THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY ERICKSON, FONTANA, TARTAGLIONE, ALLOWAY, RAFFERTY, WOZNIAK, D. WHITE, LEACH, LOGAN, TOMLINSON, PIPPY AND STACK, MARCH 30, 2010

REFERRED TO FINANCE, MARCH 30, 2010  

AN ACT

Amending the act of December 19, 1988 (P.L.1262, No.156),

entitled, as amended, "An act providing for the licensing of

eligible organizations to conduct games of chance, for the

licensing of persons to distribute games of chance, for the

registration of manufacturers of games of chance, and for

suspensions and revocations of licenses and permits;

requiring records; providing for local referendum by

electorate; and prescribing penalties," further providing for

definitions, for prize limits, for insured games, for limited

sales, for recordkeeping, for eligible organizations' use of

locations for conducting small games of chance, for separate

individual prize limitations and for revocation of licenses;

providing for licensed establishments; and further providing

for advertising.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "daily drawing" and "eligible

organizations" in section 3 of the act of December 19, 1988

(P.L.1262, No.156), known as the Local Option Small Games of

Chance Act, amended December 19, 1990 (P.L.812, No.195), are

amended and the section is amended by adding definitions to

read:

Section 3.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Daily drawing."  A game in which a bona fide member selects

or is assigned a number for a chance at a prize with the winner

determined by [a] random drawing to take place on the eligible

organization's premises [during the same operating day]. The

term includes games commonly known as "member sign-in lotteries"

and "half-and-half lotteries." Nothing in this act shall be

construed to prohibit the carrying over of a jackpot where the

winning number has not been entered in the game on a particular

operating day. Daily drawing winners may be determined with the

aid of a passive selection device or reference to drawings

conducted by the department pursuant to the act of August 26,

1971 (P.L.351, No.91), known as the State Lottery Law. Daily

drawing chances may not be sold for an amount in excess of $1,

and no more than one chance per individual may be sold [to an

individual during the same operating day.] per drawing. Nothing

in this definition shall restrict an eligible organization from

conducting more than one drawing per day.

* * *

"Eligible organizations."  Includes qualifying nonprofit

charitable, religious, fraternal and veterans organizations,

clubs [and], licensed establishments, civic and service

associations as defined by this act. In order to qualify as an

eligible organization for purposes of this act, an organization

shall have been in existence and fulfilling its stated purposes 

for one year prior to the date of application for a license.

* * *

"Gross games of chance revenue."  The total of cash wagers

received by a licensed establishment minus the total of:

(1)  Cash or cash equivalent paid out to patrons as a

result of playing a game of chance.

(2)  Cash paid to purchase annuities to fund prizes

payable to patrons over a period of time as a result of

playing a game of chance.

(3)  Any personal property distributed to a patron as a

result of playing a game of chance. This does not include

travel expenses, food, refreshments, lodging or services.

The term does not include counterfeit money or tokens, coins or

currency of other countries which are received while playing a

game of chance, except to the extent that they are readily

convertible to United States currency, cash taken in fraudulent

acts perpetrated against a licensed establishment for which the

establishment is not reimbursed.

* * *

"Licensed establishment."  A restaurant, eating place or

hotel as defined under section 2 of the act of April 12, 1951

(P.L.90, No.21), known as the Liquor Code, that operates under a

valid liquor, malt or brewed beverage license under Article IV

of the Liquor Code. The term does not include a grocery store or

a licensed facility as defined under 4 Pa.C.S. § 1103 (relating

to definitions).

* * *

Section 2.  Section 5 of the act, amended December 19, 1990

(P.L.812, No.195) and October 18, 2000 (P.L.602, No.79), is

amended to read:

Section 5.  Prize limits.

(a)  Individual prize limit.--[The] Except as provided for in

subsection (i), the maximum cash value which may be awarded for

any single chance shall be [$500] $1,000.

(b)  Weekly limit.--No more than [$5,000] $20,000 in cash or

merchandise shall be awarded by any eligible organization in any

seven-day period. Payouts of less than $26 shall not be counted

toward the weekly limit.

(c)  Limit on raffles.--No more than $5,000 in cash or

merchandise shall be awarded in raffles in any calendar month.

(d)  Exception.--An eligible organization may conduct a

raffle and award a prize or prizes valued in excess of [$500] 

$1,000 each only under the following conditions:

(1)  The licensing authority has issued a special permit

for the raffle under section 11.

(2)  Eligible organizations shall be eligible to receive

no more than two special permits in any licensed year except

that volunteer fire, ambulance and rescue organizations shall

be eligible to receive no more than three special permits in

any licensed year.

(3)  Only one raffle may be conducted under each special

permit.

(4)  The total cash value of all prizes shall be no more

than $100,000 per calendar year.

(e)  Limit on daily drawings.--Daily drawings shall be

governed by the prize [limitations] limitation contained in

[subsections (a) and (b)] subsection (a). [An eligible

organization shall not conduct daily drawings during a period

when a weekly drawing is taking place.]

(f)  Exception.--The prize limitation contained in

[subsections (a) and (b)] subsection (a) may be exceeded by a

daily drawing under the following circumstances: a daily drawing

may award a prize where the cash value is in excess of [$500] 

$1,000 if such prize is the result of a carryover of a drawing

or drawings which resulted from the winning number in such

drawing or drawings not being among the eligible entrants in

such drawings. Nothing contained herein shall authorize the

prize [limitations] limitation as contained in [subsections (a)

and (b)] subsection (a) to be exceeded as a result of a failure

to conduct a drawing on an operating day during which chances

were sold for a daily drawing or for a daily drawing for which

chances were sold in excess of $1 or for which more than one

chance was sold to an eligible participant.

(g)  Daily drawing and weekly drawing exception.--When a

daily drawing or weekly drawing is set up or conducted in such a

manner as to pay out or award 100% of the gross revenues

generated from such drawing, the limitations contained in

subsection (b) shall not apply.

(h)  Limit on weekly drawings.--Weekly drawings shall be

governed by the prize limitations contained in subsection (b).

The prize limitation contained in subsection (b) may be exceeded

by a weekly drawing under the following circumstances: a weekly

drawing may award a prize where the cash value is in excess of

[$5,000] $20,000 if such prize is the result of a carryover of a

drawing or drawings which resulted from the winning number or

numbers in such drawing or drawings not being among the eligible

entrants in such drawings. Nothing contained in this act shall

authorize the prize limitations as contained in subsection (b)

to be exceeded as a result of a failure to conduct a drawing for

a week during which chances were sold for a weekly drawing or

for a weekly drawing for which chances were sold in excess of

$1. [An eligible organization shall not conduct weekly drawings

during a period when a daily drawing is taking place.]

(i)  Progressive games.--Progressive games shall be permitted

with a maximum cash value of $5,000. Contributions to the pot

shall be counted against the limit for the week in which the

contribution is made except that when the limit is reached the

amount awarded shall be counted toward the limit only to the

extent it was not previously counted toward a prior week's

limit. For the purpose of this section, progressive games are

those in which a winning ticket awards the ticket holder an

additional chance at another game or games.

Section 3.  The act is amended by adding a section to read:

Section 5.1.  Insured games.

Notwithstanding any provision of this act to the contrary, an

eligible organization may conduct small games of chance using

insured games. Insured games sold by a licensed distributor

shall be backed by a valid insurance contract issued by an

insurance company licensed to do business in this Commonwealth.

Proof of the insurance contract must be provided to the

department prior to the game being sold. The license of a

distributor and an insurance company issuing a contract for an

insured game may be suspended or revoked for failure to pay an

award. For the purposes of this section, an insured game is a

game in which the distributor or other licensed third party

guarantees making the payment on a win of a jackpot.

Section 4.  Sections 6 and 9(b) of the act, amended December

19, 1990 (P.L.812, No.195), are amended to read:

Section 6.  Sales limited.

No person shall sell, offer for sale or furnish games of

chance for use within this Commonwealth except to an eligible

organization or distributor licensed under this act. No game of

chance, other than a raffle, sold, offered for sale or furnished

for use within this Commonwealth shall contain, permit, depict

or designate a prize having a cash value in excess of [$500] 

$1,000.

Section 9.  Regulations of department.

* * *

(b)  Limitation on recordkeeping requirements.--This section

shall not be construed to authorize the department to promulgate

regulations providing for recordkeeping requirements for

eligible organizations which require unreasonable or unnecessary

information or a repetitious listing of information. The

department shall strive to keep such recordkeeping requirements

from being an undue hardship or burden on eligible

organizations. Under no circumstances shall the department

require the retention of records for a period in excess of two

years. Each eligible organization shall report to the department

prizes awarded as required by section 335 of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.

Section 5.  Section 10 of the act, amended December 19, 1990

(P.L.812, No.195) and October 18, 2000 (P.L.602, No.79), is

amended to read:

Section 10.  Licensing of eligible organizations to conduct

games of chance.

(a)  License required.--No eligible organization shall

conduct or operate any games of chance unless such eligible

organization has obtained and maintains a valid license issued

pursuant to this section. Auxiliary groups within eligible

organizations shall be eligible to conduct small games of chance

using the license issued to the eligible organization provided

that the auxiliary group or groups are listed on the application

and license of the eligible organization. No additional

licensing fee shall be charged for an auxiliary group's

eligibility under this act. Auxiliary groups shall not include

branches, lodges or chapters of a Statewide organization.

(b)  Issuance and fees.--The licensing authority shall

license, upon application, within 30 days any eligible

organization meeting the requirements for licensure contained in

this act to conduct and operate games of chance at such

locations within the county or in such manner as stated on the

application as limited by subsection (b.1). The license fee to

be charged to each eligible organization shall be $100, except

for limited occasion licenses which shall be $10. Licenses shall

be renewable annually upon the anniversary of the date of issue.

(b.1)  Location of small games of chance.--Where there exists

a location or premises which is the normal business or operating

site of the eligible organization and is owned or leased by that

eligible organization to conduct its normal business, that site

shall be the licensed premises for small games of chance

conducted by the eligible organization. If that location

consists of more than one building and the eligible organization

wishes to conduct its games in a different building at that

location from the one that is listed on its application and

license, the eligible organization must notify, in writing, the

district attorney and the licensing authority of the change in

building site and the dates and times that will be affected.

When an eligible organization does not own or lease a specific

location to conduct its normal business, that eligible

organization may use another eligible organization's premises to

conduct its games or may make such other arrangements that are

consistent with this act, including, but not limited to, leasing

a premise under a written agreement for a rental which is not

determined by either the amount of receipts realized from the

playing of games of chance nor the number of people attending

except that an eligible organization may lease a facility for a

banquet where a per head charge is applied in connection with

the serving of a meal. When such eligible organization changes

the site of its games from that which is listed on its

application and license, the eligible organization must notify,

in writing, the district attorney and licensing authority of the

change in their games' site and dates and times that will be

affected. More than one eligible organization may use the same

location, provided that each organization has its own license

and that the prize limitations of this act shall apply

separately to each organization.

(b.2)  Off-premises games of chance.--Notwithstanding any

other provisions of this section, an eligible organization may

conduct small games of chance at a location off its premises

when such games are part of an annual carnival, fair, picnic or

banquet held or participated in by that eligible organization on

a historical basis. The eligible organization must notify, in

writing, the district attorney and licensing authority of the

location, date and times of such events where it will be

conducting small games of chance.

(b.3)  Limited occasion licenses.--Eligible organizations

which do not own their own premises or which do not lease a

specific location to conduct their normal business may apply for

a limited occasion license to conduct small games of chance on

not more than three occasions covering a total of seven days

during a licensed year. A limited occasion license entitles

eligible organizations holding such a license to conduct no more

than two raffles during a licensed year where prizes may not

exceed the established limits for regular monthly raffles.

Holders of limited occasion licenses may not apply or be granted

any other license or special permit under this act. No holder of

a regular license or special permit under this act shall apply

or be granted a limited occasion license.

(b.4)  Gambling facility prohibited.--It shall be unlawful

for a person, corporation, association, partnership or other

business entity to offer for rent or offer for use a building or

facility to be used exclusively for the conducting of small

games of chance. It shall also be unlawful for any eligible

organization to lease under any terms a facility or building

which is used exclusively for the conducting of small games of

chance.

(c)  Display.--Licenses issued pursuant to this section shall

be publicly displayed at the site of the small games of chance.

(d)  Operation.--Each licensed eligible organization shall

comply with the following restrictions and rules governing the

operation of games of chance:

(1)  No person under 18 years of age shall be permitted

to operate or play games of chance.

(2)  No eligible organization shall permit any person who

has been convicted of a felony in a Federal or State court

within the past five years or has been convicted in a Federal

or State court within the past ten years of a violation of

the act of July 10, 1981 (P.L.214, No.67), known as the Bingo

Law, or of this act to manage, set up, supervise or

participate in the operation of games of chance.

(3)  No eligible organization shall pay any compensation

to any person for conducting any games of chance. Games of

chance may only be conducted by managers, officers,

directors, bar personnel and bona fide members of the

eligible organization.

(4)  Games shall be conducted only on the licensed

premises or as otherwise provided by this act.

(5)  The eligible organization shall not lease such

premises under either an oral or a written agreement for a

rental which is determined by either the amount of receipts

realized from the playing of games of chance or the number of

people attending, except that an eligible organization may

lease a facility for a banquet where a per head charge is

applied in connection with the serving of a meal. An eligible

organization shall not lease such premises from any person

who has been convicted of a violation of this act within the

past ten years.

(6)  Games, other than raffles, daily drawings and weekly

drawings, shall be purchased only from manufacturers and

distributors approved by the department.

(7)  [No] Except as provided in paragraph (7.1), no

licensed eligible organization shall permit its premises to

be used for small games of chance by another licensed

eligible organization at the same time that it is conducting

small games of chance on the premises. When a licensed

eligible organization is permitting another licensed eligible

organization to use its premises for purposes of small games

of chance, it must cease the operation of its own small games

of chance during the period that the other licensed eligible

organization is conducting its games on the premises.

(7.1)  A licensed eligible organization may sell on its

licensed premises the raffle tickets of another licensed

eligible organization that has been issued a limited occasion

license under subsection (b.3).

(8)  Raffle tickets may be sold off the licensed premise

in any municipality in this Commonwealth which has adopted

the provisions of this act by an affirmative vote in a

municipal referendum. A licensed eligible organization which

plans to sell raffle tickets in a municipality located in a

county other than the county in which the eligible

organization is licensed must notify that county's district

attorney and licensing authority as to the location and the

dates that the eligible organization plans to sell raffle

tickets.

(9)  The eligible organization shall keep a bank account

to hold the proceeds of games of chance, which shall be

separate from all other funds belonging to the eligible

organization. Account records shall show all expenditures and

income and shall be retained by the eligible organization for

at least two years.

(e)  Application for license.--Each eligible organization

shall apply to the licensing authority for a license on a form

to be prescribed by the Secretary of Revenue. The form shall

contain an affidavit to be affirmed by the executive officer or

secretary of the eligible organization stating that:

(1)  No person under 18 years of age will be permitted by

the eligible organization to operate or play games of chance.

(2)  The facility in which the games of chance are to be

played has adequate means of ingress and egress and adequate

sanitary facilities available in the area.

(3)  The eligible organization is not leasing such

premises from the owner thereof under an oral agreement, nor

is it leasing such premises from the owner thereof under a

written agreement at a rental which is determined by the

amount of receipts realized from the playing of games of

chance or by the number of people attending, except that an

eligible organization may lease a facility for a banquet

where a per head charge is applied in connection with the

serving of a meal.

(4)  The eligible organization has complied with the

annual financial report filing.

(5)  The eligible organization has a separate bank

account to hold all proceeds of games of chance.

(6)  The eligible organization has complied with the

applicable games of chance education requirements.

(e.1)  Additional application components.--As part of the

initial or renewal application filed under subsection (e), each

eligible organization shall file an annual report with the

licensing authority. The following shall apply:

(i)  The first annual report required under this

paragraph shall contain information for the 12-month

period ending at least 60 days, but not more than 90

days, prior to the submission of the application.

Subsequent annual reports shall contain information for

the most recent 12-month period ending in the same month

as the initial report.

(ii)  The annual report shall detail gross receipts

from the conduct of games of chance, the expenses related

to the conduct of the games of chance, the prizes paid

out for games of chance and the details as to how the

proceeds from games of chance were used or disbursed by

the eligible organization.

(iii)  The annual report shall be prepared on a one-

page form to be designed by the department. Additional

schedules shall be included, if necessary, to provide

specific details on the use or disbursement of the net

proceeds from games of chance by the eligible

organization.

(iv)  A copy of the annual report shall be filed with

the application to renew the liquor license of an

eligible organization.

(f)  List of licensees.--The licensing authority, on a

semiannual basis, shall send a copy of all licensees to the

Department of Revenue.

(g)  List of municipalities.--The licensing authority shall

include with any license or renewal issued to an eligible

organization, an up-to-date listing of those municipalities

within the licensing county which have approved the referendum

question on small games of chance.

(h)  Background checks.--Each application shall include the

results of a criminal history record information check obtained

from the Pennsylvania State Police, as defined in 18 Pa.C.S. §

9102 (relating to definitions) and permitted by 18 Pa.C.S. §

9121(b) (relating to general regulations), for the executive

officer or secretary of the eligible organization making the

application and all other responsible persons listed on the

application.

Section 6.  The act is amended by adding sections to read:

Section 11.1.  Licensed establishment application.

In addition to any other eligibility and application

requirements applicable to eligible organizations, a licensed

establishment shall demonstrate the following as part of its

application for a license to conduct small games of chance:

(1)  That it possesses a valid liquor, 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, and that such

license is in good standing.

(2)  That it is located in a municipality in which small

games of chance are permitted under this act.

(3)  That it possesses tax clearance from the department

and the Department of Labor and Industry in the same manner

as required under section 470 of the Liquor Code.

Section 11.2.  Licensed establishment monthly assessment.

(a)  Rate.--The department shall determine and each licensed

establishment shall pay a monthly assessment rate of 30% of its

gross games of chance revenue from the conduct of small games of

chance at the licensed establishment.

(b)  Deposit.--The monthly assessment owed by each licensed

establishment shall be deposited in the General Fund.

Section 11.3.  Licensed establishment public interest

assessment.

(a)  Contribution.--The department shall determine and verify

that each licensed establishment conducting small games of

chance shall contribute, monthly, 20% of its gross games of

chance revenue from the conduct of small games of chance at the

licensed establishment to a charitable organization to be used

exclusively for a public interest purpose.

(b)  Accounting.--A licensed establishment shall provide a

monthly accounting to the department indicating the total amount

of gross games of chance revenue received by the licensed

establishment and the total amount contributed to charitable

organizations. The licensed establishment shall identify the

charitable organization and the public interest purpose for

which the monthly contribution is allocated.

Section 7.  Section 12(a) of the act is amended by adding a

paragraph to read:

Section 12.  Revocation of licenses.

(a)  Grounds.--The licensing authority shall revoke or refuse

to renew the license of any eligible organization whenever the

district attorney finds upon complaint and investigation that:

* * *

(13)  The eligible organization has failed to keep and

maintain the records required under this act for a period of

two years.

* * *

Section 8.  Section 15 of the act, amended December 19, 1990

(P.L.812, No.195), is amended to read:

Section 15.  Advertising.

[It shall be unlawful for any eligible organization or person

to] Any eligible organization or person may advertise the prizes

or their dollar value to be awarded in games of chance, provided

that [prizes may be identified on raffle tickets.

Notwithstanding the prohibition of advertising contained within

this section, an eligible organization may advertise prizes and

values thereof in periodic publications which are limited in

their circulation to members of the eligible organization.] such

advertisements shall contain the date, time, location, whether

cash or merchandise prizes will be awarded and the name of the

eligible organization licensed to conduct games of chance and

the name of the person who conducts the games of chance.

Section 9.  This act shall apply as follows:

(1)  The amendment or addition of section 10(e)(4) and

(5), (e.1)(1) and (h) of the act shall apply to applications

filed more than 60 days after the effective date of this

section.

(2)  The amendment or addition of section 10(e)(6) and

(e.1)(2) of the act shall apply to applications filed more

than one year after the effective date of this section.

Section 10.  This act shall take effect as follows:

(1)  The following provisions shall take effect

immediately:

(i)  The amendment or addition of section 10(b), (e), 

(e.1) and (h) of the act.

(ii)  Section 9 of this act.

(iii)  This section.

(2)  The remainder of this act shall take effect in 60

days.