THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY SCHRODER, TURZAI, SAYLOR, VEREB, M. O'BRIEN, BAKER, BARRAR, CARROLL, D. COSTA, GROVE, MURPHY, RAPP, REESE, ROAE, SWANGER, VULAKOVICH, WATSON, PICKETT AND MURT, JANUARY 24, 2011

AS REPORTED FROM COMMITTEE ON GAMING OVERSIGHT, HOUSE OF REPRESENTATIVES, AS AMENDED, OCTOBER 17, 2011   

AN ACT

Amending Title 4 (Amusements) of the Pennsylvania Consolidated

Statutes, providing for revocation and auction of slot

machine licenses; and further providing for Category 2 slot

machine license and for number of slot machine licenses.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 4 of the Pennsylvania Consolidated Statutes

is amended by adding a section to read:

§ 1209.1.  Revocation and auction of slot machine license.

(a)  General rule.--

(1)  Within 30 days after the revocation of a slot

machine license, the board shall initiate a public auction of

the slot machine license for a fee that achieves the highest 

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and table game operation certificate for the highest

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responsible bid that will provide the greatest amount of 

prospective total revenue to the Commonwealth, and otherwise

serves the interests of the citizens of Pennsylvania. The

awarding of the slot machine license and table game operation

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certificate shall be conditional on the successful bidder's

ability to satisfy the qualifications as provided in this

part and board regulations. The auction shall be conducted in

such a manner as to maximize the price for each slot machine

license and table game operation certificate. In no case may

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a Category 1 slot machine license and table game operation

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certificate be sold for a fee lower than $66,500,000. In no

case may a Category 2 slot machine license and table game

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operation certificate be sold for a fee lower than

$66,500,000. In no case may a Category 3 slot machine license 

and table game operation certificate be sold for a fee lower

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than $12,500,000.

(1.1)  For purposes of this section only, the ownership

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or financial interest restrictions in section 1330 (relating

to multiple slot machine license prohibition) shall not

apply.

(2)  The board shall adopt procedures and regulations to

facilitate the conduct of the public auction in such a manner

as to maximize the price for each slot machine license and

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table game operation certificate.

(b)  Bidding procedures.--The open and competitive bidding

process shall adhere to the following procedures:

(1)  The board shall make applications for the slot

machine license available to applicants pursuant to section

1309 (relating to slot machine license application) and allow

a reasonable time for applicants to submit applications as

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well as petitions for authorization to conduct table games

pursuant to section 13A12 (relating to petition requirements) 

to the board.

(2)  During the filing period of slot machine license

applications and petitions to conduct table games, the board

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shall retain the services of an investment banking a

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financial advisory firm to assist the board in conducting the

open and competitive bidding process.

(3)  A bidder must submit a definitive, noncontingent

offer to purchase the slot machine license and table game

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operation certificate. The binding proposal shall provide the

following:

(i)  The consideration to be paid by the prospective

purchaser.

(ii)  Identification of all sources of external

financing involved in the transaction and submission of

all relevant commitment letters and other evidence of

financing.

(iii)  Identification of the proposed location of the

new licensed facility.

(iv)  Details of agreements with the municipality

where the licensed facility is to be located, including:

(A)  Evidence of municipal approval to the

applicant for the licensed facility.

(B)  Background and status of any discussions and

agreements with municipalities regarding the

construction of a licensed facility.

(v)  A list of any regulatory, corporate or other

approvals required to consummate a transaction.

(vi)  Information responsive to any other request for

information made by the board or the investment banker 

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financial advisory firm.

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(vii)  A discussion of the proposed ownership

structure, including any other equity participants in the

binding proposal.

(viii)  A business plan for the proposed licensed

facility, including:

(A)  General statement of financial viability.

(B)  Proposed corporate involvement in charitable

activity.

(C)  Revenue sharing with other communities.

(x) (ix)  Projected financial statements through 2011 

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2012.

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(xi) (x)  Date by which the prospective purchaser

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will commit to commence gaming operations at the licensed

facility.

(xii) (xi)  A date until which the prospective

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purchaser agrees to keep such binding proposal open and

irrevocable.

(4)  After receiving all of the bid proposals, the board

shall open all of the proposals in a public forum and

disclose the prospective owners' names, venture partners, if

any, and in the case of applicants for owners' licenses, the

locations of the proposed development sites.

(5)  No later than six business days following the

opening of the binding proposals, the investment banker 

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financial advisory firm shall deliver to the board a summary

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analysis of each binding proposal as such has been refined

and clarified by the prospective owners.

(6)  The board shall evaluate the proposals within a

reasonable time and select no more than three final

applicants to participate in an auction.

(7)  By agreeing to participate in the auction or by

making a presentation to the board if so requested, each

competing bidder is agreeing that a binding proposal, as

refined and clarified, shall remain open and irrevocable

until the date indicated by such prospective purchaser in

such proposal. The date indicated shall in no event be less

than 30 days following the auction.

(8)  After the auction and following the presentations,

the board shall identify a competing bidder as the leading

proposal for the auction.

(9)  Upon selection of a winning bid, the board shall

evaluate the winning bid within a reasonable period of time

for license suitability in accordance with all applicable

statutory and regulatory criteria, including compliance with

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the bond requirements of sections 1313 (relating to slot

machine license application financial fitness requirements)

and 1316 (relating to bond for issuance of slot machine

license) and proof of financial ability as required by

section 13A12(b)(9).

(10)  If the winning bidder is unable or otherwise fails

to consummate the transaction, including if the board

determines that the winning bidder does not satisfy the

suitability requirements pursuant to this part, the board

may, on the same criteria, select from the remaining bidders.

(c)  Collusion among bidders.--Collusion among bidders is

unlawful. Any contract or conspiracy which unreasonably results

in underbidding is unlawful. When any person has reason to

believe collusion or other anticompetitive practices have

occurred among any bidders, a notice of the relevant facts shall

be transmitted to the Attorney General, who shall investigate

the reports. A bidder who violates this section shall be

penalized pursuant to section 1518(b)(ii) (relating to

prohibited acts; penalties).

(d)  Proceeds.--The proceeds of the sale or auction of the

slot machine license and table game operation certificate shall

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be deposited pursuant to section sections 1209 (relating to slot

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machine license fee) and 13A61 (relating to table game

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authorization fee).

(e)  Definition.--As used in this section, "revocation" means

a decision by the board to revoke a slot machine license that is

final, binding, nonappealable and is not subject to a pending

legal challenge.

Section 2.  Sections 1304(b) and 1307 of Title 4 are amended

to read:

§ 1304.  Category 2 slot machine license.

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(b)  Location.--

(1)  [Two] (i)  Subject to the provisions of paragraph

(1.1), not more than two Category 2 licensed facilities

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[and no more [shall] may be located by the board within a

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city of the first class, and not more than one Category 2

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licensed facility [and no more [shall] may be located by

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the board within a city of the second class.

(ii)  No Category 2 licensed facility located by the

board within a city of the first class shall be within

ten linear miles of a Category 1 licensed facility

regardless of the municipality where the Category 1

licensed facility is located. Except for any Category 2

licensed facility located by the board within a city of

the first class or a city of the second class, no

Category 2 licensed facility shall be located within 30

linear miles of any Category 1 licensed facility that has

conducted over 200 racing days per year for the two

calendar years immediately preceding the effective date

of this part and not within 20 linear miles of any other

Category 1 licensed facility. Except for any Category 2

licensed facility located by the board within a city of

the first class, no Category 2 licensed facility shall be

located within 20 linear miles of another Category 2

licensed facility.

(1.1)  In the event that a license for a Category 2

licensed facility to be located within a city of the first

class, which license was issued prior to the effective date

of this paragraph, is revoked by the board prior to

commencement of operations of the Category 2 licensed

facility, then the board shall reissue the revoked Category 2

slot machine license, pursuant to section 1209.1 (relating to

revocation and action of slot machine license) to another

applicant located anywhere in this Commonwealth for a

Category 2 licensed facility, provided that:

(i)  no more than two Category 2 licensed facilities

may be located within a city of the first class;

(ii)  no more than one Category 2 licensed facility

may be located in a city of the second class; and

(iii)  the provisions of paragraph (1)(ii) are

satisfied.

(2)  Within five days of approving a license for an

applicant with a proposed licensed facility consisting of

land designated a subzone, an expansion subzone or an

improvement subzone under the Keystone Opportunity Zone,

Keystone Opportunity Expansion Zone and Keystone Opportunity

Improvement Zone Act for a slot machine license under this

section, the board shall notify the Department of Community

and Economic Development. The notice shall include a

description of the land of the proposed licensed facility

which is designated a subzone, an expansion subzone or an

improvement subzone. Within five days of receiving the notice

required by this paragraph, the Secretary of Community and

Economic Development shall decertify the land of the proposed

licensed facility as being a subzone, an expansion subzone or

an improvement subzone. Upon decertification in accordance

with this paragraph and notwithstanding Chapter 3 of the

Keystone Opportunity Zone, Keystone Opportunity Expansion

Zone and Keystone Opportunity Improvement Zone Act, a

political subdivision may amend the ordinance, resolution or

other required action which granted the exemptions,

deductions, abatements or credits required by the Keystone

Opportunity Zone, Keystone Opportunity Expansion Zone and

Keystone Opportunity Improvement Zone Act to repeal the

exemptions, deductions, abatements or credits for the land

decertified.

(3)  Notwithstanding any other provision of law, the

governing body of a city of the first class shall not exempt

from real property taxation or provide any real property tax

abatement under the act of December 1, 1977 (P.L.237, No.76),

known as the Local Economic Revitalization Tax Assistance

Act, to a Category 2 licensed facility located within the

city, or any improvements to such facility, unless the owner

of the licensed facility enters into or has entered into a

tax settlement agreement or payment in lieu of taxes

agreement with the city, including any amendments,

supplements or modifications of such agreements.

§ 1307.  Number of slot machine licenses.

The board may license no more than seven Category 1 licensed

facilities and no more than five Category 2 licensed facilities,

as it may deem appropriate, as long as [two, and not more ,] not

more than two Category 2 licensed facilities are located by the

board within the city of the first class and [that [one, and not

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more,] not more than one Category 2 licensed facility is located

by the board within the city of the second class, except in the

case of license revocation, wherein the provisions of section

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1304(b)(1.1) (relating to Category 2 lot slot machine license) 

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shall apply. The board may at its discretion increase the total

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number of Category 2 licensed facilities permitted to be

licensed by the board by an amount not to exceed the total

number of Category 1 licenses not applied for within five years

following the effective date of this part. Except as permitted

by section 1328 (relating to change in ownership or control of

slot machine licensee), any Category 1 license may be reissued

by the board at its discretion as a Category 2 license if an

application for issuance of such license has not been made to

the board. The board may license no more than three Category 3

Licensed facilities.

Section 3.  This act shall take effect immediately.