PRINTER'S NO. 489
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
469
Session of
2017
INTRODUCED BY DeLUCA, MULLERY, MATZIE, D. COSTA, SAINATO,
McNEILL, READSHAW, SNYDER AND MILLARD, FEBRUARY 13, 2017
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, FEBRUARY 13, 2017
AN ACT
Amending Title 4 (Amusements) of the Pennsylvania Consolidated
Statutes, providing for video gaming; imposing duties on the
Pennsylvania Gaming Control Board; establishing the Video
Gaming Account; imposing penalties; and providing for
funding.
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 chapter to read:
CHAPTER 11A
VIDEO GAMING
Sec.
11A01. Definitions.
11A02. Powers and duties.
11A03. Video gaming.
11A04. Licensing of manufacturers, distributors and terminal
operators.
11A05. Licensed establishment license.
11A06. Limitations on licensed establishments.
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11A07. Central communications system.
11A08. Video gaming terminal prototype.
11A09. Fees.
11A10. Unlawful use by minors.
11A11. Inducements prohibited.
11A12. Multiple types of licenses prohibited.
11A13. Illegal activities.
11A14. Establishment of account and distribution of funds.
11A15. Preemption of local taxes and license fees.
11A16. Exemption from State gaming laws.
11A17. Exemption from Federal regulation.
11A18. Funding.
§ 11A01. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
" Account. " The Video Gaming Account established under
section 11A14 (relating to establishment of account and
distribution of funds).
" Coin-operated amusement game. " A machine that requires the
insertion of a coin, currency or tokens to play or activate a
game, the outcome of which is predominantly and primarily
determined by the skill of the player. The term does not include
a video lottery terminal.
" Distributor. " Any individual, partnership, association,
limited liability company or corporation, licensed by the board
to buy, sell, lease, service or distribute video gaming
terminals. The term does not include a terminal operator or a
manufacturer.
"Gaming machine." A device or game that has the outcome of
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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) Slot machines as defined under section 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) Lottery terminals used under the act of August 26,
1971 (P.L.351, No.91), known as the State Lottery Law.
"Inducement." Consideration from a terminal operator, or an
agent of the operator, to a licensed establishment owner as an
enticement to solicit or maintain the licensed establishment
owner's business. The term includes cash, gifts, loans and
prepayments of commissions.
" Licensed establishment. " A 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. " Any individual, partnership, association,
limited liability company or corporation that:
(1) is licensed by the board; and
(2) manufactures, produces or assembles video gaming
terminals or major parts and components of video gaming
terminals.
"Net profits." All money put into a video gaming terminal
minus the cash awards paid out to players.
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"Service technician." An individual holding a service
technician's license issued by the board allowing the individual
to service, maintain and repair video gaming terminals.
" State Lottery. " The lottery established and operated under
the State Lottery Law.
"Terminal operator . " Any individual, partnership,
association, limited liability company or corporation that:
(1) is licensed by the board; and
(2) owns, services and maintains video gaming terminals
for placement in licensed establishments.
" Video gaming terminal. " A device or terminal:
(1) that, upon insertion of a coin or currency, will
play or simulate the play of a video poker, bingo, keno or
any other game authorized by the board;
(2) that utilizes a video display and microprocessors;
and
(3) in which, by the skill of the player or by chance,
the player may receive free games or credits that may be
redeemed for cash.
§ 11A02. Powers and duties.
The board shall regulate and adopt standards for all gaming
activities in this Commonwealth, including video gaming as
authorized under this chapter.
§ 11A03. Video gaming.
The board shall provide for video gaming at licensed
establishments. 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.
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§ 11A04. Licensing of manufacturers, distributors and terminal
operators.
(a) Background investigation.--The board shall have 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:
(i) include a partial ownership or voting interest
in a partnership, association or corporation; and
(ii) bear on the fitness of the applicant for
licensure.
(b) Application fee.--Fees are as follows:
(1) A manufacturer or distributor applicant must pay a
nonrefundable application fee of $10,000.
(2) A terminal operator must pay a nonrefundable
application fee of $5,000.
(c) Production of information.--An applicant to become a
licensee must produce information, documentation and assurances
as required by the board. The following shall apply:
(1) Each license applicant must:
(i) consent in writing to and provide for the
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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; and
(ii) authorize all third parties in possession or
control of accounts or records under subparagraph (i) to
allow for their examination as deemed necessary by the
board in conducting background investigations.
(2) 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
any convictions of the gambling laws of any jurisdiction.
(3) 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. If the license applicant is unable to
obtain these 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.
(4) Each license applicant must provide information,
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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.--An individual who has
been convicted of a felony shall not be issued a license under
this chapter.
(e) Third-party disclosure.--Each license applicant must
accept any risk of adverse public notice, embarrassment,
criticism, damages or financial loss, which may result from
disclosure or publication by a third party of material or
information requested by the board pursuant to action on an
application. 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 that 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
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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 shall exclude 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
of the Commonwealth. This paragraph shall exclude 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 be:
(i) of good moral character and reputation in the
community;
(ii) 18 years of age or older; and
(iii) 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
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following:
(1) Be current in the payment of taxes, interest and
penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph shall exclude 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 be:
(i) of good moral character and reputation in the
community;
(ii) 18 years of age or older; and
(iii) 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 shall exclude 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
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penalties owed to the Commonwealth and political subdivisions
of the Commonwealth. This paragraph shall exclude 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 be:
(i) of good moral character and reputation in the
community; and
(ii) 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.
(l) Associations, limited liability companies and corporate
distributors.--An association, limited liability company or
corporate distributor 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 shall exclude 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 shareholder holding more than 10% of the
stock of a corporation be:
(i) of good moral character and reputation in the
community; and
(ii) 18 years of age or older.
(m) Sole proprietor manufacturers.--A sole proprietor
manufacturer must comply with all of the following:
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(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 shall exclude items under
formal dispute or appeal under applicable law.
(4) Demonstrate sufficient financial resources to
support the activities required to manufacture and sell video
gaming terminals through a licensed distributor.
(n) Partnership manufacturers.--Partnership manufacturers
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 shall exclude items under
formal dispute or appeal under applicable law.
(2) Demonstrate sufficient financial resources to
support the activities required to manufacture and sell video
gaming terminals through a licensed distributor.
(3) Have each partner be:
(i) 18 years of age or older; and
(ii) of good moral character and reputation in the
community.
(o) Associations, limited liability companies and corporate
manufacturers.--An association, limited liability company or
corporate manufacturer 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 shall exclude items under
formal dispute or appeal under applicable law.
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(2) Demonstrate sufficient financial resources to
support the activities required to manufacture and sell video
gaming terminals through a licensed distributor.
(3) Have each shareholder holding more than 10% of the
stock of the corporation or association be:
(i) of good moral character and reputation in the
community; and
(ii) 18 years of age or older.
(p) 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 shall exclude 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.
(q) Written agreement.--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. An 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 establishments. No inducement
may be offered to an establishment to sign a written agreement.
(r) Nonaccessibility to minors.--No video gaming terminal
may be in an area easily accessible to minors. A floor-to-
ceiling wall is not required. The area must be secure and easily
seen and observed by the employees or management of the licensed
establishment.
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(s) Advertising prohibited.--No licensed establishment with
a video gaming license may advertise gaming in any form in its
licensed name.
§ 11A05. Licensed establishment license.
The board shall issue a license to any licensed establishment
upon a showing that its liquor or retail dispenser license is
valid and is in good standing with the Pennsylvania Liquor
Control Board. The annual fee for a licensed establishment shall
be $1,000. The licensed establishment shall also pay an annual
fee of $500 per video gaming terminal.
§ 11A06. Limitations on licensed establishments.
(a) Limitations.--Licensed establishments shall be subject
to the following limitations:
(1) If the square footage licensed by the Pennsylvania
Liquor Control Board is less than 2,500 square feet, the
licensed establishment is allowed up to five video gaming
terminals. One additional terminal may be placed for each
additional 500 square feet over 2,500, with a maximum of 10
gaming terminals.
(2) No applicant may hold more than one type of license
authorized by this chapter.
(3) Each licensee is responsible for payment of its
license fee. Payment of the fee by a person, partnership,
limited liability company or corporation other than the
licensee is prohibited.
(b) Unlawful acts.--No licensed establishment shall permit:
(1) An individual under 21 years of age to operate or
attempt to operate a video gaming terminal.
(2) An individual under 21 years of age to receive or
attempt to receive a prize from a video gaming terminal.
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(3) A visibly intoxicated person to play a video gaming
terminal.
(4) An individual to tamper with the connection of a
video gaming terminal to the central computer.
(c) Summary offense.--In addition to any other penalty
provided by law, a person who violates subsection (b)(1), (2) or
(3) commits a summary offense.
(d) Seizure, forfeiture and destruction of gaming
machines.--A licensee shall have the duty to consent to seizures
of its gaming machines. Gaming machines and the proceeds of
gaming machines shall be subject to seizure under sections
1517(e) (relating to investigations and enforcement) and 1518(f)
(relating to prohibited acts; penalties).
(e) Penalties.--
(1) In the case of a gaming machine seized from a
licensed establishment, for a first violation, the penalty
shall be at least $1,000 and not more than $5,000 and a
suspension of the licensed establishment owner's liquor
license for not less than seven consecutive days, and for
each subsequent violation, a penalty of $15,000 and a
suspension of the liquor license for not less than 14
consecutive days.
(2) In the case of a gaming machine seized from a place
of business other than a licensed establishment, for a first
violation, the penalty shall be at least $1,000 and not more
than $5,000 against the owner of the business from which the
gaming machine was seized, and for each subsequent violation,
a penalty of $15,000.
§ 11A07. Central communications 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. The board may, by
agreement between the Department of Revenue and the State
Lottery, 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 board and the State Lottery, at the State Lottery.
§ 11A08. Video gaming terminal prototype.
The board shall develop a prototype video gaming terminal
that includes hardware and software specifications. All video
gaming terminals offered for play in this Commonwealth shall
conform to an approved model. The board is authorized to utilize
the standards approved by other states and may contract for the
services of the board's testing laboratory. The board may also
contract for services of one or more independent outside testing
laboratories that have been accredited by a national
accreditation body and that, in the judgment of the board, are
qualified to perform such examinations and tests. These
specifications shall include:
(1) All video gaming terminals must have the ability to
interact with the central communications system.
(2) Unremovable identification plates shall appear on
the exterior of the video gaming terminal containing the name
of the manufacturer and the serial and model number of the
video gaming terminal.
(3) Rules of play shall be displayed on the video gaming
terminal face or screen as promulgated by the board.
(4) A video gaming terminal may not directly dispense
coins, cash, tokens or any other article of exchange or value
except for tickets. Such tickets shall be dispensed by
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pressing the ticket dispensing button on the video gaming
terminal at the end of one's turn or play. The ticket shall
indicate the total amount of credits and the cash award. The
player shall be permitted to insert the ticket into another
terminal in the same licensed establishment or turn in the
ticket for redemption. Redemption shall be made by giving the
ticket to the responsible person in charge at the licensed
establishment or through the use of an approved redemption
machine. A redemption machine is required at the licensed
establishment if the establishment has three or more
terminals.
(5) The cost of a credit shall be 1 ¢ , 5 ¢ , 10 ¢ or 25 ¢,
and the maximum wager played per hand shall not exceed $2.50.
(6) No cash award for any individual game may exceed
$500.
(7) All video gaming terminals must be designed and
manufactured with total accountability to include gross
proceeds, net profits, winning percentages and any other
information the board requires.
(8) Each video gaming terminal shall pay out a minimum
of 85% of the amount wagered.
§ 11A09. Fees.
(a) Terminal operator license and fee.--The annual fee for a
terminal operator license shall be $25,000 for 50 or fewer video
gaming terminals. An additional annual fee of $500 shall be
charged per video gaming terminal license for more than 50 video
gaming terminals.
(b) Distributor license fee.--The annual fee for a
distributor license shall be $10,000.
(c) Manufacturer license fee.--The annual fee for a
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manufacturer license shall be $10,000.
(d) Service technician license fee.--The annual fee for a
service technician license shall be $100.
§ 11A10. Unlawful use by minors.
(a) Minors.--No individual under 21 years of age may use or
play a video gaming terminal. An individual who violates this
subsection commits a summary offense.
(b) Licensees.--
(1) A licensed establishment may not permit an
individual under 21 years of age to play or use a video
gaming terminal.
(2) A licensed establishment that violates this
subsection commits a misdemeanor of the second degree.
§ 11A11. Inducements prohibited.
(a) General rule.--A terminal operator shall not give, or
offer to give, any type of inducement to a licensed
establishment to secure a video gaming terminal placement
agreement.
(b) Acceptance of inducements prohibited.--A licensed
establishment may not accept any inducement from a terminal
operator or any other third party, directly or indirectly,
associated with a terminal operator.
§ 11A12. Multiple types of licenses prohibited.
(a) Manufacturer restriction.--A manufacturer may not be
licensed as a video gaming terminal distributor or a terminal
operator, or own, manage or control a licensed establishment,
and shall be licensed only to sell to licensed distributors.
(b) Distributor restriction.--A licensed video gaming
terminal distributor may not be licensed as a manufacturer or a
terminal operator, or own, manage or control a licensed
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establishment.
(c) Terminal operator restriction.--A terminal operator may
not be licensed as a manufacturer or distributor, or own, manage
or control a licensed establishment, and shall be licensed only
to contract with licensed distributors and licensed
establishments.
(d) Establishment owner restriction.--An owner of a licensed
establishment may not be licensed as a manufacturer, distributor
or terminal operator and shall only contract with a terminal
operator to place and service equipment.
§ 11A13. Illegal activities.
A person may not sell, distribute, service, own, operate or
place on location a video gaming terminal unless the person is
licensed under this chapter and is in compliance with all
requirements of this chapter.
§ 11A14. Establishment of account and distribution of funds.
(a) Video Gaming Account.--A separate account in the State
Treasury to be known as the Video Gaming Account is established.
Fees and fines under this chapter and the portion of net profits
under subsection (b)(3) shall be deposited in the account.
(b) Distribution of net profits.--The net profits from each
video gaming terminal shall be distributed in the following
manner:
(1) To the licensed establishment, 33%.
(2) To the terminal operator, 33%.
(3) To the General Fund, 34%.
(c) Board funding.--The board shall derive all funding for
its operations related to the establishment, enforcement and
operation of video gaming from the account.
(d) Payments to municipalities.--The board shall pay each
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municipality $1,000 per licensed terminal located in the
municipality.
(e) Funding for compulsive gambling programs.--The board
shall allocate from the account $1,000,000 annually for the
purpose of treating compulsive gambling in this Commonwealth.
(f) Continuing appropriation.--The money in the account is
appropriated to the account on a continuing basis and shall not
lapse at the end of any fiscal year.
§ 11A15. Preemption of local taxes and license fees.
(a) Statutes.--Video gaming terminals shall be exempt from
taxes levied under the following:
(1) The act of August 5, 1932 (Sp.Sess., P.L.45, No.45),
referred to as the Sterling Act.
(2) The act of December 31, 1965 (P.L.1257, No.511),
known as The Local Tax Enabling Act.
(3) 53 Pa.C.S. Pt. III Subpt. E (relating to home rule
and optional plan government).
(4) Any statute that confers taxing authority to a
political subdivision.
(b) Licensing fees.--
(1) Video gaming terminals are exempt from local
licensing fees.
(2) Local licensing fees imposed on all other coin-
operated amusement games shall not exceed $100.
§ 11A16. Exemption from State gaming laws.
Video gaming terminals authorized under this chapter and
their use as authorized under this chapter are exempt from 18
Pa.C.S. § 5513 (relating to gambling devices, gambling, etc.).
§ 11A17. Exemption from Federal regulation.
The General Assembly declares that the Commonwealth is exempt
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from section 2 of the Gambling Devices Transportation Act (64
Stat. 1134, 15 U.S.C. § 1172). Shipments of approved video
gaming terminals into this Commonwealth in compliance with
sections 3 and 4 of the Gambling Devices Transportation Act (15
U.S.C. §§ 1173 and 1174) shall be deemed legal shipments into
this Commonwealth.
§ 11A18. Funding.
The sum of $10,000,000 necessary for the payment of costs
associated with the operation of the board and the initial
implementation of this chapter and other costs associated with
this chapter shall be transferred from the General Fund to the
Pennsylvania Gaming Control Board. The transferred funds shall
be repaid by the board to the General Fund by June 30, 2019.
Section 2. This act shall take effect in 90 days.
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