PRINTER'S NO. 461
No. 422 Session of 2005
INTRODUCED BY COSTA, CAWLEY, DeLUCA, PALLONE, BEBKO-JONES,
CALTAGIRONE, CRUZ, DALEY, DeWEESE, FABRIZIO, GERGELY,
GOODMAN, JAMES, LaGROTTA, PRESTON, SANTONI, STABACK, THOMAS,
WANSACZ, GRUCELA, KOTIK, PISTELLA, SAINATO, SHANER, SURRA,
WALKO AND YOUNGBLOOD, FEBRUARY 14, 2005
REFERRED TO COMMITTEE ON TOURISM AND RECREATIONAL DEVELOPMENT,
FEBRUARY 14, 2005
AN ACT
1 Amending Title 4 (Amusements) of the Pennsylvania Consolidated
2 Statutes, providing for video gaming; establishing the Video
3 Gaming Account; and reorganizing State offices.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Title 4 of the Pennsylvania Consolidated Statutes
7 is amended by adding a chapter to read:
8 CHAPTER 17
9 VIDEO GAMING
10 Sec.
11 1701. Definitions.
12 1702. (Reserved).
13 1703. (Reserved).
14 1704. (Reserved).
15 1705. (Reserved).
16 1706. (Reserved).
1 1707. (Reserved).
2 1708. (Reserved).
3 1709. (Reserved).
4 1710. Video gaming.
5 1711. Licensing of manufacturers, distributors and
6 vendors.
7 1712. Licensed establishment license.
8 1713. Limitations on licensed establishments.
9 1714. Central communications system.
10 1715. Video gaming machine prototype.
11 1716. Fees.
12 1717. Unlawful use by minors.
13 1718. Inducements prohibited.
14 1719. Illegal activities.
15 1720. Establishment of account; distribution of funds.
16 1721. Preemption of local taxes and license fees.
17 1722. Exemption from State gaming laws.
18 1723. Exemption from Federal regulation.
19 § 1701. Definitions.
20 The following words and phrases when used in this chapter
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
23 "Account." The Video Gaming Account established in section
24 1720 (relating to establishment of account; distribution of
25 funds).
26 "Board member." A member of the Pennsylvania Gaming Control
27 Board.
28 "Chairman." The chairman of the Pennsylvania Gaming Control
29 Board.
30 "Coin-operated amusement machine." A machine that requires
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1 the insertion of a coin, currency or tokens to play or activate
2 an amusement game or music machine.
3 "Distributor." Any individual, partnership, association or
4 corporation, licensed by the Pennsylvania Gaming Control Board
5 to buy, sell, service or distribute video gaming machines. The
6 term does not include a machine vendor or a manufacturer.
7 "Gaming board." The Pennsylvania Gaming Control Board.
8 "Licensed establishment." A restaurant, bar, tavern, hotel
9 or club that has a valid liquor or malt or brewed beverage
10 license under Article IV of the act of April 12, 1951 (P.L.90,
11 No.21), known as the Liquor Code.
12 "Machine vendor." Any individual, partnership, association
13 or corporation that:
14 (1) is licensed by the Pennsylvania Gaming Control
15 Board; and
16 (2) owns, services and maintains video gaming machines
17 for placement in licensed establishments.
18 "Manufacturer." Any individual, partnership, association or
19 corporation that:
20 (1) is licensed by the Pennsylvania Gaming Control
21 Board; and
22 (2) manufactures or assembles video gaming machines.
23 "Party officer." The following members or officers of any
24 political party:
25 (1) A member of a national committee.
26 (2) A chairman, vice chairman, secretary, treasurer or
27 counsel of a Commonwealth committee.
28 (3) A member of the executive committee of a
29 Commonwealth committee.
30 (4) A county chairman, vice chairman or counsel.
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1 (5) A secretary or treasurer of a county committee.
2 (6) A city chairman, vice chairman or counsel.
3 (7) A secretary or treasurer of a city committee.
4 "State Lottery." The lottery established and operated under
5 the act of August 26, 1971 (P.L.351, No.91), know as the State
6 Lottery Law.
7 "Video gaming machine." A device or machine:
8 (1) that, upon insertion of a coin or currency, will
9 play or simulate the play of a video poker, bingo, keno,
10 blackjack or other game authorized by the Pennsylvania Gaming
11 Control Board;
12 (2) that utilizes a video display and microprocessors;
13 and
14 (3) in which, by the skill of the player or by chance,
15 the player may receive free games or credits that may be
16 redeemed for cash.
17 § 1702. (Reserved).
18 § 1703. (Reserved).
19 § 1704. (Reserved).
20 § 1705. (Reserved).
21 § 1706. (Reserved).
22 § 1707. (Reserved).
23 § 1708. (Reserved).
24 § 1709. (Reserved).
25 § 1710. Video gaming.
26 The gaming board shall provide for video gaming at licensed
27 establishments. With the exception of tickets indicating credits
28 won, which are redeemable for cash, no machine may directly
29 dispense coins, cash, tokens or anything else of value.
30 § 1711. Licensing of manufacturers, distributors and vendors.
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1 (a) Background investigation; application fee.--The gaming
2 board shall conduct a background investigation of an applicant
3 for a manufacturer's, distributor's, or machine vendor's license
4 as to personal and business character, honesty and integrity. An
5 applicant must pay a nonrefundable application fee of $5,000.
6 The investigation may utilize information on the applicant
7 compiled by the Pennsylvania Liquor Control Board. The
8 investigation includes the following:
9 (1) An examination of criminal or civil records.
10 (2) An examination of personal, financial or business
11 records. This paragraph includes tax returns, bank accounts,
12 business accounts, mortgages and contracts, to which the
13 license applicant is a party or has an interest.
14 (3) An examination of personal or business relationships
15 which:
16 (i) include a partial ownership or voting interest
17 in a partnership, association or corporation; and
18 (ii) bear on the fitness of the applicant for
19 licensure.
20 (b) Production of information.--An applicant to become a
21 licensee must produce information, documentation and assurances
22 as required by the gaming board. This subsection includes the
23 following:
24 (1) Each license applicant must:
25 (i) consent in writing to and provide for the
26 examination of financial and business accounts, bank
27 accounts, tax returns and related records, in the
28 applicant's possession or under the applicant's control
29 that establish by clear and convincing evidence the
30 financial stability, integrity and responsibility of the
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1 license applicant; and
2 (ii) authorize all third parties in possession or
3 control of accounts or records under subparagraph (i) to
4 allow for their examination as deemed necessary by the
5 gaming board in conducting background investigations.
6 (2) Each license applicant must disclose on the
7 application form any criminal convictions for offenses graded
8 above summary offenses covering the ten-year period
9 immediately preceding the filing of the application. The
10 license applicant must also include on the application form
11 any convictions of the gambling laws of any jurisdiction.
12 (3) If the license applicant has conducted a gaming
13 operation in a jurisdiction that permits such activity, the
14 license applicant must produce letters of reference from the
15 gaming or casino enforcement or control agency that specify
16 the experiences of the agency with the license applicant, the
17 license applicant's associates and the license applicant's
18 gaming operations. If the license applicant is unable to
19 obtain these letters within 60 days of the request, the
20 license applicant may submit a copy of the letter requesting
21 the information together with a statement under oath or
22 affirmation that, during the period activities were
23 conducted, the license applicant was in good standing with
24 the appropriate gambling or casino enforcement control
25 agency.
26 (4) Each license applicant must provide information,
27 documentation and assurances as required by the gaming board
28 to establish by clear and convincing evidence the license
29 applicant's good character, honesty and integrity.
30 Information under this paragraph may relate to family,
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1 habits, character, reputation, business affairs, financial
2 affairs, business associates, professional associates and
3 personal associates, covering the ten-year period immediately
4 preceding the filing of the application.
5 (c) Third-party disclosure.--Each license applicant must
6 accept any risk of adverse public notice, embarrassment,
7 criticism, damages or financial loss, which may result from
8 disclosure or publication by a third party of material or
9 information requested by the gaming board pursuant to action on
10 an application. The license applicant expressly must waive a
11 claim against the gaming board or the Commonwealth and its
12 employees from damages as a result of disclosure or publication
13 by a third party.
14 (d) Hearing upon denial.--A person who is denied a license
15 has the right to a hearing before the gaming board in accordance
16 with the provisions of 2 Pa.C.S. Ch. 5 Subch. A (relating to
17 practice and procedure of Commonwealth agencies) and Ch. 7
18 Subch. A (relating to judicial review of Commonwealth agency
19 action).
20 (e) Sole proprietor vendors.--A sole proprietor vendor must
21 comply with all of the following:
22 (1) Be a resident of this Commonwealth for at least two
23 years prior to application for a license.
24 (2) Be of good moral character and reputation in the
25 community.
26 (3) Be at least 18 years of age.
27 (4) Be current in the payment of all taxes, interest and
28 penalties owed to the Commonwealth and political
29 subdivisions. This paragraph excludes items under formal
30 dispute or appeal under applicable law.
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1 (5) Demonstrate sufficient financial resources to
2 support the activities required to place and service video
3 gaming machines.
4 (f) Partnership vendors.--Partnership vendors must comply
5 with all of the following:
6 (1) Be current in the payment of taxes, interest and
7 penalties owed to the Commonwealth and political
8 subdivisions. This paragraph excludes items under formal
9 dispute or appeal under applicable law.
10 (2) Demonstrate sufficient financial resources to
11 support the activities required to place and service video
12 gaming machines.
13 (3) Have each partner be:
14 (i) of good moral character and reputation in the
15 community;
16 (ii) at least 18 years of age; and
17 (iii) a resident of this Commonwealth for at least
18 two years prior to application for a license.
19 (4) At all times subsequent to licensing, a majority of
20 the partnership ownership interest must be held by residents
21 of this Commonwealth.
22 (g) Association and corporate vendors.--Association or
23 corporate vendors must comply with all of the following:
24 (1) Be current in the payment of taxes, interest and
25 penalties owed to the Commonwealth and political
26 subdivisions. This paragraph excludes items under formal
27 dispute or appeal under applicable law.
28 (2) Demonstrate sufficient financial resources to
29 support the activities required to place and service video
30 gaming machines.
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1 (3) Have each shareholder holding more than 10% of the
2 stock of a corporation be:
3 (i) of good moral character and reputation in the
4 community;
5 (ii) at least 18 years of age; and
6 (iii) a resident of this Commonwealth for at least
7 two years prior to application.
8 (h) Sole proprietor distributors.--A sole proprietor
9 distributor must comply with all of the following:
10 (1) Be a resident of this Commonwealth for at least one
11 year prior to application.
12 (2) Be of good moral character and reputation in the
13 community.
14 (3) Be at least 18 years of age.
15 (4) Be current in the payment of taxes, interest and
16 penalties owed to the Commonwealth and political
17 subdivisions. This paragraph excludes items under formal
18 dispute or appeal under applicable laws.
19 (5) Demonstrate sufficient financial resources to
20 support the activities required to sell and service video
21 gaming machines.
22 (i) Partnership distributors.--Partnership distributors must
23 comply with all of the following:
24 (1) Be current in the payment of taxes, interest and
25 penalties owed to the Commonwealth and political
26 subdivisions. This paragraph excludes items under formal
27 dispute or appeal under applicable law.
28 (2) Demonstrate sufficient financial resources to
29 support the activities required to sell and service video
30 gaming machines.
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1 (3) Have each partner be:
2 (i) of good moral character and reputation in the
3 community;
4 (ii) at least 18 years of age; and
5 (iii) a resident of this Commonwealth for at least
6 one year prior to application.
7 (4) At all times subsequent to licensing, a majority of
8 the partnership ownership interest must be held by residents
9 of this Commonwealth.
10 (j) Association and corporate distributors.--Association or
11 corporate distributors must comply with all of the following:
12 (1) Be current in the payment of taxes, interest and
13 penalties owed to the Commonwealth and political
14 subdivisions. This paragraph excludes items under formal
15 dispute or appeal under applicable law.
16 (2) Demonstrate sufficient financial resources to
17 support the activities required to sell and service video
18 gaming machines.
19 (3) Have each shareholder holding more than 10% of the
20 stock of a corporation be:
21 (i) of good moral character and reputation in the
22 community; and
23 (ii) at least 18 years of age.
24 (4) For at least one year immediately prior to
25 application, have maintained and operated a coin machine
26 distributorship office and sales staff within this
27 Commonwealth. This paragraph does not apply to an association
28 distributor.
29 (k) Sole proprietor manufacturers.--A sole proprietor
30 manufacturer must comply with all of the following:
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1 (1) Be of good moral character and reputation in the
2 community.
3 (2) Be at least 18 years of age.
4 (3) Be current in the payment of taxes, interest and
5 penalties owed to the Commonwealth and political
6 subdivisions. This paragraph excludes items under formal
7 dispute or appeal under applicable law.
8 (4) Demonstrate sufficient financial resources to
9 support the activities required to manufacture and sell video
10 gaming machines through a licensed distributor.
11 (l) Partnership manufacturers.--Partnership manufacturers
12 must comply with all of the following:
13 (1) Be current in the payment of taxes, interest and
14 penalties owed to the Commonwealth and political
15 subdivisions. This paragraph excludes items under formal
16 dispute or appeal under applicable law.
17 (2) Demonstrate sufficient financial resources to
18 support the activities required to manufacture and sell video
19 gaming machines through a licensed distributor.
20 (3) Have each partner be:
21 (i) at least 18 years of age; and
22 (ii) of good moral character and reputation in the
23 community.
24 (m) Association and corporate manufacturers.--Association or
25 corporate manufacturers must comply with all of the following:
26 (1) Be current in the payment of taxes, interest and
27 penalties owed to the Commonwealth and political
28 subdivisions. This paragraph excludes items under formal
29 dispute or appeal under applicable law.
30 (2) Demonstrate sufficient financial resources to
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1 support the activities required to manufacture and sell video
2 gaming machines through a licensed distributor.
3 (3) Have each shareholder holding more than 10% of the
4 stock of the corporation or association be:
5 (i) of good moral character and reputation in the
6 community; and
7 (ii) at least 18 years of age.
8 § 1712. Licensed establishment license.
9 The gaming board shall issue a license to any licensed
10 establishment upon a showing that its liquor or retail
11 dispensers license is valid and is in good standing with the
12 Pennsylvania Liquor Control Board. The annual fee for a licensed
13 establishment shall be $500 per video gaming machine.
14 § 1713. Limitations on licensed establishments.
15 Licensed establishments shall be subject to the following
16 limitations:
17 (1) No licensed establishment may have more than three
18 video gaming machines. A licensed establishment which
19 requests a video gaming machine must receive one machine
20 before any other licensed establishment receives second or
21 subsequent machines.
22 (2) No applicant may hold more than one type of license
23 authorized by this chapter.
24 (3) Each licensee is responsible for payment of its
25 license fee. Payment of the fee by a person, partnership or
26 corporation other than the licensee is prohibited.
27 § 1714. Central communications system.
28 The gaming board shall establish and procure a central
29 communications system capable of monitoring and communicating
30 with each licensed video gaming machine. The gaming board may,
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1 by agreement between the gaming board and the Pennsylvania State
2 Lottery, utilize the central communications system utilized by
3 the State Lottery. All licensed video gaming machines must be
4 linked to the central communications system either at the gaming
5 board or, by agreement between the gaming board and the
6 Pennsylvania State Lottery, at the Pennsylvania State Lottery.
7 § 1715. Video gaming machine prototype.
8 The gaming board shall develop a prototype video gaming
9 machine that includes hardware and software specifications.
10 These specifications shall include:
11 (1) All machines must have the ability to interact with
12 the central communications system.
13 (2) Unremovable identification plates shall appear on
14 the exterior of the machine containing the name of the
15 manufacturer and the serial and model number of the machine.
16 (3) Rules of play shall be displayed on the machine face
17 or screen as promulgated by the gaming board.
18 (4) A video gaming machine may not directly dispense
19 coins, cash, tokens or any other article of exchange or value
20 except for tickets. Such tickets shall be dispensed by
21 pressing the ticket dispensing button on the machine at the
22 end of one's turn or play. The ticket shall indicate the
23 total amount of credits and the cash award, and the player
24 shall turn in this ticket to the appropriate person at the
25 licensed establishment to receive the cash award. The cost of
26 the credit shall be $.25, and the number of credits played
27 per game shall not exceed ten.
28 (5) No cash award for any individual game may exceed
29 $1,000.
30 (6) All video gaming machines must be designed and
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1 manufactured with total accountability, to include gross
2 proceeds, net profits, winning percentages and any other
3 information the gaming board requires.
4 (7) Each machine shall pay out a minimum of 80% of the
5 amount wagered.
6 § 1716. Fees.
7 (a) Vendors license and fee.--The annual fee for a machine
8 vendors license shall be $25,000 for the first 50 video gaming
9 machines and an additional $500 per video gaming machine license
10 in excess of 50. A machine vendor license permits the vendor to
11 sell video gaming machines to another licensed machine vendor or
12 licensed distributor.
13 (b) Distributor's license fee.--The annual fee for a
14 distributor's license shall be $25,000.
15 (c) Manufacturer's license fee.--The annual fee for a
16 manufacturer's license shall be $25,000.
17 § 1717. Unlawful use by minors.
18 (a) Minors.--No individual under 21 years of age may use or
19 play a video gaming machine. An individual who violates this
20 subsection commits a summary offense.
21 (b) Licensees.--
22 (1) A licensed establishment may not, regardless of
23 knowledge or intent, permit an individual under 21 years of
24 age to play or use a video gaming machine.
25 (2) A licensed establishment that violates this
26 subsection commits a misdemeanor of the second degree.
27 (3) The establishment of any of the following facts
28 constitutes a defense to prosecution under this subsection:
29 (i) The minor falsely represented in writing that
30 the minor was 21 years of age or older.
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1 (ii) The appearance of the minor was such that an
2 ordinary person of prudent judgment would believe the
3 minor to be 21 years of age or older.
4 § 1718. Inducements prohibited.
5 (a) General rule.--A video gaming machine owner may not
6 offer or give any type of inducement or incentive to a licensed
7 establishment to secure a machine placement agreement.
8 (b) Definition.--As used in this section, the term
9 "inducement" or "incentive" means consideration from a licensed
10 machine vendor to a licensed establishment owner as an
11 enticement to solicit or maintain the licensed establishment
12 owner's business. The term includes cash, gifts, loans and
13 prepayment of commissions.
14 § 1719. Illegal activities.
15 A person may not sell, distribute, service, own, operate or
16 place on location a video gaming machine unless the person is
17 licensed pursuant to this chapter and is in compliance with all
18 requirements of this chapter.
19 § 1720. Establishment of account; distribution of funds.
20 (a) Video Gaming Account.--There is established a separate
21 account in the State Treasury to be known as the Video Gaming
22 Account. Fees and fines under this chapter and the portion of
23 net profits under subsection (b)(2)(iii) and (iv) shall be
24 deposited in the account.
25 (b) Distribution of net profits.--
26 (1) Net profits shall be calculated by subtracting cash
27 awards from the total consideration played on the machine.
28 (2) The net profits from each video gaming machine shall
29 be distributed in the following manner:
30 (i) 30% to the licensed establishment.
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1 (ii) 30% to the licensed vendor.
2 (iii) 30% to the account.
3 (iv) 10% to the account to be returned to the
4 municipality in which the video gaming machine is
5 located.
6 (c) Board funding.--The gaming board shall derive all
7 funding for its operations related to the establishment,
8 enforcement and operation of video gaming from the account.
9 (d) Payments to municipalities.--In addition to the funds
10 distributed under subsection (b)(2)(iv) the following shall
11 apply:
12 (1) The gaming board shall pay each municipality from
13 the account $1,000 per licensed machine located in the
14 municipality to each municipality.
15 (2) The gaming board may provide grants to
16 municipalities for the purpose of defraying the costs of
17 local enforcement of the provisions of this chapter,
18 including enforcement activities related to operation and use
19 of illegal gaming devices. The total of annual grants under
20 this paragraph shall not exceed 1% of the annual revenue of
21 the account.
22 (e) Funds maintained in account.--An annual minimum balance
23 of $2,000,000 shall be maintained in the account. Money in
24 excess of this amount at the end of each fiscal year shall be
25 distributed to the General Fund.
26 (f) Funding for compulsive gambling programs.--The gaming
27 board shall allocate from the account at least $1,000,000
28 annually for the purpose of treating compulsive gambling in this
29 Commonwealth. Approximately $500,000 should be earmarked for
30 treatment and the remainder directed toward prevention,
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1 education, training, research and intervention.
2 (g) Continuous appropriation.--The money in the account is
3 continuously appropriated to the account and shall not lapse at
4 the end of any fiscal year.
5 § 1721. Preemption of local taxes and license fees.
6 (a) Statutes.--Video gaming machines shall be exempt from
7 taxes levied under the following:
8 (1) The act of August 5, 1932 (Sp.Sess., P.L.45, No.45),
9 referred to as the Sterling Act.
10 (2) The act of December 31, 1965 (P.L.1257, No.511),
11 know as The Local Tax Enabling Act.
12 (3) The provisions of 53 Pa.C.S. Pt. III Subpt. E
13 (relating to home rule and optional plan government).
14 (4) Any statute that confers taxing authority to a
15 political subdivision.
16 (b) Licensing fees.--
17 (1) Video gaming machines are exempt from local
18 licensing fees.
19 (2) Local licensing fees imposed on all other coin-
20 operated amusement machines shall not exceed $150.
21 § 1722. Exemption from State gaming laws.
22 Video gaming machines authorized under this chapter and their
23 use as authorized under this chapter are exempt from 18 Pa.C.S.
24 § 5513 (relating to gambling devices, gambling, etc.).
25 § 1723. Exemption from Federal regulation.
26 The General Assembly declares that the Commonwealth is exempt
27 from section 2 of the Gambling Devices Transportation Act (64
28 Stat. 1134, 15 U.S.C. § 1172). Shipments of approved video
29 gaming machines into this Commonwealth in compliance with
30 sections 3 and 4 of the Gambling Devices Transportation Act (15
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1 U.S.C. §§ 1173 and 1174) shall be deemed legal shipments into
2 this Commonwealth.
3 Section 2. This act shall take effect in 60 days.
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