PRINTER'S NO. 1495
No. 1211 Session of 1989
INTRODUCED BY SALVATORE, SEPTEMBER 25, 1989
REFERRED TO FINANCE, SEPTEMBER 25, 1989
AN ACT
1 Providing for licensing, taxing and placement of video poker
2 machines in this Commonwealth; creating the Video Poker
3 Machine Control Commission and providing for its powers and
4 duties; and providing for local option and for distribution
5 of revenues.
6 TABLE OF CONTENTS
7 Section 1. Short title.
8 Section 2. Definitions.
9 Section 3. Video Poker Machine Control Commission.
10 Section 4. Qualifications.
11 Section 5. Chairman of commission; quorum.
12 Section 6. Director.
13 Section 7. Bonds.
14 Section 8. Powers and duties of commission.
15 Section 9. Use of enforcement agents.
16 Section 10. Unlawful use by minors.
17 Section 11. Local option.
18 Section 12. Authority to license.
19 Section 13. Authority to tax.
1 Section 14. Distribution of tax.
2 Section 15. Creation of account.
3 Section 16. Preemption of local taxes and license fees.
4 Section 17. Exemption from State gambling laws.
5 Section 18. Exemption from Federal regulation.
6 Section 19. Effective date.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the Video Poker
11 Machine Law.
12 Section 2. Definitions.
13 The following words and phrases when used in this act shall
14 have the meanings given to them in this section unless the
15 context clearly indicates otherwise:
16 "Associations." Volunteer fire companies, ambulance
17 associations or religious, charitable, civic, county fair or
18 agricultural associations.
19 "Clubs." Nonprofit establishments which have a valid
20 Pennsylvania club liquor license. The term shall include the
21 holders of special occasion permits.
22 "Commission." The Video Poker Machine Control Commission
23 created by this law.
24 "Distributor." An individual, partnership or corporation
25 that buys, sells or leases video poker machines, other than an
26 operator.
27 "Locations." Commercial establishments, such as restaurants,
28 bars, taverns, hotels and clubs, which have valid Pennsylvania
29 liquor licenses.
30 "Manufacturer." An individual, partnership or corporation
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1 that manufactures or assembles video poker machines.
2 "Net machine revenues." Those net profits remaining from
3 video poker machines after all winning cash or prizes have been
4 paid.
5 "Operator." An individual, partnership or corporation that
6 owns, services and maintains video poker machines for placement
7 in various State-approved places.
8 "Participating political subdivision." Any city,
9 incorporated town, township or borough where video poker
10 machines are in use in accordance with this act.
11 "Person." Includes a corporation, partnership and
12 association, as well as a natural person.
13 "Video poker machines." A device or machine which, upon
14 insertion of a coin, is available to play or simulate the play
15 of the game of poker, utilizing a video display and
16 microprocessors and in which, whether by the skill of the player
17 or by chance, the player may receive free games or credits which
18 can be redeemed for cash or prizes or anything of value. No
19 machine shall directly dispense any coins, cash, tokens or
20 anything of value.
21 Section 3. Video Poker Machine Control Commission.
22 (a) Commission created.--An independent commission to be
23 known as the Video Poker Machine Control Commission is hereby
24 created. The commission shall consist of three members, one to
25 be appointed by the Governor, one by the Speaker of the House of
26 Representatives and one by the President pro tempore of the
27 Senate.
28 (b) Members.--Of the original members, one shall be
29 appointed for a term of two years, one for a term of four years
30 and one for a term of six years; and thereafter, all
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1 appointments shall be for terms of six years or until successors
2 are appointed and qualified. All successors shall be appointed
3 by the same appointing authority as the members whom they are
4 replacing.
5 (c) Registration.--No more than two members shall be
6 registered under the same political party.
7 (d) Expenses.--The members of the commission shall receive
8 no compensation but shall be reimbursed for all actual and
9 necessary expenses performed in the course of their duties.
10 Section 4. Qualifications.
11 (a) Citizenship and residency.--Each member of the
12 commission at the time of appointment and qualification shall be
13 a citizen of the United States and a resident of this
14 Commonwealth and shall have been a qualified elector in the
15 Commonwealth for a period of at least two years preceding the
16 member's appointment.
17 (b) Offices.--No member of the commission shall, during the
18 member's period of service, hold any other office under the laws
19 of this Commonwealth or the United States or seek elected office
20 of any kind within this Commonwealth or the United States.
21 Section 5. Chairman of commission; quorum.
22 (a) Election.--The commissioners shall elect a chairman from
23 their membership. The chairman shall, when present, preside at
24 all meetings. In the chairman's absence, a designated member
25 shall preside.
26 (b) Quorum.--Two members of the commission shall constitute
27 a quorum and any action or order of the commission shall require
28 the approval of at least two members.
29 Section 6. Director.
30 The commission may appoint an executive director to hold
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1 office at its pleasure. The director, if appointed, shall have
2 powers and duties as the commission shall prescribe and shall
3 receive compensation as the commission, with the approval of the
4 Executive Board, shall determine. The director shall have the
5 authority to designate a deputy director to perform the duties
6 of director during the director's absence.
7 Section 7. Bonds.
8 (a) Requirement.--Before entering upon the duties of their
9 respective offices or positions, each member of the commission
10 and the director shall execute and file with the State Treasurer
11 a bond in such sum as shall be fixed by the Executive Board upon
12 recommendation of the Governor, but the amount of any bond shall
13 not be less than $40,000. Bonds in such sums as shall be fixed
14 by the Executive Board shall be executed and filed with the
15 State Treasurer by the Video Poker Machine Control Commission as
16 the head of such board, with the approval of the Executive
17 Board, shall prescribe. Bonds shall be payable to the
18 Commonwealth and shall be conditioned upon the faithful
19 performance of the member's, secretary's or employee's duties
20 imposed by law and that the person bonded will not knowingly
21 violate the provisions of this act.
22 (b) Approval and costs.--All bonds required shall, before
23 being accepted by the State Treasurer, be approved by the Office
24 of Attorney General. Unless the Commonwealth establishes its own
25 indemnity fund, all bonds shall be given with security approved
26 by the Office of Attorney General. If the Commonwealth
27 establishes its own indemnity fund, the Executive Board may,
28 nevertheless, require any bond given to be executed by a surety
29 or sureties satisfactory to the Office of Attorney General. The
30 cost of bonds required to be executed by a surety or sureties
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1 shall be borne by the commission as a part of its operating
2 expense.
3 Section 8. Powers and duties of commission.
4 (a) General powers and duties.--The commission shall have
5 the power to prescribe rules and regulations and its duty shall
6 be to:
7 (1) Provide for licensing and taxing procedures under
8 this act.
9 (2) Prescribe all necessary application and reporting
10 forms to be used in this act.
11 (3) Grant or deny license applications.
12 (b) License approval.--The commission may not deny any
13 application or limit, condition or restrict any license except
14 for reasonable cause. An applicant shall not be granted a
15 license unless:
16 (1) If the applicant is an individual:
17 (i) The applicant is of good character, honesty and
18 integrity and in all respects is qualified and has
19 adequate financing from suitable sources.
20 (ii) The applicant is a citizen of the United States
21 and a resident of this Commonwealth for at least two
22 years prior to the application.
23 (2) If the applicant is a partnership, all partners must
24 qualify as individuals under paragraph (1).
25 (3) If the applicant is a corporation:
26 (i) It is a registered Pennsylvania corporation for
27 at least one year.
28 (ii) At least 50% of its directors are Pennsylvania
29 residents for at least one year.
30 (iii) All officers qualify as individuals under
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1 paragraph (1).
2 (iv) All stockholders are individuals.
3 (c) Hearing.--Any person who was denied a license shall have
4 the right to a hearing before the commission. The hearing shall
5 be conducted in accordance with the provisions of Title 2 of the
6 Pennsylvania Consolidated Statutes (relating to administrative
7 law and procedure).
8 (d) Winning percentage.--The commission shall prescribe
9 winning percentage and necessary machine accounting information.
10 All video poker machines will be set to award players minimum
11 winnings of 80% or more. All video poker machines will have
12 electronic accounting devices to verify revenue due the
13 Commonwealth and winning percentages.
14 (e) Violations.--The commission shall investigate, suspend
15 or revoke licensees for violations of this act and hold hearings
16 in which to consider these matters. No license shall be
17 suspended or revoked until a hearing is completed. The fine for
18 a violation of provisions of this act or of regulations adopted
19 under this act shall not exceed $5,000 for the first offense and
20 $15,000 for each subsequent violation.
21 (f) Standards of conduct.--The commission shall prescribe
22 rules and regulations for the conduct of the officers, employees
23 and agents of the commission.
24 Section 9. Use of enforcement agents.
25 (a) Powers.--Employees of the commission designated as
26 enforcement agents shall be empowered to investigate the
27 background and associates of every license applicant to whatever
28 extent is judged necessary by the commission. No investigation
29 shall be undertaken prior to the submission of an application
30 for a license by a party and no investigation shall continue
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1 subsequent to the grant of a license, the denial of a license or
2 the withdrawal of a license application.
3 (b) Authority.--Enforcement agents are empowered to be peace
4 officers and shall have police power and authority throughout
5 this Commonwealth to arrest, on view or under warrant, any
6 person tampering with video poker machines, attempting or
7 conspiring to manipulate the outcome or the payoff of any
8 machine, or manipulating the outcome or payoff of any machine by
9 physical tampering or through the interference of the lawful and
10 proper functioning of the mechanism by any means whatsoever.
11 (c) Investigation and report.--Enforcement agents may
12 investigate any alleged illegal activities concerning video
13 poker machines and their operation, maintenance and placement.
14 Findings shall be reported in writing to the commission which
15 shall relay any suspected criminal activity or violations of the
16 law to the district attorney for prosecution.
17 Section 10. Unlawful use by minors.
18 (a) Minors.--No person under 21 years of age shall use or
19 play the video poker machines. Any minor using or playing a
20 video poker machine or attempting to use or play a video poker
21 machine shall, upon conviction, be liable for a fine not in
22 excess of $1,000.
23 (b) Licensees.--Any licensee who permits a person under 21
24 years of age to play or use the video poker machines in any
25 fashion, whether that licensee is actually aware of the minor's
26 age or not, shall, upon conviction, be liable for a fine not in
27 excess of $5,000. The establishment of all the following facts
28 by a person allowing a minor to operate the video poker machines
29 shall constitute a defense to any prosecution under this
30 subsection:
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1 (1) The minor falsely represented in writing that the
2 minor was 21 years of age or older.
3 (2) The appearance of the minor was such that an
4 ordinary person of prudent judgment would believe the minor
5 to be 21 years of age or older.
6 (3) The permission to operate the video poker machines
7 was made in good faith, relying upon written representation
8 and appearance and in the reasonable belief that the minor
9 was actually 21 years of age or older.
10 Section 11. Local option.
11 (a) Placement on ballot.--A majority of the voters of any
12 political subdivision such as a city, town, township or borough
13 within this Commonwealth shall have the option to reject the
14 placement of coin-operated video poker machines in their
15 respective political subdivision within 30 days from the
16 effective date of this act, provided that the rejection is
17 adopted by a majority of the voters of that political
18 subdivision in conformity with the act of June 3, 1937
19 (P.L.1333, No.320), known as the Pennsylvania Election Code. The
20 question shall be placed upon the ballot of that political
21 subdivision for the next regularly scheduled election as a "no"
22 question, provided that 25% of the registered voters of that
23 political subdivision sign a petition requesting that the
24 question be put on the ballot. The results shall be transmitted
25 to the Secretary of the Commonwealth who shall have the duty of
26 informing the commission of the result.
27 (b) Special election.--No special election shall be held to
28 answer this question. However, if a special election is held to
29 decide other matters, this question may properly be placed on
30 that ballot along with the other matters to be decided.
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1 Section 12. Authority to license.
2 (a) Type of licenses.--After approving the proper
3 applications, the commission may issue the following licenses:
4 (1) A manufacturer's license to a person that
5 manufactures or assembles video poker machines for use in
6 Pennsylvania. The annual fee shall be $25,000.
7 (2) A distributor's license to a person that buys or
8 sells video poker machines in Pennsylvania, other than an
9 operator. The annual fee shall be $10,000.
10 (3) An operator's license to a person that owns,
11 services and maintains video poker machines to place in
12 commission-approved locations. The annual fee shall be
13 $50,000. This fee includes 100 individual video poker machine
14 licenses. For each additional video poker machine license an
15 operator needs, the fee is $500 per machine. Every video
16 poker machine in use must have a $500 license displayed.
17 (b) Commercial establishment requirements.--For any
18 commercial establishment which is approved by the Commonwealth
19 and uses video poker machines, the maximum number of video poker
20 machines allowed per location shall be three. No video poker
21 machines may be placed in any commercial establishment unless
22 the owner of the commercial establishment has entered into a
23 contract with an operator for the placement of the machine or
24 machines for a minimum term of one year.
25 (c) Limitations.--
26 (1) No operator shall be issued more than one license.
27 (2) No person may hold more than one class of license,
28 directly or indirectly, or have any interest therein.
29 Section 13. Authority to tax.
30 (a) Tax levy.--The commission shall levy a video poker
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1 machine net revenues tax. The amount of this tax is 40% of the
2 net profit of each video poker machine. Net profit equals the
3 income of each machine after all prizes have been paid.
4 (b) Collection.--This tax will be collected by the operator
5 for each licensed video poker machine on the location.
6 (c) Reports.--The operator will make a report to the county
7 treasurer and the Commonwealth once each month with the
8 following information:
9 (1) Serial number of each video poker machine totalizer.
10 (2) Name and address of the premises where the machine
11 is located.
12 (3) Computer printout of the net revenue of each machine
13 taken directly from totalizer.
14 Section 14. Distribution of tax.
15 The operator of each video poker machine shall send a monthly
16 report and the tax money to the county treasurer where the
17 machines are located to be distributed as follows:
18 (1) Eighteen percent of the net revenue of each video
19 poker machine to the Commonwealth for transportation for
20 education.
21 (2) Ten percent of the net revenue of each video poker
22 machine to the political subdivision where the video poker
23 machine is located.
24 (3) Ten percent of the net revenue of each video poker
25 machine for special education intermediate unit costs where
26 the video poker machine is located.
27 (4) Two percent of net revenue to the county treasurers
28 for their county for collecting and distributing funds in
29 each county.
30 Section 15. Creation of account.
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1 All revenues from licenses and fines shall be placed in a
2 restricted revenue account to fund the total operation of the
3 commission, including, but not limited to, salaries and
4 administrative expenses.
5 Section 16. Preemption of local taxes and license fees.
6 (a) Preemption.--By enactment of this act, all coin-operated
7 video poker machines and coin-operated amusement machines will
8 be exempt from any taxes levied under the authority of the act
9 of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the
10 Sterling Act, or the act of December 31, 1965 (P.L.1257,
11 No.511), known as The Local Tax Enabling Act.
12 (b) Fees restricted.--By enactment of this act, all coin-
13 operated amusement games, excluding video poker machines, may be
14 licensed by local political subdivisions for a total of up to,
15 but not exceeding, $25 per machine per year.
16 Section 17. Exemption from State gambling laws.
17 On enactment of this act, all video poker machines will be
18 exempt from State gambling laws.
19 Section 18. Exemption from Federal regulation.
20 The General Assembly declares that the Commonwealth is exempt
21 from the provisions of section 2 of the act of January 2, 1981
22 (64 Stat. 1134, 15 U.S.C. § 1172), and all shipments of video
23 devices into this Commonwealth in compliance with sections 3 and
24 4 of that act shall be deemed legal shipments into this
25 Commonwealth.
26 Section 19. Effective date.
27 This act shall take effect in 60 days.
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