Bill Text: PA HB1766 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for video gaming.

Spectrum: Moderate Partisan Bill (Democrat 25-5)

Status: (Introduced - Dead) 2011-06-30 - Referred to GAMING OVERSIGHT [HB1766 Detail]

Download: Pennsylvania-2011-HB1766-Introduced.html

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PRINTER'S NO. 2266
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1766 Session of2011
INTRODUCED BY P. COSTA, D. COSTA, DeLUCA, FRANKEL, KORTZ, KOTIK, MATZIE, BARRAR, BRENNAN, BURNS, DAVIS, EVERETT, FABRIZIO, HALUSKA, HARHAI, HARKINS, MAHONEY, MUSTIO, PASHINSKI, SAINATO, STABACK, STERN, STURLA, TAYLOR, WAGNER, WHITE AND YOUNGBLOOD, JUNE 30, 2011
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, JUNE 30, 2011
AN ACT
Amending Title 4 (Amusements) of the Pennsylvania Consolidated
Statutes, providing for video gaming.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 4 of the Pennsylvania Consolidated Statutes
is amended by adding a chapter to read:
CHAPTER 11A
VIDEO GAMING
Sec.
11A01. Definitions.
11A02. Powers and duties.
11A03. Video gaming.
11A04. Licensing of manufacturers, distributors and vendors.
11A05. Licensed establishment license.
11A06. Limitations on licensed establishments.
11A07. Central communications system.
11A08. Video gaming machine prototype.
11A09. Fees.
11A10. Unlawful use by minors.
11A11. Inducements prohibited.
11A12. Multiple types of licenses prohibited.
11A13. Illegal activities.
11A14. Establishment of account and distribution of funds.
11A15. Preemption of local taxes and license fees.
11A16. Exemption from State gaming laws.
11A17. Exemption from Federal regulation.
§ 11A01. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." The Video Gaming Account established under
section 11A14 (relating to establishment of account and
distribution of funds).
"Coin-operated amusement machine." A machine that requires
the insertion of a coin, currency or tokens to play or activate
a game, the outcome of which is primarily determined by the
skill of the player. The term does not include a video lottery
terminal.
"Department." The Department of Revenue of the Commonwealth.
"Distributor." Any individual, partnership, association or
corporation, licensed by the Department of Revenue to buy, sell,
service or distribute video gaming machines. The term does not
include a machine vendor or a manufacturer.
"Gaming machine." A device or machine that has the outcome
of play primarily determined by chance. The term includes an
antique slot machine under 18 Pa.C.S. § 5513(c) (relating to
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gambling devices, gambling, etc.) when used for profit. The term
shall not include any of the following:
(1) A coin-operated amusement machine.
(2) A video lottery terminal that has all of its seals
or identification plates.
(3) Slot machines as defined under section 1103
(relating to definitions).
(4) A game of chance under the act of December 19, 1988
(P.L.1262, No.156), known as the Local Option Small Games of
Chance Act.
(5) Lottery terminals used under the act of August 26,
1971 (P.L.351, No.91), known as the State Lottery Law.
"Licensed establishment." A restaurant, bar, tavern, hotel
or club that has a valid liquor or malt or brewed beverage
license under Article IV of the act of April 12, 1951 (P.L.90,
No.21), known as the Liquor Code.
"Machine vendor." Any individual, partnership, association
or corporation that:
(1) is licensed by the Department of Revenue; and
(2) owns, services and maintains video gaming machines
for placement in licensed establishments.
"Manufacturer." Any individual, partnership, association or
corporation that:
(1) is licensed by the Department of Revenue; and
(2) manufactures or assembles video gaming machines.
"Net profits." All money put into a video gaming machine
minus the cash awards paid out to players.
"Service technician." An individual holding a service
technician's license issued by the Department of Revenue
allowing the individual to service, maintain and repair video
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gaming machines.
"State Lottery." The lottery established and operated under
the act of August 26, 1971 (P.L.351, No.91), known as the State
Lottery Law.
"Video gaming machine." A device or machine:
(1) that, upon insertion of a coin or currency, will
play or simulate the play of a video poker, bingo, keno,
blackjack or any other game authorized by the Department of
Revenue;
(2) that utilizes a video display and microprocessors;
and
(3) in which, by the skill of the player or by chance,
the player may receive free games or credits that may be
redeemed for cash.
§ 11A02. Powers and duties.
The department shall regulate and adopt standards for all
gaming activities in this Commonwealth, including video gaming
as authorized under this chapter.
§ 11A03. Video gaming.
The department shall provide for video gaming at licensed
establishments. With the exception of tickets indicating credits
won, which are redeemable for cash, no machine may directly
dispense coins, cash, tokens or anything else of value.
§ 11A04. Licensing of manufacturers, distributors and vendors.
(a) Background investigation; application fee.--The
department shall have the Pennsylvania State Police conduct a
background investigation of an applicant for a manufacturer,
distributor or machine vendor license as to personal and
business character, honesty and integrity. An applicant must pay
a nonrefundable application fee of $5,000. The investigation may
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utilize information on the applicant compiled by the
Pennsylvania Liquor Control Board. The investigation includes
the following:
(1) An examination of criminal or civil records.
(2) An examination of personal, financial or business
records. This paragraph includes tax returns, bank accounts,
business accounts, mortgages and contracts to which the
license applicant is a party or has an interest.
(3) An examination of personal or business relationships
which:
(i) include a partial ownership or voting interest
in a partnership, association or corporation; and
(ii) bear on the fitness of the applicant for
licensure.
(b) Production of information.--An applicant to become a
licensee must produce information, documentation and assurances
as required by the department. This subsection includes the
following:
(1) Each license applicant must:
(i) consent in writing to and provide for the
examination of financial and business accounts, bank
accounts, tax returns and related records in the
applicant's possession or under the applicant's control
that establish by clear and convincing evidence the
financial stability, integrity and responsibility of the
license applicant; and
(ii) authorize all third parties in possession or
control of accounts or records under subparagraph (i) to
allow for their examination as deemed necessary by the
department in conducting background investigations.
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(2) Each license applicant must disclose on the
application form any criminal convictions for offenses graded
above summary offenses covering the ten-year period
immediately preceding the filing of the application. The
license applicant must also include on the application form
any convictions of the gambling laws of any jurisdiction.
(3) If the license applicant has conducted a gaming
operation in a jurisdiction that permits such activity, the
license applicant must produce letters of reference from the
gaming or casino enforcement or control agency that specify
the experiences of the agency with the license applicant, the
license applicant's associates and the license applicant's
gaming operations. If the license applicant is unable to
obtain these letters within 60 days of the request, the
license applicant may submit a copy of the letter requesting
the information together with a statement under oath or
affirmation that, during the period activities were
conducted, the license applicant was in good standing with
the appropriate gambling or casino enforcement control
agency.
(4) Each license applicant must provide information,
documentation and assurances as required by the department to
establish by clear and convincing evidence the license
applicant's good character, honesty and integrity.
Information under this paragraph may relate to family,
habits, character, reputation, business affairs, financial
affairs, business associates, professional associates and
personal associates, covering the ten-year period immediately
preceding the filing of the application.
(b.1) Felony conviction prohibition.--A person that has been
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convicted of a felony within ten years of the date of
application shall not be issued a license under this chapter.
(c) Third-party disclosure.--Each license applicant must
accept any risk of adverse public notice, embarrassment,
criticism, damages or financial loss, which may result from
disclosure or publication by a third party of material or
information requested by the department pursuant to action on an
application. The license applicant expressly must waive a claim
against the department, executive director or the Commonwealth
and its employees from damages as a result of disclosure or
publication by a third party.
(d) Hearing upon denial.--A person who is denied a license
has the right to a hearing before the department in accordance
with the provisions of 2 Pa.C.S. Chs. 5 Subch. A (relating to
practice and procedure of Commonwealth agencies) and 7 Subch. A
(relating to judicial review of Commonwealth agency action).
(e) Sole proprietor vendors.--A sole proprietor vendor must
comply with all of the following:
(1) Be a resident of this Commonwealth for at least two
years prior to application for a license.
(2) Be of good moral character and reputation in the
community.
(3) Be at least 18 years of age.
(4) Be current in the payment of all taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(5) Demonstrate sufficient financial resources to
support the activities required to place and service video
gaming machines.
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(f) Partnership vendors.--Partnership vendors must comply
with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to place and service video
gaming machines.
(3) Have each partner be:
(i) of good moral character and reputation in the
community;
(ii) at least 18 years of age; and
(iii) a resident of this Commonwealth for at least
two years prior to application for a license.
(4) At all times subsequent to licensing, a majority of
the partnership ownership interest must be held by residents
of this Commonwealth.
(g) Association and corporate vendors.--Association or
corporate vendors must comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to place and service video
gaming machines.
(3) Have each shareholder holding more than 10% of the
stock of a corporation be:
(i) of good moral character and reputation in the
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community;
(ii) at least 18 years of age; and
(iii) a resident of this Commonwealth for at least
two years prior to application.
(h) Sole proprietor distributors.--A sole proprietor
distributor must comply with all of the following:
(1) Be a resident of this Commonwealth for at least one
year prior to application.
(2) Be of good moral character and reputation in the
community.
(3) Be at least 18 years of age.
(4) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(5) Demonstrate sufficient financial resources to
support the activities required to sell and service video
gaming machines.
(i) Partnership distributors.--Partnership distributors must
comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to sell and service video
gaming machines.
(3) Have each partner be:
(i) of good moral character and reputation in the
community;
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(ii) at least 18 years of age; and
(iii) a resident of this Commonwealth for at least
one year prior to application.
(4) At all times subsequent to licensing, a majority of
the partnership ownership interest must be held by residents
of this Commonwealth.
(j) Association and corporate distributors.--Association or
corporate distributors must comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to sell and service video
gaming machines.
(3) Have each shareholder holding more than 10% of the
stock of a corporation be:
(i) of good moral character and reputation in the
community; and
(ii) at least 18 years of age.
(4) For at least one year immediately prior to
application, have maintained and operated a coin machine
distributorship office and sales staff within this
Commonwealth. This paragraph does not apply to an association
distributor.
(k) Sole proprietor manufacturers.--A sole proprietor
manufacturer must comply with all of the following:
(1) Be of good moral character and reputation in the
community.
(2) Be at least 18 years of age.
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(3) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(4) Demonstrate sufficient financial resources to
support the activities required to manufacture and sell video
gaming machines through a licensed distributor.
(l) Partnership manufacturers.--Partnership manufacturers
must comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to manufacture and sell video
gaming machines through a licensed distributor.
(3) Have each partner be:
(i) at least 18 years of age; and
(ii) of good moral character and reputation in the
community.
(m) Association and corporate manufacturers.--Association or
corporate manufacturers must comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to manufacture and sell video
gaming machines through a licensed distributor.
(3) Have each shareholder holding more than 10% of the
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stock of the corporation or association be:
(i) of good moral character and reputation in the
community; and
(ii) at least 18 years of age.
(n) Service technician.--A service technician must comply
with the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political
subdivisions. This paragraph excludes items under formal
dispute or appeal under applicable law.
(2) Be of good moral character and reputation in the
community.
(3) Be at least 18 years of age.
(o) Written agreement.--Each licensed establishment shall
have a written agreement with a licensed machine vendor for a
minimum 12-month term. The agreement shall be approved by the
department and on file at the licensed establishment.
(p) Nonaccessibility to minors.--No video gaming machine may
be in an area easily accessible to minors. A floor-to-ceiling
wall is not required, but the area must be secure and easily
seen and observed by the employees or management of the licensed
establishment.
(q) Advertising prohibited.--No licensed establishment with
a video gaming license may advertise gaming in any form, written
or electronic, nor may its name include the words "casino,"
"gambling," "gaming" or any other term that may be interpreted
to advertise gaming.
§ 11A05. Licensed establishment license.
The department shall issue a license to any licensed
establishment upon a showing that its liquor or retail dispenser
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license is valid and is in good standing with the Pennsylvania
Liquor Control Board. The annual fee for a licensed
establishment shall be $500 per video gaming machine.
§ 11A06. Limitations on licensed establishments.
(a) Limitations.--Licensed establishments shall be subject
to the following limitations:
(1) No licensed establishment may have more than five
video gaming machines.
(2) No applicant may hold more than one type of license
authorized by this chapter.
(3) Each licensee is responsible for payment of its
license fee. Payment of the fee by a person, partnership or
corporation other than the licensee is prohibited.
(b) Unlawful acts.--No licensed establishment shall permit:
(1) An individual under 21 years of age to operate or
attempt to operate a video gaming machine.
(2) An individual under 21 years of age to receive or
attempt to receive a prize from a video gaming machine.
(3) A visibly intoxicated person to play a video gaming
machine.
(4) An individual to tamper with the connection of a
video gaming machine to the central computer.
In addition to any other penalties provided by law, a person who
violates paragraph (1), (2) or (3) commits a summary offense.
(c) Seizure, forfeiture and destruction of gaming
machines.--Gaming machines shall be considered to be per se
illegal. Gaming machines and the proceeds therefrom may be
seized upon view as illegal contraband by agents of the
department and any other law enforcement agency. The owner of a
gaming machine shall have no right to compensation for the
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seizure and destruction of a gaming machine or the proceeds of a
gaming machine.
(d) Penalties.--
(1) In the case of a gaming machine seized from a
licensed establishment, for a first violation, a penalty of
at least $1,000 and not more than $5,000 and a suspension of
the licensed establishment owner's liquor license for not
less than seven consecutive days, and for each subsequent
violation, a penalty of $15,000 and a suspension of the
liquor license for not less than 14 consecutive days.
(2) In the case of a gaming machine seized from a place
of business other than a licensed establishment, for a first
violation, a penalty of at least $1,000 and not more than
$5,000 against the owner of the business from which the
gaming machine was seized, and for each subsequent violation,
a penalty of $15,000.
§ 11A07. Central communications system.
The department shall establish and procure a central
communications system capable of monitoring and communicating
with each licensed video gaming machine. The department may, by
agreement between the department and the State Lottery, utilize
the central communications system utilized by the State Lottery.
All licensed video gaming machines must be linked to the central
communications system either at the department or, by agreement
between the department and the State Lottery, at the State
Lottery.
§ 11A08. Video gaming machine prototype.
The department shall develop a prototype video gaming machine
that includes hardware and software specifications. These
specifications shall include:
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(1) All machines must have the ability to interact with
the central communications system.
(2) Unremovable identification plates shall appear on
the exterior of the machine containing the name of the
manufacturer and the serial and model number of the machine.
(3) Rules of play shall be displayed on the machine face
or screen as promulgated by the department.
(4) A video gaming machine may not directly dispense
coins, cash, tokens or any other article of exchange or value
except for tickets. Such tickets shall be dispensed by
pressing the ticket-dispensing button on the machine at the
end of one's turn or play. The ticket shall indicate the
total amount of credits and the cash award, and the player
shall turn in this ticket to the appropriate person at the
licensed establishment to receive the cash award. The cost of
the credit shall be $.25, and the number of credits played
per game shall not exceed ten.
(5) No cash award for any individual game may exceed
$1,000.
(6) All video gaming machines must be designed and
manufactured with total accountability to include gross
proceeds, net profits, winning percentages and any other
information the department requires.
(7) Each machine shall pay out a minimum of 85% of the
amount wagered.
(8) The department may contract with the board to
develop and verify specifications for video gaming machines.
§ 11A09. Fees.
(a) Vendors license and fee.--The annual fee for a machine
vendor license shall be $25,000 for the first 50 video gaming
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machines and an additional $500 per video gaming machine license
in excess of 50. A machine vendor license permits the vendor to
sell video gaming machines to another licensed machine vendor or
licensed distributor.
(b) Distributor license fee.--The annual fee for a
distributor license shall be $10,000.
(c) Manufacturer license fee.--The annual fee for a
manufacturer license shall be $10,000.
(d) Service technician license fee.--The annual fee for a
service technician license shall be $100.
§ 11A10. Unlawful use by minors.
(a) Minors.--No individual under 21 years of age may use or
play a video gaming machine. An individual who violates this
subsection commits a summary offense.
(b) Licensees.--
(1) A licensed establishment may not, regardless of
knowledge or intent, permit an individual under 21 years of
age to play or use a video gaming machine.
(2) A licensed establishment that violates this
subsection commits a misdemeanor of the second degree.
§ 11A11. Inducements prohibited.
(a) General rule.--A video gaming machine owner may not
offer or give any type of inducement or incentive to a licensed
establishment to secure a machine placement agreement.
(b) Definition.--As used in this section, the term
"inducement" or "incentive" means consideration from a licensed
machine vendor to a licensed establishment owner as an
enticement to solicit or maintain the licensed establishment
owner's business. The term includes cash, gifts, loans and
prepayment of commissions.
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§ 11A12. Multiple types of licenses prohibited.
(a) Manufacturer restriction.--A manufacturer may not be
licensed as a machine vendor or own, manage or control a
licensed establishment and shall be licensed only to sell to
licensed distributors.
(b) Distributor restriction.--A licensed machine distributor
may not be licensed as a machine vendor or own, manage or
control a licensed establishment and shall only contract with
licensed machine vendors.
(c) Vendor restriction.--A machine vendor may not be
licensed as a manufacturer or distributor or own, manage or
control a licensed establishment and shall be licensed only to
contract with licensed distributors and licensed establishments.
This shall not prohibit a licensed vendor from selling used
equipment to another licensed vendor.
(d) Establishment owner restriction.--An owner of a licensed
establishment may not be licensed as a manufacturer, distributor
or vendor and shall only contract with a machine vendor to place
and service equipment.
§ 11A13. Illegal activities.
A person may not sell, distribute, service, own, operate or
place on location a video gaming machine unless the person is
licensed under this chapter and is in compliance with all
requirements of this chapter.
§ 11A14. Establishment of account and distribution of funds.
(a) Video Gaming Account.--There is established a separate
account in the State Treasury to be known as the Video Gaming
Account. Fees and fines under this chapter and the portion of
net profits under subsection (b)(2)(iii) shall be deposited in
the account.
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(b) Distribution of net profits.--
(1) Net profits shall be calculated by subtracting cash
awards from the total consideration played on the machine.
(2) The net profits from each video gaming machine shall
be distributed in the following manner:
(i) 33% to the licensed establishment.
(ii) 33% to the licensed vendor.
(iii) 34% to the Motor License Fund for use by the
Pennsylvania State Police, except for any amount in
excess of $500,000,000, which shall be paid to the
account.
(c) Department funding.--The department shall derive all
funding for its operations related to the establishment,
enforcement and operation of video gaming from the account.
(d) Payments to municipalities.--In addition to the funds
distributed under subsection (b)(2)(iv), the department shall
pay each municipality from the account $500 per licensed machine
located in the municipality.
(e) Funds maintained in account.--An annual minimum balance
of $2,000,000 shall be maintained in the account. Money in
excess of this amount at the end of each fiscal year shall be
distributed to the Department of Transportation for highway
maintenance and/or projects.
(f) Funding for compulsive gambling programs.--The
department shall allocate from the account at least $1,000,000
annually for the purpose of treating compulsive gambling in this
Commonwealth.
(g) Continuous appropriation.--The money in the account is
continuously appropriated to the account and shall not lapse at
the end of any fiscal year.
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§ 11A15. Preemption of local taxes and license fees.
(a) Statutes.--Video gaming machines shall be exempt from
taxes levied under the following:
(1) The act of August 5, 1932 (Sp.Sess., P.L.45, No.45),
referred to as the Sterling Act.
(2) The act of December 31, 1965 (P.L.1257, No.511),
known as The Local Tax Enabling Act.
(3) 53 Pa.C.S. Pt.III Subpt. E (relating to home rule
and optional plan government).
(4) Any statute that confers taxing authority to a
political subdivision.
(b) Licensing fees.--
(1) Video gaming machines are exempt from local
licensing fees.
(2) Local licensing fees imposed on all other coin-
operated amusement machines shall not exceed $150.
§ 11A16. Exemption from State gaming laws.
Video gaming machines authorized under this chapter and their
use as authorized under this chapter are exempt from 18 Pa.C.S.
§ 5513 (relating to gambling devices, gambling, etc.).
§ 11A17. Exemption from Federal regulation.
The General Assembly declares that the Commonwealth is exempt
from section 2 of the Gambling Devices Transportation Act (64
Stat. 1134, 15 U.S.C. § 1172). Shipments of approved video
gaming machines into this Commonwealth in compliance with
sections 3 and 4 of the Gambling Devices Transportation Act (64
Stat. 1134, 15 U.S.C. §§ 1173 and 1174) shall be deemed legal
shipments into this Commonwealth.
Section 2. This act shall take effect in 60 days.
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