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                                 HOUSE AMENDED
        PRIOR PRINTER'S NOS. 1385, 2487               PRINTER'S NO. 2598

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 1136 Session of 1989


        INTRODUCED BY PUNT, BRIGHTBILL, LEMMOND, BELL, WENGER, CORMAN,
           HOPPER, RHOADES, BAKER AND WILT, JUNE 28, 1989

        AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
           REPRESENTATIVES, AS AMENDED, NOVEMBER 13, 1990

                                     AN ACT

     1  Amending the act of August 26, 1971 (P.L.351, No.91), entitled    <--
     2     "An act providing for a State Lottery and administration
     3     thereof; authorizing the creation of a State Lottery
     4     Commission; prescribing its powers and duties; disposition of
     5     funds; violations and penalties therefor; exemption of prizes
     6     from State and local taxation and making an appropriation,"
     7     providing that there shall be no drawings or selections of
     8     winning tickets on Sundays.
     9  PROVIDING FOR CONTROL AND LICENSING OF VIDEO POKER MACHINES IN    <--
    10     THIS COMMONWEALTH; CREATING THE VIDEO POKER MACHINE CONTROL
    11     COMMISSION AND PROVIDING FOR ITS POWERS AND DUTIES; AND
    12     PROVIDING FOR LOCAL OPTION AND FOR DISTRIBUTION OF REVENUE.
    13                         TABLE OF CONTENTS
    14  SECTION 1.  SHORT TITLE.
    15  SECTION 2.  DEFINITIONS.
    16  SECTION 3.  VIDEO POKER MACHINE CONTROL COMMISSION.
    17  SECTION 4.  QUALIFICATIONS.
    18  SECTION 5.  CHAIRMAN OF COMMISSION; QUORUM.
    19  SECTION 6.  DIRECTOR.
    20  SECTION 7.  POWERS AND DUTIES OF COMMISSION.
    21  SECTION 8.  USE OF ENFORCEMENT AGENTS.
    22  SECTION 9.  UNLAWFUL USE BY MINORS.
    23  SECTION 10.  DIRECT DISPENSING.
    24  SECTION 11.  LOCAL OPTIONS.
    25  SECTION 12.  STATEMENT OF INTENT.                                 <--
    26  SECTION 12 13.  AUTHORITY TO LICENSE.                             <--
    27  SECTION 13 14.  DISTRIBUTION OF PROCEEDS.                         <--
    28  SECTION 14 15.  GOVERNMENT REVENUES.                              <--
    29  SECTION 15 16.  CREATION OF ACCOUNT.                              <--
    30  SECTION 16 17.  PREEMPTION OF LOCAL TAXES AND LICENSE FEES.       <--
    31  SECTION 17 18.  PROHIBITION AND PENALTIES.                        <--
    32  SECTION 18 19.  EXEMPTION FROM STATE GAMBLING LAWS.               <--


     1  SECTION 19 20.  EXEMPTION FROM FEDERAL REGULATION.                <--
     2  SECTION 20 21.  APPLICABILITY.                                    <--
     3  SECTION 21 22.  EFFECTIVE DATE.                                   <--

     4     The General Assembly of the Commonwealth of Pennsylvania
     5  hereby enacts as follows:
     6     Section 1.  Section 6(a)(6) of the act of August 26, 1971      <--
     7  (P.L.351, No.91), known as the State Lottery Law, is amended to
     8  read:
     9     Section 6.  Powers and Duties of the Secretary of Revenue.--
    10  (a)  In addition to the powers and duties provided by law and
    11  "The Administrative Code of 1929," the Secretary of Revenue
    12  shall have the power and it shall be his duty to operate and
    13  administer the lottery, and to promulgate rules and regulations
    14  governing the establishment and operation thereof, including but
    15  not limited to:
    16     * * *
    17     (6)  The frequency of the drawings or selections of winning
    18  tickets or shares, [without limitation] except that no drawings
    19  or selections may occur on Sundays.
    20     * * *
    21     Section 2.  This act shall take effect immediately.
    22  SECTION 1.  SHORT TITLE.                                          <--
    23     THIS ACT SHALL BE KNOWN AND MAY BE CITED AS THE VIDEO POKER
    24  MACHINE CONTROL LAW.
    25  SECTION 2.  DEFINITIONS.
    26     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ACT SHALL
    27  HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    28  CONTEXT CLEARLY INDICATES OTHERWISE:
    29     "COMMISSION."  THE VIDEO POKER MACHINE CONTROL COMMISSION
    30  CREATED BY THIS ACT.
    31     "DISTRIBUTOR."  AN INDIVIDUAL, PARTNERSHIP OR CORPORATION
    19890S1136B2598                  - 2 -

     1  LICENSED UNDER THIS ACT TO BUY, SELL, LEASE OR DISTRIBUTE VIDEO
     2  POKER MACHINES. THE TERM EXCLUDES MACHINE OWNERS AND
     3  MANUFACTURERS.
     4     "GROSS PROCEEDS."  THE TOTAL AMOUNT OF MONEY PLACED INTO
     5  VIDEO POKER MACHINES.
     6     "INCENTIVE."  A CONSIDERATION, INCLUDING A PREMIUM OR BONUS
     7  IN CASH OR ADVANCE COMMISSION OR MERCHANDISE, OFFERED FROM A
     8  MACHINE OWNER TO A LICENSED ESTABLISHMENT IN ORDER TO SOLICIT
     9  ITS BUSINESS.
    10     "LICENSED ESTABLISHMENT."  A RESTAURANT, BAR, TAVERN, HOTEL
    11  OR CLUB WHICH HAS A VALID LIQUOR OR MALT BEVERAGE LICENSE UNDER
    12  THE ACT OF APRIL 12, 1951 (P.L.90, NO.21), KNOWN AS THE LIQUOR
    13  CODE, AND WHICH IS LOCATED WITHIN A PARTICIPATING POLITICAL
    14  SUBDIVISION.
    15     "MACHINE OWNER."  AN INDIVIDUAL, PARTNERSHIP OR CORPORATION
    16  WHICH IS LICENSED UNDER THIS ACT AND WHICH OWNS, SERVICES AND
    17  MAINTAINS VIDEO POKER MACHINES FOR PLACEMENT IN LICENSED
    18  ESTABLISHMENTS.
    19     "MANUFACTURER."  AN INDIVIDUAL, PARTNERSHIP OR CORPORATION
    20  WHICH IS LICENSED UNDER THIS ACT AND WHICH MANUFACTURES OR
    21  ASSEMBLES VIDEO POKER MACHINES.
    22     "MUNICIPALITY."  A CITY, BOROUGH, INCORPORATED TOWN OR
    23  TOWNSHIP OR A HOME RULE MUNICIPALITY FORMERLY CLASSIFIED AS A
    24  CITY, BOROUGH, INCORPORATED TOWN OR TOWNSHIP.
    25     "NET PROFITS."  GROSS PROCEEDS AFTER AWARDS HAVE BEEN PAID.
    26     "PARTICIPATING POLITICAL SUBDIVISIONS."  ANY CITY,
    27  INCORPORATED TOWN, TOWNSHIP, BOROUGH OR HOME RULE MUNICIPALITY
    28  WHERE VIDEO POKER MACHINES ARE IN USE IN ACCORDANCE WITH THIS
    29  ACT.
    30     "PERSON."  INCLUDES A CORPORATION, PARTNERSHIP AND
    19890S1136B2598                  - 3 -

     1  ASSOCIATION, AS WELL AS A NATURAL PERSON.
     2     "VIDEO POKER MACHINES."  A DEVICE OR MACHINE WHICH, UPON
     3  INSERTION OF A COIN OR CURRENCY, WILL PLAY OR SIMULATE THE PLAY
     4  OF THE GAME OF POKER, UTILIZING A VIDEO DISPLAY AND
     5  MICROPROCESSORS AND IN WHICH, BY THE SKILL OF THE PLAYER OR BY
     6  CHANCE, THE PLAYER MAY RECEIVE FREE GAMES OR CREDITS WHICH MAY
     7  BE REDEEMED FOR CASH. NO MACHINE SHALL DIRECTLY DISPENSE ANY
     8  COINS, CASH, TOKENS OR ANYTHING OF VALUE. ALL MACHINES MUST
     9  CONTAIN ELECTRONIC INFORMATION VERIFYING TRANSMITTING
    10  COMPONENTS.
    11  SECTION 3.  VIDEO POKER MACHINE CONTROL COMMISSION.
    12     (A)  COMMISSION CREATED.--AN INDEPENDENT COMMISSION, TO BE
    13  KNOWN AS THE VIDEO POKER MACHINE CONTROL COMMISSION IS HEREBY
    14  CREATED. THE COMMISSION SHALL CONSIST OF FIVE MEMBERS, ONE TO BE
    15  APPOINTED BY THE GOVERNOR, ONE BY THE SPEAKER OF THE HOUSE OF
    16  REPRESENTATIVES, ONE BY THE PRESIDENT PRO TEMPORE OF THE SENATE,
    17  ONE BY THE MINORITY LEADER OF THE HOUSE OF REPRESENTATIVES AND
    18  ONE BY THE MINORITY LEADER OF THE SENATE.
    19     (B)  MEMBERS.--OF THE ORIGINAL MEMBERS, TWO SHALL BE
    20  APPOINTED FOR A TERM OF TWO YEARS, TWO FOR A TERM OF FOUR YEARS
    21  AND ONE FOR A TERM OF SIX YEARS. THOSE APPOINTED BY THE MINORITY
    22  LEADER OF THE HOUSE OF REPRESENTATIVES AND THE MINORITY LEADER
    23  OF THE SENATE SHALL SERVE THE INITIAL TWO-YEAR TERM. THOSE
    24  APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES AND THE
    25  PRESIDENT PRO TEMPORE OF THE SENATE SHALL SERVE THE INITIAL
    26  FOUR-YEAR TERMS. THE GOVERNOR'S APPOINTMENT SHALL SERVE THE
    27  INITIAL SIX-YEAR TERM. THEREAFTER, ALL APPOINTMENTS SHALL BE FOR
    28  TERMS OF SIX YEARS OR UNTIL SUCCESSORS ARE APPOINTED AND
    29  QUALIFIED. ALL SUCCESSORS SHALL BE APPOINTED BY THE SAME
    30  APPOINTING AUTHORITY AS THE MEMBERS WHOM THEY ARE REPLACING.
    19890S1136B2598                  - 4 -

     1     (C)  COMPENSATION AND EXPENSES.--THE MEMBERS OF THE
     2  COMMISSION SHALL BE COMPENSATED AT A RATE OF $125 PER DAY AND
     3  SHALL RECEIVE REIMBURSEMENT FOR THEIR ACTUAL AND NECESSARY
     4  EXPENSES WHILE PERFORMING THE BUSINESS OF THE COMMISSION.
     5  SECTION 4.  QUALIFICATIONS.
     6     (A)  CITIZENSHIP AND RESIDENCY.--EACH MEMBER OF THE
     7  COMMISSION, AT THE TIME OF APPOINTMENT AND QUALIFICATION, SHALL
     8  BE A CITIZEN OF THE UNITED STATES AND A RESIDENT OF THIS
     9  COMMONWEALTH AND SHALL HAVE BEEN A QUALIFIED ELECTOR IN THIS
    10  COMMONWEALTH FOR A PERIOD OF AT LEAST TWO YEARS PRECEDING THE
    11  MEMBER'S APPOINTMENT.
    12     (B)  OFFICES.--NO MEMBER OF THE COMMISSION SHALL, DURING THE
    13  MEMBER'S PERIOD OF SERVICE, HOLD ANY OTHER OFFICE UNDER THE LAWS
    14  OF THIS COMMONWEALTH OR THE UNITED STATES OR SEEK ELECTED OFFICE
    15  OF ANY KIND WITHIN THIS COMMONWEALTH OR THE UNITED STATES.
    16  SECTION 5.  CHAIRMAN OF COMMISSION; QUORUM.
    17     (A)  APPOINTMENT.--THE MEMBER APPOINTED BY THE GOVERNOR SHALL
    18  SERVE AS CHAIRMAN. THE CHAIRMAN SHALL, WHEN PRESENT, PRESIDE AT
    19  ALL MEETINGS. IN THE CHAIRMAN'S ABSENCE, A MEMBER DESIGNATED BY
    20  THE COMMISSION SHALL PRESIDE.
    21     (B)  QUORUM.--THREE MEMBERS OF THE COMMISSION SHALL
    22  CONSTITUTE A QUORUM, AND ANY ACTION OR ORDER OF THE COMMISSION
    23  SHALL REQUIRE THE APPROVAL OF AT LEAST THREE MEMBERS.
    24  SECTION 6.  DIRECTOR.
    25     THE COMMISSION MAY APPOINT AN EXECUTIVE DIRECTOR TO HOLD
    26  OFFICE AT ITS PLEASURE. THE DIRECTOR SHALL HAVE POWERS AND
    27  DUTIES AS THE COMMISSION SHALL PRESCRIBE AND SHALL RECEIVE
    28  COMPENSATION AS THE COMMISSION SHALL DETERMINE. THE DIRECTOR
    29  SHALL HAVE THE AUTHORITY TO EMPLOY PERSONNEL NECESSARY TO CARRY
    30  OUT THE DUTIES OF OFFICE.
    19890S1136B2598                  - 5 -

     1  SECTION 7.  POWERS AND DUTIES OF COMMISSION.
     2     (A)  GENERAL POWERS AND DUTIES.--THE COMMISSION SHALL:
     3         (1)  PROVIDE FOR LICENSING AND FOR DISTRIBUTION OF
     4     REVENUE.
     5         (2)  PRESCRIBE ALL NECESSARY APPLICATION AND REPORTING
     6     FORMS.
     7         (3)  GRANT OR DENY LICENSE APPLICATIONS.
     8         (4)  PRESCRIBE TYPES OF VIDEO POKER MACHINES TO BE USED.
     9     (B)  LICENSE APPROVAL.--THE COMMISSION MAY NOT DENY ANY
    10  APPLICATION OR LIMIT, CONDITION OR RESTRICT ANY LICENSE EXCEPT
    11  FOR NONCONFORMANCE WITH THIS ACT. AN APPLICANT SHALL NOT BE
    12  GRANTED A LICENSE UNLESS:
    13         (1)  IF THE APPLICANT IS AN INDIVIDUAL:
    14             (I)  THE APPLICANT IS OF GOOD CHARACTER, HONESTY AND
    15         INTEGRITY AND IN ALL RESPECTS IS QUALIFIED AND HAS
    16         ADEQUATE FINANCING FROM SUITABLE SOURCES.
    17             (II)  IF THE APPLICANT IS A DISTRIBUTOR OR MACHINE
    18         OWNER THE APPLICANT HAS BEEN A CITIZEN OF THE UNITED
    19         STATES AND A RESIDENT OF THIS COMMONWEALTH FOR AT LEAST
    20         TWO YEARS PRIOR TO THE APPLICATION.
    21         (2)  IF THE APPLICANT IS A PARTNERSHIP, ALL PARTNERS
    22     QUALIFY AS INDIVIDUALS UNDER PARAGRAPH (1).
    23         (3)  IF THE APPLICANT IS A DISTRIBUTOR OR MACHINE OWNER
    24     AND A CORPORATION:
    25             (I)  IT IS A REGISTERED PENNSYLVANIA CORPORATION FOR
    26         AT LEAST ONE YEAR.
    27             (II)  AT LEAST 50% OF ITS DIRECTORS HAVE BEEN
    28         PENNSYLVANIA RESIDENTS FOR AT LEAST TWO YEARS.
    29             (III)  ALL OFFICERS QUALIFY AS INDIVIDUALS UNDER
    30         PARAGRAPH (1).
    19890S1136B2598                  - 6 -

     1             (IV)  ALL STOCKHOLDERS ARE INDIVIDUALS.
     2         (4)  THE STATEMENT OF INTENT TO APPLY FOR A                <--
     3     MANUFACTURER'S, DISTRIBUTOR'S OR MACHINE OWNER'S LICENSE HAS
     4     BEEN FILED AND THE PROPER FEES PAID.
     5     (C)  HEARING AND APPEALS.--ANY PERSON WHO WAS DENIED A
     6  LICENSE SHALL HAVE THE RIGHT TO A HEARING BEFORE THE COMMISSION.
     7  THE HEARING SHALL BE CONDUCTED IN ACCORDANCE WITH THE PROVISIONS
     8  OF 2 PA.C.S. (RELATING TO ADMINISTRATIVE LAW AND PROCEDURE). AN
     9  AGGRIEVED PARTY SHALL HAVE THE RIGHT TO APPEAL THE DECISION ON
    10  LICENSE DENIAL TO THE COURT OF COMMON PLEAS IN THE JUDICIAL
    11  DISTRICT HAVING JURISDICTION OVER THE APPLICANT AND/OR THE
    12  LICENSED PREMISES.
    13     (D)  WINNING PERCENTAGE.--THE COMMISSION SHALL PRESCRIBE
    14  WINNING PERCENTAGES AND NECESSARY MACHINE ACCOUNTING
    15  INFORMATION. CENTRAL AUDITING IS REQUIRED AND THE COMMISSION
    16  SHALL PROVIDE LICENSED MANUFACTURERS OR MANUFACTURERS APPLYING
    17  FOR LICENSURE THE PROTOCOL DOCUMENTATION NECESSARY TO ENABLE
    18  THEIR VIDEO POKER MACHINES TO COMMUNICATE WITH THE COMMISSION'S
    19  CENTRAL COMPUTER IN PROVIDING THE AUDITING PROGRAM INFORMATION
    20  AND CONTROLS APPROVED BY THE COMMISSION. ALL VIDEO POKER
    21  MACHINES WILL BE SET AT A MINIMUM WIN PERCENTAGE OF 80%. ALL
    22  VIDEO POKER MACHINES WILL HAVE METERING DEVICES TO VERIFY THE
    23  WINNING PERCENTAGES.
    24     (E)  VIOLATIONS.--THE COMMISSION SHALL INVESTIGATE LICENSEES
    25  FOR VIOLATIONS OF THIS ACT AND SHALL HOLD HEARINGS IN WHICH TO
    26  CONSIDER THESE MATTERS. HEARINGS AND APPEALS SHALL BE CONDUCTED
    27  IN THE SAME MANNER AS SET FORTH IN SUBSECTION (C). THE
    28  COMMISSION SHALL HAVE AUTHORITY TO SUSPEND OR REVOKE A LICENSE
    29  IF IT FINDS THAT A VIOLATION OF THIS ACT HAS OCCURRED. NO
    30  LICENSE SHALL BE SUSPENDED OR REVOKED UNTIL A HEARING IS
    19890S1136B2598                  - 7 -

     1  COMPLETED. THE FINE FOR A VIOLATION OF PROVISIONS OF THIS ACT OR
     2  OF REGULATIONS ADOPTED UNDER THIS ACT SHALL NOT EXCEED $5,000
     3  FOR THE FIRST OFFENSE AND $15,000 FOR EACH SUBSEQUENT VIOLATION.
     4     (F)  STANDARDS OF CONDUCT.--THE COMMISSION SHALL PRESCRIBE
     5  RULES AND REGULATIONS FOR THE CONDUCT OF THE OFFICERS, EMPLOYEES
     6  AND AGENTS OF THE COMMISSION.
     7     (G)  REGULATION.--THE COMMISSION SHALL PROMULGATE REGULATIONS
     8  TO CARRY OUT THE PROVISIONS OF THIS ACT.
     9  SECTION 8.  USE OF ENFORCEMENT AGENTS.
    10     (A)  POWERS.--EMPLOYEES OF THE COMMISSION DESIGNATED AS
    11  ENFORCEMENT AGENTS SHALL BE EMPOWERED TO INVESTIGATE THE
    12  BACKGROUND AND ASSOCIATES OF EVERY LICENSE APPLICANT TO WHATEVER
    13  EXTENT IS JUDGED NECESSARY BY THE COMMISSION. NO INVESTIGATION
    14  SHALL BE UNDERTAKEN PRIOR TO THE SUBMISSION OF AN APPLICATION
    15  FOR A LICENSE BY A PARTY, AND NO INVESTIGATION SHALL CONTINUE
    16  SUBSEQUENT TO THE DENIAL OF A LICENSE OR THE WITHDRAWAL OF A
    17  LICENSE APPLICATION.
    18     (B)  AUTHORITY.--ENFORCEMENT AGENTS ARE PEACE OFFICERS AND
    19  SHALL HAVE POLICE POWER AND AUTHORITY THROUGHOUT THIS
    20  COMMONWEALTH TO ARREST, ON VIEW OR UNDER WARRANT, ANY PERSON
    21  TAMPERING WITH VIDEO POKER MACHINES, ATTEMPTING OR CONSPIRING TO
    22  MANIPULATE THE OUTCOME OR THE PAYOFF OF ANY MACHINE, OR
    23  MANIPULATING THE OUTCOME OR PAYOFF OF ANY MACHINE BY PHYSICAL
    24  TAMPERING OR THROUGH THE INTERFERENCE OF THE LAWFUL OR PROPER
    25  FUNCTIONING OF THE MECHANISM BY ANY MEANS WHATSOEVER.
    26     (C)  INVESTIGATION AND REPORT.--ENFORCEMENT AGENTS MAY
    27  INVESTIGATE ANY ALLEGED ILLEGAL ACTIVITIES CONCERNING VIDEO
    28  POKER MACHINES AND THEIR OPERATION, MAINTENANCE AND PLACEMENT.
    29  FINDINGS SHALL BE REPORTED IN WRITING TO THE COMMISSION, WHICH
    30  SHALL RELAY ANY SUSPECTED CRIMINAL ACTIVITY OR VIOLATIONS OF THE
    19890S1136B2598                  - 8 -

     1  LAW TO THE DISTRICT ATTORNEY FOR PROSECUTION.
     2     (D)  STATE AND LOCAL POLICE.--IN ADDITION TO ANY OTHER PERSON
     3  AUTHORIZED TO ENFORCE THE PROVISIONS OF THIS ACT, THE
     4  PENNSYLVANIA STATE POLICE AND POLICE OF PARTICIPATING POLITICAL
     5  SUBDIVISIONS ARE EMPOWERED TO ENFORCE THIS ACT.
     6  SECTION 9.  UNLAWFUL USE BY MINORS.
     7     (A)  MINORS.--NO PERSON UNDER 21 YEARS OF AGE MAY USE OR PLAY
     8  A VIDEO POKER MACHINE. A MINOR USING OR PLAYING OR ATTEMPTING TO
     9  USE OR PLAY A VIDEO POKER MACHINE COMMITS A SUMMARY OFFENSE.
    10     (B)  LICENSEES.--A LICENSED ESTABLISHMENT IN WHICH A PERSON
    11  UNDER 21 YEARS OF AGE PLAYS OR USES A VIDEO POKER MACHINE,
    12  WHETHER OR NOT THAT LICENSED ESTABLISHMENT IS ACTUALLY AWARE OF
    13  THE MINOR'S AGE, COMMITS A SUMMARY OFFENSE AND SHALL, UPON
    14  CONVICTION, PAY A FINE OF NOT MORE THAN $5,000. THE
    15  ESTABLISHMENT OF ANY OF THE FOLLOWING FACTS BY A PERSON ALLOWING
    16  A MINOR TO OPERATE THE VIDEO POKER MACHINES CONSTITUTES A
    17  DEFENSE TO PROSECUTION UNDER THIS SUBSECTION:
    18         (1)  THE MINOR FALSELY REPRESENTED IN WRITING THAT THE
    19     MINOR WAS 21 YEARS OF AGE OR OLDER.
    20         (2)  THE APPEARANCE OF THE MINOR WAS SUCH THAT AN
    21     ORDINARY PERSON OF PRUDENT JUDGMENT WOULD BELIEVE THE MINOR
    22     TO BE 21 YEARS OF AGE OR OLDER.
    23  SECTION 10.  DIRECT DISPENSING.
    24     A VIDEO POKER MACHINE MAY NOT DIRECTLY DISPENSE COINS, CASH,
    25  TOKENS OR ANY OTHER ARTICLE OF EXCHANGE OR VALUE EXCEPT FOR
    26  RECEIPT TICKETS. SUCH TICKETS SHALL BE DISPENSED BY PRESSING THE
    27  TICKET DISPENSING BUTTON ON THE MACHINE AT THE END OF ONE'S TURN
    28  OR PLAY. THE TICKET SHALL INDICATE THE TOTAL AMOUNT OF CREDITS
    29  AND THE CASH AWARD, AND THE PLAYER SHALL TURN IN THIS TICKET TO
    30  THE APPROPRIATE PERSON AT THE LICENSED ESTABLISHMENT TO RECEIVE
    19890S1136B2598                  - 9 -

     1  THE CASH AWARD. THE COST OF THE CREDIT SHALL BE 25¢, AND THE
     2  NUMBER OF CREDITS PLAYED PER GAME SHALL NOT EXCEED EIGHT. VIDEO
     3  POKER MACHINES SHALL NOT ACCEPT ANY MONEY DENOMINATION IN EXCESS
     4  OF A $5 BILL. NO CASH AWARD FOR ANY INDIVIDUAL GAME SHALL EXCEED
     5  $500. ALL VIDEO POKER MACHINES SHALL BE DESIGNED AND
     6  MANUFACTURED WITH TOTAL ACCOUNTABILITY, TO INCLUDE GROSS
     7  PROCEEDS, NET PROFITS, WINNING PERCENTAGES AND WITH THE ABILITY
     8  TO ELECTRONICALLY VERIFY AND TRANSMIT TO A CENTRAL COMPUTER ANY
     9  OTHER INFORMATION THE COMMISSION REQUIRES.
    10  SECTION 11.  LOCAL OPTIONS.
    11     (A)  ELECTION TO BE HELD.--IN ANY MUNICIPALITY, AN ELECTION
    12  MAY BE HELD ON THE DATE OF A PRIMARY, MUNICIPAL OR GENERAL
    13  ELECTION TO DETERMINE THE WILL OF THE ELECTORS WITH RESPECT TO
    14  THE ISSUANCE OF LICENSES WITHIN THE LIMITS OF SUCH MUNICIPALITY
    15  UNDER THE PROVISIONS OF THIS ACT. WHENEVER ELECTORS EQUAL TO AT
    16  LEAST 25% OF THE HIGHEST VOTE CAST FOR ANY OFFICE IN THE
    17  MUNICIPALITY AT THE LAST PRECEDING GENERAL ELECTION SHALL FILE A
    18  PETITION WITH THE COUNTY BOARD OF ELECTIONS OF THE COUNTY, OR
    19  THE GOVERNING BODY OF THE MUNICIPALITY ADOPTS, BY A MAJORITY
    20  VOTE, A RESOLUTION TO PLACE SUCH A QUESTION ON THE BALLOT AND A
    21  COPY OF THE RESOLUTION IS FILED WITH THE BOARD OF ELECTIONS OF
    22  THE COUNTY, FOR A REFERENDUM ON THE QUESTION OF ISSUING
    23  LICENSES, THE COUNTY BOARD OF ELECTIONS SHALL CAUSE A QUESTION
    24  TO BE PLACED ON THE BALLOT OR ON THE VOTING MACHINE BOARD AND
    25  SUBMITTED AT THE NEXT FOLLOWING PRIMARY, MUNICIPAL OR GENERAL
    26  ELECTION. THE QUESTION SHALL BE IN THE FOLLOWING FORM:
    27         DO YOU FAVOR THE ISSUANCE OF LICENSES TO PERMIT THE PLAY
    28         OF VIDEO POKER IN THE                OF                 ?
    29     (B)  VOTE.--IF A MAJORITY OF THE ELECTORS VOTING ON THE
    30  QUESTION UNDER SUBSECTION (A) VOTE "YES", THEN LICENSES SHALL BE
    19890S1136B2598                 - 10 -

     1  ISSUED BY THE COMMISSION IN SUCH MUNICIPALITY, BUT IF A MAJORITY
     2  OF THE ELECTORS VOTING ON SUCH QUESTION VOTE "NO", THEN THE
     3  COMMISSION SHALL HAVE NO POWER TO ISSUE OR TO RENEW, UPON THEIR
     4  EXPIRATION, ANY LICENSES IN SUCH MUNICIPALITY, UNLESS AND UNTIL,
     5  AT A LATER ELECTION, A MAJORITY OF THE VOTING ELECTORS VOTE
     6  "YES" ON SUCH QUESTION.
     7     (C)  VOTING PROCEDURES.--PROCEEDINGS UNDER THIS SECTION SHALL
     8  BE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OF JUNE 3, 1937
     9  (P.L.1333, NO.320), KNOWN AS THE PENNSYLVANIA ELECTION CODE.
    10     (D)  APPLICABILITY.--THIS ACT APPLIES ONLY TO THOSE LICENSED
    11  ESTABLISHMENTS LOCATED IN MUNICIPALITIES WHICH HAVE ADOPTED THE
    12  PROVISIONS OF THIS ACT BY AN AFFIRMATIVE VOTE IN A MUNICIPAL
    13  REFERENDUM IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION.
    14     (E)  WITHDRAWAL OF APPROVAL.--THE REFERENDUM PROCEDURE
    15  CONTAINED IN THIS SECTION SHALL ALSO BE AVAILABLE TO WITHDRAW
    16  THE APPROVAL OF THE ISSUANCE OF LICENSES WITHIN THE MUNICIPALITY
    17  WHICH WAS GRANTED THROUGH A PRIOR REFERENDUM.
    18  SECTION 12.  STATEMENT OF INTENT.                                 <--
    19     (A)  GENERAL RULE.--A PERSON WHO INTENDS TO APPLY FOR A
    20  MANUFACTURER'S, DISTRIBUTOR'S OR MACHINE OWNER'S LICENSE, MUST
    21  FIRST FILE A STATEMENT OF INTENT WITH THE COMMISSION. THE
    22  STATEMENT SHALL INCLUDE:
    23         (1)  THE NAME AND ADDRESS OF THE PERSON, PARTNERSHIP OR
    24     CORPORATION WHICH INTENDS TO FILE AN APPLICATION; AND
    25         (2)  THE TYPE OF LICENSE THAT WILL BE APPLIED FOR.
    26     (B)  FEE.--A $2,500 FILING FEE MUST ACCOMPANY THE STATEMENT
    27  OF INTENT.
    28         (1)  THE FILING FEE SHALL BE APPLIED TO THE APPLICANT'S
    29     LICENSE FEE IF A LICENSE IS SUBSEQUENTLY APPROVED BY THE
    30     COMMISSION.
    19890S1136B2598                 - 11 -

     1         (2)  THE FULL FEE SHALL BE REFUNDED IF THE SUBSEQUENT
     2     APPLICATION IS DENIED BY THE COMMISSION.
     3         (3)  AN APPLICANT MAY ALSO WITHDRAW THE STATEMENT OF
     4     INTENT AT ANY TIME AND SHALL BE ENTITLED TO A FULL REFUND OF
     5     THE FEE.
     6     (C)  WHEN NOT REQUIRED.--THE STATEMENT OF INTENT IS NOT
     7  REQUIRED FOR RENEWAL OF A LICENSE NOR IS IT REQUIRED OF A
     8  LICENSED ESTABLISHMENT.
     9     (D)  WAIVER.--THE COMMISSION MAY WAIVE THE REQUIREMENT OF A
    10  STATEMENT OF INTENT 12 MONTHS OR MORE AFTER THE EFFECTIVE DATE
    11  OF THIS ACT IF THE COMMISSION CERTIFIES IT HAS SUFFICIENT
    12  FINANCES ON HAND TO MEET THE BUDGET REQUIREMENTS OF THIS ACT.
    13  THE CERTIFICATION SHALL BE PUBLISHED IN THE PENNSYLVANIA
    14  BULLETIN.
    15  SECTION 12 13.  AUTHORITY TO LICENSE.                             <--
    16     (A)  TYPE OF LICENSES.--AFTER APPROVING THE PROPER
    17  APPLICATIONS, THE COMMISSION SHALL ISSUE THE FOLLOWING LICENSES:
    18         (1)  A MANUFACTURER'S LICENSE TO A PERSON THAT
    19     MANUFACTURES OR ASSEMBLES VIDEO POKER MACHINES FOR USE IN
    20     PENNSYLVANIA. THE ANNUAL FEE SHALL BE $25,000.
    21         (2)  A DISTRIBUTOR'S LICENSE TO A PERSON THAT BUYS, SELLS
    22     OR SERVICES VIDEO POKER MACHINES IN PENNSYLVANIA OTHER THAN A
    23     MACHINE OWNER. THE ANNUAL FEE SHALL BE $25,000.
    24         (3)  A MACHINE OWNER'S LICENSE TO A PERSON WHO OWNS,
    25     SERVICES AND MAINTAINS VIDEO POKER MACHINES FOR PLACEMENT IN
    26     LICENSED ESTABLISHMENTS. THE ANNUAL FEE SHALL BE $25,000 FOR
    27     THE FIRST 50 INDIVIDUAL POKER MACHINE LICENSES. FOR EACH
    28     ADDITIONAL VIDEO POKER MACHINE, THE ANNUAL FEE SHALL BE $500
    29     PER MACHINE. EVERY VIDEO POKER MACHINE IN USE IN THIS
    30     COMMONWEALTH MUST HAVE A CURRENT $500 LICENSE DISPLAYED.
    19890S1136B2598                 - 12 -

     1     EVERY VIDEO POKER MACHINE LICENSED UNDER THIS ACT MUST BE
     2     MANUFACTURED BY AN INDIVIDUAL, PARTNERSHIP OR CORPORATION
     3     LICENSED UNDER PARAGRAPH (1). THIS TYPE OF LICENSE WILL ALLOW
     4     A MACHINE OWNER TO SELL USED VIDEO POKER MACHINES THAT THE
     5     OWNERS PURCHASED NEW AND OPERATED FOR AT LEAST TWO YEARS.
     6         (4)  A LICENSED ESTABLISHMENT MUST OBTAIN A LICENSE UNDER
     7     THIS ACT IN ORDER TO HAVE VIDEO POKER MACHINES ON ITS
     8     PREMISES. THE ANNUAL FEE FOR THE LICENSE SHALL BE $300 FOR
     9     EACH MACHINE, PER YEAR.
    10     (B)   LICENSED ESTABLISHMENT REQUIREMENTS.--FOR ANY LICENSED
    11  ESTABLISHMENT WHICH IS APPROVED BY THE COMMONWEALTH AND WHICH
    12  USES VIDEO POKER MACHINES, THE MAXIMUM NUMBER OF VIDEO POKER
    13  MACHINES ALLOWED PER LOCATION SHALL BE THREE. NO VIDEO POKER
    14  MACHINES MAY BE PLACED IN ANY LICENSED ESTABLISHMENT UNLESS THE
    15  OWNER OF A LICENSED ESTABLISHMENT HAS ENTERED INTO A CONTRACT
    16  WITH A MACHINE OWNER FOR THE PLACEMENT OF THE MACHINE OR
    17  MACHINES FOR A MINIMUM OF TWO YEARS.
    18     (C)  LIMITATIONS.--NO PERSON MAY HOLD MORE THAN ONE CLASS OF
    19  LICENSE ISSUED UNDER THIS ACT, DIRECTLY OR INDIRECTLY, OR HAVE
    20  ANY INTEREST THEREIN.
    21     (D)  INCENTIVES.--NO MACHINE OWNER MAY GIVE AND NO LICENSED
    22  ESTABLISHMENT MAY RECEIVE AN INCENTIVE.
    23  SECTION 13 14.  DISTRIBUTION OF PROCEEDS.                         <--
    24     (A)  COLLECTION.--GROSS PROCEEDS SHALL BE COLLECTED BY THE
    25  MACHINE OWNER FOR EACH LICENSED VIDEO POKER MACHINE.
    26     (B)  DISTRIBUTION OF NET PROFITS.--THE NET PROFITS DERIVED
    27  FROM A VIDEO POKER MACHINE SHALL BE DISTRIBUTED BY THE MACHINE
    28  OWNER AS FOLLOWS:
    29         (1)  34% 35% TO THE MACHINE OWNER.                         <--
    30         (2)  34% 35% TO THE LICENSED ESTABLISHMENT WHERE THE       <--
    19890S1136B2598                 - 13 -

     1     MACHINE IS LOCATED.
     2         (3)  14% TO THE POLITICAL SUBDIVISION WHERE THE VIDEO
     3     POKER MACHINE IS LOCATED.
     4         (4)  11% TO THE SCHOOL DISTRICT WHERE THE VIDEO POKER      <--
     5     MACHINE IS LOCATED.
     6         (5)  5% (4)  14% TO THE STATE LOTTERY FUND.
     7         (6) (5)  2% TO THE ATTORNEY GENERAL TO BE USED FOR DRUG    <--
     8     EDUCATION AND/OR ENFORCEMENT.
     9     (C)  REPORTS.--THE COMMISSION IS AUTHORIZED TO ESTABLISH A
    10  PROCEDURE FOR AUDITING POKER MACHINES. THE PROCEDURE WILL
    11  INCLUDE REPORTS PREPARED BY THE MACHINE OWNERS AND ELECTRONIC
    12  AUDITING AT A CENTRAL LOCATION DESIGNATED BY THE COMMISSION. THE
    13  TIMING AND CONTENTS OF THE REPORTS SHALL BE ESTABLISHED BY THE
    14  COMMISSION. THE COMMISSION SHALL HAVE THE AUTHORITY TO CONTRACT
    15  WITH AN INDEPENDENT AUDITING FIRM TO ESTABLISH AND OPERATE ALL
    16  OR SOME OF THE AUDITING REQUIREMENTS AS ESTABLISHED BY THE
    17  COMMISSION.
    18  SECTION 14 15.  GOVERNMENT REVENUES.                              <--
    19     THE COMMISSION WILL ESTABLISH PROCEDURES ON THE METHOD OF
    20  PAYMENT OF REVENUES DUE THE MUNICIPALITIES, SCHOOL DISTRICTS      <--
    21  STATE LOTTERY FUND AND ATTORNEY GENERAL'S OFFICE. ANY MACHINE     <--
    22  OWNER WHO DOES NOT COMPLY WITH THE PAYMENT SCHEDULE SHALL BE
    23  SUBJECT TO A 5% LATE PAYMENT PENALTY. ANY MACHINE OWNER WHO IS
    24  CONSISTENTLY LATE IN MAKING PAYMENTS MAY BE SUBJECT TO LICENSE
    25  REVOCATION.
    26  SECTION 15 16.  CREATION OF ACCOUNT.                              <--
    27     ALL REVENUES FROM LICENSES AND FINES SHALL BE PLACED IN A
    28  RESTRICTED REVENUE ACCOUNT TO FUND THE TOTAL OPERATION OF THE
    29  COMMISSION, INCLUDING THE ELECTRONIC AUDITING FIRM, BUT NOT
    30  LIMITED TO, SALARIES, ADMINISTRATIVE EXPENSES AND AUDITING
    19890S1136B2598                 - 14 -

     1  COSTS. THE COMMISSION SHALL ALLOCATE A MINIMUM OF $1,000,000
     2  ANNUALLY TO BE USED FOR THE TREATMENT OF COMPULSIVE BEHAVIORS IN
     3  ACCORDANCE WITH REGULATIONS ADOPTED BY THE COMMISSION. THE FIRST
     4  SUCH ALLOCATION SHALL BE MADE IN THE FIRST FISCAL YEAR
     5  COMMENCING ONE YEAR FOLLOWING THE EFFECTIVE DATE OF THIS ACT.
     6  SECTION 16 17.  PREEMPTION OF LOCAL TAXES AND LICENSE FEES.       <--
     7     VIDEO POKER MACHINES AND COIN-OPERATED AMUSEMENT MACHINES
     8  LOCATED IN A PARTICIPATING POLITICAL SUBDIVISION SHALL BE EXEMPT
     9  FROM TAXES LEVIED UNDER THE ACT OF AUGUST 5, 1932 (SP.SESS.,
    10  P.L.45, NO.45), REFERRED TO AS THE STERLING ACT, THE ACT OF
    11  DECEMBER 31, 1965 (P.L.1257, NO.511), KNOWN AS THE LOCAL TAX
    12  ENABLING ACT, OR THE ACT OF APRIL 13, 1972 (P.L.184, NO.62),
    13  KNOWN AS THE HOME RULE CHARTER AND OPTIONAL PLANS LAW, OR UNDER
    14  ANY OTHER STATUTE THAT CONFERS TAXING AUTHORITY TO ANY POLITICAL
    15  SUBDIVISION.
    16  SECTION 17 18.  PROHIBITION AND PENALTIES.                        <--
    17     (A)  MANUFACTURE.--A PERSON MAY NOT MANUFACTURE, ASSEMBLE,
    18  PRODUCE OR SELL A VIDEO POKER MACHINE IN THIS COMMONWEALTH
    19  UNLESS THE PERSON HAS A VALID MANUFACTURER'S LICENSE ISSUED
    20  UNDER SECTION 12(A)(1). A MANUFACTURER MAY ONLY SELL VIDEO POKER
    21  MACHINES IN USE IN THIS COMMONWEALTH TO PERSONS HAVING A VALID
    22  DISTRIBUTOR'S LICENSE.
    23     (B)  DISTRIBUTION.--A PERSON MAY NOT SELL, SERVICE,
    24  DISTRIBUTE, LEASE OR MARKET A VIDEO POKER MACHINE IN THIS
    25  COMMONWEALTH UNLESS THE PERSON HAS A VALID DISTRIBUTOR'S LICENSE
    26  ISSUED UNDER SECTION 12(A)(2). A DISTRIBUTOR MAY ONLY SELL VIDEO
    27  POKER MACHINES FOR USE IN THIS COMMONWEALTH TO PERSONS HAVING A
    28  VALID DISTRIBUTOR'S OR MACHINE OWNER'S LICENSE. THIS SECTION
    29  DOES NOT PRECLUDE A MACHINE OWNER FROM SELLING USED VIDEO POKER
    30  MACHINES THAT THE OWNER PURCHASED NEW AND OPERATED FOR AT LEAST
    19890S1136B2598                 - 15 -

     1  TWO YEARS.
     2     (C)  PLACE ON LOCATIONS.--A PERSON MAY NOT OWN, SERVICE,
     3  MAINTAIN, LEASE OR PLACE A VIDEO POKER MACHINE UNLESS HE HAS A
     4  VALID MACHINE OWNER'S LICENSE ISSUED UNDER SECTION 12(A)(3). A
     5  MACHINE OWNER CAN ONLY PLACE VIDEO POKER MACHINES FOR USE IN
     6  THIS COMMONWEALTH IN LOCATIONS HAVING A VALID ESTABLISHMENT
     7  LICENSE.
     8     (D)  USE.--A PERSON MAY NOT OFFER, ENABLE OR ALLOW THE
     9  PLAYING OF VIDEO POKER AT AN ESTABLISHMENT UNLESS THAT
    10  ESTABLISHMENT HAS A VALID ESTABLISHMENT LICENSE ISSUED UNDER
    11  SECTION 12(A)(4). A PERSON WITH A VALID ESTABLISHMENT LICENSE
    12  MAY NOT HAVE MORE THAN THREE VIDEO POKER MACHINES IN A LICENSED
    13  ESTABLISHMENT AT THE SAME TIME.
    14     (E)  TAMPERING.--A PERSON MAY NOT MANIPULATE THE OUTCOME OR
    15  PAYOFF OF A VIDEO POKER MACHINE THROUGH INTERFERENCE WITH THE
    16  PROPER FUNCTIONING OF THE MECHANISM.
    17     (F)  PENALTIES.--
    18         (1)  A PERSON WHO VIOLATES THIS SECTION COMMITS A
    19     MISDEMEANOR OF THE THIRD DEGREE AND SHALL, UPON CONVICTION,
    20     BE SENTENCED TO PAY A FINE OF $1,000, OR TO IMPRISONMENT FOR
    21     NOT MORE THAN ONE YEAR, OR BOTH.
    22         (2)  A PERSON WHO VIOLATES THIS SECTION A SECOND TIME
    23     COMMITS A MISDEMEANOR OF THE SECOND DEGREE AND SHALL, UPON
    24     CONVICTION, BE SENTENCED TO PAY A FINE OF $2,000, OR TO
    25     IMPRISONMENT FOR NOT MORE THAN TWO YEARS, OR BOTH.
    26         (3)  A PERSON WHO VIOLATES THIS SECTION A THIRD AND
    27     SUBSEQUENT TIME COMMITS A MISDEMEANOR OF THE FIRST DEGREE AND
    28     SHALL, UPON CONVICTION, BE SENTENCED TO PAY A FINE OF $5,000,
    29     OR TO IMPRISONMENT FOR NOT MORE THAN FIVE YEARS, OR BOTH.
    30  SECTION 18 19.  EXEMPTION FROM STATE GAMBLING LAWS.               <--
    19890S1136B2598                 - 16 -

     1     VIDEO POKER MACHINES AND THEIR USE ARE EXEMPT FROM 18 PA.C.S.
     2  § 5513 (RELATING TO GAMBLING DEVICES, GAMBLING, ETC.).
     3  SECTION 19 20.  EXEMPTION FROM FEDERAL REGULATION.                <--
     4     THE GENERAL ASSEMBLY DECLARES THAT THE COMMONWEALTH IS EXEMPT
     5  FROM SECTION 2 OF THE GAMBLING DEVICES TRANSPORTATION ACT (64
     6  STAT. 1134, 15 U.S.C. § 1172). SHIPMENTS OF VIDEO DEVICES INTO
     7  THIS COMMONWEALTH IN COMPLIANCE WITH SECTIONS 3 AND 4 OF THE
     8  GAMBLING DEVICES TRANSPORTATION ACT (64 STAT. 1134, 15 U.S.C. §§
     9  1173 AND 1174) SHALL BE DEEMED LEGAL SHIPMENTS INTO THIS
    10  COMMONWEALTH.
    11  SECTION 20 21.  APPLICABILITY.                                    <--
    12     THE PROVISIONS OF THIS ACT SHALL NOT APPLY TO ACTIVITIES
    13  RELATING TO SPECIAL OCCASION PERMITS.
    14  SECTION 21 22.  EFFECTIVE DATE.                                   <--
    15     THIS ACT SHALL TAKE EFFECT IN 60 DAYS.










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