PRINTER'S NO. 672
No. 570 Session of 2003
INTRODUCED BY SAINATO, MARKOSEK, SOLOBAY, CAPPELLI, PISTELLA,
BARRAR, BELARDI, LaGROTTA, DALEY, STABACK, TIGUE, LAUGHLIN,
DIVEN, COSTA, HARHAI, KOTIK, JAMES, MELIO, HORSEY, THOMAS AND
WASHINGTON, MARCH 3, 2003
REFERRED TO COMMITTEE ON FINANCE, MARCH 3, 2003
AN ACT
1 Authorizing the implementation of keno games at certain retail
2 liquor establishments; providing for collection of revenues;
3 imposing duties on the Bureau of Pennsylvania State Lottery;
4 establishing an advisory committee; imposing a keno games
5 tax; and making an appropriation.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the Keno Games
10 Act.
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Applicant." A licensed corporation which applies for a keno
16 license under this act.
17 "Bureau." The Bureau of Pennsylvania State Lottery of the
18 Commonwealth.
1 "Department." The Department of Revenue of the Commonwealth.
2 "Fund." The State Lottery Fund.
3 "Gross income." The total amount of cash, vouchers or tokens
4 collected for a keno game operated by a licensee, minus the
5 total value of coins and tokens won by a player.
6 "Keno." A game of chance using 80 numbers in which 20 random
7 numbers are drawn. Players may win cash prizes based on how many
8 numbers they match to the numbers randomly drawn by the
9 licensee.
10 "Keno license" or "license." A license authorizing a
11 licensed corporation to conduct keno games in its licensed
12 premises.
13 "Licensed corporation." A corporation or other entity that
14 holds a retail liquor license under the act of April 12, 1951
15 (P.L.90, No.21), known as the Liquor Code.
16 "Licensee." A licensed corporation that has obtained a keno
17 license from the Bureau of Pennsylvania State Lottery under this
18 act.
19 "Secretary." The Secretary of Revenue of the Commonwealth.
20 Section 3. Keno games system.
21 A keno games system is hereby established and shall be
22 administered by the bureau in accordance with this act.
23 Section 4. Bureau of Pennsylvania State Lottery.
24 (a) General powers.--
25 (1) The bureau shall establish, administer and ensure
26 the integrity of keno games and shall have jurisdiction over
27 the location and operation of keno games.
28 (2) The secretary shall employ an executive director,
29 deputies, secretaries, officers and representatives as it may
30 deem necessary, who shall serve at the secretary's pleasure.
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1 The secretary shall also employ other employees as the
2 secretary sees fit and whose duties and compensation shall be
3 prescribed by the secretary.
4 (b) Specific powers.--The bureau shall have the following
5 specific powers and duties:
6 (1) Investigate, evaluate and decide upon applications
7 for all keno licenses provided for in this act.
8 (2) Issue licenses pursuant to the provisions of section
9 6.
10 (3) Promulgate regulations as the bureau deems necessary
11 to carry out the policy and purposes of this act and to
12 enhance the credibility and integrity of keno games in this
13 Commonwealth. Notwithstanding any other provision of law to
14 the contrary and in order to facilitate the prompt
15 implementation of this act, regulations promulgated by the
16 bureau during the first year of its existence shall not be
17 subject to notice of proposed rulemaking pursuant to section
18 204 of the act of July 31, 1968 (P.L.769, No.240), referred
19 to as the Commonwealth Documents Law. Regulations adopted
20 after the one-year period shall be promulgated, adopted and
21 published as provided by law.
22 (4) The bureau or designated officers, employees or
23 agents of the secretary shall have the power to administer
24 oaths, examine witnesses and may issue subpoenas to compel
25 attendance of witnesses and production of all relevant and
26 material reports, books, papers, documents and other evidence
27 relating to the administration and enforcement of this act.
28 (5) Provide for the assessment and collection of fines
29 and penalties for violations of this act. All fines and
30 penalties shall be credited for deposit to the fund.
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1 (6) Revoke or suspend any license provided for in this
2 act if the bureau finds by a preponderance of the evidence
3 that a licensee under this act, its officers, employees or
4 agents do not comply with the provisions of this act or the
5 rules and regulations of the bureau and that it would be in
6 the public interest, convenience or necessity to revoke or
7 suspend the license. None of the licenses provided for in
8 this act shall be transferable or assignable in any manner.
9 (7) Restrict access to confidential information obtained
10 under this act and ensure that the confidentiality of
11 information is maintained and protected.
12 (8) Prescribe financial reporting and internal control
13 requirements for the operations of licensees that relate to
14 keno games.
15 (9) Prescribe the manner in which gross revenue must be
16 computed and reported by the licensee that relates to keno
17 games.
18 (10) Require audits of the financial statements of the
19 operations of licensees that relate to keno games.
20 (11) Require periodic financial reports from licensees
21 consistent with standards and intervals prescribed by the
22 bureau.
23 (12) Prescribe the procedures to be followed by
24 licensees for cash transactions affecting keno games.
25 (13) Prescribe criteria and conditions for the operation
26 of the keno games system.
27 (14) Enforce the prescribed hours for the conduct of
28 keno games, so that licensees may conduct keno games on any
29 day, except Christmas day, between the hours of 10 a.m. on
30 one day until 2 a.m. the next day.
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1 (15) Prohibit the offering of free alcohol or free malt
2 or free brewed beverages to patrons participating in keno
3 games.
4 (16) Prohibit persons under 21 years of age from
5 participating in keno games.
6 (17) Prescribe any rule or regulation necessary to
7 administer the provisions of this act.
8 Section 5. Advisory committee.
9 (a) Establishment.--There is hereby established an advisory
10 committee within the department, to be known as the Keno Games
11 Advisory Committee. The committee shall assist the bureau in
12 developing and discussing proposed regulation, final regulation
13 or policy guidance and to provide continuing advice on
14 implementing and administering the provisions of this act.
15 (b) Membership.--The advisory committee shall consist of the
16 following members:
17 (1) the chairman of the Pennsylvania Liquor Control
18 Board or his designee;
19 (2) the Secretary of Revenue or his designee; and
20 (3) five members appointed by the Governor with the
21 advice and consent of the Senate who shall be representative
22 of the interests affected by the provisions of this act.
23 (c) Terms.--The Governor shall appoint the initial members
24 of the committee under subsection (b)(3) within 60 days of the
25 effective date of this act. The members appointed by the
26 Governor shall serve three-year terms, except that the initial
27 appointees shall have staggered terms so that one member shall
28 be appointed for a one-year term, two members shall be appointed
29 for a two-year term and two members shall be appointed for a
30 three-year term.
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1 (d) Chairperson.--A chairperson shall be chosen by a
2 majority vote of the committee members present at a regularly
3 scheduled meeting. A person employed by the Commonwealth may not
4 chair the committee.
5 (e) Expenses.--Members of the committee shall be reimbursed
6 for their travel expenses to attend committee meetings.
7 Employees of the Commonwealth shall only be entitled to the
8 compensation and expenses they receive as public employees.
9 (f) Support.--The department shall provide the appropriate
10 administrative and technical support needed by the committee in
11 order to accomplish its objectives.
12 Section 6. Issuance of keno licenses.
13 (a) Authorization.--The bureau may issue a keno license to a
14 licensed corporation that desires to conduct keno games in its
15 licensed premises if that licensed corporation makes application
16 to the bureau and abides by all of the provisions of and
17 regulations promulgated under this act.
18 (b) Restriction.--No applicant that has been convicted in
19 any jurisdiction of a felony, crime of moral turpitude or
20 gambling offense may be issued a keno license under this act.
21 (c) Suspension.--The bureau shall suspend the keno license
22 of any licensee who fails to satisfy the requirements of this
23 act during the term of the keno license until those requirements
24 are satisfied.
25 Section 7. Application.
26 (a) General rule.--Any licensed corporation which meets the
27 requirements of section 6 that desires to conduct keno games in
28 its licensed premises must file an application form with the
29 bureau.
30 (b) Form.--The bureau shall develop an application form that
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1 collects such information as deemed necessary by the bureau.
2 Section 8. Accounting controls and audits.
3 (a) Approval.--A licensed corporation which desires to
4 conduct keno games in its licensed premises must first obtain
5 approval of its internal control systems and audits from the
6 bureau.
7 (b) Minimum requirements.--At a minimum, the internal
8 controls and audits shall consist of:
9 (1) The safeguarding of its assets and revenues,
10 especially the recording of cash and evidences of
11 indebtedness related to the keno games.
12 (2) The provision of reliable records, accounts and
13 reports of transactions, operations and events, including
14 reports to the bureau that relate to the keno games.
15 (3) A procedure whereby assets that relate to keno games
16 operations are safeguarded.
17 (4) Financial records that relate to keno games
18 operations are accurate and reliable.
19 (5) Transactions that relate to keno games operations
20 are performed only in accordance with the management's
21 general or specific authorization.
22 (6) Transactions that relate to keno games operations
23 are recorded adequately to permit proper and timely reporting
24 of gaming revenue and of fees and taxes and to maintain
25 accountability for assets.
26 (7) Access to assets that relate to keno games
27 operations is permitted only in accordance with management's
28 specific authorization.
29 (8) Recorded accountability for assets that relate to
30 keno games operations is compared with actual assets at
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1 reasonable intervals and appropriate action is taken with
2 respect to any discrepancies.
3 (9) Functions, duties and responsibilities that relate
4 to keno games operations are appropriately segregated and
5 performed in accordance with sound practices by competent,
6 qualified personnel.
7 (c) Internal control.--A licensed corporation which seeks to
8 conduct keno games in its licensed premises shall describe, in
9 the manner the bureau may approve or require, its administrative
10 and accounting procedures that relate to keno games operations
11 in detail in a written system of internal control and shall
12 submit a copy of its written keno games operations to the
13 bureau. Each written keno games operation shall include:
14 (1) An organizational chart depicting appropriate
15 segregation of functions and responsibilities.
16 (2) A description of the duties and responsibilities of
17 each position shown on the organizational chart.
18 (3) A detailed narrative description of the
19 administrative and accounting procedures designed to satisfy
20 the requirements of subsection (a).
21 (4) A written statement signed by the chief financial
22 officer of the licensed corporation and the chief executive
23 officer of the licensed corporation attesting that the
24 operation satisfies the requirements of this section.
25 (5) Any other item that the bureau may require.
26 Section 9. Keno games tax.
27 (a) Imposition of tax.--Each licensed corporation shall pay
28 a tax in the amount of 60% of the gross income arising from the
29 keno games.
30 (b) Payment and credit.--The tax imposed by this section
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1 shall be paid by the licensed corporation through the department
2 for credit to the fund monthly on or before the 20th day of the
3 month next succeeding the month in which the tax accrues.
4 (c) Administrative expenses.--No more than 10% of the tax
5 credited to the fund under subsection (b) may be used for the
6 administrative expenses of the system as incurred by the bureau.
7 (d) Tax reconciliation.--If the amount of tax required to be
8 reported and paid under this section is later determined to be
9 greater or less than the amount actually reported and paid by
10 the licensed corporation, the bureau shall:
11 (1) assess and collect the additional tax determined to
12 be due with interest thereon until paid; or
13 (2) provide for a refund of any overpayment, with
14 interest thereon, to the licensed corporation.
15 Section 10. Declaration of exemption from Federal laws
16 prohibiting gambling devices.
17 Pursuant to section 2 of the act of January 2, 1951 (64 Stat.
18 1135, 15 U.S.C. § 1172), the Commonwealth declares that it is
19 exempt from section 1134 of that act.
20 Section 11. Annual report.
21 The bureau shall, within 18 months of the effective date of
22 this act and each year thereafter, submit a report to the
23 Governor and General Assembly, which reports on the general
24 operation of the bureau under this act and all taxes, fees,
25 fines and other revenues collected and disbursed. The number and
26 result of hearings conducted under this act and any other
27 information that the bureau deems necessary or appropriate.
28 Section 12. Appropriation.
29 The sum of $1,500,000, or as much thereof as may be
30 necessary, is hereby appropriated to the Department of Revenue
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1 for the establishment of the keno games system within the Bureau
2 of Pennsylvania State Lottery. The department shall reimburse
3 the General Fund from the revenue generated within the first
4 year of the conduct of keno games.
5 Section 13. Effective date.
6 This act shall take effect in 60 days.
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