Regular Session 2017-2018 House Bill 1282 P.N. 1559

PRINTER'S NO. 1559

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1282

Session of

2017

INTRODUCED BY M. QUINN, DUNBAR AND MILLARD, APRIL 25, 2017

REFERRED TO COMMITTEE ON GAMING OVERSIGHT, APRIL 25, 2017

AN ACT

Amending Title 4 (Amusements) of the Pennsylvania Consolidated

Statutes, in Pennsylvania Gaming Control Board, providing for

auction of slot machine license; and, in licensees, further

providing for Category 2 slot machine license and for number

of slot machine licenses.

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 section to read:

§ 1209.1. Auction of slot machine license.

(a) General rule.--After December 31, 2017, a slot machine

license shall become available to be auctioned by the board if:

(1) the license has not been approved by the board or

the approved applicant has not fulfilled all required

conditions for issuance of the license within the time

prescribed by this part; or

(2) the license has been revoked under this part.

(b) Time period.--A slot machine license becomes available

for auction by the board 30 days after the approved applicant

fails to meet the required conditions for issuance within:

(1) the time prescribed by this part has passed; or

(2) thirty days after the revocation of a slot machine

license, whichever occurs later.

(1) The board shall initiate a public auction of the

slot machine license and table game operation certificate for

the highest responsible proposal that will provide the

greatest amount of projected total revenue to the

Commonwealth and otherwise serves the interests of the

residents of Pennsylvania. The awarding of the slot machine

license and table game operation certificate shall be

conditional on the successful prospective licensee's ability

to satisfy the qualifications as provided in this part and

board regulations.

(2) The auction shall be conducted in such a manner as

to maximize the price for each slot machine license and table

game operation certificate, subject to the following:

(i) In no case may a Category 1 slot machine license

and table game operation certificate be awarded for a fee

lower than $66,500,000.

(ii) In no case may a Category 2 slot machine

license and table game operation certificate be awarded

for a fee lower than $66,500,000.

(iii) In no case may a Category 3 slot machine

license and table game operation certificate be awarded

for a fee lower than $12,500,000.

(3) For purposes of this section only, the ownership or

financial interest restrictions in section 1330 (relating to

multiple slot machine license prohibition) shall not apply.

(4) The board shall adopt procedures and regulations to

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facilitate the conduct of the public auction in such a manner

as to maximize the price for each slot machine license and

table game operation certificate.

(d) Auction procedures.--The open and competitive auction

process shall adhere to the following procedures:

(1) The board shall make applications for the slot

machine license available to applicants under section 1309

(relating to slot machine license application) and allow a

reasonable time for applicants to submit applications as well

as petitions for authorization to conduct table games under

section 13A12 (relating to petition requirements) to the

board.

(2) During the filing period of slot machine license

applications and petitions to conduct table games, the board

shall retain the services of a financial advisory firm to

assist the board in conducting the open and competitive

auction process.

(3) A prospective licensee must submit a definitive,

noncontingent binding proposal to accept the award of the

slot machine license and table game operation certificate.

The binding proposal must include the following:

(i) The consideration to be paid by the prospective

licensee .

(ii) Identification of all sources of external

financing involved in the transaction and submission of

all relevant commitment letters and other evidence of

financing.

(iii) Identification of the proposed location of the

new licensed facility.

(iv) Details of agreements with the municipality

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where the licensed facility is to be located, including:

(A) Evidence of municipal approval to the

applicant for the licensed facility.

(B) Background and status of any discussions and

agreements with municipalities regarding the

construction of the licensed facility.

(v) A list of regulatory, corporate or other

approvals required to consummate a transaction.

(vi) Information responsive to any other request for

information made by the board or the financial advisory

firm .

(vii) A description of the proposed ownership

structure, including any other equity participants in the

proposal.

(viii) A business plan for the proposed licensed

facility, including:

(A) General statement of financial viability.

(B) Proposed corporate involvement in charitable

activity.

(ix) Projected financial statements for five years

following the projected date to commence gaming

operations at the licensed facility.

(x) Date by which the prospective licensee will

commit to commence gaming operations at the licensed

facility.

(xi) A projected date until which the prospective

licensee agrees to keep the proposal open and

irrevocable.

(4) Within five days of its receipt of all of the

proposals, the board shall disclose the content of all of the

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proposals in a public forum , including:

(i) owners' names;

(ii) venture partners, if any; and

(iii) in the case of applicants for owners'

licenses, the locations of the proposed development

sites.

(5) No later than 30 business days following the opening

of the proposals, the financial advisory firm shall deliver

to the board a summary analysis of each proposal, including

refinements and clarifications by the prospective owners.

(6) The board shall evaluate the proposals within a

reasonable time and select no more than three final

applicants to participate in an auction.

(7) Following the selection of the three final

applicants, the board shall:

(i) Hold public hearings under section 1205

(relating to license or permit application hearing

process; public input hearings).

(ii) Evaluate the proposals of the three final

applicants within a reasonable period of time for license

suitability in accordance with all applicable statutory

and regulatory criteria, including compliance with

sections 1310 (relating to slot machine license

application character requirements), 1313 (relating to

slot machine license application financial fitness

requirements), 1316 (relating to bond for issuance of

slot machine license) and proof of financial ability as

required by section 13A12(b)(9).

(8) By agreeing to participate in the auction or by

making a presentation to the board if so requested, a

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prospective licensee agrees that a proposal, as refined and

clarified, shall remain open and irrevocable until the date

indicated by the prospective licensee in the proposal. The

date indicated shall in no event be less than 30 days

following the auction.

(9) After the auction and following the presentations,

the board shall identify a prospective licensee as the

winning prospective licensee of the auction.

(10) If the winning prospective licensee is unable or

otherwise fails to consummate the transaction, including if

the board determines that the prospective licensee does not

satisfy the suitability requirements under this part, the

board may, on the same criteria, select from the remaining

prospective licensees .

(e) Collusion among prospective licensees .--

(1) Collusion among prospective licensees is unlawful. A

contract or conspiracy that unreasonably results in

underbidding is unlawful.

(2) When a person has reason to believe collusion or

other anticompetitive practices have occurred among

prospective licensees , a notice of the relevant facts may be

transmitted to the Attorney General, who shall investigate

the matter.

(3) A prospective licensee who violates this section

shall be penalized under section 1518(b)(1)(ii) (relating to

prohibited acts; penalties).

(f) Proceeds.--The proceeds of the sale or auction of the

slot machine license and table game operation certificate shall

be deposited into the General Fund .

(g) Temporary regulations.--

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(1) In order to facilitate the prompt implementation of

this section, regulations promulgated by the board shall be

deemed temporary regulations that shall expire not later than

two years following the publication of the temporary

regulations. The board may promulgate temporary regulations

not subject to:

(i) Sections 201, 202, 203, 204 and 205 of the act

of July 31, 1968 (P.L.769, No.240), referred to as the

Commonwealth Documents Law.

(ii) Section 204(b) of the act of October 15, 1980

(P.L.950, No.164), known as the Commonwealth Attorneys

Act.

(iii) The act of June 25, 1982 (P.L.633, No.181),

known as the Regulatory Review Act.

(2) The board's authority to promulgate temporary

regulations under paragraph (1) shall expire one year after

the effective date of this section. Regulations adopted after

this period shall be promulgated as provided by law.

(h) Definition.--As used in this section, the term

"revocation" means a decision by the board to revoke a slot

machine license that is final, binding, nonappealable and is not

subject to a pending legal challenge.

Section 2. Sections 1304(b) and 1307 of Title 4 are amended

to read:

§ 1304. Category 2 slot machine license.

* * *

(b) Location.--

(1) [Two] (i) Subject to the provisions of paragraph

(1.1), not more than two Category 2 licensed facilities

[and no more shall] may be located by the board within a

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city of the first class, and not more than one Category 2

licensed facility [and no more shall] may be located by

the board within a city of the second class.

(ii) No Category 2 licensed facility located by the

board within a city of the first class shall be within

ten linear miles of a Category 1 licensed facility

regardless of the municipality where the Category 1

licensed facility is located. Except for any Category 2

licensed facility located by the board within a city of

the first class or a city of the second class, no

Category 2 licensed facility shall be located within 30

linear miles of any Category 1 licensed facility that has

conducted over 200 racing days per year for the two

calendar years immediately preceding the effective date

of this part and not within 20 linear miles of any other

Category 1 licensed facility. Except for any Category 2

licensed facility located by the board within a city of

the first class, no Category 2 licensed facility shall be

located within 20 linear miles of another Category 2

licensed facility.

(1.1) In the event that a license for a Category 2

licensed facility to be located within a city of the first

class is revoked by the board prior to commencement of

operations of the Category 2 licensed facility, then the

board shall reissue the revoked Category 2 slot machine

license, under section 1209.1 (relating to auction of slot

machine license) to another applicant located anywhere in

this Commonwealth for a Category 2 licensed facility,

provided that:

(i) no more than two Category 2 licensed facilities

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may be located within a city of the first class;

(ii) no more than one Category 2 licensed facility

may be located in a city of the second class; and

(iii) the provisions of paragraph (1)(ii) are

satisfied.

(2) Within five days of approving a license for an

applicant with a proposed licensed facility consisting of

land designated a subzone, an expansion subzone or an

improvement subzone under the Keystone Opportunity Zone,

Keystone Opportunity Expansion Zone and Keystone Opportunity

Improvement Zone Act for a slot machine license under this

section, the board shall notify the Department of Community

and Economic Development. The notice shall include a

description of the land of the proposed licensed facility

which is designated a subzone, an expansion subzone or an

improvement subzone. Within five days of receiving the notice

required by this paragraph, the Secretary of Community and

Economic Development shall decertify the land of the proposed

licensed facility as being a subzone, an expansion subzone or

an improvement subzone. Upon decertification in accordance

with this paragraph and notwithstanding Chapter 3 of the

Keystone Opportunity Zone, Keystone Opportunity Expansion

Zone and Keystone Opportunity Improvement Zone Act, a

political subdivision may amend the ordinance, resolution or

other required action which granted the exemptions,

deductions, abatements or credits required by the Keystone

Opportunity Zone, Keystone Opportunity Expansion Zone and

Keystone Opportunity Improvement Zone Act to repeal the

exemptions, deductions, abatements or credits for the land

decertified.

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(3) Notwithstanding any other provision of law, the

governing body of a city of the first class shall not exempt

from real property taxation or provide any real property tax

abatement under the act of December 1, 1977 (P.L.237, No.76),

known as the Local Economic Revitalization Tax Assistance

Act, to a Category 2 licensed facility located within the

city, or any improvements to such facility, unless the owner

of the licensed facility enters into or has entered into a

tax settlement agreement or payment in lieu of taxes

agreement with the city, including any amendments,

supplements or modifications of such agreements.

§ 1307. Number of slot machine licenses.

(a) General rule.--The board may license no more than seven

Category 1 licensed facilities and no more than five Category 2

licensed facilities, as it may deem appropriate, as long as

[two, and not more ,] not more than two Category 2 licensed

facilities are located by the board within the city of the first

class and [that one, and not more,] not more than one Category 2

licensed facility is located by the board within the city of the

second class, except in the case of license revocation, the

provisions of section 1304(b)(1.1) (relating to Category 2 slot

machine license) shall apply. [The board may at its discretion

increase the total number of Category 2 licensed facilities

permitted to be licensed by the board by an amount not to exceed

the total number of Category 1 licenses not applied for within

five years following the effective date of this part. Except as

permitted by section 1328 (relating to change in ownership or

control of slot machine licensee), any Category 1 license may be

reissued by the board at its discretion as a Category 2 license

if an application for issuance of such license has not been made

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to the board.] The board may license no more than three Category

3 Licensed facilities.

(b) Conversion of certain licenses.--A Category 1 license

not issued on or before the effective date of this subsection

shall be converted to a Category 2 license if:

(i) the commission fails to receive an application

for an unissued standardbred horse race meeting license

on or before June 14, 2017;

(ii) the commission receives an application for an

unissued standardbred horse race meeting license on or

before June 14, 2017, and does not approve the

application; or

(iii) the commission revokes the approval of an

unissued standardbred horse race meeting license.

standardbred horse race meeting license" means a license for a

standardbred horse race meeting under 3 Pa.C.S. §§ 9315(a)

(relating to number of licensed racing entities) and 9318

(relating to licenses for horse race meetings).

Section 3. This act shall take effect immediately.

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