THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY ERICKSON, STACK, SOLOBAY, D. WHITE, FONTANA, RAFFERTY, BREWSTER, CORMAN, LEACH, PIPPY, TOMLINSON, ALLOWAY, M. WHITE, WOZNIAK AND YAW, MARCH 2, 2011

REFERRED TO FINANCE, MARCH 2, 2011  

AN ACT

Amending the act of December 19, 1988 (P.L.1262, No.156),

entitled, as amended, "An act providing for the licensing of

eligible organizations to conduct games of chance, for the

licensing of persons to distribute games of chance, for the

registration of manufacturers of games of chance, and for

suspensions and revocations of licenses and permits;

requiring records; providing for local referendum by

electorate; and prescribing penalties," further providing for

definitions, for games of chance permitted, for prize limits,

for insured games, for limited sales, for recordkeeping, for

eligible organizations' use of locations for conducting small

games of chance, for separate individual prize limitations

and for revocation of licenses; providing for licensed

establishments; further providing for enforcement, for

penalties and for advertising; and providing for transfer

from General Fund to State Lottery Fund.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "daily drawing," "eligible

organizations" and "games of chance" in section 3 of the act of

December 19, 1988 (P.L.1262, No.156), known as the Local Option

Small Games of Chance Act, amended December 19, 1990 (P.L.812,

No.195) and October 18, 2000 (P.L.602, No.79), are amended and

the section is amended by adding definitions to read:

Section 3.  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:

* * *

"Daily drawing."  A game in which a bona fide member selects

or is assigned a number for a chance at a prize with the winner

determined by [a] random drawing to take place on the eligible

organization's premises [during the same operating day]. The

term includes games commonly known as "member sign-in lotteries"

and "half-and-half lotteries." Nothing in this act shall be

construed to prohibit the carrying over of a jackpot where the

winning number has not been entered in the game on a particular

operating day. Daily drawing winners may be determined with the

aid of a passive selection device or reference to drawings

conducted by the department pursuant to the act of August 26,

1971 (P.L.351, No.91), known as the State Lottery Law. Daily

drawing chances may not be sold for an amount in excess of $1,

and no more than one chance per individual may be sold [to an

individual during the same operating day.] per drawing. Nothing

in this definition shall restrict an eligible organization from

conducting more than one drawing per day.

* * *

"Electronic monitoring device."  An electromechanical device,

electrical device or machine that satisfies the following

requirements:

(1)  Is a contrivance which records time of sale of

particular units referred to as games of chance.

(2)  Is a device that is able to generate reports for

auditing purposes.

(3)  Allows for financial auditing reports to be sent

electronically to a State agency.

"Eligible organizations."  Includes qualifying nonprofit

charitable, religious, fraternal and veterans organizations,

clubs [and], licensed establishments, civic and service

associations as defined by this act. In order to qualify as an

eligible organization for purposes of this act, an organization

shall have been in existence and fulfilling its stated purposes 

for one year prior to the date of application for a license.

* * *

"Games of chance."  Punchboards, daily drawings, weekly

drawings, monthly drawings, raffles and pull-tabs, as defined in

this act, provided that no such game shall be played by or with

the assistance of any mechanical or electrical devices or media

other than a dispensing machine or passive selection device and

further provided that the particular chance taken by any person

in any such game shall not be made contingent upon any other

occurrence or the winning of any other contest, but shall be

determined solely at the discretion of the purchaser. This

definition shall not be construed to authorize any other form of

gambling currently prohibited under any provision of Title 18 of

the Pennsylvania Consolidated Statutes (relating to crimes and

offenses). Nothing in this act shall be construed to authorize

games commonly known as "slot machines" or "video poker."

"Gross games of chance revenue."  The total of cash wagers

received by a licensed establishment minus the total of:

(1)  Cash or cash equivalent paid out to patrons as a

result of playing a game of chance.

(2)  Cash paid to purchase annuities to fund prizes

payable to patrons over a period of time as a result of

playing a game of chance.

(3)  Any personal property distributed to a patron as a

result of playing a game of chance. This does not include

travel expenses, food, refreshments, lodging or services.

The term does not include counterfeit money or tokens, coins or

currency of other countries which are received while playing a

game of chance, except to the extent that they are readily

convertible to United States currency, cash taken in fraudulent

acts perpetrated against a licensed establishment for which the

establishment is not reimbursed.

* * *

"Licensed establishment."  A restaurant, eating place or

hotel as defined under section 2 of the act of April 12, 1951

(P.L.90, No.21), known as the Liquor Code, that operates under a

valid liquor, malt or brewed beverage license under Article IV

of the Liquor Code. The term does not include a grocery store or

a licensed facility as defined under 4 Pa.C.S. § 1103 (relating

to definitions).

* * *

Section 2.  Section 4 of the act, amended December 19, 1990

(P.L.812, No.195), is amended to read:

Section 4.  Games of chance permitted.

Every eligible organization to which a license has been

issued under the provisions of this act may conduct games of

chance for the purpose of raising funds for general operating

expenses and for public interest purposes. [All proceeds of

games of chance shall be used exclusively for public interest

purposes or for the purchase of games of chance as permitted by

this act.] No more than fifty percent of proceeds may be used

for general operating expenses.

Section 3.  Section 5 of the act, amended December 19, 1990

(P.L.812, No.195) and October 18, 2000 (P.L.602, No.79), is

amended to read:

Section 5.  Prize limits.

(a)  Individual prize limit.--[The] Except as provided for in

subsection (i), the maximum cash value which may be awarded for

any single chance shall be [$500] $1,000.

(b)  Weekly limit.--No more than [$5,000] $20,000 in cash or

merchandise shall be awarded by any eligible organization in any

seven-day period.

(c)  Limit on raffles.--No more than $5,000 in cash or

merchandise shall be awarded in raffles in any calendar month.

(d)  Exception.--An eligible organization may conduct a

raffle and award a prize or prizes valued in excess of [$500] 

$1,000 each only under the following conditions:

(1)  The licensing authority has issued a special permit

for the raffle under section 11.

(2)  Eligible organizations shall be eligible to receive

no more than two special permits in any licensed year except

that volunteer fire, ambulance and rescue organizations shall

be eligible to receive no more than three special permits in

any licensed year.

(3)  Only one raffle may be conducted under each special

permit.

(4)  The total cash value of all prizes shall be no more

than $100,000 per calendar year.

(e)  Limit on daily drawings.--Daily drawings shall be

governed by the prize [limitations] limitation contained in

[subsections (a) and (b)] subsection (a). [An eligible

organization shall not conduct daily drawings during a period

when a weekly drawing is taking place.]

(f)  Exception.--The prize limitation contained in

[subsections (a) and (b)] subsection (a) may be exceeded by a

daily drawing under the following circumstances: a daily drawing

may award a prize where the cash value is in excess of [$500] 

$1,000 if such prize is the result of a carryover of a drawing

or drawings which resulted from the winning number in such

drawing or drawings not being among the eligible entrants in

such drawings. Nothing contained herein shall authorize the

prize [limitations] limitation as contained in [subsections (a)

and (b)] subsection (a) to be exceeded as a result of a failure

to conduct a drawing on an operating day during which chances

were sold for a daily drawing or for a daily drawing for which

chances were sold in excess of $1 or for which more than one

chance was sold to an eligible participant.

(g)  Daily drawing and weekly drawing exception.--When a

daily drawing or weekly drawing is set up or conducted in such a

manner as to pay out or award 100% of the gross revenues

generated from such drawing, the limitations contained in

subsection (b) shall not apply.

(h)  Limit on weekly drawings.--Weekly drawings shall be

governed by the prize limitations contained in subsection (b).

The prize limitation contained in subsection (b) may be exceeded

by a weekly drawing under the following circumstances: a weekly

drawing may award a prize where the cash value is in excess of

[$5,000] $20,000 if such prize is the result of a carryover of a

drawing or drawings which resulted from the winning number or

numbers in such drawing or drawings not being among the eligible

entrants in such drawings. Nothing contained in this act shall

authorize the prize limitations as contained in subsection (b)

to be exceeded as a result of a failure to conduct a drawing for

a week during which chances were sold for a weekly drawing or

for a weekly drawing for which chances were sold in excess of

$1. [An eligible organization shall not conduct weekly drawings

during a period when a daily drawing is taking place.]

Section 4.  The act is amended by adding a section to read:

Section 5.1.  Insured games.

Notwithstanding any provision of this act to the contrary, an

eligible organization may conduct small games of chance using

insured games. Insured games sold by a licensed distributor

shall be backed by a valid insurance contract issued by an

insurance company licensed to do business in this Commonwealth.

Proof of the insurance contract must be provided to the

department prior to the game being sold. The license of a

distributor and an insurance company issuing a contract for an

insured game may be suspended or revoked for failure to pay an

award. For the purposes of this section, an insured game is a

game in which the distributor or other licensed third party

guarantees making the payment on a win of a jackpot.

Section 5.  Sections 6 and 9 of the act, amended December 19,

1990 (P.L.812, No.195), are amended to read:

Section 6.  Sales limited.

No person shall sell, offer for sale or furnish games of

chance for use within this Commonwealth except to an eligible

organization or distributor licensed under this act. No game of

chance, other than a raffle, sold, offered for sale or furnished

for use within this Commonwealth shall contain, permit, depict

or designate a prize having a cash value in excess of [$500] 

$1,000.

Section 9.  Regulations of department.

(a)  Authorization.--The department shall promulgate

regulations to:

(1)  Impose minimum standards and restrictions applicable

to games of chance manufactured for sale in this

Commonwealth, which may include standards and restrictions

which specify the maximum number of chances available to be

sold for any single game or prize and such other standards

and restrictions as the department deems necessary for the

purposes of this act. The department shall consider standards

adopted by the National Association of Gambling Regulatory

Agencies and other standards commonly accepted in the

industry.

(2)  Establish procedures by which manufacturers may

register and distributors of games of chance may apply for

licensure on forms which the department shall provide.

(3)  Provide for the suspension or revocation of

distribution licenses or manufacturer certificates for

violations of this act or regulations of the department.

(3.1)  Provide for the electronic monitoring and

reporting of tickets and proceeds from games of chance

through the use of electronic monitoring devices.

(4)  Carry out other provisions of this act.

(b)  Limitation on recordkeeping requirements.--[This] Except

as otherwise authorized under subsection (a)(3.1), this section

shall not be construed to authorize the department to promulgate

regulations providing for recordkeeping requirements for

eligible organizations which require unreasonable or unnecessary

information or a repetitious listing of information. The

department shall strive to keep such recordkeeping requirements

from being an undue hardship or burden on eligible

organizations. Under no circumstances shall the department

require the retention of records for a period in excess of two

years. Each eligible organization shall report to the department

prizes awarded as required by section 335 of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.

Section 6.  Section 10(b), (d) and (e) of the act, amended

December 19, 1990 (P.L.812, No.195) and October 18, 2000

(P.L.602, No.79), are amended and the section is amended by

adding subsections to read:

Section 10.  Licensing of eligible organizations to conduct

games of chance.

* * *

(b)  Issuance and fees.--The licensing authority shall

license, upon application, within 30 days any eligible

organization meeting the requirements for licensure contained in

this act to conduct and operate games of chance at such

locations within the county or in such manner as stated on the

application as limited by subsection (b.1). The license fee to

be charged to each eligible organization shall be $100, except

for limited occasion licenses which shall be $10. Licenses shall

be renewable annually upon the anniversary of the date of issue. 

For licensed establishments the license fee shall be $500.

* * *

(d)  Operation.--Each licensed eligible organization shall

comply with the following restrictions and rules governing the

operation of games of chance:

(1)  No person under 18 years of age shall be permitted

to operate or play games of chance.

(2)  No eligible organization shall permit any person who

has been convicted of a felony in a Federal or State court

within the past five years or has been convicted in a Federal

or State court within the past ten years of a violation of

the act of July 10, 1981 (P.L.214, No.67), known as the Bingo

Law, or of this act to manage, set up, supervise or

participate in the operation of games of chance.

(3)  No eligible organization shall pay any compensation

to any person for conducting any games of chance. Games of

chance may only be conducted by managers, officers,

directors, bar personnel and bona fide members of the

eligible organization.

(4)  Games shall be conducted only on the licensed

premises or as otherwise provided by this act.

(5)  The eligible organization shall not lease such

premises under either an oral or a written agreement for a

rental which is determined by either the amount of receipts

realized from the playing of games of chance or the number of

people attending, except that an eligible organization may

lease a facility for a banquet where a per head charge is

applied in connection with the serving of a meal. An eligible

organization shall not lease such premises from any person

who has been convicted of a violation of this act within the

past ten years.

(6)  Games, other than raffles, daily drawings and weekly

drawings, shall be purchased only from manufacturers and

distributors approved by the department.

(7)  [No] Except as provided in paragraph (7.1), no

licensed eligible organization shall permit its premises to

be used for small games of chance by another licensed

eligible organization at the same time that it is conducting

small games of chance on the premises. When a licensed

eligible organization is permitting another licensed eligible

organization to use its premises for purposes of small games

of chance, it must cease the operation of its own small games

of chance during the period that the other licensed eligible

organization is conducting its games on the premises.

(7.1)  A licensed eligible organization may sell on its

licensed premises the raffle tickets of another licensed

eligible organization that has been issued a limited occasion

license under subsection (b.3).

(8)  Raffle tickets may be sold off the licensed premise

in any municipality in this Commonwealth which has adopted

the provisions of this act by an affirmative vote in a

municipal referendum. A licensed eligible organization which

plans to sell raffle tickets in a municipality located in a

county other than the county in which the eligible

organization is licensed must notify that county's district

attorney and licensing authority as to the location and the

dates that the eligible organization plans to sell raffle

tickets.

(9)  The eligible organization shall keep a bank account

to hold the proceeds of games of chance, which shall be

separate from all other funds belonging to the eligible

organization. Account records shall show all expenditures and

income and shall be retained by the eligible organization for

at least two years.

(e)  Application for license.--Each eligible organization

shall apply to the licensing authority for a license on a form

to be prescribed by the Secretary of Revenue. The form shall

contain an affidavit to be affirmed by the executive officer or

secretary of the eligible organization stating that:

(1)  No person under 18 years of age will be permitted by

the eligible organization to operate or play games of chance.

(2)  The facility in which the games of chance are to be

played has adequate means of ingress and egress and adequate

sanitary facilities available in the area.

(3)  The eligible organization is not leasing such

premises from the owner thereof under an oral agreement, nor

is it leasing such premises from the owner thereof under a

written agreement at a rental which is determined by the

amount of receipts realized from the playing of games of

chance or by the number of people attending, except that an

eligible organization may lease a facility for a banquet

where a per head charge is applied in connection with the

serving of a meal.

(4)  The eligible organization has complied with the

annual financial report filing.

(5)  The eligible organization has a separate bank

account to hold all proceeds of games of chance.

(6)  The eligible organization has complied with the

applicable games of chance education requirements.

(e.1)  Additional application components.--As part of the

initial or renewal application filed under subsection (e), each

eligible organization shall file an annual report with the

licensing authority. The following shall apply:

(1)  The first annual report required under this

paragraph shall contain information for the 12-month period

ending at least 60 days, but not more than 90 days, prior to

the submission of the application. Subsequent annual reports

shall contain information for the most recent 12-month period

ending in the same month as the initial report.

(2)  The annual report shall detail gross receipts from

the conduct of games of chance, the expenses related to the

conduct of the games of chance, the prizes paid out for games

of chance and the details as to how the proceeds from games

of chance were used or disbursed by the eligible

organization.

(3)  The annual report shall be prepared on a one-page

form to be designed by the department. Additional schedules

shall be included, if necessary, to provide specific details

on the use or disbursement of the net proceeds from games of

chance by the eligible organization.

(4)  A copy of the annual report shall be filed with the

application to renew the liquor license of an eligible

organization.

* * *

(h)  Background checks.--Each application shall include the

results of a criminal history record information check obtained

from the Pennsylvania State Police, as defined in 18 Pa.C.S. §

9102 (relating to definitions) and permitted by 18 Pa.C.S. §

9121(b) (relating to general regulations), for the executive

officer or secretary of the eligible organization making the

application and all other responsible persons listed on the

application.

Section 7.  The act is amended by adding sections to read:

Section 11.1.  Licensed establishment application.

In addition to any other eligibility and application

requirements applicable to eligible organizations, a licensed

establishment shall demonstrate the following as part of its

application for a license to conduct small games of chance:

(1)  That it possesses a valid liquor, 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, and that such

license is in good standing.

(2)  That it is located in a municipality in which small

games of chance are permitted under this act.

(3)  That it possesses tax clearance from the department

and the Department of Labor and Industry in the same manner

as required under section 470 of the Liquor Code.

Section 11.2.  Licensed establishment monthly assessment.

(a)  Rate.--The department shall determine and each licensed

establishment shall pay a monthly assessment rate of 30% of its

gross games of chance revenue from the conduct of small games of

chance at the licensed establishment.

(b)  Deposit.--The monthly assessment owed by each licensed

establishment shall be deposited in the General Fund.

Section 11.3.  Licensed establishment public interest

assessment.

(a)  Contribution.--The department shall determine and verify

that each licensed establishment conducting small games of

chance shall contribute, monthly, 20% of its gross games of

chance revenue from the conduct of small games of chance at the

licensed establishment to a charitable organization to be used

exclusively for a public interest purpose.

(b)  Accounting.--A licensed establishment shall provide a

monthly accounting to the department indicating the total amount

of gross games of chance revenue received by the licensed

establishment and the total amount contributed to charitable

organizations. The licensed establishment shall identify the

charitable organization and the public interest purpose for

which the monthly contribution is allocated.

Section 11.4.  Additional licensed establishment assessment fee.

In addition to assessment in section 11.2, a licensed

establishment shall pay a monthly assessment rate of 2% of the

gross games of chance revenue from the conduct of small games of

chance at the licensed establishment. This amount shall be

divided equally between the department and the Bureau of Liquor

Control Enforcement of the Pennsylvania State Police for

administrative and enforcement costs.

Section 8.  Section 12(a) of the act is amended by adding a

paragraph to read:

Section 12.  Revocation of licenses.

(a)  Grounds.--The licensing authority shall revoke or refuse

to renew the license of any eligible organization whenever the

district attorney finds upon complaint and investigation that:

* * *

(13)  The eligible organization has failed to keep and

maintain the records required under this act for a period of

two years.

* * *

Section 9.  Section 13(a) of the act is amended to read:

Section 13.  Enforcement.

(a)  [District] Attorney General and district attorney.--The

Attorney General and district attorney shall have concurrent

jurisdiction and the Pennsylvania State Police shall have the

independent authority to investigate alleged violations of this

act. If the Attorney General or district attorney finds probable

cause to believe that a violation has occurred, he may file a

complaint against the alleged violator in the court of common

pleas of said county, except in counties of the first class

where the complaint may be filed in the municipal court. In

addition, the Attorney General or district attorney shall

prosecute said complaint in the manner provided by law.

* * *

Section 10.  Section 17 of the act is amended by adding a

subsection to read:

Section 17.  Penalties.

* * *

(f)  Fines for license revocation or refusal to renew

license.--In addition to any other penalty provided by law, an

eligible organization whose license has been revoked or not

renewed on any of the grounds enumerated in section 12(a) shall

be subject to the following fines:

(1)  A fine of $500 for a first occurrence.

(2)  A fine of $1,000 for a second occurrence.

(3)  A fine of $2,500 for a third or subsequent

occurrence.

Section 11.  Section 15 of the act, amended December 19, 1990

(P.L.812, No.195), is amended to read:

Section 15.  Advertising.

[It shall be unlawful for any eligible organization or person

to] Any eligible organization or person may advertise the prizes

or their dollar value to be awarded in games of chance, provided

that [prizes may be identified on raffle tickets.

Notwithstanding the prohibition of advertising contained within

this section, an eligible organization may advertise prizes and

values thereof in periodic publications which are limited in

their circulation to members of the eligible organization.] such

advertisements shall contain the date, time, location, whether

cash or merchandise prizes will be awarded and the name of the

eligible organization licensed to conduct games of chance and

the name of the person who conducts the games of chance.

Section 12.  The act is amended by adding a section to read:

Section 16.1.  Transfer from General Fund to State Lottery Fund.

If, on June 15, 2011, and June 15 of each year thereafter,

the secretary determines that a decrease in the revenue

deposited in that fiscal year in the State Lottery Fund is due

to the play of small games of chance in retail licensed

establishments in this Commonwealth, the secretary shall certify

the amount of the decrease due to such activity. The secretary's

determination shall be based upon an audit or other report of an

independent expert regarding the decrease. A sum equal to the

amount of the decrease shall be deducted from the amount to be

distributed to the General Fund under section 11.2(b) in the

next fiscal year and deposited in the State Lottery Fund. The

cost of the audit or independent report may be included in the

costs of the department to be funded from money in the account

under section 11.2(b).

Section 13.  This act shall apply as follows:

(1)  The amendment or addition of section 10(e)(4) and

(5), (e.1)(1) and (h) of the act shall apply to applications

filed more than 60 days after the effective date of this

section.

(2)  The amendment or addition of section 10(e)(6) and

(e.1)(2) of the act shall apply to applications filed more

than one year after the effective date of this section.

Section 14.  This act shall take effect as follows:

(1)  The following provisions shall take effect

immediately:

(i)  The amendment or addition of section 10(b), (e), 

(e.1) and (h) of the act.

(ii)  Section 13 of this act.

(iii)  This section.

(2)  The remainder of this act shall take effect in 60

days.