PRINTER'S NO. 3726
No. 2764 Session of 1978
INTRODUCED BY BENNETT, PRATT, IRVIS, F. TAYLOR, MILANOVICH,
COLE, COHEN AND ZITTERMAN, SEPTEMBER 13, 1978
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE,
SEPTEMBER 13, 1978
AN ACT
1 Providing for the Pennsylvania Industrial Development Authority
2 Lottery Fund and administration thereof; providing for the
3 disposition of funds; violations and penalties therefore;
4 exemption of prizes from local taxation; and allocating money
5 in said fund for industrial development projects in critical
6 economic areas.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the "Pennsylvania
11 Industrial Development Lottery Fund Law."
12 Section 2. Statement of purpose.
13 This act is enacted to establish a special lottery to be
14 operated by the State, the net proceeds of which are to be used
15 for the purposes of providing for industrial development
16 projects in critical economic areas. It is further intended to
17 provide a means through which to curb illegal gambling
18 operations in Pennsylvania.
19 Section 3. Definitions.
1 The following words and phrases when used in this act shall
2 have, unless the context clearly indicates otherwise, the
3 meanings given to them in this section:
4 "Director." The Director of the Division of the State
5 Lottery.
6 "Division." The Division of the State Lottery created by the
7 act of August 26, 1971 (P.L.351, No.91), known as the "State
8 Lottery Law."
9 "Pennsylvania Industrial Development Authority." The
10 authority created by the act of May 17, 1956 (P.L.1609, No.537),
11 known as the "Pennsylvania Industrial Development Authority
12 Act."
13 "Secretary." The Secretary of Revenue.
14 "Special lottery." Any lottery established pursuant to the
15 authority granted by this act.
16 Section 4. Powers and duties of the Secretary of Revenue.
17 (a) In addition to the powers and duties provided by law and
18 by the act of April 9, 1929 (P.L.177, No.175), known as "The
19 Administrative Code of 1929," the Secretary of Revenue shall
20 have the power and it shall be his duty to operate and
21 administer this special lottery, and to promulgate rules and
22 regulations providing the establishment and operation thereof,
23 including but not limited to:
24 (1) The type of lottery to be conducted.
25 (2) The price or prices of tickets or shares in the
26 lottery.
27 (3) The numbers and sizes of the prizes on the winning
28 tickets or shares.
29 (4) The manner of selecting the winning tickets or
30 shares.
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1 (5) The manner of payment of prizes to the holders of
2 winning tickets or shares.
3 (6) The frequency of the drawings or selections of
4 winning tickets or shares, without limitation.
5 (7) Without limit as to number, the type or types of
6 locations at which tickets or shares may be sold.
7 (8) The method to be used in selling tickets or shares.
8 (9) The licensing of agents to sell tickets or shares
9 provided that no person under the age of 21 shall be licensed
10 as an agent.
11 (10) The manner and amount of compensation, if any, to
12 be paid licensed sales agents necessary to provide for the
13 adequate availability of tickets or shares to prospective
14 buyers and for the convenience of the public.
15 (11) The apportionment of the total revenues accruing
16 from the sale of lottery tickets or shares and from all other
17 sources among:
18 (i) The payment of prizes to the holders of winning
19 tickets or shares.
20 (ii) The payment of costs incurred in the operation
21 and administration of the special lottery, including the
22 expenses of the division and the costs resulting from any
23 contract or contracts entered into for promotional,
24 advertising or operational services or for the purchase
25 or lease of lottery equipment and materials.
26 (iii) The transfer of moneys in the "Pennsylvania
27 Industrial Development Authority Lottery Fund" to the
28 "Industrial Development Fund," as established by the
29 "Pennsylvania Industrial Development Authority Act," so
30 as to provide for industrial development projects in
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1 critical economic areas.
2 (12) Such other matters necessary or desirable for the
3 efficient and economical operation and administration of this
4 special lottery for the convenience of the purchasers of
5 tickets or shares and the holders of winning tickets or
6 shares.
7 (b) To report monthly to the Governor and the General
8 Assembly the total lottery revenues, prize disbursements and
9 other expenses for the preceding month, and to make an annual
10 report, which shall include a full and complete statement of
11 special lottery revenues, prize disbursements and other
12 expenses, to the Governor and the General Assembly, and
13 including such recommendations for changes in this act as the
14 secretary deems necessary or desirable.
15 Section 5. Lottery sales agents; qualifications; prohibitions.
16 (a) No license as an agent to sell lottery tickets or shares
17 shall be issued to any person to engage in business exclusively
18 as a lottery sales agent. Before issuing such license the
19 secretary shall consider such factors as:
20 (1) the financial responsibility and security of the
21 person and his business or activity;
22 (2) the accessibility of his place of business or
23 activity to the public;
24 (3) the sufficiency of existing licenses to serve the
25 public convenience; and
26 (4) the volume of expected sales.
27 (b) If the secretary shall find that the experience,
28 character and general fitness of the applicant are such that the
29 participation of such person as a lottery sales agent will be
30 consistent with the public interest, convenience and necessity,
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1 it may thereupon grant a license.
2 (c) Without limiting the generality of the foregoing, the
3 secretary may refuse to issue a license pursuant to this
4 section, or may suspend or revoke a license so issued if it
5 shall find that the applicant or licensee:
6 (1) Has been convicted of a crime involving moral
7 turpitude.
8 (2) Has engaged in bookmaking or other forms of illegal
9 gambling.
10 (3) Has been found guilty of any fraud or
11 misrepresentation in any connection.
12 (4) Has violated any rule, regulation or order of the
13 secretary.
14 (d) The secretary may refuse to grant a license or may
15 suspend or revoke a license issued pursuant to this section to a
16 corporation, if it shall determine that:
17 (1) Any officer, director, member or stockholder of such
18 corporation applying for a license or of any corporation
19 which owns stock in or shares in the profits, or participates
20 in the management of the affairs of such applicant:
21 (i) has been convicted of a crime involving moral
22 turpitude;
23 (ii) has engaged in bookmaking or other forms of
24 illegal gambling;
25 (iii) has been found guilty of any fraud or
26 misrepresentation in any connection; or
27 (iv) has violated any rule, regulation or order of
28 the secretary.
29 (2) The experience, character or general fitness of any
30 officer, director or stockholder of any of the aforesaid
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1 corporations is such that the participation of such person as
2 a lottery sales agent would be inconsistent with the public
3 interest, convenience or necessity, but if the secretary
4 determines that the interest of any stockholder referred to
5 in this paragraph or in paragraph (1) of this subsection is
6 sufficient, in the opinion of the secretary, to affect
7 adversely the conduct of a lottery sales agency or such
8 corporation in accordance with the provisions of this act,
9 the secretary may disregard such interest in determining
10 whether or not to grant a license to such corporation.
11 (3) The applicant is not the owner or the lessee of the
12 business at which it will conduct a lottery sales agency
13 pursuant to the license applied for, or that any person,
14 firm, association or corporation other than the applicant
15 shares, or will share, in the profits of the applicant, other
16 than by dividends as a stockholder, or participates, or will
17 participate, in the management of the affairs of the
18 applicant.
19 (e) Pending final determination of any question under this
20 section, the secretary may issue a temporary license upon such
21 terms and conditions as it may deem necessary, desirable or
22 proper to effectuate the provisions of this act.
23 (f) For the purposes of this act, the term "person" shall be
24 construed to mean and include an individual, association,
25 corporation, club, trust, estate, society, company, joint-stock
26 company, receiver, trustee, assignee, referee, or any other
27 person acting in a fiduciary or representative capacity, whether
28 appointed by a court or otherwise, and any combination of
29 individuals. "Person" shall also be construed to mean and
30 include all departments, commissions, agencies and
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1 instrumentalities of the State, including counties and
2 municipalities and agencies and instrumentalities thereof.
3 Section 6. Assignability of prizes drawn.
4 No right of any person to a prize drawn shall be assignable,
5 except that payment of any prize drawn may be paid to the estate
6 of a deceased prize winner, and, except that any person pursuant
7 to an appropriate judicial order may be paid the prize to which
8 the winner is entitled. The secretary shall be discharged of all
9 further liability upon payment of a prize pursuant to this
10 section.
11 Section 7. Sales of tickets in excess of regulated price;
12 sales by nonlicensed persons; penalties.
13 (a) No person shall sell a ticket or share at a price
14 greater than that fixed by rule or regulation of the commission.
15 (b) No person other than a licensed lottery sales agent
16 shall sell lottery tickets or shares, except that nothing in
17 this section shall be construed to prevent any person from
18 giving lottery tickets or shares to another as a gift.
19 (c) Any person convicted of violating this section shall be
20 guilty of a misdemeanor and upon conviction thereof, shall be
21 sentenced to pay a fine not exceeding $500.
22 Section 8. Sales to certain persons prohibited; penalty.
23 (a) No ticket or share shall be sold to any person under the
24 age of 18 years. For the purpose of making a gift, a person 18
25 years of age or older may purchase a ticket or share for the
26 benefit of a person less than that age.
27 (b) Any agent or employee of any agent who knowingly sells a
28 lottery ticket or share to any person under the age of 18 years
29 shall be guilty of a misdemeanor, and upon conviction thereof,
30 shall be sentenced to pay a fine not exceeding $500.
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1 (c) No ticket or share shall be sold to and no prize shall
2 be awarded to any officer or employee of the State Lottery
3 Commission or the division of the State Lottery in the
4 Department of Revenue or any spouse, child, brother, sister or
5 parent residing as a member of the same household in the
6 principal place of abode of any of the foregoing persons.
7 Section 9. Other laws inapplicable.
8 No other law providing any penalty or disability for the sale
9 of lottery tickets or shares or any acts done in connection with
10 a lottery shall apply to the sale of tickets or shares or acts
11 performed pursuant to this act.
12 Section 10. Disposition of funds from sale of tickets
13 or shares.
14 All moneys received from the operation of this special
15 lottery shall be deposited in the Pennsylvania Industrial
16 Development Authority Lottery Fund which is hereby created. Such
17 moneys shall be used to the extent necessary for the payment of
18 special lottery prizes but the amount so used shall not be less
19 than 40% of the amount of which tickets or shares have been
20 sold. All payments of lottery prizes and for expenses of
21 operation of this special lottery shall be made as provided by
22 law. All moneys remaining after payment of prizes and operating
23 expenses shall be transferred to the Pennsylvania Industrial
24 Development Authority Lottery Fund and shall be allocated to the
25 Industrial Development Fund, as established by the "Pennsylvania
26 Industrial Development Authority Act," for the purpose of
27 providing for industrial development projects in critical
28 economic areas.
29 Section 11. Exemption of lottery prizes from State and local
30 taxation.
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1 Lottery prizes shall be exempt from State and local taxation
2 imposed upon such proceeds except such proceeds shall be taxable
3 pursuant to the State personal income tax.
4 Section 12. Unclaimed prize money.
5 Unclaimed prize money on a winning lottery ticket or share
6 shall be retained by the secretary for payment to the person
7 entitled thereto for one year after the drawing in which the
8 prize was won. If no claim is made within such period, the prize
9 money shall be paid into the Special Lottery Fund and used for
10 purposes as otherwise herein provided.
11 Section 13. Bank deposits and control of lottery transactions.
12 The secretary may, in his discretion, require any or all
13 lottery sales agents to deposit to the credit of the Special
14 Lottery Fund in banks, designated by the State Treasurer, all
15 moneys received by such agents from the sale of special lottery
16 tickets or shares, less the amount, if any, retained as
17 compensation for the sale of the tickets or shares, and to file
18 with the secretary or his designated agents reports of their
19 receipts and transactions in the sale of special lottery tickets
20 in such form and containing such information as he may require.
21 The secretary may make such arrangements for any person,
22 including a bank, to perform such functions, activities or
23 services in connection with the operation of the special lottery
24 as he may deem advisable pursuant to this act and the rules and
25 regulations of the department, and such functions, activities or
26 services shall constitute lawful functions, activities and
27 services of such person.
28 Section 14. Effective date.
29 This act shall take effect in 60 days.
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