PRINTER'S NO. 1763
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1182
Session of
2015
INTRODUCED BY CALTAGIRONE, THOMAS, BROWNLEE, MASSER, COHEN,
MAHONEY AND DeLUCA, JUNE 10, 2015
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, JUNE 10, 2015
AN ACT
Providing for the licensing and regulation of video gaming;
prescribing powers and duties of the Pennsylvania State
Police and the Department of Revenue; and establishing the
State Video Gaming Fund and the Municipal Economic
Development Fund.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Video Gaming Authorized
Section 301. Powers and duties.
Section 302. Video gaming.
Section 303. Licensing of manufacturers, distributors and
terminal operators.
Section 304. Central computer system.
Section 305. Video gaming machine prototype.
Chapter 5. Fees
Section 501. Fees.
Chapter 7. Prohibited Conduct
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Section 701. Unlawful use by minors.
Section 702. Inducements prohibited.
Section 703. Multiple types of licenses prohibited.
Section 704. Illegal activities.
Chapter 9. Funding and Distributions
Section 901. State Video Gaming Fund.
Section 902. Municipal Economic Development Fund.
Section 903. Distribution of net profits.
Section 904. Host municipality.
Chapter 11. Miscellaneous Provisions
Section 1101. Preemption of local taxes and license fees.
Section 1102. Exemption from State gaming laws.
Section 1103. Exemption from Federal regulation.
Section 1104. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Video Gaming
Act.
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:
"Board." The Pennsylvania Gaming Control Board.
"Board member." A member of the Pennsylvania Gaming Control
Board.
"Chairman." The chairman of the Pennsylvania Gaming Control
Board.
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"Coin-operated amusement machine." A machine that requires
the insertion of a coin, currency or token to play or activate a
game, the outcome of which is primarily determined by the skill
of the player. The term does not include a video lottery
terminal.
"Department." The Department of Revenue of the Commonwealth.
"Distributor." An individual, partnership, association or
corporation licensed by the Pennsylvania Gaming Control Board to
buy, sell, service or distribute video gaming machines. The term
does not include a machine vendor or a manufacturer.
"Gaming machine." A device or game that has the outcome of
play primarily determined by chance. The term includes 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 game.
(2) A video gaming terminal that has all of its seals or
identification plates.
(3) A slot machine 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) A lottery terminal used under the act of August 26,
1971 (P.L.351, No.91), known as the State Lottery Law.
"Host municipality." A city, borough or incorporated town or
township in which a licensed video gaming establishment is
located.
"Inducement." Consideration from a terminal operator, or an
agent of the operator, to a licensed establishment owner as an
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enticement to solicit or maintain the licensed establishment
owner's business. The term includes cash and a gift, loan and
prepayment of commission.
"Licensed establishment." A restaurant, bar, tavern, hotel
or club that has a valid liquor or malt or brewed beverage
license under Article IV of the act of April 12, 1951 (P.L.90,
No.21), known as the Liquor Code.
"Manufacturer." An individual, partnership, association or
corporation that:
(1) Is licensed by the Pennsylvania Gaming Control
Board.
(2) Manufactures or assembles video gaming machines.
"Municipality." A county, city, borough, incorporated town,
township or home rule, optional plan or optional charter
municipality within this Commonwealth.
"Terminal operator." An individual, partnership,
association, limited liability company or corporation that:
(1) Is licensed by the Pennsylvania Gaming Control
Board.
(2) Owns, services and maintains video gaming terminals
for placement in licensed establishments.
"Video gaming terminal." A device or terminal that:
(1) Upon insertion of a coin or currency, plays or
simulates the play of a video poker, bingo, keno or any other
game authorized by the Pennsylvania Gaming Control Board.
(2) Utilizes a video display and microprocessors.
(3) By the skill of the player or by chance, permits the
player to receive free games or credits that may be redeemed
for cash.
CHAPTER 3
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VIDEO GAMING AUTHORIZED
Section 301. Powers and duties.
The board shall regulate and adopt standards for video gaming
as authorized under this act.
Section 302. Video gaming.
The board shall provide for video gaming at licensed
establishments. No licensed establishment may operate more than
five video gaming machines. With the exception of tickets
indicating credits won, which are redeemable for cash, no video
gaming terminal may directly dispense coins, cash, tokens or
anything else of value. The winning ticket may, however, be used
in other licensed video gaming terminals in the same
establishment.
Section 303. Licensing of manufacturers, distributors and
terminal operators.
(a) Background investigation.--The board shall, in
consultation with the Pennsylvania State Police, conduct a
background investigation of an applicant for a manufacturer,
distributor or terminal operator license as to personal and
business character, honesty and integrity. The investigation may
utilize information on the applicant compiled by the
Pennsylvania Liquor Control board. The investigation shall
include the following:
(1) An examination of criminal or civil records.
(2) An examination of personal, financial or business
records. This paragraph includes tax returns, bank accounts,
business accounts, mortgages and contracts to which the
license applicant is a party or has an interest.
(3) An examination of personal or business relationships
which:
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(i) Include a partial ownership or voting interest
in a partnership, association or corporation.
(ii) Bear on the fitness of the applicant for
licensure.
(b) Application fees.--
(1) An applicant that is a manufacturer or distributor
must pay a nonrefundable application fee of $10,000.
(2) An applicant that is a terminal operator must pay a
nonrefundable application fee of $5,000.
(c) Production of information.--
(1) To become a licensee, an applicant must produce
information, documentation and assurances as required by the
board.
(2) Each license applicant must:
(i) Consent in writing to and provide for the
examination of financial and business accounts, bank
accounts, tax returns and related records in the
applicant's possession or under the applicant's control
that establish the financial stability, integrity and
responsibility of the license applicant.
(ii) Authorize all third parties in possession or
control of accounts or records under subparagraph (i).
(iii) Allow for their examination as deemed
necessary by the board in conducting background
investigations.
(3) Each license applicant must disclose on the
application form any criminal convictions for offenses graded
above summary offenses covering the 10-year period
immediately preceding the filing of the application. The
license applicant must also include on the application form a
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conviction of the gambling laws of any jurisdiction.
(4) (i) If the license applicant has conducted a gaming
operation in a jurisdiction that permits such activity,
the license applicant must produce letters of reference
from the gaming or casino enforcement or control agency
that specify the experiences of the agency with the
license applicant, the license applicant's associates and
the license applicant's gaming operations.
(ii) If the license applicant is unable to obtain
the letters within 60 days of the request, the license
applicant may submit a copy of the letter requesting the
information, together with a statement under oath or
affirmation that, during the period activities were
conducted, the license applicant was in good standing
with the appropriate gambling or casino enforcement
control agency.
(5) Each license applicant must provide information,
documentation and assurances as required by the board to
establish the license applicant's good character, honesty and
integrity. Information under this paragraph may relate to
family, habits, character, reputation, business affairs,
financial affairs, business associates, professional
associates and personal associates, covering the 10-year
period immediately preceding the filing of the application.
(d) Felony conviction prohibition.--No person that has been
convicted of a felony may be issued a license under this act.
(e) Third-party disclosure.--
(1) Each license applicant must accept any risk of
adverse public notice, embarrassment, criticism, damages or
financial loss, which may result from disclosure or
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publication by a third party of material or information
requested by the board pursuant to action on an application.
(2) The license applicant expressly must waive a claim
against the board or the Commonwealth and its employees from
damages as a result of disclosure or publication by a third
party.
(f) Hearing upon denial.--A person who is denied a license
or the renewal of a license has the right to a hearing before
the board in accordance with the provisions of 2 Pa.C.S. Chs. 5
Subch. A (relating to practice and procedure of Commonwealth
agencies) and 7 Subch. A (relating to judicial review of
Commonwealth agency action).
(g) Sole proprietor terminal operators.--A sole proprietor
terminal operator must comply with all of the following:
(1) Be a resident of this Commonwealth for at least two
years prior to application for a license.
(2) Be of good moral character and reputation in the
community.
(3) Be 18 years of age or older.
(4) Be current in the payment of all taxes, interest and
penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph excludes items under
formal dispute or appeal under applicable law.
(5) Demonstrate sufficient financial resources to
support the activities required to place and service video
gaming terminals.
(h) Partnership terminal operators.--Partnership terminal
operators must comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political subdivisions
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of the Commonwealth. This paragraph excludes items under
formal dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to place and service video
gaming terminals.
(3) Each partner must comply with all of the following:
(i) Be of good moral character and reputation in the
community.
(ii) Be 18 years of age or older.
(iii) Be a resident of this Commonwealth for at
least two years prior to application for a license.
(4) At all times subsequent to licensing, a majority of
the ownership interest in the partnership must be held by
residents of this Commonwealth.
(i) Associations, limited liability companies and corporate
terminal operators.--An association, limited liability or
corporate terminal operator must comply with all of the
following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph excludes items under
formal dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to place and service video
gaming terminals.
(3) Have each shareholder holding more than 10% of the
stock of a corporation:
(i) Be of good moral character and reputation in the
community.
(ii) Be 18 years of age or older.
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(iii) Be a resident of this Commonwealth for at
least two years prior to application.
(j) Sole proprietor distributors.--A sole proprietor
distributor must comply with all of the following:
(1) Be of good moral character and reputation in the
community.
(2) Be 18 years of age or older.
(3) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph excludes items under
formal dispute or appeal under applicable law.
(4) Demonstrate sufficient financial resources to
support the activities required to sell and service video
gaming terminals.
(k) Partnership distributors.--Partnership distributors must
comply with all of the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph excludes items under
formal dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to sell and service video
gaming terminals.
(3) Have each partner:
(i) Be of good moral character and reputation in the
community.
(ii) Be 18 years of age or older.
(4) At all times subsequent to licensing, a majority of
the partnership ownership interest must be held by residents
of this Commonwealth.
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(l) Service technician.--A service technician must comply
with the following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph excludes items under
formal dispute or appeal under applicable law.
(2) Be of good moral character and reputation in the
community.
(3) Be 18 years of age or older.
(m) Written agreement.--
(1) Each licensed establishment shall have a written
agreement with a terminal operator for a minimum 60-month
term. The agreement shall be approved by the board and on
file at the licensed establishment.
(2) A licensed establishment may only sign or agree to
sign a written agreement with a terminal operator. Unlicensed
third parties are prohibited from soliciting written
contracts with licensed establishments.
(3) No inducement may be offered to a licensed
establishment to sign a written agreement.
(n) Nonaccessibility to minors.--No video gaming terminal
may be in an area easily accessible to minors. A floor-to-
ceiling wall shall not be required. The area must be secure and
easily seen and observed by the employees or management of the
licensed establishment.
(o) Advertising prohibited.--No licensed establishment with
a video gaming license may advertise gaming in any form in its
licensed name.
Section 304. Central computer system.
The board shall establish and procure a central
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communications system capable of monitoring and communicating
with each licensed video gaming terminal. By agreement between
the department and the State Lottery, the department may utilize
the central communications system utilized by the State Lottery.
All licensed video gaming terminals must be linked to a central
communications system by agreement between the department and
the State Lottery, at the State Lottery.
Section 305. Video gaming machine prototype.
(a) General rule.--The department shall develop a prototype
video gaming machine that includes hardware and software
specifications. The specifications shall include the following
provisions:
(1) All video gaming machines shall interact with the
central communications system.
(2) Irremovable identification plates shall appear on
the exterior of the video gaming machine containing the name
of the manufacturer and the serial and model number of the
video gaming machine.
(3) Rules of play shall be displayed on the video gaming
machine face or screen as promulgated by regulation of the
department.
(4) A video gaming machine may not directly dispense
coins, cash, tokens or any other article of exchange or value
except for tickets. The tickets shall be dispensed by
pressing the ticket-dispensing button on the machine at the
end of one's turn or play. The ticket shall indicate the
total amount of credits and the cash award, and the player
must turn in this ticket to the appropriate person at the
licensed establishment to receive the cash award. The cost of
the credit shall be 25 cents and the number of credits played
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per game shall not exceed 10.
(5) No cash award for any individual game may exceed
$1,000.
(6) All video gaming machines shall be designed and
manufactured with total accountability to include gross
proceeds, net profits, winning percentages and any other
information the department requires.
(7) A video gaming machine shall pay out a minimum of
85% of the amount wagered.
(8) All video gaming machines shall contain a prominent
sign on the front of the machine with the following
statement:
If you or someone you know has a gambling problem,
help is available. Call (Toll-free telephone number
provided by the State).
(b) Agreement with board.--The department may enter into an
agreement with the board to develop and verify specifications
for video gaming machines.
CHAPTER 5
FEES
Section 501. Fees.
(a) Operator license fee.--The annual fee for an operator
license shall be $25,000 for the first 50 video gaming machines
and an additional $500 per video gaming machine in excess of 50.
An operator license permits the operator to sell video gaming
machines to another licensed operator.
(b) Manufacturer license fee.--The annual fee for a
manufacturer license shall be $10,000.
(c) Service technician license fee.--The annual fee for a
service technician license shall be $100.
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(d) Deposit of fees.--All license fees shall be deposited
into the fund.
CHAPTER 7
PROHIBITED CONDUCT
Section 701. Unlawful use by minors.
(a) Prohibition.--
(1) No individual under 21 years of age may use or play
a video gaming machine.
(2) An individual who violates this subsection commits a
summary offense.
(b) Licensees.--
(1) A licensed establishment may not, regardless of
knowledge or intent, permit an individual under 21 years of
age to play or use a video gaming machine.
(2) A licensed establishment that violates this
subsection commits a misdemeanor of the second degree.
Section 702. Inducements prohibited.
No video gaming operator may offer or give any type of
inducement or incentive to a licensed establishment to secure a
machine placement agreement.
Section 703. Multiple types of licenses prohibited.
(a) Manufacturer restriction.--No manufacturer may be
licensed as an operator or own, manage or control a licensed
establishment. A manufacturer may be licensed only to sell to
licensed operators.
(b) Operator restrictions.--
(1) No licensed operator may:
(i) be licensed as a manufacturer; or
(ii) own, manage or control a licensed
establishment.
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(2) A licensed operator shall be licensed only to
contract with licensed establishments.
(3) Nothing in this subsection shall be construed to
prohibit a licensed operator from selling used equipment to
another licensed operator.
(c) Establishment owner restriction.--No owner of a licensed
establishment may be licensed as a manufacturer or operator. An
owner of a licensed establishment may only contract with an
operator or service technician to place and service equipment.
Section 704. Illegal activities.
No person may sell, distribute, service, own, operate or
place on location a video gaming machine unless the person is
licensed under this act and is in compliance with all
requirements of this act.
CHAPTER 9
FUNDING AND DISTRIBUTIONS
Section 901. State Video Gaming Fund.
(a) Establishment.--The State Video Gaming Fund is
established in the State Treasury. The money of the fund is
hereby appropriated to the department on a continuing basis to
carry out the provisions of this act.
(b) Deposit of fees.--Fees under section 501(a) and the
portion of net profits under section 903(b) shall be deposited
into the State Video Gaming Fund.
Section 902. Municipal Economic Development Fund.
(a) Establishment.--The Municipal Economic Development Fund
is established in the State Treasury. The fund shall consist of
money transferred from the State Video Gaming Fund under section
903(b).
(b) Use of funds.--The Municipal Economic Development Fund
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shall be used by the Department of Community and Economic
Development exclusively for the purpose of issuing grants. The
Department of Community and Economic Development may utilize up
to 10% of the total money collected and deposited in the
Municipal Economic Development Fund within the fiscal year to
cover the administrative costs associated with administering the
grant program.
Section 903. Distribution of net profits.
(a) Calculation.--Net profits shall be calculated by
subtracting cash awards from the total consideration played on
the machine.
(b) Distribution.--The net profits from each video gaming
machine shall be deposited into the State Video Gaming Fund and,
together with any interest earned thereon, shall be distributed,
after payment of administrative expenses under section 904(f),
in the following manner:
(1) Fifty percent to the licensed establishment.
(2) Twenty percent to the licensed vendor.
(3) Twenty-nine percent for deposit in the Municipal
Economic Development Fund.
(4) One percent for deposit in the Host Municipality
Video Gaming Share Account established in section 904.
Section 904. Host municipality.
(a) Establishment of account.--The Host Municipality Video
Gaming Share Account is established as a restricted account in
the General Fund.
(b) Distributions.--The department shall make distributions
from the Host Municipality Video Gaming Share Account to each
host municipality. Each host municipality shall receive a
distribution equal to the revenue remitted into the Host
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Municipality Video Gaming Share Account by:
(1) licenses located within the host municipality; and
(2) licensed distributors based on purchases made to
licensees in the host municipality.
(c) Payments to host municipalities.--The department shall
make payments to host municipalities within 60 days of the end
of each calendar year.
(d) Transfer for compulsive and problem gambling
treatment.--Each year, the sum of $2,000,000 or an amount equal
to .002 multiplied by the total gross terminal revenue of all
active and operating licensed gaming entities, whichever is
greater, shall be transferred from the Host Municipality Video
Gaming Share Account to the Compulsive and Problem Gambling
Treatment Fund established in 4 Pa.C.S. § 1509 (relating to
compulsive and problem gambling program).
(e) Transfer for drug and alcohol addiction treatment.--
Beginning on the first business day of January of the first year
following the effective date of this section, and annually
thereafter, the sum of $3,000,000 shall be transfered from the
Host Municipality Video Gaming Share Account to the General Fund
to be used by the Department of Health for the purpose of drug
and alcohol addiction treatment services, including treatment
for drug and alcohol addiction related to compulsive and problem
gambling, as set forth in 4 Pa.C.S. § 1509.1 (relating to drug
and alcohol treatment).
(f) Board funding.--The board shall derive all expenses
related to the implementation and enforcement of this act from
the State Video Gaming Fund.
CHAPTER 11
MISCELLANEOUS PROVISIONS
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Section 1101. Preemption of local taxes and license fees.
(a) Statutes.--Video gaming machines shall be exempt from
taxes levied under the following:
(1) The act of December 31, 1965 (P.L.1257, No.511),
known as The Local Tax Enabling Act.
(2) The provisions of 53 Pa.C.S. Pt. III Subpt. E
(relating to home rule and optional plan government).
(3) Any statute that confers taxing authority to a
political subdivision.
(b) Licensing fees.--
(1) Video gaming machines shall be exempt from local
licensing fees.
(2) Local licensing fees imposed on all other coin-
operated amusement machines shall not exceed $150.
Section 1102. Exemption from State gaming laws.
Video gaming machines authorized under this act and their
authorized use under this act shall be exempt from 18 Pa.C.S. §
5513 (relating to gambling devices, gambling, etc.).
Section 1103. Exemption from Federal regulation.
The General Assembly declares that the Commonwealth is exempt
from section 2 of the Gambling Devices Transportation Act (64
Stat. 1134, 15 U.S.C. § 1172). Shipments of approved video
gaming machines into this Commonwealth in compliance with
sections 3 and 4 of the Gambling Devices Transportation Act (64
Stat. 1134, 15 U.S.C. §§ 1173 and 1174) shall be deemed legal
shipments into this Commonwealth.
Section 1104. Effective date.
This act shall take effect in 60 days.
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