PRINTER'S NO. 3358
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
105
Session of
2015
INTRODUCED BY PAYNE, D. COSTA, DUNBAR, HELM, KAUFER, PICKETT,
RADER AND MOUL, MAY 17, 2016
REFERRED TO COMMITTEE ON FINANCE, MAY 17, 2016
AN ACT
Amending the act of August 26, 1971 (P.L.351, No.91), entitled
"An act providing for a State Lottery and administration
thereof; authorizing the creation of a State Lottery
Commission; prescribing its powers and duties; disposition of
funds; violations and penalties therefor; exemption of prizes
from State and local taxation and making an appropriation,"
in State Lottery, further providing for definitions, for
powers and duties of secretary, for commercial advertising,
for lottery sales agents, for assignability of prizes drawn,
for ticket sales, for compact to sell tickets, for certain
sales prohibited, for disposition of funds, for unclaimed
prize money, for deposits and transactions and for report; in
pharmaceutical assistance for the elderly, further providing
for request for proposal; and providing for transfers to the
Pennsylvania Gaming Control Board.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "secretary" in section 302 of
the act of August 26, 1971 (P.L.351, No.91), known as the State
Lottery Law, amended October 31, 2014 (P.L.3041, No.201), is
amended and the section is amended by adding a definition to
read:
Section 302. Definitions.
The following words and phrases when used in this chapter
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shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Board." The Pennsylvania Gaming Control Board.
* * *
["Secretary." The Secretary of Revenue of the Commonwealth.]
Section 2. Section 303 heading, (a) introductory paragraph,
(1) and (13), (a.1) and (b) of the act, amended November 21,
1996 (P.L.741, No.134) and October 31, 2014 (P.L.3041, No.201),
are amended to read:
Section 303. Powers and duties of [secretary] board.
(a) Powers and duties enumerated.--In addition to the powers
and duties provided by law and [the act of April 9, 1929
(P.L.177, No.175), known as The Administrative Code of 1929] 4
Pa.C.S. Pt. II (relating to gaming), the [secretary] board shall
have the power and [it shall be his] duty to operate and
administer the lottery, and to promulgate rules and regulations
governing the establishment and operation thereof, including,
but not limited to:
(1) The type of lottery to be conducted, except that the
[secretary] board may not authorize the game of keno or an
Internet instant game unless specifically authorized by law.
* * *
(13) The performance of the powers and duties relating
to the operation and administration of the lottery heretofore
vested in the State Lottery Commission and the Secretary of
Revenue.
(a.1) Prohibitions.--The [secretary] board may not offer any
Internet-based or monitor-based interactive lottery game or
simulated casino-style lottery game, including video poker,
video roulette, slot machines or video blackjack, through the
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State Lottery.
(b) Reports.--The [secretary] board shall report monthly to
the Governor and the Legislature the total lottery revenues,
prize disbursements and other expenses for the preceding month,
and shall make an annual report, which shall include a full and
complete statement of lottery revenues, prize disbursements and
other expenses, to the Governor and the Legislature, and
including such recommendations for changes in this chapter as
the [secretary] board deems necessary or desirable.
Section 3. Sections 304, 305, 306, 307(a), 308, 309(b),
311(a), 313 and 314 of the act, amended or added November 21,
1996 (P.L.741, No.134), are amended to read:
Section 304. Commercial advertising.
(a) General rule.--The [secretary] board may enter into
contracts with persons, associations or corporations that
provide for the placement of commercial advertisements on
tickets or shares.
(b) Contracts.--The [secretary] board may enter into the
contracts only after completion of the bidding procedure
contained in subsection (c).
(c) Bidding procedures.--
(1) The [secretary] board shall, not less than six weeks
prior to the date set for opening bids or proposals to place
advertisements on the tickets or shares, advertise the
opening of proposals for at least three days, the first and
last publication to be at least ten days apart, in not fewer
than six nor more than 12 newspapers of extensive general
circulation in different parts of this Commonwealth. The
advertisements shall invite proposals for the placement of
commercial advertisements on the tickets or shares, shall
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direct potential bidders to include with their proposals a
specimen advertisement and shall give notice of the time and
place where the proposals will be received and when they will
be opened.
(2) All proposals shall be delivered to the [secretary]
board on or before the hour designated in the invitation to
bid, on the day set by the [secretary] board, following the
date of the last advertisement, and each bid shall be in
duplicates, one of which shall be marked "Duplicate Bid."
Each bid shall be enclosed in an envelope, securely sealed,
and shall be mailed or delivered to the [secretary] board who
shall retain all envelopes unopened until the time fixed for
the opening thereof.
(3) The [secretary] board shall, on the date fixed for
opening of bids, at the hour designated in the invitation to
bid, open and publish the proposals and, as soon thereafter
as practicable, award the contract to the highest responsible
bidder. The [secretary] board shall have the right to reject
any or all bids. The bids, when opened, shall be tabulated
and shall be subject to examination by bidders. A record of
all bids shall be made by the [secretary] board in a book
kept for that purpose.
(4) When no proposal has been received or if for any
reason the [secretary] board rejects all proposals, the
[secretary] board may advertise again for proposals, giving
at least 15 days' notice of the time of receiving the same,
which proposals shall be opened, awarded and approved in like
manner as the initial bids.
(5) The [secretary] board shall have the discretion to
refuse to accept any advertisement that is inappropriate or
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offensive or displays poor taste. Advertisements for tobacco
products or for alcoholic beverages shall not be accepted.
(d) Disposition of revenues.--All revenues derived from
contracts entered into under this section shall be deposited in
the State Lottery Fund.
(e) Regulations.--The [secretary] board may promulgate rules
and regulations to implement the provisions of this section.
(f) Definition.--As used in this section, the term "tickets
or shares" shall not include instant game tickets.
Section 305. Lottery sales agents.
(a) Licensing.--No license as an agent to sell lottery
tickets or shares shall be issued to any person to engage in
business exclusively as a lottery sales agent. Before issuing
such license the [secretary] board shall consider such factors
as:
(1) The financial responsibility and security of the
person and his business or activity.
(2) The accessibility of his place of business or
activity to the public.
(3) The sufficiency of existing licenses to serve the
public convenience.
(4) The volume of expected sales.
(b) Approval of applicant.--If the [secretary] board shall
find that the experience, character and general fitness of the
applicant are such that the participation of such person as a
lottery sales agent will be consistent with the public interest,
convenience and necessity, it may thereupon grant a license.
Without limiting the generality of the foregoing, the
[secretary] board may refuse to issue a license pursuant to this
section, or may suspend or revoke a license so issued if it
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shall find that the applicant or licensee:
(1) Has been convicted of a crime involving moral
turpitude.
(2) Has engaged in bookmaking or other form of illegal
gambling.
(3) Has been found guilty of any fraud or
misrepresentation in any connection.
(4) Has violated any rule, regulation or order of the
[secretary] board.
(c) Denial of license.--The [secretary] board may refuse to
grant a license or may suspend or revoke a license issued
pursuant to this section to a corporation, if it shall determine
that:
(1) Any officer, director, member or stockholder of such
corporation applying for a license or of any corporation
which owns stock in or shares in the profits, or participates
in the management of the affairs of such applicant:
(i) has been convicted of a crime involving moral
turpitude;
(ii) has engaged in bookmaking or other forms of
illegal gambling;
(iii) has been found guilty of any fraud or
misrepresentation in any connection; or
(iv) has violated any rule, regulation or order of
the [secretary] board.
(2) The experience, character, or general fitness of any
officer, director, or stockholder of any of the aforesaid
corporations is such that the participation of such person as
a lottery sales agent would be inconsistent with the public
interest, convenience or necessity, but if the [secretary]
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board determines that the interest of any stockholder
referred to in this paragraph or in paragraph (1) is
sufficient, in the opinion of the [secretary] board, to
affect adversely the conduct of a lottery sales agency by
such corporation in accordance with the provisions of this
chapter, the [secretary] board may disregard such interest in
determining whether or not to grant a license to such
corporation.
(3) The applicant is not the owner or the lessee of the
business at which it will conduct a lottery sales agency
pursuant to the license applied for, or that any person,
firm, association, or corporation other than the applicant
shares, or will share, in the profits of the applicant, other
than by dividends as a stockholder, or participates, or will
participate, in the management of the affairs of the
applicant.
(d) Temporary license.--Pending final determination of any
question under this section, the [secretary] board may issue a
temporary license upon such terms and conditions as it may deem
necessary, desirable or proper to effectuate the provisions of
this chapter.
(e) Resurvey.--Any person who has a pending application for
a lottery machine and is currently engaged in the sale of out-
of-State lottery tickets may submit a written request to the
[Department of Revenue] board for a resurvey. This resurvey
shall be completed by the [department] board within 90 days of
receipt of the request.
(f) Definition.--As used in this section, the term "person"
means and includes an individual, association, corporation,
club, trust, estate, society, company, joint-stock company,
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receiver, trustee, assignee, referee or any other person acting
in a fiduciary or representative capacity, whether appointed by
a court or otherwise, and any combination of individuals. The
term shall also mean and include all departments, commissions,
agencies and instrumentalities of the State, including counties
and municipalities and agencies and instrumentalities thereof.
Section 306. Assignability of prizes drawn.
(a) Assignability.--The right of any person to a prize drawn
shall be assignable under the following limited circumstances:
(1) Payment of any prize drawn may be paid to the estate
of a deceased prize winner.
(2) Payment of any prize drawn may be made to any person
pursuant to an appropriate judicial order.
(3) Payment of any prize drawn may be made to any person
pursuant to a voluntary assignment of the right to receive
future prize payments, in whole or in part, if the assignment
is made to a person or entity designated pursuant to an
appropriate judicial order of the court of common pleas
located in either the judicial district where the assignor
resides or where the division's headquarters are located.
Under this paragraph, the court shall issue an order
approving the assignment and directing the [secretary] board
to pay the assignee all future prize payments, in whole or in
part, if:
(i) the assignment is in writing, executed by the
assignor and subject to the laws of this Commonwealth;
(ii) the assignor provides a sworn affidavit to the
court attesting that the assignor is of sound mind, is
not acting under duress, has been advised regarding the
assignment by his or her own independent legal counsel
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and understands and agrees that, with regard to the
assigned payments, the Commonwealth and the [secretary]
board shall have no further liability or responsibility
to make said payments to the assignor; and
(iii) the proposed assignment does not include or
cover payments or portions of payments alleged to be
subject to offset under judicial order, unless
appropriate provision is made in the order to satisfy the
obligations giving rise to the claim for offset, or to
offset under any other statute.
(b) Discharge of [secretary] board.--The [secretary] board
shall be discharged of all further liability upon payment of a
prize pursuant to this section.
(c) Enforcement.--Soliciting or offering rights to lottery
prizewinnings, either by assignment or through pledge as
collateral for a loan, shall not be deemed selling or offering
for sale lottery tickets or shares under this act. Selling or
offering for sale assigned or pledged lottery prizewinnings
shall not be deemed selling or offering for sale an interest
under section 307.
(d) Fees.--The [secretary] board is authorized to establish
a reasonable fee to defray any administrative expenses
associated with assignments made pursuant to this section,
including the cost to the Commonwealth of any processing fee
that may be imposed by a private annuity provider. The fee
amount shall reflect the direct and indirect costs associated
with processing the assignments.
(e) Discharge of Commonwealth.--Upon a voluntary assignment
pursuant to appropriate judicial order under subsection (a)(3)
of payments due to a prizewinner under a private annuity policy
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that has been purchased by the lottery for the benefit of a
prizewinner, the Commonwealth and the [secretary] board shall be
discharged from any and all liability for the payments or
portions thereof assigned, and, as to the payments or portions
thereof assigned, the assignee shall have recourse only against
the private annuity provider and its guarantors and shall have
no further recourse against the Commonwealth.
(f) Assignment limitation.--Notwithstanding any other
provision of this section, no prizewinner shall have the right
to assign prize payments upon:
(1) The issuance by the United States Internal Revenue
Service (IRS) of a technical rule letter, revenue ruling or
other public ruling of the IRS in which the IRS determines
that, based upon the right of assignment provided in this
act, a Pennsylvania lottery prizewinner who does not assign
any prize payments pursuant to subsection (a)(3) would be
subject to an immediate income tax liability for the value of
the entire prize rather than annual income tax liability for
each installment when paid.
(2) The issuance by a court of competent jurisdiction of
a published decision holding that, based upon the right of
assignment provided in this act, a Pennsylvania lottery
prizewinner who does not assign any prize payments pursuant
to subsection (a)(3) would be subject to an immediate income
tax liability for the value of the entire prize rather than
annual income tax liability for each installment when paid.
(g) Filing of letter decision.--Upon receipt of a letter or
ruling from the IRS or a published decision of a court of
competent jurisdiction, as specified in subsection (f), the
[executive] director shall immediately file a copy of that
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letter, ruling or published decision with the Secretary of
State. Immediately upon the filing by the director of a letter,
ruling or published decision with the Secretary of State, a
prizewinner shall be ineligible to assign a prize pursuant to
subsection (a)(3).
Section 307. Ticket sales.
(a) Prices.--No person shall sell, resell or engage in the
business of reselling lottery tickets or shares at a price
greater than that fixed by rule or regulation of the
[department] board. Price shall include any fee associated with
the acquisition or transportation of lottery tickets or shares.
* * *
Section 308. Compact to sell tickets.
The [secretary] board shall enter into a compact with any
other states that permit sale of Pennsylvania lottery tickets
within their borders to sell those states' lottery tickets
within this Commonwealth.
Section 309. Certain sales prohibited.
* * *
(b) Certain employees.--No ticket or share shall be sold to
and no prize shall be awarded to any officer or employee of the
division [in the Department of Revenue] or any spouse, child,
brother, sister or parent residing as a member of the same
household in the principal place of abode of any of the
foregoing persons.
Section 311. Disposition of funds.
(a) State Lottery Fund.--All moneys received from the
operation of the State lottery shall be deposited in a State
Lottery Fund which is hereby created. Such moneys shall be used
to the extent necessary for the payment of lottery prizes but
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the amount so used shall not be less than 40% of the amount of
which tickets or shares have been sold. All payments of lottery
prizes and for expenses of operation of the lottery shall be
made as provided by law. All moneys remaining after payment of
prizes and operating expenses shall remain in the State Lottery
Fund and shall be allocated for the purpose of providing
property tax relief for the elderly for taxes paid in 1971 and
thereafter pursuant to the provisions of [the act of March 11,
1971 (P.L.104, No.3), known as the Senior Citizens Rebate and
Assistance Act] Chapter 13 of the act of June 27, 2006 (1st
Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act, and
for the purpose of providing free or reduced fare transit
service for the elderly pursuant to Chapter 9 and the act of
February 11, 1976 (P.L.14, No.10), known as the Pennsylvania
Rural and Intercity Common Carrier Surface Transportation
Assistance Act. In the event sufficient funds are not available
from the lottery receipts to meet the requirements of [the
Senior Citizens Rebate and Assistance Act] Chapter 13 of the
Taxpayer Relief Act or for providing free or reduced fare
transit service for the elderly under Chapter 9 and the
Pennsylvania Rural and Intercity Common Carrier Surface
Transportation Assistance Act, additional funds to fulfill these
obligations shall be appropriated from the General Fund for this
purpose.
* * *
Section 313. Unclaimed prize money.
Unclaimed prize money on a winning lottery ticket or share
shall be retained by the [secretary] board for payment to the
person entitled thereto for one year after the drawing in which
the prize was won. If no claim is made within such period, the
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prize money shall be paid into the State Lottery Fund and used
for purposes as otherwise herein provided.
Section 314. Deposits and transactions.
The [secretary] board may, in [his] its discretion, require
any or all lottery sales agents to deposit to the credit of the
State Lottery Fund in banks, designated by the State Treasurer,
all moneys received by such agents from the sale of lottery
tickets or shares, less the amount, if any, retained as
compensation for the sale of the tickets or shares, and to file
with the [secretary] board or [his] designated agents of the
board reports of their receipts and transactions in the sale of
lottery tickets in such form and containing such information as
[he] the board may require. The [secretary] board may make such
arrangements for any person, including a bank, to perform such
functions, activities or services in connection with the
operation of the lottery as [he] the board may deem advisable
pursuant to this chapter and the rules and regulations of the
[department] board, and such functions, activities or services
shall constitute lawful functions, activities and services of
such person.
Section 4. Section 315 of the act, amended October 31, 2014
(P.L.3041, No.201), is amended to read:
Section 315. Report.
The [Department of Revenue] board shall submit a report to
the Governor, the chairman and minority chairman of the
Appropriations Committee of the Senate, the chairman and
minority chairman of the Appropriations Committee of the House
of Representatives, the chairman and minority chairman of the
Aging and Youth Committee of the Senate, the chairman and
minority chairman of the Aging and Older Adult Services
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Committee of the House of Representatives, the chairman and
minority chairman of the Finance Committee of the Senate and the
chairman and minority chairman of the Finance Committee of the
House of Representatives by September 1 of each year. The report
shall set forth current lottery profits and the State Lottery's
plan for increasing future profits. This report shall be posted
on the [department's] board's publicly accessible Internet
website.
Section 5. Section 508 of the act, added November 21, 1996
(P.L.741, No.134), is amended to read:
Section 508. Request for proposal.
(a) General rule.--The department shall prepare a request
for proposal for the purpose of providing pharmaceutical
assistance for the elderly within this Commonwealth. Upon the
adoption of the General Fund budget, the [Department of Revenue]
Pennsylvania Gaming Control Board shall be authorized to
transmit the appropriated funds in the State Lottery Fund to the
State Treasurer to be deposited in the Pharmaceutical Assistance
Contract for the Elderly Fund. This fund shall consist of
appropriations and interest and shall be created by the State
Treasurer to fund the operations of the program by the
department and the private contractor. Funds not expended in the
fiscal year in which they were appropriated shall not lapse and
be available for use in the next fiscal year.
(b) Additional requests for proposals.--To provide for the
continued operation of the program, the department shall
prepare, as needed, requests for proposals, in addition to that
set forth in subsection (a), for the purpose of providing
pharmaceutical assistance for the elderly within this
Commonwealth. A request for proposal shall require potential
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private contractors to submit a proposal for a period of time
and with monetary limitations as determined by the department.
Upon the enactment of an appropriation from the State Lottery
Fund, the [Department of Revenue] Pennsylvania Gaming Control
Board shall be authorized to transmit the appropriated amount to
the State Treasurer to be deposited in the Pharmaceutical
Assistance Contract for the Elderly Fund. Funds not expended in
the fiscal year in which they were appropriated shall not lapse
and shall be available for use in the next fiscal year.
Section 6. The following transitional provisions apply:
(1) All personnel, allocations, appropriations,
equipment, files, records, contracts, agreements, obligations
and other materials which are used, employed or expended by
the Department of Revenue in conjunction with the functions
transferred by this act to the Pennsylvania Gaming Control
Board are hereby transferred to the Pennsylvania Gaming
Control Board as if these contracts, agreements and
obligations had been incurred or entered into by the
Pennsylvania Gaming Control Board in the first instance.
(2) The personnel, appropriations, equipment and other
items and material transferred by this section shall include
an appropriate portion of the general administrative,
overhead and supporting personnel, appropriations, equipment
and other material of the Department of Revenue.
(3) All personnel transferred under this section shall
retain any civil service employment status assigned to the
personnel.
(4) All orders, permits, regulations, decisions and
other actions of the Department of Revenue transferred by
this act shall remain in full force and effect until
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modified, repealed, suspended, superseded or otherwise
changed by appropriate action of the Pennsylvania Gaming
Control Board.
Section 7. This act shall take effect July 1, 2017.
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