1Amending the act of August 26, 1971 (P.L.351, No.91), entitled 
2"An act providing for a State Lottery and administration 
3thereof; authorizing the creation of a State Lottery 
4Commission; prescribing its powers and duties; disposition of 
5funds; violations and penalties therefor; exemption of prizes 
6from State and local taxation and making an appropriation,"
7further providing for definitions; and providing for
8political influence, for financial and employment interests
9and for applicability of Public Official and Employee Ethics
10Act.

11The General Assembly of the Commonwealth of Pennsylvania
12hereby enacts as follows:

13Section 1. Section 302 of the act of August 26, 1971 
14(P.L.351, No.91), known as the State Lottery Law, is amended by
15adding definitions to read:

16Section 302. Definitions.

17The following words and phrases when used in this chapter
18shall have the meanings given to them in this section unless the
19context clearly indicates otherwise:

20"Affiliate," "affiliate of" or "person affiliated with." A
21person that directly or indirectly, through one or more

1intermediaries, controls, is controlled by or is under common
2control with a specified person.

3"Contribution." A payment, gift, subscription, assessment,
4contract, payment for services, dues, loan, forbearance, advance
5or deposit of money or a valuable thing made to a candidate or
6political committee for the purpose of influencing an election
7in this Commonwealth or for paying debts incurred by or for a
8candidate or committee before or after an election. The term
9includes:

10(1) the purchase of a ticket for an event, including a
11dinner, luncheon, rally or other fundraising event;

12(2) the granting of a discount or rebate that is:

13(i) not available to the general public; or

14(ii) not extended on an equal basis to the
15candidates for an office by a television, radio station
16or newspaper;

17(3) a payment provided for the benefit of a candidate,
18including a payment for the services of a person serving as
19an agent of a candidate or committee by a person other than
20the candidate or committee or person whose expenditures the
21candidate or committee must report;

22(4) a receipt or use of anything of value received by a
23political committee from another political committee; and

24(5) a return on an investment by a political committee.

25"Controlling interest." Either of the following:

26(1) For a publicly traded domestic or foreign
27corporation, the term is:

28(i) an interest in a legal entity, if a person's
29sole voting rights under State law or corporate articles
30or bylaws entitle the person to elect or appoint one or

1more of the members of the board of directors or other
2governing board or the ownership; or

3(ii) a beneficial holding of 5% or more of the
4securities of the publicly traded corporation,
5partnership, limited liability company or other form of
6publicly traded legal entity, unless the presumption of
7control or ability to elect is rebutted by clear and
8convincing evidence; or

9(2) for a privately held domestic or foreign
10corporation, partnership, limited liability company or other
11form of privately held legal entity, the term is the holding
12of a security in the legal entity unless the presumption of
13control is rebutted by clear and convincing evidence.

14* * *

15"Executive-level public employee."

16(1) A deputy secretary of the Commonwealth.

17(2) The executive staff of the Governor's Office.

18"Financial interest." Owning or holding, or being deemed to
19hold, debt or equity securities or other ownership interest or
20profits interest. A financial interest does not include a debt
21or equity security, or other ownership interest or profit
22interest that is held or deemed to be held in the following:

23(1) a blind trust over which the prohibited individual
24may not exercise managerial control or receive income during
25the tenure of office and the period under section 317(a). The
26provisions of this paragraph apply only to a blind trust
27established prior to the effective date of this paragraph;

28(2) a security that is held in a pension plan, profit-
29sharing plan, individual retirement account, tax-sheltered
30annuity, a plan established under section 457 of the Internal

1Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 457) or
2a successor provision deferred compensation plan whether
3qualified or not qualified under the Internal Revenue Code of
41986 or a successor provision or other retirement plan that:

5(i) is not self-directed by the individual; and

6(ii) is advised by an independent investment adviser
7who has sole authority to make investment decisions with
8respect to contributions made by the individual to these
9plans;

10(3) a tuition account plan organized and operated under
11section 529 of the Internal Revenue Code of 1986 that is not
12self-directed by the individual; or

13(4) a mutual fund where the interest owned by the mutual
14fund in a licensed entity does not constitute a controlling
15interest.

16"Holding company." A person, other than an individual, that,
17directly or indirectly, owns or has the power or right to
18control or vote a significant part of the outstanding voting
19securities of a corporation or other form of business
20organization. If it does so through an interest in a subsidiary
21or successive subsidiaries, a holding company indirectly has,
22holds or owns the power, right or security.

23"Immediate family." A spouse, minor child or unemancipated
24child.

25"Intermediary." A person, other than an individual, that is:

26(1) a holding company with respect to a corporation or
27other form of business organization that holds or applies for
28a license under this part; and

29(2) a subsidiary regarding a holding company.

30* * *

1"Management-level employee." An individual who is:

2(1) employed in a director or department head capacity;
3and

4(2) empowered to make discretionary decisions that
5relate to the operation and administration of the lottery by
6the private manager and other positions not otherwise
7designated or defined under this act that the Department of
8State shall determine based on detailed analyses of job
9descriptions submitted by the private manager to the
10Department of State.

11"Party officer." Any of the following:

12(1) a member of a national committee;

13(2) a chairman, vice chairman, secretary, treasurer or
14counsel of a State committee; or

15(3) a member of the executive committee of a State
16committee.

17"Person." A natural person, corporation, foundation,
18organization, business trust, estate, limited liability company,
19licensed corporation, trust, partnership, limited liability
20partnership, association or another form of legal business
21entity.

22"Political committee." A committee, club, association or
23other group of persons that receives contributions or makes
24expenditures.

25"Principal." Any of the following:

26(1) an officer;

27(2) a director;

28(3) a person who directly holds a beneficial interest in
29or ownership of the securities of the private manager;

30(4) a person who has:

1(i) a controlling interest in the private manager;
2or

3(ii) the ability to elect a majority of the board of
4directors of a private manager or to otherwise control a
5private manager; or

6(5) other person or employee of a private manager deemed
7to be a principal by the Department of State.

8"Private manager." A person that enters into a contract with
9the Commonwealth to provide operational services for the lottery
10for a term of years.

11"Public official." The term includes the following:

12(1) The Governor, Lieutenant Governor, member of the
13Governor's cabinet, Treasurer, Auditor General and Attorney
14General.

15(2) A member of the Senate or House of Representatives.

16* * *

17"Subsidiary." A person other than an individual. The term
18includes:

19(1) a corporation with a significant part of its
20outstanding equity securities owned, subject to a power or
21right of control or held with power to vote by a holding
22company or an intermediary company;

23(2) a significant interest in a person, other than an
24individual, that is owned, subject to a power or right of
25control or held with power to vote by a holding company or an
26intermediary company; or

27(3) a person deemed a subsidiary by the Department of
28State.

29Section 2. The act is amended by adding sections to read:

30Section 316. Political influence.

1(a) Legislative intent.--The General Assembly recognizes the
2following public policy purposes and declares that the following
3objectives of the Commonwealth are served by this section:

4(1) The General Assembly has a compelling interest in
5protecting the integrity of both the electoral process and
6the legislative process by preventing corruption and the
7appearance of corruption that may arise through permitting
8political campaign contributions by certain persons
9associated with a business entity operating the lottery under
10a private management agreement executed pursuant to this act.

11(2) Banning all types of political campaign
12contributions by certain persons associated with a business
13entity operating the lottery under a private management
14agreement executed pursuant to this act is necessary to
15prevent corruption and the appearance of corruption that may
16arise when political campaign contributions and the
17administration and operation of the lottery authorized by
18this act are intermingled.

19(b) Contribution restriction.--The following persons shall
20be prohibited from contributing money or an in-kind contribution
21to a candidate for nomination or election to a public office in
22this Commonwealth or to a political party committee or other
23political committee in this Commonwealth or to a group,
24committee or association organized in support of a candidate,
25political party committee or other political committee in this
26Commonwealth:

27(1) A principal or management-level employee of the
28private manager.

29(2) An affiliate, intermediary, subsidiary or holding
30company of the private manager.

1(3) A principal or management-level employee of an
2affiliate, intermediary, subsidiary or holding company of the
3private manager.

4(4) A person who holds or operates a state lottery
5through a private management agreement or similar contract in
6another jurisdiction and the affiliates, intermediaries,
7subsidiaries, holding companies, principals or management-
8level employees thereof.

9(c) Contribution prohibition.--An individual that is
10prohibited from making a political contribution under subsection
11(b) may not make a political contribution of money or an in-kind
12contribution to an association or organization, including a
13nonprofit organization, that has been solicited by or knowing
14that the contribution or a portion thereof will be contributed
15to:

16(1) the elected official;

17(2) executive-level public employee; or

18(3) candidate for nomination or election to a public
19office in this Commonwealth.

20(d) Annual certification.--The chief executive officer or
21other appropriate individual of a private manager shall annually
22certify under oath to the Department of Revenue and the
23Department of State that the private manager:

24(1) developed and implemented internal safeguards and
25policies intended to prevent a violation of this section; and

26(2) conducted a good faith investigation that did not
27reveal a violation of this section during the past year.

28(e) Penalties.--

29(1) The first violation of this section by a licensed
30gaming entity or a person that holds a controlling interest

1in the gaming entity or a subsidiary company thereof or an
2officer, director or management-level employee of the
3licensee shall be punishable by a fine equal to three times
4the amount or value of the contribution made or $25,000,
5whichever is greater.

6(2) A second violation of this section within five years
7of the first violation shall be punishable by a fine equal to
8five times the amount or value of the contribution made or
9$50,000, whichever is greater.

10(3) A third or subsequent violation of this section
11within five years of the second violation shall be punishable
12by a fine equal to ten times the amount or value of the
13contribution made or $100,000, whichever is greater.

14(4) In addition to a fine imposed under this subsection,
15an individual who makes a contribution in violation of this
16section commits a misdemeanor of the third degree.

17Section 317. Financial and employment interests.

18(a) Financial interests.--Except as may be provided for the
19judiciary by rule or order of the Pennsylvania Supreme Court,
20the secretary, director, an executive-level public employee,
21public official or party officer or an immediate family member
22thereof, may not intentionally or knowingly hold a financial
23interest in a private manager or a holding company, affiliate,
24intermediary or subsidiary thereof while the individual is an
25executive-level public employee, public official or party
26officer and for one year following the termination of the
27individual's status as an executive-level public employee,
28public official or party officer.

29(b) Employment.--Except as may be provided by rule or order
30of the Pennsylvania Supreme Court, a secretary, director,

1executive-level public employee, public official or party
2officer, or an immediate family member thereof, may be employed
3by a private manager or by a holding company, affiliate,
4intermediary or subsidiary thereof while the individual is
5serving or employed as secretary, director, an executive-level
6public employee, public official or party officer and for one
7year following termination of the individual's status as
8secretary, director, an executive-level public employee, public
9official or party officer.

10(c) Grading.--An individual who violates this section
11commits a misdemeanor and shall, upon conviction, be sentenced
12to pay a fine of not more than $1,000 or to imprisonment for not
13more than one year, or both.

14(d) Divestiture.--An executive-level public employee, public
15official or party officer, or an immediate family member
16thereof, who holds a financial interest prohibited by this
17section shall divest the financial interest within three months
18of the effective date of the restrictions set forth in
19subsection (a), as applicable. The State Ethics Commission may,
20for good cause, extend the time period under this subsection.

21Section 318. Applicability of Public Official and Employee
22Ethics Act.

23The provisions of 65 Pa.C.S. § 1103(g) (relating to
24restricted activities) do not apply to a lottery employee who is
25offered or obtains employment with a private manager under terms
26of a contract between a private manager and the Commonwealth to
27provide operational services for the lottery.

28Section 3. This act shall take effect in 60 days.