CORRECTIVE REPRINT

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY SANTONI, McCALL, EACHUS, DeWEESE, STURLA, J. TAYLOR, BRENNAN, CALTAGIRONE, BROWN, D. COSTA, FABRIZIO, GOODMAN, GALLOWAY, HARKINS, HARHAI, KOTIK, PAYTON, SEIP, SAINATO, D. EVANS, SIPTROTH, PALLONE, THOMAS AND MELIO, APRIL 21, 2009

AS REPORTED FROM COMMITTEE ON GAMING OVERSIGHT, HOUSE OF REPRESENTATIVES, AS AMENDED, JULY 17, 2009   

AN ACT

Providing for tuition relief and for a video lottery program and

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host municipality revenue allocations; establishing

penalties; and making appropriations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

GENERAL PROVISIONS

Section 101.  Short title.

This act shall be known and may be cited as the Tuition

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Relief Act Video Lottery Law.

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Section 102.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Account."  The Enabling Students to Attend College Video

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Lottery Administration Account.

"Agency."  The Pennsylvania Higher Education Assistance

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Agency.

"Applicant."  A person who applies for a license or the

renewal of a license under Chapter 5.

"Central computer system."  A central site computer system

controlled by the Department of Revenue that at all times is

connected to video lottery terminals at licensed establishments

at which video lottery retailers are authorized to place and

operate video lottery terminals and that, at a minimum, is

capable of monitoring, communicating, auditing, retrieving

information, generating games for and activating and disabling

each video lottery terminal.

"Cheating or thieving device."  A device to facilitate any

winning play or to remove from any video lottery terminal money

or other contents. The term includes a tool, drill, wire, coin

or token attached to a string or wire and any electronic or

magnetic device.

"Coin-operated amusement machine."  A machine that requires

the insertion of a coin, currency or tokens to play or activate

a game, the outcome of which is primarily determined by the

skill of the player. The term shall not include a video lottery

terminal.

"Community college."  A public college operated under Article

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XIX-A of the act of March 10, 1949 (P.L.30, No.14), known as the

Public School Code of 1949.

"Department."  The Department of Revenue of the Commonwealth.

"Eligible student."  A student who meets all of the

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following:

(1)  Is enrolled at the undergraduate level in a degree

program or is enrolled in a certificate program at a public

institution of higher education.

(2)  Does not hold a bachelor's degree or its equivalent.

(3)  Does one of the following:

(i)  Participates in the scholarship program.

(ii)  Meets the family income requirements under

section 302(1).

(4)  Has complied with all of the Federal Title IV

financial assistance application and eligibility

requirements.

(5)  Has completed application requirements of the

agency.

"Enforcement Bureau."  The Bureau of Liquor Control

Enforcement of the Pennsylvania State Police.

"Expected family contribution."  A contribution as determined

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under the policies and procedures established by the agency for

the scholarship program.

"Family income."  Income as established by the agency for the

scholarship program.

"First-time student."  An eligible student who has enrolled

in undergraduate level courses for the first time or is

readmitted to undergraduate level courses at the same or

different institution after a period of not less than three

years. The term shall include students enrolled for the first

time in the academic year who attended college in the prior

summer term or who entered with advanced standing due to college

credits earned before graduation from high school.

"Full-time student."  An eligible student that meets the

definition of full-time student as defined in the act of January

25, 1966 (1965 P.L.1546, No.541), referred to as the Higher

Education Scholarship Law.

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"Fund."  The College Tuition Relief Video Lottery Fund.

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"Gaming machine."  A device or machine that has the outcome

of play primarily determined by chance. The term shall include

an antique slot machine under 18 Pa.C.S. § 5513(c) (relating to

gambling devices, gambling, etc.) when used for profit. The term

shall not include any of the following:

(1)  A coin operated amusement machine.

(2)  A video lottery terminal that has all of its seals

or identification plates.

(3)  Slot machines as defined under 4 Pa.C.S. § 1103

(relating to definitions).

(4)  A game of chance under the act of December 19, 1988

(P.L.1262, No.156), known as the Local Option Small Games of

Chance Act.

(5)  Lottery terminals used under the act of August 26,

1971 (P.L.351, No.91), known as the State Lottery Law.

"Grocery store."  A retail establishment, that is less than

2,500 square feet or more than 8,500 square feet in size,

commonly known as a grocery store, supermarket or delicatessen,

where food, food products and supplies are sold for human

consumption on or off the premises with average monthly sales,

exclusive of wine sales, of not less than $5,000. The term shall

also include a licensed establishment with an interior

connection to a grocery store and the separate and segregated

portion of any other retail establishment which is dedicated

solely to the sale of food, food products and supplies for human

consumption on or off the premises with average monthly sales

with respect to the separate or segregated portion, exclusive of

wine sales, of not less than $5,000.

"Higher Education Scholarship Law."  The act of January 25,

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1966 (1965 P.L.1546, No.541), referred to as the Higher

Education Scholarship Law.

"Host municipality."  A municipality with one or more video

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lottery terminals located within its municipal boundaries.

"Licensed establishment."  A restaurant, eating place, hotel

or club as defined under section 102 of the act of April 12,

1951 (P.L.90, No.21), known as the Liquor Code, that operates

under a valid liquor or malt or brewed beverage license under

Article IV of the Liquor Code. The term shall not include a

grocery store or a licensed facility as defined under 4 Pa.C.S.

§ 1103 (relating to definitions).

"Licensed establishment owner."  A person who holds a license

to sell liquor or malt or brewed beverages at a licensed

establishment.

"Liquor Code."  The act of April 12, 1951 (P.L.90, No.21),

known as the Liquor Code.

"Manufacturer."  A person holding a manufacturer’s license

issued under Chapter 5 allowing the person to engage in the

business of designing, building, constructing, assembling or

manufacturing video lottery terminals, the electronic computer

components of video lottery terminals, the random number

generator of video lottery terminals or the cabinets in which

video lottery terminals are housed, and whose product is

intended for sale, lease or other assignment to an operator.

"Mode of instruction."  One of the following methods of

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delivery of a public institution of higher education's

curriculum:

(1)  In person.

(2)  Via distance learning as defined by the United

States Department of Education for student aid purposes.

(3)  A combination of paragraphs (1) and (2).

"Office of Administrative Law Judge."  An adjudicative office

within the Pennsylvania Liquor Control Board charged with the

responsibility of presiding at all citation hearings and other

enforcement hearings under the act of April 12, 1951 (P.L.90,

No.21), known as the Liquor Code.

"Municipality."  A city, borough, incorporated town or

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township.

"Operator."  A person holding an operator’s license issued

under Chapter 5 allowing the person to do all of the following:

(1)  Purchase or lease a specified number of video

lottery terminals from one or more manufacturers.

(2)  Service and repair those video lottery terminals.

(3)  Enter into contracts with video lottery retailers

for placement of those video lottery terminals in licensed

establishments where video lottery terminals have been

authorized for placement and operation under Chapter 5.

"Part-time student."  An eligible student who is enrolled on

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a less than full-time basis.

"Pennsylvania Lottery."  The Division of the State Lottery of

the Department of Revenue.

"Person."  Any natural person, corporation, foundation,

organization, business trust, estate, limited liability company,

licensed corporation, trust, partnership, association or any

other form of legal business entity.

"Profits."  The total value of all cash, tickets and credits

used for the play of a video lottery terminal less the amount

paid out in prizes. The value of tickets and credits shall be as

determined by the secretary Secretary of Revenue.

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"Public institution of higher education."  A community

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college, technical school, State-related institution or an

institution which is part of the State System of Higher

Education under Article XX-A of the act of March 10, 1949

(P.L.30, No.14), known as the Public School Code of 1949.

"Scholarship program."  The scholarship program established

under the act of January 25, 1966 (1965 P.L.1546, No.541),

referred to as the Higher Education Scholarship Law.

"Secretary."  The Secretary of Revenue of the Commonwealth.

"Service technician."  An individual holding a service

technician's license issued under Chapter 5 allowing the

individual to service, maintain and repair video lottery

terminals. A service technician may be a sole proprietor,

partner or an employee of a person licensed under Chapter 5 or

an employee of a business not licensed under Chapter 5 that

services, maintains and repairs video lottery terminals owned or

leased by an operator through one or more service technicians.

"State-related institution."  All of the following:

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(1)  Temple University.

(2)  The University of Pittsburgh.

(3)  The Pennsylvania State University.

(4)  Lincoln University.

"State Lottery Law."  The act of August 26, 1971 (P.L.351,

No.91), known as the State Lottery Law.

"Technical school."  The Thaddeus Stevens College of

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Technology or a public postsecondary vocational program

accredited by the State Board of Vocational Education as

established under Article XVIII of the act of March 10, 1949

(P.L.30, No.14), known as the Public School Code of 1949, and

recognized by the United States Department of Education for the

purpose of determining eligibility for Federal student

assistance programs.

"Total cost of attendance."  The cost of attending a public

institution of higher education as determined under the policies

and procedures established by the United States Department of

Education.

"Unfunded total cost of attendance."  The total cost of

attendance minus the sum of all grants, scholarships, waivers

and other categories of gift-aid received, excluding veterans

educational benefits.

"Video lottery license."  A license issued by the secretary 

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Secretary of Revenue authorizing the placement and operation of

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one or more video lottery terminals at the licensed

establishment specified in the application for licensure.

"Video lottery retailer."  A licensed establishment owner

that holds a video lottery license.

"Video lottery terminal."  An interactive electronic terminal

or device that is compatible with the central computer system

and is approved by the secretary Secretary of Revenue for the

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play of video lottery games. The term shall not include an

authorized slot machine as defined under 4 Pa.C.S. § 1103

(relating to definitions).

CHAPTER 3

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TUITION RELIEF

Section 301.  Supplement to State scholarship program.

(a)  Supplemental grants.--Except as provided under

subsections (b), (c) and (d), the agency shall award a

supplemental tuition relief grant to an eligible student

participating in the scholarship program so that the eligible

student's unfunded total cost of attendance is equal to the

eligible student's expected family contribution.

(b)  Minimum unfunded cost.--The unfunded cost of attendance

may not be less than $1,000 annually on a full-time equivalent

basis.

(c)  Supplemental grant minimum.--Except as provided under

subsections (b) and (d), the supplemental grant shall not be

less than 75% of the tuition rate of the public institution of

higher education applicable to the eligible student's status as

a full-time or part-time student.

(d)  Maximum award.--The total amount of all grants,

scholarships, waivers and other categories of gift aid,

excluding veterans educational benefits, received by an eligible

student may not exceed the eligible student's total cost of

attendance.

Section 302.  Tuition relief grants for additional Commonwealth

students.

The agency shall award a tuition relief grant to an eligible

student who is not eligible for a supplemental grant under

section 301 under the following conditions:

(1)  The student's family income does not exceed

$100,000.

(2)  The tuition relief grant shall be equal to 50% of

the tuition rate of the public institution of higher

education applicable to the eligible student's status as a

full-time or part-time student, except that the total amount

of all grants, scholarships, waivers and other categories of

gift-aid, excluding veterans educational benefits, may not

exceed the total cost of attendance and that the unfunded

total cost of attendance may not be less than $1,000 annually

on a full-time equivalent basis.

(3)  A student whose scholarship under the scholarship

program is terminated, denied or not renewed for reasons of

financial need, part-time enrollment status, remedial content

that does not exceed guidelines for the Federal Pell grant

program or mode of instruction shall not be disqualified for

a grant under this section on the basis of such termination,

denial or nonrenewal.

Section 303.  Implementation.

(a)  Awards.--Awards granted in the first year that grants

are awarded under this chapter shall be limited to first-time

students at public institutions of higher education. One

additional class of first-time students shall be added in each

subsequent year until the time as all classes of eligible

students at the public institution of higher education are

included. Nothing in this subsection shall limit the ability of

an eligible student who receives a grant under this chapter to

remain eligible for a grant upon returning from a gap in

enrollment, if all other eligibility requirements are met.

(b)  Part-time student.--In the case of a part-time student,

the amount of the grant under this chapter to which the eligible

student is entitled shall be reduced in proportion to the degree

to which that student is not attending on a full-time basis,

except that the total funds awarded to any eligible student

shall not exceed the amount to which the student would have been

entitled had the educational program been completed in the

standard duration for a full-time student as established by the

agency.

(c)  Reduction.--If sufficient funds are not transferred to

the agency under section 304 for the award of grants under this

chapter, all grants under this chapter shall be proportionately

reduced so as not to exceed the total amount of available funds.

(d)  Scholarship program hold harmless.--It is the intent of

the General Assembly that the transfers to the agency for the

purpose of awarding grants to eligible students under this

chapter shall supplement, not supplant, grants made by the

agency under the scholarship program. In no fiscal year after

the effective date of this section shall the number and value of

grants awarded by the agency under the scholarship program be

less than the number and value of the grants awarded to students

in the 2008-2009 fiscal year.

(e)  Exclusion from total cost of attendance.--The total cost

of attendance at a community college shall not include room and

board for the purpose of this chapter. The total cost of

attendance shall not include a commuter allowance at any public

institution of higher education for the purpose of this chapter.

(f)  Domicile, renewal and transfer.--Except as provided

under subsection (b) and section 302(3), all provisions

regarding domicile, citizenship, renewal of scholarship and

transfers established by the agency for the scholarship program

shall apply to tuition relief grants awarded under this chapter.

(g)  State-related institutions.--In addition to any other

provisions of this act, tuition relief grants to eligible

students attending State-related institutions shall be subject

to the following provisions:

(1)  (i)  No grant shall be awarded by the agency to an

eligible student attending a State-related institution in

any fiscal year unless sums have been transferred under

section 304 in the fiscal year in excess of sums required

by the agency to make all possible grant awards under

this chapter to eligible students attending other public

institutions of higher education. In that event, only the

excess sums shall be used to award grants to eligible

students attending State-related institutions.

(ii)  Notwithstanding subparagraph (i), the agency

may determine, in its discretion, that the excess sums

available under subparagraph (i) are not sufficient to

award meaningful grants to eligible students attending

State-related institutions in a fiscal year. In that

event, the excess sums shall remain in the fund and may

be available for transfer under section 304 in the

subsequent fiscal year.

(2)  The tuition rate or total cost of attendance used to

calculate a tuition relief grant to be awarded to an eligible

student attending a State-related institution shall not

exceed the average amount of tuition rate or total cost of

attendance, as appropriate, for all institutions that are

part of the State System of Higher Education.

(h)  Technical schools.—-In the case of an eligible student

attending a technical school, the tuition rate or total cost of

attendance used to calculate the tuition relief grant under this

chapter shall not exceed the average amount of tuition rate or

total cost of attendance, as appropriate, for all community

colleges.

Section 304.  Transfer.

The Office of the Budget shall annually transfer proceeds

from the fund to the agency as follows:

(1)  As of the date occurring five business days

following the effective date of this section, and April 15 of

each year thereafter, the Secretary of the Budget shall

certify the total amount of revenue that will be available

for transfer. In calculating the total amount of available

revenue, the Secretary of the Budget shall take into account

all of the following:

(i)  (A)  For the initial certification to be

completed under paragraph (1), revenue which:

(I)  has been advanced by the Commonwealth or

appropriated by the General Assembly to or

deposited into the fund prior to the date of

certification; and

(II)  is reasonably projected to be deposited

into the fund during the six months following the

date on which the certification is made.

(B)  The amount certified under this subparagraph

shall be the amount transferred in the fiscal year in

which the certification is made. The Secretary of the

Budget shall only certify an amount that is

sustainable in subsequent years.

(ii)  (A)  For the certification to be made on April

15, 2010, and the certifications to be made in fiscal

years after 2009-2010, revenue which:

(I)  has been advanced by the Commonwealth or

appropriated by the General Assembly to or

deposited into the fund since the conclusion of

the period which the prior certification covered;

and

(II)  is reasonably projected to be deposited

into the fund during the six months following the

date on which the certification is made.

(B)  The amounts certified under this

subparagraph shall be the amounts transferred in the

fiscal year following the fiscal year in which the

certification is made. The Secretary of the Budget

shall only certify an amount that is sustainable in

subsequent years.

(2)  If the actual revenue deposited into the fund during

the period which a certification covers exceeds projections,

any revenue in excess of the projections shall, subject to

the provisions of section 303(g), remain in the fund and may

be included in the certification to be made in the subsequent

fiscal year.

(3)  For the 2009-2010 fiscal year, the Office of the

Budget shall transfer the amount certified under paragraph

(1) to the agency by a payment no later than the first day of

September and a second payment no later than the first day of

February. For the 2010-2011 fiscal year and each fiscal year

thereafter, the Office of the Budget shall transfer the

amount certified under paragraph (1) to the agency by a

payment no later than the first day of August and a second

payment no later than the first day of January.

(4)  Any portion of the transfer that the agency does not

expend in order to comply with this chapter shall be returned

to the fund and may be included in the certification for the

subsequent fiscal year.

CHAPTER 3

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HOST MUNICIPALITY REVENUE ALLOCATIONS

Section 301.  Host municipality share.

Each host municipality shall receive a share of the revenue

under section 506(c)(3)(i) derived from the video lottery

terminals located within its municipal boundaries. A host

municipality’s share shall be equivalent to 50% of the profits

from all video lottery terminals located within the boundaries

of the municipality.

Section 302.  Transfer.

The Office of the Budget shall annually transfer proceeds

from the fund to host municipalities as follows:

(1)  As of August 15, 2009, and April 15 of each year

thereafter, the Secretary of the Budget shall certify the

total amount of revenue that will be available for transfer.

In calculating the total amount of revenue, the Secretary of

the Budget shall take into account all of the following:

(i)  (A)  For the certification to be completed no

later than August 15, 2009, revenue which:

(I)  has been advanced by the Commonwealth or

appropriated by the General Assembly to or

deposited into the fund prior to the date of

certification; and

(II)  is reasonably projected to be deposited

into the fund during the six months following the

date on which the certification is made.

(B)  The certification under this subparagraph

shall be applicable to the fiscal year in which

certification is made. The Secretary of the Budget

shall only certify an amount that is sustainable in

subsequent years.

(ii)  (A)  For certification for fiscal years after

2009-2010, revenue which:

(I)  has been advanced by the Commonwealth or

appropriated by the General Assembly to or

deposited into the fund since the conclusion of

the period which the prior certification covered;

and

(II)  is reasonably projected to be deposited

into the fund during the six months following the

date on which the certification is made.

(B)  The certification under this subparagraph

shall be applicable to the fiscal year following the

fiscal year in which certification is made. The

Secretary of the Budget shall only certify an amount

that is sustainable in subsequent years.

(2)  If the actual revenue deposited into the fund during

the period which a certification covers exceeds projections,

any revenue in excess of the projections shall remain in the

fund and may be included in the certification for the

subsequent fiscal year.

(3)  For the 2009-2010 fiscal year, the Office of the

Budget shall transfer each host municipality's share of the

amount certified under paragraph (1) to the host municipality

by a payment no later than the first day of October and a

second payment no later than the first day of March. For the

2010-2011 fiscal year and each year thereafter, the Office of

the Budget shall transfer each host municipality's share of

the amount certified under paragraph (1) to the host

municipality by a payment no later than the first day of

August and a second payment no later than the first day of

January.

(4)  Any portion of the transfer that a host municipality

does not expend shall be returned to the fund and may be

included in the certification for the subsequent fiscal year.

CHAPTER 5

FUNDING FOR COLLEGE TUITION RELIEF HOST MUNICIPALITIES

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Section 501.  Video lottery.

(a)  Provision.--The secretary, by the authority granted

under the State Lottery Law, shall provide for video lottery

through use of video lottery terminals. Except as set forth

under this act, video lottery terminals shall be operated and

administered in conformity with the provisions of the State

Lottery Law.

(b)  Placement, contracts with operators.--A video lottery

terminal may be placed for operation only on the premises of a

licensed establishment owned by a video lottery retailer that

has entered into a contract with an operator authorized to place

and operate a video lottery terminal under this chapter at the

licensed establishment. A video lottery terminal may not be

placed in any other location. A contract between a video lottery

retailer and an operator shall provide, among other things, for

the payment by the operator to the video lottery retailer of at

least 22.5% of the profits from the video lottery terminals to

be placed in the video lottery retailer's licensed establishment

under the contract.

(c)  Amount.--No more than five video lottery terminals may

be placed on the premises of a licensed establishment.

(d)  Allocation of video lottery terminals.--The secretary

shall establish and publish in the Pennsylvania Bulletin an

initial application date, which shall be no fewer than 45 days

following the date of publication, by which a licensed

establishment owner may submit an application for a video

lottery license. The department will make its initial decisions

for the placement of video lottery terminals in licensed

establishments for which applications have been submitted on or

before the initial application date and are approved for a video

lottery license. Additional video lottery terminals shall be

approved for placement by the department to provide equitable

access of terminals to video lottery retailers in all regions in

this Commonwealth and to optimize contributions to the fund.

(e)  Licenses to be issued.--The secretary may issue the

following types of licenses under this chapter:

(1)  A manufacturer's license, which is required for any

person seeking to manufacture video lottery terminals for use

in this Commonwealth.

(2)  An operator's license, which is required for any

person seeking to engage in the business of placing and

operating video lottery terminals in this Commonwealth. An

operator may obtain video lottery terminals only from a

manufacturer. An operator shall be responsible for all costs

for connection of its video lottery terminals with the

central computer system and the installation, repair and

maintenance of the video lottery terminals.

(3)  A video lottery license, which is required for a

licensed establishment owner seeking to conduct video lottery

at the licensed establishment.

(4)  A service technician's license, which is required

for an individual seeking to service, maintain and repair

video lottery terminals in this Commonwealth.

Section 502.  Video lottery licenses.

(a)  Eligibility.--A licensed establishment owner may apply

to the secretary for a video lottery license under this section

on a form prescribed by the department if all of the following

conditions are met:

(1)  The license to sell liquor or malt or brewed

beverages at the licensed establishment is valid and in

effect and is not in safekeeping or under suspension at the

time the application is filed.

(2)  The licensed establishment owner is in good standing

with the Pennsylvania Liquor Control Board.

(3)  The licensed establishment owner agrees to have

sufficient funds available at the licensed establishment to

pay out anticipated prizes.

(4)  The licensed establishment owner has or agrees to

have within six months of application, and to maintain for

the duration of the video lottery license, at least 50% of

its alcohol service personnel certified as having

successfully completed an alcohol beverage servers training

program, as provided under section 471.1 of the Liquor Code.

(b)  Requirements.--The following shall apply to video

lottery licenses issued under this section:

(1)  A video lottery license may be issued at the

discretion of the secretary. The secretary shall make a

determination within 60 days of receiving all required

information from an applicant. Nothing in this chapter is

intended or shall be construed to create an entitlement to a

license by any person.

(2)  Before issuing a video lottery license, the

secretary shall consider at least the following factors:

(i)  The likelihood of the applicant's business

remaining in operation for the duration of the current

valid liquor or malt or brewed beverage license under

Article IV of the Liquor Code.

(ii)  Compliance of the applicant and the applicant's

business with all laws of this Commonwealth.

(iii)  Security of the applicant's business.

(iv)  Whether the volume of expected number of plays

on a video lottery terminal at the licensed establishment

is sufficient to cover the cost of placing and

maintaining the video lottery terminal at the licensed

establishment. The department shall annually publish in

the Pennsylvania Bulletin the threshold to be used under

this subparagraph.

(3)  The secretary may refuse to issue a license under

this section, or may suspend or revoke a license, if:

(i)  The secretary finds that the experience,

character and general fitness of the applicant and any

officers, directors, stockholders and partners of the

applicant and any other person that shares or will share

in the profits or participates or will participate in the

management of the affairs of the applicant are such that

the participation of the applicant as a video lottery

retailer will not be consistent with the public interest.

(ii)  The applicant or an officer, director,

stockholder or partner of the applicant or any other

person that shares or will share in the profits or

participates or will participate in the management of the

affairs of the applicant:

(A)  Has been convicted of a crime involving

moral turpitude.

(B)  Has been convicted of illegal gambling

activities including with respect to lotteries,

gambling devices, gambling, or pool selling or

bookmaking under 18 Pa.C.S. § 5512 (relating to

lotteries, etc.), 5513 (relating to gambling devices,

gambling, etc.) or 5514 (relating to pool selling and

bookmaking) or similar laws of another state.

(C)  Has been convicted of any fraud or

misrepresentation in any context.

(D)  Has failed to comply with the terms of a

contract or a license issued under this section.

(E)  Has violated any rule, regulation or order

of the department.

(iii)  The applicant is not the owner or lessee of

the licensed establishment where it intends to conduct

video lottery.

(iv)  A person other than the applicant shares or

will share in the profits of the applicant other than as

a bona fide owner of a financial interest in the

applicant or participates or will participate in the

management of the affairs of the applicant other than as

a bona fide manager of the operations of the licensed

establishment.

(4)  The secretary may issue a temporary video lottery

license upon the terms and conditions as the secretary deems

necessary, desirable or proper to effectuate the provisions

of this chapter.

(5)  The secretary shall refuse to grant or renew a video

lottery license and shall suspend and may revoke the video

lottery license of any video lottery retailer that is not

compliant with the tax laws of this Commonwealth.

(6)  The secretary shall refuse to renew a video lottery

license and shall suspend and may revoke the video lottery

license issued to a video lottery retailer who fails to

maintain the licensure requirements of this chapter,

including maintaining the status of the licensed

establishment authorized under the license.

(c)  Lottery tickets.--A video lottery retailer may be

required to sell Pennsylvania Lottery tickets as determined by

the secretary.

(d)  Term and application fees.--A video lottery license

shall be valid for one year following the date of issuance and

may be renewed annually upon application of the video lottery

retailer. An applicant for a video lottery license shall pay a

nonrefundable initial license application fee of $500 and a

nonrefundable annual renewal application fee of $100.

(e)  Third-party disclosure.--Each video lottery license

applicant or licensee shall accept any risk of adverse public

notice, embarrassment, criticism, damages or financial loss,

which may result from disclosure or publication by a third party

of material or information received by the department in

connection with an application or license. The video lottery

license applicant or licensee shall expressly waive any and all

claims against the secretary, the department, the Commonwealth

and its employees from damages as a result of disclosure or

publication by a third party of any material or information

supplied or developed under this section.

Section 503.  Central computer system.

The department shall enter into a contract to purchase or

otherwise obtain and maintain control of the central computer

system. The contract shall provide for, among other things, the

operation of the central computer system and connectivity

between the central computer system and all video lottery

terminals. All video lottery terminals placed and operating in

licensed establishments must be linked at all times to the

central computer system. The contractor shall be required to

meet the suitability findings under section 504.1.

Section 504.  Video lottery terminal.

In addition to the requirements established by the secretary

under the State Lottery Law for lottery terminals, a video

lottery terminal:

(1)  Shall be linked to and have the ability to interact

with the central computer system.

(2)  Shall not directly dispense coins, cash, tokens or

any other article of exchange or value that represents

winnings, except for tickets. The ticket shall indicate the

total amount of credits and the cash value of winnings or

prizes, and the player shall turn in the ticket to the

appropriate person at the licensed establishment to receive

the cash award.

(3)  Shall not award a ticket or prize with a value in an

amount equal to or greater than $600 for any individual play

or equal to or greater than any other amount established by

the Internal Revenue Service as the minimum lottery award for

which the video lottery retailer is required to file Form

W-2G, or a successor form, for tax purposes. The amount shall

be published in the Pennsylvania Bulletin.

(4)  Shall not pay out less than a theoretical payout

percentage. The secretary may adopt regulations that set and

define the theoretical payout percentage of video lottery

play, which shall not be less than 85%.

(5)  Shall have a maximum amount per individual play of

$2.

(6)  Shall have seals and identification plates as

required by the department.

Section 504.1.  Other licenses and suitability.

(a)  Eligibility.--A person may apply to the secretary for a

manufacturer's license, an operator's license or a service

technician's license under this section on a form prescribed by

the department.

(b)  Requirements.--The following shall apply to licenses

issued under this section:

(1)  All licenses shall be issued at the discretion of

the secretary. The secretary shall make a determination

within 60 days of receiving all required information from the

applicant. Nothing in this chapter is intended or shall be

construed to create an entitlement to a license by any

person.

(2)  The secretary may refuse to issue a license under

this section, or may suspend or revoke a license, if any of

the following apply:

(i)  The applicant or the applicant's business is not

in compliance with all laws of this Commonwealth.

(ii)  The secretary finds that the experience,

character and general fitness of the applicant and any

officers, directors, stockholders and partners of the

applicant and any other person that shares or will share

in the profits or participates or will participate in the

management of the affairs of the applicant will not be

consistent with the public interest.

(iii)  The applicant or an officer, director,

stockholder or partner of the applicant or any other

person that shares or will share in the profits or

participates or will participate in the management of the

affairs of the applicant has done any of the following:

(A)  Failed to comply with the terms of a license

issued under this section.

(B)  Violated any rule, regulation or order of

the department.

(iv)  A person other than the applicant shares or

will share in the profits of the applicant other than as

a bona fide owner of a financial interest in the

applicant or participates or will participate in the

management of the affairs of the applicant.

(3)  The secretary may issue a temporary license upon the

terms and conditions as the secretary deems necessary,

desirable or proper to effectuate the provisions of this

chapter.

(4)  The secretary shall refuse to grant or renew a

license issued under this section and may revoke a license if

the applicant is not compliant with the tax laws of this

Commonwealth.

(c)  Term and application fees.--Each license issued under

this section shall be valid for a period of three years from the

date of issuance and may be renewed for three-year terms upon

application of the applicant. Each applicant for a license under

this section shall pay a nonrefundable initial application fee

of $500 and a nonrefundable renewal application fee of $100.

(d)  Suitability.--In addition to any other specifications

and qualifications established by the department, the

Pennsylvania State Police shall conduct a background

investigation of any applicant under this section, as follows:

(1)  The applicant shall be required to consent to a

background investigation of the applicant, its owners,

officers, directors, stockholders and partners, and any other

person that shares or will share in the profits or

participates or will participate in the management of the

affairs of the applicant and shall provide any and all

information requested by the Pennsylvania State Police and

consent to a release to obtain any and all information

necessary for the completion of the background investigation,

which shall include fingerprints.

(2)  The background investigation shall include a

security, criminal, credit and suitability investigation by

the Pennsylvania State Police, which shall include records of

criminal arrests and convictions, no matter where occurring,

including Federal criminal history record information. None

of the information obtained by the Pennsylvania State Police

shall be disclosed publicly nor be subject to disclosure

under the act of February 14, 2008 (P.L.6, No.3), known as

the Right-to-Know Law.

(3)  Each application for a license under this section

must be accompanied by a nonrefundable fee set by the

Pennsylvania State Police for the cost of each individual

requiring a background investigation. The reasonable and

necessary costs and expenses incurred in any background

investigation shall be reimbursed to the Pennsylvania State

Police by the applicant.

(4)  Upon completion of the background investigation, the

Pennsylvania State Police shall determine whether the

experience, character and general fitness of the applicant

and its owners, officers, directors, stockholders and

partners, and any other person that shares or will share in

the profits or participates or will participate in the

management of the affairs of the applicant, are such that the

participation of the applicant in the operations of video

lottery under this chapter will be consistent with the public

interest. The Pennsylvania State Police shall notify the

department of its determination, and may share information

with the department to the extent permitted by State and

Federal law as determined by the Pennsylvania State Police.

(5)  In determining whether participation by an applicant

is consistent with the public interest, the Pennsylvania

State Police's standards shall include whether the applicant

and its owners, officers, directors, stockholders and

partners, and any other person that shares or will share in

the profits or participates or will participate in the

management of the affairs of the applicant:

(i)  Have been convicted of a crime involving moral

turpitude.

(ii)  Have been convicted of illegal gambling

activities including with respect to lotteries, gambling

devices, gambling or pool selling under 18 Pa.C.S. §§

5512 (relating to lotteries, etc.), 5513 (relating to

gambling devices, gambling, etc.) or 5514 (relating to

pool selling and bookmaking) or the similar laws of

another state.

(iii)  Have been convicted of any fraud or

misrepresentation in any context.

(6)  The department shall not issue a license to any

applicant whose participation is deemed by the Pennsylvania

State Police to be inconsistent with the public interest.

Determination of suitability by the Pennsylvania State Police

shall not entitle an applicant to receive a license under

this chapter.

(7)  A finding of suitability is a privilege. No

applicant has a vested or property right in being found

suitable for licensure under this section. A determination of

suitability or unsuitability shall not be subject to

challenge or appeal.

(8)  Upon any change in the owners, officers, directors,

stockholders and partners of an applicant or any other person

that shares or will share in the profits or participates or

will participate in the management of the affairs of an

applicant, the applicant shall be required to consent to an

updated background investigation and updated finding of

suitability by the Pennsylvania State Police under this

subsection. The department shall revoke the license issued to

an applicant in the case of a finding that the applicant is

no longer suitable under this paragraph.

(e)  Employees.--An employee of an applicant who has or will

have access to video lottery terminals shall receive and

maintain a finding of suitability based on a background check

from the Pennsylvania State Police consistent with the

provisions of subsection (d). No employee of an applicant shall

have access to video lottery terminals until such time as the

employee has received a finding of suitability from the

Pennsylvania State Police.

Section 505.  Fees.

(a)  General rule.--In addition to the application fees

required under this chapter, as a condition to the issuance of a

license or the renewal of a license, an applicant shall pay the

following license fee:

(1)  An applicant for a manufacturer's license shall pay

an initial license fee of $10,000 and a renewal fee of

$10,000.

(2)  An applicant for an operator's license shall pay an

initial license fee of $5,000 and a renewal fee of $5,000. In

addition, an operator shall pay at times determined by the

secretary, but no more frequently than annually, a fee of

$500 per video lottery terminal that the operator is

authorized to place and operate at licensed establishments in

this Commonwealth.

(3)  An applicant for a video lottery license shall pay

an initial license fee of $500 and a renewal fee of $500. In

addition, a video lottery retailer shall pay at times

determined by the secretary, but no more frequently than

annually, a fee of $500 per video lottery terminal that has

been authorized to be placed at the video lottery retailer’s

licensed establishment.

(4)  An applicant for a service technician's license

shall pay an initial license fee of $1,000 and a renewal fee

of $1,000.

(b)  Increase.--

(1)  The secretary may increase an application or license

fee authorized under this chapter by an amount which shall

not exceed the rate of increase in the Consumer Price Index

for All Urban Consumers for the Pennsylvania, New Jersey,

Delaware and Maryland area for the most recent 12-month

period for which figures have been officially reported by the

Department of Labor, Bureau of Labor Statistics, immediately

prior to the date the increase is due to take effect.

(2)  Notwithstanding paragraph (1), a fee increase may

not occur if the secretary determines that the existing fees

are sufficient to pay the costs under section 506(c)(1).

(c)  Deposit.--All application and license fees shall be

deposited into the account.

Section 506.  College Tuition Relief Video Lottery Fund.

<--

(a)  Establishment.--

(1)  There is established a separate fund in the State

Treasury to be known as the College Tuition Relief Video

<--

Lottery Fund. 

(2)  A restricted receipts account to be known as the

Enabling Students to Attend College Video Lottery

<--

Administration Account is established within the fund.

(b)  Deposits.--Notwithstanding section 311(a) of the State

Lottery Law, money shall be deposited as follows:

(1)  All fees, fines and penalties imposed under this

chapter shall be deposited into the account as collected.

(2)  All profits from the play of a video lottery

terminal received by the department and proceeds seized under

section 507(e) shall be deposited into the fund.

(c)  Distributions.--

(1)  Money in the account shall be distributed to the

department, the Pennsylvania Liquor Control Board and the

Pennsylvania State Police for the cost of carrying out their

respective obligations under this chapter upon appropriation

by the General Assembly. The costs shall include the start-up

and ongoing cost of the central computer system and the

administration and enforcement of this chapter. The

department, the Pennsylvania Liquor Control Board and the

Pennsylvania State Police shall prepare and annually submit

to the chairman of the Appropriations Committee of the Senate

and the chairman of the Appropriations Committee of the House

of Representatives an itemized budget consisting of amounts

to be appropriated out of the account necessary to pay such

costs.

(2)  An operator shall establish and maintain an account

in a State depository in this Commonwealth into which the

operator shall deposit revenue generated by the play of all

video lottery terminals for which the operator has been

issued an operator's license equal to 55% of the profits from

such terminals. The sums in the account shall be withdrawn

weekly by the department and deposited into the fund for

distribution under this subsection.

(3)  Money in the fund shall be distributed pursuant to

this paragraph. The money is appropriated on a continuing

basis for that purpose. The following shall apply:

(i)  Money in the fund representing 50% of the

profits from all video lottery terminals shall remain in

the fund to be used for the program allocated as provided

<--

under Chapter 3.

(ii)  The balance of money in the fund shall be

allocated as follows:

(A)  To the department, to the Pennsylvania

Liquor Control Board and to the Pennsylvania State

Police for any amount needed to pay the costs under

paragraph (1) not funded by money in the account.

(B)  An amount equal to $3,000,000 per year shall

be paid to the department for the program under

subsection (e) for a period of five years from the

effective date of this section.

(C)  To the General Fund.

(d)  State Lottery Fund hold harmless.--If, on June 15, 2010,

and June 15 of each year thereafter, the secretary determines

that a decrease in the revenue deposited in that fiscal year in

the State Lottery Fund is due to the play of video lottery

terminals in this Commonwealth, the secretary shall certify the

amount of the decrease due to the play. The secretary's

determination shall be based upon an audit or other report of an

independent expert with respect to such decrease. A sum equal to

the amount of the decrease shall be deducted from the amount to

be distributed to the General Fund under subsection (c)(3)(ii)

in the next fiscal year and deposited in the State Lottery Fund.

The cost of the audit or independent report may be included in

the costs of the department to be funded from money in the

account under subsection (c)(1).

(e)  Access.--The department shall establish a program to

make grants to video lottery retailers who hold a video lottery

license for the purpose of making access improvements to a

licensed establishment. The amount of such grants shall be

limited to any amount paid to the department under subsection

(c)(3)(ii)(B).

Section 507.  Enforcement.

(a)  Unlawful acts.--Except as provided under subsections (b)

and (c), it shall be unlawful for any person to do any of the

following:

(1)  To operate or attempt to operate a video lottery

terminal or to receive a prize or attempt to receive a prize

from a video lottery terminal if the person is under 21 years

of age.

(2)  To permit an individual under 21 years of age to

play a video lottery terminal or provide a prize to an

individual under 21 years of age as a result of playing a

video lottery terminal.

(3)  To permit a visibly intoxicated patron to play a

video lottery terminal.

(4)  To possess a gaming machine.

(5)  To install or operate more video lottery terminals

in a licensed establishment than permitted by the department.

(6)  To possess a video lottery terminal without holding

a current video lottery license or an operator's license.

(7)  To possess or use or permit any person to possess or

use a cheating or thieving device.

(8)  To provide false information or documents in or with

respect to an application for a license under this chapter or

in or with respect to any other information or document

required by the department or the Pennsylvania State Police

in the administration of this chapter.

(9)  To possess a video lottery terminal with altered or

missing identification.

(10)  To alter or remove or to permit the alteration or

removal of the identification plate on a video lottery

terminal.

(11)  To tamper or permit tampering with the connection

of the video lottery terminal to the central computer system.

(12)  To award or permit the award of a prize in excess

of the amount established under section 504 for an individual

play.

(13)  To fail to report or pay or to fail to truthfully

account for and pay any license fee or other amount imposed

under this chapter.

(14)  To attempt in any manner to evade or defeat the

payment of any application or license fee or other amount

imposed under this chapter.

(15)  To permit a video lottery terminal to be

transported to or repaired or opened on the premises of a

licensed establishment by a person other than a person

authorized by this chapter.

(16)  To use currency other than lawful coin or legal

tender of the United States or a coin not of the same

denomination as the coin required to be used in the video

lottery terminal.

(17)  To possess any device, equipment or material which

the person knows has been manufactured, distributed, sold,

tampered with or serviced in violation of this chapter with

the intent to use the device, equipment or material as though

it had been manufactured, distributed, sold or serviced under

this chapter.

(18)  To sell, offer for sale, represent or pass off as

lawful any device, equipment or material which the person

knows has been manufactured, distributed, sold, offered for

sale, tampered with or serviced in violation of this chapter.

(19)  To violate or knowingly permit the violation of any

provision of this chapter.

(b)  Compliance checks.--Notwithstanding any provision of

law, the enforcement bureau may conduct compliance checks in

licensed establishments in accordance with this subsection. As

part of a compliance check, an individual who is under 21 years

of age may play a video lottery terminal and receive a prize

from playing the video lottery terminal in a licensed

establishment if all of the following apply:

(1)  The individual is at least 18 years of age.

(2)  The individual is an officer, employee or intern of

the enforcement bureau.

(3)  The individual has completed training specified by

the enforcement bureau.

(4)  The individual is acting within the scope of

prescribed duties.

(5)  The individual is acting under the direct control or

supervision of an enforcement bureau officer who is at least

21 years of age.

(c)  Cheating device.--An authorized employee of the

enforcement bureau or an authorized employee of the department

may possess and use a cheating or thieving device, counterfeit

or altered billet, ticket, token or similar objects accepted by

a video lottery terminal or counterfeit or altered video lottery

terminal-issued tickets or credits in performance of the duties

of employment.

(d)  Criminal penalties.--In addition to any other penalties

provided by law, the following shall apply:

(1)  The provisions of 18 Pa.C.S. § 4902 (relating to

perjury), 4903 (relating to false swearing) or 4904 (relating

to unsworn falsification to authorities) shall apply to any

person providing information or making any statement, whether

written or oral, as required under this chapter.

(2)  A person convicted of violating subsection (a)(1),

(2) and (3) commits a summary offense.

(3)  Except for subsection (a)(1), (2) and (3), a person

convicted of violating any of the provisions of subsection

(a) commits a misdemeanor of the first degree and shall pay a

fine of not less than $5,000. Except for subsection (a)(1),

(2) and (3), a person convicted of violating any of the

provisions of subsection (a) that is convicted of a second or

subsequent violation commits a felony of the second degree

and shall pay a fine of not less than $15,000.

(e)  Seizure, forfeiture and destruction of gaming

machines.--

(1)  Gaming machines shall be considered to be per se

illegal. Gaming machines and the proceeds therefrom may be

seized upon view as illegal contraband by the enforcement

bureau and any other law enforcement agency. The owner of a

gaming machine shall have no right to compensation for the

seizure and destruction of a gaming machine or the seizure of

proceeds of the gaming machine.

(2)  (i)  Notwithstanding any other provision of law, the

Office of Administrative Law Judge shall have the

authority to order forfeiture to the Commonwealth of a

gaming machine and proceeds from the gaming machine

seized by the enforcement bureau and the destruction of

the gaming machine.

(ii)  Upon adjudication following a hearing, the

bureau may initiate forfeiture proceedings under this

section by filing a motion with the Office of

Administrative Law Judge.

(iii)  The motion may be filed at any time following

the issuance of the adjudication and disposition of all

appeals. The motion shall include all of the following:

(A)  A list and description of the property to be

forfeited.

(B)  The time and place of seizure.

(C)  The person in possession at time of seizure.

(D)  The owner, if known.

(E)  An attestation that the enforcement bureau

has sent a copy of the motion and a notice of

forfeiture to the video lottery retailer, the

operator or to the owner or possessor of the gaming

machine by certified mail return receipt requested at

the last known address on file with the Pennsylvania

Liquor Control Board.

(iv)  The notice of forfeiture under subparagraph

(iii)(E) shall state that the gaming machine will be

destroyed and proceeds will be forfeited to the

Commonwealth by operation of law, unless the licensed

establishment owner, operator or possessor of the gaming

machine files a written objection with the Office of

Administrative Law Judge setting forth a right of

possession of the seized property. The written objection

must be postmarked within 30 days of the mailing date of

the notice.

(v)  The Office of Administrative Law Judge shall

issue an order of forfeiture and destruction if the

Administrative Law Judge is satisfied that the

requirements of this subsection have been met.

(vi)  Upon receipt of a written objection to

forfeiture and destruction from the licensed

establishment owner, operator or owner or possessor of

the gaming machine, the Office of Administrative Law

Judge shall issue an order denying the motion for an

order of forfeiture and destruction.

(vii)  The licensed establishment owner, operator or

owner or possessor of the gaming machine or enforcement

bureau shall have a right of appeal from an order issued

under subparagraph (v) or (vi) in accordance with the

procedures under section 471 of the Liquor Code for

appeals of adjudications issued by the Office of

Administrative Law Judge, except that any appeal will not

place in issue the finding of fact, conclusion of law or

sanction of the underlying adjudication.

(3)  This subsection shall apply to cases involving

gaming machines and proceeds seized by the enforcement bureau

prior to the effective date of this subsection.

(4)  In addition to any other law enforcement agency with

jurisdiction, the enforcement bureau shall have the

jurisdiction and the authority to enter a business in order

to enforce the provisions of this section.

(f)  Administrative sanctions.--

(1)  In addition to any other sanction, penalty or remedy

authorized by law or regulation, the secretary may impose any

sanction, penalty or remedy for a violation of this chapter

that is also available to the secretary under the State