PRINTER'S NO.  1028

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

863

Session of

2009

  

  

INTRODUCED BY COSTA, RAFFERTY, GREENLEAF, TARTAGLIONE, FONTANA, PIPPY AND FARNESE, MAY 11, 2009

  

  

REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT, MAY 11, 2009  

  

  

  

AN ACT

  

1

Providing for gaming integrity; and imposing penalties.

2

The General Assembly of the Commonwealth of Pennsylvania

3

hereby enacts as follows:

4

Section 1.  Short title.

5

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

6

Integrity Act.

7

Section 2.  Legislative intent.

8

The General Assembly finds and declares as follows:

9

(1)  With the enactment of 4 Pa.C.S. Pt. II (relating to

10

gaming), the General Assembly legalized slot machine gaming

11

in the Commonwealth of Pennsylvania to inure to the benefit

12

of the Commonwealth's taxpayers.

13

(2)  The enactment of legalized gaming was intended to

14

enhance the Commonwealth's horse racing industry while

15

providing a significant source of new revenue to support

16

property tax relief, wage tax reduction, economic development

17

opportunities and other similar initiatives.

 


1

(3)  4 Pa.C.S. Pt. II was designed to protect the public

2

from the social ills historically related to the gaming

3

industry and to ensure that the Commonwealth's gaming

4

industry operates at the highest levels of integrity and is

5

beyond reproach. As such, the conduct of legalized gaming was

6

to be subject to strict regulation and oversight with the

7

protection of the public interest to be of paramount concern. 

8

(4)  Recognizing the dangers historically associated with

9

gaming and the issues other jurisdictions faced with respect

10

to public corruption, or the appearance of public corruption,

11

when legalizing gaming, the General Assembly declared it to

12

be the public policy of the Commonwealth and in the best

13

interests of the Commonwealth's citizens to avoid corruption,

14

or the appearance of corruption, by prohibiting certain

15

individuals and entities associated with the gaming industry

16

from making political contributions.

17

(5)  Recently, in DePaul v. Commonwealth, ____ Pa. ____,

18

____A.2d ____ (No. 194 EM 2007, decided May 1, 2009), the

19

Pennsylvania Supreme Court declared that the total ban on

20

campaign contributions contained in 4 Pa.C.S. Pt. II

21

unconstitutional under Article I, section 7 of the

22

Pennsylvania Constitution. In so doing, the court held that

23

the provisions of 4 Pa.C.S. Pt. II did not meet a "strict

24

scrutiny" analysis under Article I, section 7 of the

25

Pennsylvania Constitution as the provisions were not

26

"narrowly tailored to further a compelling government

27

interest" because the stated intent in 4 Pa.C.S. Pt. II was

28

to address only "large" campaign contributions.

29

(6)  With the passage of this act, it is the intention of

30

the General Assembly to address DePaul v. Commonwealth and

- 2 -

 


1

enact a complete ban on political contributions by

2

individuals and entities subject to this act and 4 Pa.C.S.

3

Pt. II. In carrying out this intent, the General Assembly

4

finds and declares as follows:

5

(i)  The General Assembly has a compelling interest

6

in protecting the integrity of both the electoral process

7

and the legislative process by preventing corruption and

8

the appearance of corruption which may arise through

9

permitting campaign contributions by the gaming industry. 

10

(ii)  Historical evidence from other states that have

11

legalized gaming shows that the potential for corruption

12

associated with the gaming industry is real. 

13

(iii)  Completely banning political contributions by

14

those individuals and entities subject to this act and 4

15

Pa.C.S. Pt. II is necessary to prevent corruption, or the

16

appearance of corruption, that may arise when politics

17

and gaming are intermingled. 

18

(iv)  Decoupling politics and gaming through a total

19

ban of campaign contributions is the only manner in which

20

to guarantee that the Commonwealth's gaming industry, and

21

those who regulate it, are beyond reproach. 

22

(v)  This act is narrowly tailored to further the

23

Commonwealth's compelling interest. The ban contained in

24

this act is not applicable to all individuals associated

25

with gaming, rather it is specifically targeted to those

26

who have substantial interests in, or responsibilities

27

with, licensed gaming entities. 

28

(vi)  This act is narrowly tailored to further the

29

compelling interest because it leaves numerous avenues

30

through which individuals can participate in the

- 3 -

 


1

political process. This act does not prohibit individuals

2

from engaging in any type of "pure speech" that may take

3

the form of a political contribution. Individuals can

4

still express their political opinions to any who will

5

listen, can still announce their support for specific

6

candidates or political parties, can still express their

7

political opinions by voting and can still join political

8

parties or groups and volunteer their services to those

9

parties or groups.

10

(vii)  The campaign contribution prohibition presents

11

only a very marginal restriction of an individual's right

12

to free speech and association and involves little direct

13

restraint on an individual's right to engage in political

14

communication or association. 

15

(viii)  Although other less restrictive means, such

16

as limiting the amount of campaign contributions or

17

limiting the scope of the ban, may exist to further the

18

Commonwealth's goal of preventing corruption, or the

19

appearance of corruption, the General Assembly deems

20

those alternatives inadequate. Campaign contribution

21

limits do not further the General Assembly's stated

22

interest. Allowing small contributions would permit the

23

individuals subject to the provisions under this act or 4

24

Pa.C.S. Pt. II to circumvent the legislative intent by

25

financing a large number of small contributions. In this

26

sense, the ban enacted in this act is analogous to the

27

ban on corporate contributions or contributions by labor

28

unions. Acting in concert, these individuals could make

29

numerous small contributions and, as a group, inject

30

exorbitant sums of money into the political process,

- 4 -

 


1

thereby raising the appearance of undue influence and

2

corruption. Additionally, limiting the scope of the ban

3

to those public officials or candidates with a connection

4

to legalized gaming also fail to further the General 

5

Assembly's stated interest. Predicting what office

6

holders at what levels exert influence in areas related

7

to gaming, whether it be through their elected positions,

8

their individual involvement with political parties or

9

their personal relationships with legislators in general,

10

is impossible. Political pressure is often subtle and

11

comes in many forms. Consequently, deciding which public

12

officials are influential and which ones are not is

13

impracticable and not a valid alternative to a total

14

contribution ban.

15

Section 3.  Definitions.

16

The following words and phrases when used in this act shall

17

have the meanings given to them in this section unless the

18

context clearly indicates otherwise:

19

"Applicant."

20

(1)  An applicant for the following, as defined in 4

21

Pa.C.S. § 1103 (relating to definitions):

22

(i)  Slot machine license.

23

(ii)  Manufacturer license.

24

(iii)  Supplier license.

25

(iv)  Principal license.

26

(v)  Key employee license.

27

(vi)  Registration.

28

(2)  An applicant for a horse racing or harness racing

29

license issued under the act of December 17, 1981 (P.L.435,

30

No.135), known as the Race Horse Industry Reform Act.

- 5 -

 


1

(3)  The term includes affiliates, intermediaries,

2

subsidiaries or holding companies of an applicant under

3

paragraphs (1) and (2).

4

"Key employee."  As defined in 4 Pa.C.S. § 1103 (relating to

5

definitions).

6

"Licensed racing entity."  As defined in 4 Pa.C.S. § 1103

7

(relating to definitions).

8

"Licensee."

9

(1)  The holder of the following, as defined in 4 Pa.C.S.

10

§ 1103 (relating to definitions):

11

(i)  Slot machine license.

12

(ii)  Manufacturer license.

13

(iii)  Supplier license.

14

(iv)  Registration.

15

(2)  The term includes affiliates, intermediaries,

16

subsidiaries or holding companies of holders of licenses or

17

registrations under paragraph (1).

18

"Political committee."  Any committee, club, association or

19

other group of persons which receives contributions or makes

20

expenditures. The term includes a political committee as defined

21

in section 1621(h) of the act of June 3, 1937 (P.L.1333,

22

No.320), known as the Pennsylvania Election Code.

23

"Political contribution."  Any monetary or in-kind

24

contribution. The term includes:

25

(1)  A payment, gift, subscription, assessment, contract,

26

payment for services, dues, loan, forbearance, advance or

27

deposit of money or any valuable thing made to a candidate or

28

political committee for the purpose of influencing any

29

election in this Commonwealth or for paying debts incurred by

30

or for a candidate or committee before or after any election.

- 6 -

 


1

(2)  The purchase of tickets for events, including

2

dinners, luncheons, rallies and other fundraising events.

3

(3)  The granting of discounts or rebates not available

4

to the general public.

5

(4)  The granting of discounts or rebates by television

6

and radio stations and newspapers not extended on an equal

7

basis to all candidates for the same office.

8

(5)  Payments provided for the benefit of any candidate,

9

including payments for the services of a person serving as an

10

agent of a candidate or committee by a person other than the

11

candidate or committee or person whose expenditures the

12

candidate or committee must report.

13

(6)  A receipt or use of anything of value received by a

14

political committee from another political committee and also

15

includes any return on investments by a political committee.

16

"Principal."  As defined in 4 Pa.C.S. § 1103 (relating to

17

definitions).

18

"Registrant."  Any person registered by the Pennsylvania

19

Gaming Control Board under 4 Pa.C.S. Pt. II (relating to

20

gaming).

21

Section 4.  Political contributions.

22

(a)  Political contribution restriction.--The following

23

persons shall be prohibited from making a political contribution

24

to a candidate for nomination or election to any public office

25

in this Commonwealth, or to any political party committee or

26

other political committee in this Commonwealth or to any group,

27

committee or association organized in support of a candidate,

28

political party committee or other political committee in this

29

Commonwealth:

30

(1)  An applicant.

- 7 -

 


1

(2)  A licensee, licensed racing entity or registrant.

2

(3)  A licensed principal or licensed key employee of a

3

licensee, licensed racing entity or registrant.

4

(4)  An affiliate, intermediary, subsidiary or holding

5

company of a licensee, licensed racing entity or registrant.

6

(5)  A licensed principal or licensed key employee of an

7

affiliate, intermediary, subsidiary or holding company of a

8

licensee, licensed racing entity or registrant.

9

(6)  A person who holds a similar gaming license in

10

another jurisdiction and the affiliates, intermediaries,

11

subsidiaries, holding companies, principals or key employees

12

of those entities.

13

(b)  Political contributions to certain associations and

14

organizations barred.--The persons prohibited from making

15

political contributions under subsection (a) shall not make a

16

political contribution to any association or organization,

17

including a nonprofit organization, if the political

18

contribution has been solicited by an elected official,

19

executive-level public employee or candidate for nomination or

20

election to a public office in this Commonwealth or the

21

individual knows or has reason to know that the association or

22

organization will donate the contribution or a portion thereof

23

to an elected official, a candidate for nomination or election

24

to public office in this Commonwealth or to a political

25

committee.

26

(c)  Internet website.--

27

(1)  The board shall establish an Internet website that

28

includes a list of all applicants and licensees and the

29

affiliates, intermediaries, subsidiaries, holding companies,

30

principals and key employees thereof, all persons holding a

- 8 -

 


1

similar gaming license in another jurisdiction and the

2

affiliates, intermediaries, subsidiaries, holding companies,

3

principals and key employees thereof and any other entity in

4

which the applicant or licensee has any debt or equity

5

security or other ownership or profits interest. An applicant

6

or licensee shall notify the board within seven days of the

7

discovery of any change in or addition to the information.

8

The list shall be published semiannually in the Pennsylvania

9

Bulletin.

10

(2)  An individual who acts in good faith and in reliance

11

on the information on the Internet website shall not be

12

subject to any penalties or liability imposed for a violation

13

of this section.

14

(3)  The board shall request the information required

15

under paragraph (1) from persons licensed in another

16

jurisdiction who do not hold a license in this Commonwealth

17

and from regulatory agencies in the other jurisdiction. If a

18

licensee in another jurisdiction refuses to provide the

19

information required under paragraph (1), the person and its

20

officers, directors or persons with a controlling interest

21

shall be ineligible to receive any license under this act.

22

(d)  Certifications.--

23

(1)  Upon submission of an application and prior to the

24

award of a license or registration by the board, the chief

25

executive officer, or other appropriate individual, of each

26

applicant shall certify under oath to the board and the

27

Department of State that the applicant has developed and

28

implemented internal safeguards and policies intended to

29

prevent a violation of this provision and that the applicant

30

has conducted a good faith investigation that has not

- 9 -

 


1

revealed any violation of this provision since the date the

2

application was filed. If the applicant is an individual, the

3

applicant shall submit an affidavit to the board and the

4

Department of State that the applicant has not violated the

5

provisions of this section since the date the application was

6

filed.

7

(2)  No later than February 1 of each year, the chief

8

executive officer, or other appropriate individual, of each

9

licensee shall certify under oath to the board and the

10

Department of State that the licensee has developed and

11

implemented internal safeguards and policies intended to

12

prevent a violation of this provision and that the licensee

13

has conducted a good faith investigation that has not

14

revealed any violation of this subsection during the prior

15

calendar year.

16

(e)  Civil penalties.--The following civil penalties shall

17

apply to a violation of this section:

18

(1)  For a violation committed by a person prohibited

19

from making a contribution under subsection (a)(1), the board

20

shall impose a fine equal to three times the amount of the

21

contribution made or $100,000, whichever is greater. A

22

violation of this section by an applicant shall constitute

23

grounds for denial of the application.

24

(2)  For a violation of this section committed by a

25

person prohibited from making a contribution under subsection

26

(a)(2) or (4), the following shall apply:

27

(i)  For a slot machine licensee, the board shall

28

impose a fine of not less than an average single day's

29

gross terminal revenue of the slot machine licensee

30

derived from the operation of slot machines in this

- 10 -

 


1

Commonwealth. For a second violation of this section

2

within five years of the first violation, the board shall

3

impose a fine of not less than an average of five days'

4

gross terminal revenue of the slot machine licensee

5

derived from the operation of slot machines in this

6

Commonwealth. For a third violation of this section

7

within five years of the second violation, the board

8

shall immediately revoke the license held by the slot

9

machine licensee. A fine levied under this subparagraph

10

may not be less than $100,000.

11

(ii)  For a manufacturer or supplier licensee, the

12

board shall impose a fine of not less than one day's

13

average of the gross profit from sales made by the

14

manufacturer or supplier in Pennsylvania during the

15

preceding 12-month period or portion thereof in the event

16

the manufacturer or supplier has not operated in

17

Pennsylvania for 12 months. A second violation of this

18

section within five years of the first violation shall be

19

punishable by a one-month suspension of the license held

20

by the manufacturer or supplier and a fine of not less

21

than two times one day's average of the gross profit from

22

sales made by the manufacturer or supplier in

23

Pennsylvania during the preceding 12-month period or

24

portion thereof in the event the manufacturer or supplier

25

has not operated in Pennsylvania for 12 months. For a

26

third violation of this section within five years of the

27

second violation, the board shall immediately revoke the

28

license. A fine levied under this subparagraph may not be

29

less than $100,000.

30

(iii)  For a licensed racing entity or registrant,

- 11 -

 


1

the board shall impose a fine equal to three times the

2

amount of the contribution made or $100,000, whichever is

3

greater. For a second violation of this section within

4

five years of the first violation, the board or the

5

commission shall impose a one-month suspension of the

6

registration or horse or harness racing license held by

7

the licensed racing entity. For a third violation of this

8

section within five years of the second violation, the

9

board or the commission shall immediately revoke the

10

registration or the horse or harness license held by the

11

licensed racing entity.

12

(3)  For a violation committed by a person prohibited

13

from making a contribution under subsection (a)(3) or (5),

14

the board shall impose a fine equal to three times the amount

15

of the contribution made. The board shall also impose a fine

16

under paragraph (2) against the licensee, licensed racing

17

entity or registrant with which the person is associated. For

18

a second violation of this section, the board shall impose

19

the fines authorized under this subparagraph and shall

20

suspend the principal or key employee's license for a period

21

of 30 days. For a third violation of this section, the board

22

shall impose the fines authorized under this subparagraph and

23

shall revoke the principal or key employee's license.

24

(4)  For a violation committed by a person prohibited

25

from making a contribution under subsection (a)(6), the board

26

shall impose a fine equal to three times the amount of the

27

contribution made. A person fined under this paragraph shall

28

be prohibited from applying for a license, permit or

29

registration under this part for a period of six months from

30

the date the board imposes the fine. For a second violation

- 12 -

 


1

of this section, the board shall impose the fine authorized

2

under this paragraph and shall prohibit the person from

3

applying for a license, permit or registration under this

4

part for a period of one year from the date the board imposes

5

the fine. For a third violation of this section, the board

6

shall impose the fines authorized under this paragraph and

7

shall prohibit the person from applying for a license, permit

8

or registration under this part for a period of five years

9

from the date the board imposes the fine.

10

(5)  Any candidate for nomination or election to any

11

public office in this Commonwealth, any political party

12

committee or other political committee in this Commonwealth,

13

or any group, committee or association organized in support

14

of a candidate, political party committee or other political

15

committee in this Commonwealth that accepts a contribution

16

prohibited under this section commits a violation of this

17

section. The Department of State shall have jurisdiction over

18

violations of this section committed by those persons or

19

entities identified in this paragraph. In addition to any

20

other penalty authorized by law, the Department of State

21

shall require the return of the contribution and shall impose

22

a fine equal to three times the amount of the contribution

23

accepted. An individual who acts in good faith and in

24

reliance on the information on the Internet website under

25

subsection (c)(2) shall not be subject to any penalties or

26

liability imposed for a violation of this section.

27

(f)  Criminal penalties.--In addition to any fine or sanction

28

that may be imposed by the board, any person who makes a

29

contribution in violation of this act commits a misdemeanor of

30

the third degree.

- 13 -

 


1

Section 20.  Effective date.

2

This act shall take effect in 60 days.

- 14 -