General Assembly | Draft

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Bill Title: An Act To Amend Title 29 Of The Delaware Code Relating To Lotteries.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced - Dead) 2010-05-12 - Reported Out of Committee (GAMING & PARIMUTUELS) in House with 4 Favorable, 2 On Its Merits [HB389 Detail]

Download: Delaware-2009-HB389-Draft.html

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SPONSOR:	Rep. Viola & Sen. Henry
	Reps. Barbieri, Brady, Mitchell, D.E. Williams

HOUSE OF REPRESENTATIVES

145th GENERAL ASSEMBLY

HOUSE BILL NO. 389

AN ACT TO AMEND TITLE 29 OF THE DELAWARE CODE RELATING TO LOTTERIES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each house thereof concurring therein):

Section 1.Amend Chapter 48, Title 29 of the Delaware Code by adding a new "§4840" thereto as follows:

§ 4840. Licensing of Limited Lottery Agent.

(a) (1) The Director is authorized and empowered to license Delaware Development Associates, LLC as a limited lottery agent and pursuant to that authority may issue an exclusive limited lottery license to Delaware Development Associates, LLC , upon its application in accordance with the terms and conditions of this section.

(2) The issuance by the Director of a license to serve as a limited lottery agent shall be conditioned upon the Director's determination that the person, business entity or association making application satisfies such fitness and background standards as the Director may promulgate pursuant to this section.

(3)The Director, pursuant to the authority granted under this section, shall establish regulations for issuing and administering the limited lottery license and shall apply the regulations to the applicant for a limited lottery license within 90 days of the effective date of this legislation to determine its eligibility therefor. A limited lottery license shall be issued to the applicant upon determination of its eligibility. Regulations promulgated pursuant to this section shall include the following:financial reporting requirements for a limited lottery agent; rules and standards in accordance with §4830 of this title for licensing any key employee, gaming employee, gaming room service employee, or sports lottery operations employees of a limited lottery agent; a registration and enforcement procedure for any employee organization representing or seeking to represent employees who are employed by a limited lottery agent; such other matters that the Director deems prudent for the effective administration of the license; provided however, that the regulations may not impose any fees or costs on the limited lottery agent in excess of $125,000.00 per year. Any financial or payroll information reported to the State Lottery Office pursuant to such regulations shall not be subject to disclosure under the Freedom of Information Act, §§10001-10005 of this title.

(4)Change of ownership of the limited lottery agent occurring after the Director has issued a license shall automatically terminate the license 90 days thereafter unless the Director has determined, after application, to issue a license to the new owner(s) because the new owner(s) has met the requirements of this section and satisfied such fitness and background standards as the Director may promulgate pursuant to its authority under this section. A change of ownership shall occur if more than 20 percent of the legal or beneficial interest in the limited lottery agent is transferred, whether by direct or indirect means.

(5) A limited lottery license granted pursuant to this section is a privilege exclusive to the limited lottery agent and is not a legal right. A license granted under this section may not be transferred or assigned to another person, business entity or association without the written authorization of the Director upon the Director's determination that the transferee or assignee satisfies the fitness and background standards promulgated pursuant to this section. This section shall not be interpreted to preclude the limited lottery agent from changing its name or converting its status from one form of business entity to another, subject to rules governing change of ownership of the limited lottery agent promulgated by the Director in accordance with subsection (a)(4) of this section. A limited lottery license shall not be pledged as collateral. A limited lottery license may be revoked or suspended by the Director for cause upon 30 days written notice to the limited lottery agent, but shall not otherwise be subject to expiration or termination. "Cause" for termination shall mean the material violation of any laws, rules or regulations governing a limited lottery agent or unintentional violation of any federal, state or local law, rule or regulation provided that the violation is not cured within a reasonable time as determined by the Director. The Secretary of Finance shall within a reasonable time, if requested, appoint a hearing officer to hold a hearing to determine whether a limited lottery license shall be revoked or suspended. The hearing officer's decision shall be appealable to the Superior Court under the provisions of the Administrative Procedures Act

(6)A limited lottery agent shall hold the Director and the State harmless from and defend and pay for the defense of any and all claims which may be asserted against the Director, the State or the employees thereof, arising from the participation in gaming at a limited lottery facility, specifically excluding, however, any claims arising from the negligence or willful misconduct of the Director, the State or the employees thereof.

(b) (1) A "limited lottery license" shall authorize the limited lottery agent to conduct a sports lottery and table games only at a facility operated by the limited lottery agent and only when participation in the sports lottery or table games at such facility is restricted to members of a private gaming club established by the limited lottery agent or the guests of such members who are permitted entry to the facility pursuant to a guest registration procedure established by the limited lottery agent.The limited lottery agent shall be authorized to operate sports lottery machines and conduct a sports lottery and table games including, but not limited to, blackjack, roulette, baccarat, craps, poker, pai gow, backgammon and bridge.Video lottery machines shall not be permitted at a facility operated by the limited lottery agent and the limited lottery license shall not authorize the holder thereof to operate video lottery machines unless all licensed video lottery agents consent to the operation of video lottery machines by the limited lottery agent.

(2)A "private gaming club" shall be an association of persons comprised of no more than 5,000 members who are granted membership into the association at the discretion of the limited lottery agent and who pay the limited lottery agent a membership fee established by the limited lottery agent for the privilege of participating in the sports lottery or table games conducted at a facility operated by the limited lottery agent. The minimum membership fee assessed by a limited lottery agent shall be $10,000.00.

(3) No person under the age of 21 years shall be permitted membership in a private gaming club. No person under the age of 21 years shall be permitted entry into a limited lottery facility as a guest of a member.

(c) (1) A one-time license fee of $1,000,000.00 shall be paid to the State Lottery Fund by the limited lottery agent upon issuance of its limited lottery license.The Director shall retain $100,000.00 of the license fee to cover the initial administrative costs associated with the issuance of the limited lottery license.The Director shall pay over the balance of the license fee to the General Fund of the State.

(2)A limited lottery agent shall return proceeds from a sports lottery conducted by a limited lottery agent, less the amounts returned to winning players and vendor fees (if any), to the State at the rate of 50% of the total win experienced by the limited lottery agent.The proceeds due the State shall be electronically transferred daily or weekly at the discretion of the Lottery Director into a designated state lottery account by the limited lottery agent and transferred to the State Lottery Fund by the lottery on a daily or weekly basis.

(3) A limited lottery agent shall return 6.75% of its Gross Table Game Revenue to the State. The Gross Table Game Revenue due the State from the limited lottery agent shall be electronically transferred daily or weekly at the discretion of the Lottery Director into a designated state lottery account by the limited lottery agent and transferred to the State Lottery Fund by the lottery on a daily or weekly basis.

(4) The funds paid to the State in accordance with subsections (2) and (3) of this subsection (c) shall be applied as follows: first, to the administrative costs and expenses of the Office attributable to the administration and enforcement of any limited lottery license, including but not limited to administrative expenses, including payroll and other employment costs, and law enforcement and security expenses, including payroll and other employment costs of the state lottery, the Office of the Attorney General, the Division of Gaming Enforcement and the Delaware State Police; second,1% of theproceeds returned to the state under this paragraph, but not to exceed $250,000.00, to the Division of Substance Abuse and Mental Health of the Department of Health and Social Services to be used exclusively for funding programs for treatment, education and assistance of compulsive gamblers and their families; third, the remainder shall be paid to the State's General Fund.

Section 2. Amend §4803(b), Title 29 of the Delaware Code by inserting the word "or limited lottery" after the word "video lottery" and before the word "agent".

Section 3.Amend §4803(c), Title 29 of the Delaware Code by inserting the words "or Limited Lottery " after the words "Video Lottery" and before the word "Facility"; and by inserting the words "or limited lottery" after the words "video lottery" and before the word "agent" as the same appear therein.

Section 4.Amend §4803(j), Title 29 of the Delaware Code by inserting the words "or Limited Lottery" after the words "Video Lottery" and before the word "Facility".

Section 5.Amend §4803(o), Title 29 of the Delaware Code by inserting the words "or Limited Lottery" after the words "Video Lottery" and before the word "Facility".

Section 6. Amend §4803(r), Title 29 of the Delaware Code by substituting the word "or limited lottery" after the words "video lottery" and before the word "agent" each time the same appear in the subsection; and by inserting the words "or limited lottery" after the words "video lottery" and before the word "facility" in the first sentence thereof.

Section 7.Amend §4803(v), Title 29 of the Delaware Code by deleting the subsection in its entirety and substituting in lieu thereof the following:

"(v) ‘Gaming Area' shall mean a location in a facility where gaming activity is conducted at video lottery machines, sports lottery machines, or table games."

Section 8.Amend §4803(w), Title 29 of the Delaware Code by deleting the subsection in its entirety and substituting in lieu thereof the following:

"(w) ‘Video Lottery Facility' shall mean a building containing a gaming area where video lottery, sports lottery and table games may be conducted."

Section 9. Amend §4803, Title 29 of the Delaware Code by inserting a new subsection "(y)" thereto as follows:

"(y) ‘Limited Lottery Facility' shall mean a space within a building that contains a gaming area where sports lottery and/or table games may be conducted pursuant to a limited lottery license.

Section 10.Amend §4805(b)(2), Title 29 of the Delaware Code by inserting the words "and limited lottery" after the words "video lottery" and before the word "agents".

Section 11.Amend §4805(b)(16), Title 29 of the Delaware Code by inserting the word "and limited lottery" after the word "video lottery" and before the word "agent" as the same appear therein.

Section 12. Amend §4807, Title 29 of the Delaware Code by striking the existing section in its entirety and substituting the following in lieu thereof:

"Notwithstanding any other provision of law, any person licensed as provided in this subchapter is hereby authorized and empowered to act as a lottery ticket sales agent, video lottery agent or limited lottery agent as the case may be."

Section 13.Further Amend §4815(c), Title 29 of the Delaware Code by inserting a sentence after the last sentence of the subsection as follows:

"The provisions of this subsection (c) shall not apply to the proceeds generated by a limited lottery agent.".

Section 14.Amend §4815(d), Title 29 of the Delaware Code by inserting a subsection "(d)(5)" as follows:

"(d)(5)This subsection (d) shall not apply to the proceeds generated by a limited lottery agent.".

Section 15.Amend §4819(a), Title 29 of the Delaware Code by adding the language and punctuation, "Except as otherwise provided in Section 4840," before the first word in the subsection and making the "v" in the first word lower case so that the word reads "video".

Section 16.Amend §4823, Title 29 of the Delaware Code by inserting the language "and §4840" after the language "§4805" but before the word "of".

Section 17.Amend §4825(c), Title 29 of the Delaware Code by inserting the language and punctuation, "Except as permitted in Section 4840," before the first word of the subsection and making the first word lower case so that it reads "a".

Section 18.Amend §4827(d), Title 29 of the Delaware Code by inserting the language and punctuation, "Except as permitted in Section 4840," before the first word of the subsection and making the first letter of the first word lower case so that it reads "table".

Section 19.Amend §4828(c), Title 29 of the Delaware Code by inserting the words "applicable to video lottery agents" after the word "licenses" but before the word "under" in the first sentence of the subsection.

Section 20.Amend §4832, Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "facility" as the same appear therein.

Section 21.Amend §4833, Title 29 of the Delaware Code by striking the existing section in its entirety and substituting the following in lieu thereof:

"§4833. Exemption from federal law.

Pursuant to Section 2 of Chapter 1194, 64 Stat. §1134, 15 U.S. C. §1172, the State of Delaware, acting by and through its duly elected and qualified members of the General Assembly, does declare and proclaim that the state is exempt from Chapter 1194, 64 Stat. §1134, 15 U.S.C. §1172, and that the shipment of table gaming equipment or sports lottery equipment to video lottery and limited lottery agents in Delaware and the shipment of video lottery machines to video lottery agents in Delaware, done in accordance with federal law, shall be a legal shipment of a gambling device within the State of Delaware.".

Section 22.Amend §4834(a), Title 29 of the Delaware Code by inserting the words "and limited lottery" after the words "video lottery" and before the word "facilities".

Section 23.Amend §4834(c), Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "facility".

Section 24.Amend §4834(d), Title 29 of the Delaware Code by inserting the words "and limited lottery" after the words "video lottery" and before the word "facilities".

Section 25.Further amend §4834, Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "agent" as the same appear in subsections (f) and (g) of the section.

Section 26.Amend §4835(a), Title 29 of the Delaware Code by striking the words "video lottery" as the same appear before the word "facility" in the heading and first sentence thereof; before the word "facilities" in the third sentence thereof; and before the word "facility" in paragraph (3) thereof.

Section 27.Amend §4835(f), Title 29 of the Delaware Code by inserting the words "and limited lottery" after the words "video lottery" and before the word "agents" as the same appear in paragraphs (1) and (2) thereof.

Section 28.Amend §4835(g), Title 29 the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "agent" as the same appear in paragraphs (1) and (2) thereof.

Section 29.Amend §4836(a), Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "facilities" or "facility" as the same appear therein.

Section 30.Amend §4836(c), Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "facility" in the first sentence thereof; and after the words "video lottery" and before the word "agent" in the second sentence thereof.

Section 31.Amend §4836(e), Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "facility".

Section 32.Amend §4837(d), Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "agent" wherever the same appear in the subsection.

Section 33. Amend §8236(a) of Title 29 of the Delaware Code by inserting the words "and limited lottery" after the words "video lottery" and before the word "agents" as the same appear therein.

Section 34. Amend §8236(c)(1) of Title 29 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "facility" as the same appear therein.

Section 35. Amend §8236(c)(3)(7) of Title 29 of the Delaware Code by inserting the words "and limited lottery" after the words "video lottery" and before the word "facilities" as the same appear therein.

Section 36. Amend §1413 of Title 11 of the Delaware Code by inserting the words "or limited lottery" after the words "video lottery" and before the word "agent" as the same appear therein.

Section 37.The Director shall promulgate regulations to implement the provisions of this Act.

SYNOPSIS

This act creates a new class of gaming institution in Delaware through exclusive authorization of a limited lottery license.A limited lottery license can only be granted to a private club with no more than 5,000 members with a minimum membership fee of $10,000.A limited lottery license expressly prohibits the licensee from operating video lottery machines, restricting gaming activity to table games and sports lottery machines operated exclusively for the enjoyment of members and their guests.

This act benefits the State of Delaware through a one-time $1,000,000 license fee payable immediately upon issuance of the limited lottery license; an estimated $2,000,000 per year in direct gaming tax revenue; millions more in corporate taxes generated by non-gaming operations within the private club receiving the license; at least 150 permanent new jobs, plus hundreds more in construction and start-up efforts, and the resulting employment and city wage taxes; exposure to a unique class of the most elite corporate and financial leaders, international travelers, and high-dollar tourists drawn to the only private gaming club in the United States.

The limited gaming license brings to Delaware a new class of gaming consumer that would never be drawn to traditional casinos in the state - consumers willing to pay for the exclusivity and customer service available only through a private club.By prohibiting video lottery machines, the limited gaming license poses no direct competition to Delaware casinos.And by making Delaware the first state to offer private gaming to this small but highly desirable market segment, this act gives Delaware a permanent competitive advantage relative to Maryland, Pennsylvania, and New Jersey in the regional gaming market.