PRINTER'S NO. 1496
No. 1212 Session of 1989
INTRODUCED BY SALVATORE, SEPTEMBER 25, 1989
REFERRED TO FINANCE, SEPTEMBER 25, 1989
AN ACT
1 Providing for licensing and placement of video poker machines in
2 this Commonwealth, for powers and duties of the Department of
3 Revenue, for local option and for distribution of revenues.
4 TABLE OF CONTENTS
5 Section 1. Short title.
6 Section 2. Definitions.
7 Section 3. Powers and duties of department.
8 Section 4. Use of enforcement agents.
9 Section 5. Unlawful use by minors.
10 Section 6. Direct dispensing.
11 Section 7. Local option.
12 Section 8. Authority to license.
13 Section 9. Distribution of proceeds.
14 Section 10. Local government revenues.
15 Section 11. Creation of account.
16 Section 12. Preemption of local taxes and license fees.
17 Section 13. Existing machines.
18 Section 14. Exemption from State gambling laws.
1 Section 15. Exemption from Federal regulation.
2 Section 16. Effective date.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Video Poker
7 Control Law.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Clubs." Nonprofit establishments which have a valid
13 Pennsylvania club liquor license.
14 "Department." The Department of Revenue of the Commonwealth.
15 "Distributor." An individual, partnership or corporation
16 that buys, sells or leases video poker machines. The term
17 excludes machine owners and manufacturers.
18 "Incentives." Any consideration, including any premium or
19 bonus in cash of advance commission or merchandise, offered from
20 a licensed machine owner to a licensed establishment owner in
21 order to solicit his business.
22 "Licensed establishments." A restaurant, bar, tavern, hotel
23 or club which has a valid Pennsylvania liquor license.
24 "Machine owner." An individual, partnership or corporation
25 that owns, services and maintains video poker machines for
26 placing in various State-approved places.
27 "Manufacturer." An individual, partnership or corporation
28 that manufactures or assembles video poker machines.
29 "Net machine revenues." Those net profits remaining from
30 video poker machines after prizes and licensing fees have been
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1 paid.
2 "Participating political subdivision." A city, incorporated
3 town, township or borough where video poker machines are in use
4 under this act.
5 "Video poker machine." A device or machine which, upon
6 insertion of a coin, is available to play or simulate the play
7 of the game of poker, utilizing a video display and
8 microprocessors, and from which, whether by the skill of the
9 player or by chance, the player may receive free games or
10 credits which can be redeemed for cash or anything of value.
11 Section 3. Powers and duties of department.
12 (a) General powers and duties.--The department shall have
13 the power to promulgate regulations and its duty shall be to:
14 (1) Provide for licensing procedures under this act.
15 (2) Prescribe necessary application and reporting forms
16 to be used in this act.
17 (3) Prescribe electronic accounting devices necessary to
18 verify reports to be used in this act.
19 (4) Grant or deny license applications.
20 (b) License approval.--The department may not deny an
21 application or limit, condition or restrict a license except for
22 reasonable cause. An applicant shall not be granted a license
23 unless:
24 (1) If the applicant is an individual:
25 (i) The applicant is an honest person of good
26 character and integrity and is qualified and has adequate
27 financing from suitable sources.
28 (ii) The applicant is a citizen of the United States
29 and a resident of this Commonwealth for at least two
30 years previous to the application.
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1 (2) If the applicant is a partnership, the partners,
2 general and limited, qualify as individuals under paragraph
3 (1).
4 (3) If the applicant is a corporation:
5 (i) It is a registered Pennsylvania corporation for
6 at least two years.
7 (ii) At least 50% of its directors are Pennsylvania
8 residents for at least two years.
9 (iii) All officers qualify as individuals under
10 paragraph (1).
11 (iv) Its stockholders are individuals.
12 (v) Every stockholder owning 5% or more of the stock
13 of the corporation qualifies as an individual under
14 paragraph (1).
15 (c) Hearing.--A person who was denied a license shall have
16 the right to a hearing before the department. The hearing shall
17 be conducted in accordance with the provisions of Title 2 of the
18 Pennsylvania Consolidated Statutes (relating to administrative
19 law and procedure).
20 (d) Winning percentage.--The department shall prescribe
21 winning percentage and necessary machine accounting information.
22 Video poker machines shall be set to award players minimum
23 winnings of 80% or more. Video poker machines will have
24 electronic accounting devices to verify revenue due and winning
25 percentages.
26 (e) Violations.--The department shall investigate, suspend
27 or revoke licenses for violations of this act and shall hold
28 hearings in which to consider these matters. A license may not
29 be suspended or revoked until a hearing is completed. The fine
30 for a violation of this act or of regulations promulgated under
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1 this act may not exceed $5,000 for the first violation and
2 $15,000 for each subsequent violation. In addition to the fine,
3 interest on any moneys held improperly, as the department may
4 prescribe, shall be collected.
5 (f) Standards of conduct.--The department shall promulgate
6 regulations for the conduct of the officers, employees and
7 agents of the department.
8 Section 4. Use of enforcement agents.
9 (a) Powers.--Employees of the department designated as
10 enforcement agents are empowered to investigate the background
11 and associates of license applicants to whatever extent is
12 judged necessary by the department. No investigation may be
13 undertaken prior to the submission of an application for a
14 license. No investigation may continue subsequent to the
15 granting of a license, the denial of a license or the withdrawal
16 of a license application.
17 (b) Authority.--Enforcement agents are empowered to be peace
18 officers and shall have police power and authority throughout
19 this Commonwealth to arrest, on view or under warrant, a person
20 tampering with video poker machines, attempting or conspiring to
21 manipulate the outcome or the payoff of a video poker machine or
22 manipulating the outcome or payoff of a video poker machine by
23 physical tampering or through interference with the lawful and
24 proper functioning of the mechanism.
25 (c) Investigation and report.--Enforcement agents may
26 investigate alleged illegal activities concerning video poker
27 machines and their operation, maintenance and placement.
28 Findings shall be reported in writing to the department, which
29 shall relay suspected criminal activity or violations of the law
30 to the appropriate district attorney for prosecution.
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1 (d) State and local police.--In addition to any other person
2 authorized to enforce the provisions of this act, the
3 Pennsylvania State Police and police of any municipality shall
4 be empowered to enforce the provisions of this act.
5 Section 5. Unlawful use by minors.
6 (a) Minors.--No person under 21 years of age may use or play
7 the video poker machines. A minor using or playing or attempting
8 to use or play a video poker machine commits a summary offense
9 and shall, upon conviction, pay a fine not in excess of $1,000.
10 (b) Licensees.--A licensed establishment which permits a
11 person under 21 years of age to play or use the video poker
12 machines, whether or not that licensed establishment is actually
13 aware of the minor's age, commits a summary offense and shall,
14 upon conviction, pay a fine not in excess of $5,000. The
15 establishment of the following facts by a person allowing a
16 minor to operate the video poker machines shall constitute a
17 defense to prosecution under this subsection:
18 (1) The minor falsely represented in writing that the
19 minor was 21 years of age or older.
20 (2) The appearance of the minor was such that an
21 ordinary person of prudent judgment would believe the minor
22 to be 21 years of age or older.
23 (3) The permission to operate the video poker machines
24 was made in good faith, relying upon written representation
25 and appearance and in the reasonable belief that the minor
26 was actually 21 years of age or older.
27 Section 6. Direct dispensing.
28 A machine may not directly dispense coins, cash, tokens,
29 tickets or any other article of exchange or value.
30 Section 7. Local option.
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1 (a) Placement on ballot.--A majority of the voters of a
2 city, incorporated town, township or borough shall have the
3 option to reject the placement of video poker machines in its
4 respective political subdivision within 180 days from the
5 effective date of this act if the rejection is in conformity
6 with the act of June 3, 1937 (P.L.1333, No.320), known as the
7 Pennsylvania Election Code. The question shall be placed upon
8 the ballot of that political subdivision for the next regularly
9 scheduled election as a "no" question if 25% of the registered
10 voters of that political subdivision sign a petition requesting
11 that the question be put on the ballot. The results shall be
12 transmitted to the Secretary of the Commonwealth, who shall have
13 the duty of informing the department of the result.
14 (b) Special election.--No special election shall be held to
15 answer this question. However, if a special election is held to
16 decide other matters, this question may properly be placed on
17 that ballot along with the other matters to be decided.
18 Section 8. Authority to license.
19 (a) Types of license.--After approving the proper
20 applications, the department may issue the following licenses:
21 (1) A manufacturer's license may be issued to a person
22 who manufactures or assembles video poker machines for use in
23 this Commonwealth. The annual fee shall be $25,000. It shall
24 be lawful for any person or company licensed as a
25 manufacturer under this act to sell, or offer to sell, video
26 poker machines in this Commonwealth.
27 (2) A distributor's license may be issued to a person
28 who buys or sells video poker machines in this Commonwealth.
29 The annual fee shall be $10,000.
30 (3) A machine owner's license may be issued to a person
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1 who owns, services and maintains video poker machines for
2 placement in licensed establishments. The annual fee shall be
3 $25,000 for the first 50 individual video poker machine
4 licenses. For each additional video poker machine, the annual
5 fee shall be $500 per machine. Every video poker machine in
6 use in this Commonwealth must have a current $500 license
7 displayed. Every video poker machine licensed under this act
8 must be manufactured by a person or company licensed by this
9 act.
10 (4) A licensed establishment is also required to obtain
11 a licensed establishment license in order to have video poker
12 machines on its premises. This fee shall be in addition to
13 any other license fee imposed by this act. The annual fee for
14 the license shall be as follows:
15 (i) Class I - $500 (for up to and including three
16 video poker machines).
17 (ii) Class II - $1,500 (for up to and including five
18 video poker machines).
19 (iii) Class III - $5,000 (for up to and including
20 ten video poker machines).
21 (b) Requirements.--For a licensed establishment which uses
22 video poker machines, the maximum video poker machines allowed
23 shall be ten. No video poker machines may be placed in a
24 licensed establishment unless the owner, or, in the case of a
25 club, the proper authority of the licensed establishment, has
26 entered into a contract with a machine owner for the placement
27 of the machines for a minimum term of one year.
28 (c) Licensees.--No person may hold more than one type of
29 license, directly or indirectly, or have any interest therein.
30 (d) Incentives.--Any licensed machine owner who gives, or
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1 any licensed establishment which receives, an incentive will be
2 in violation of this act.
3 Section 9. Distribution of proceeds.
4 (a) Manner of distribution.--The net profit derived from a
5 video poker machine shall be distributed as follows:
6 (1) Thirty percent to the machine owner.
7 (2) Thirty percent to the licensed establishment where
8 the machine is located.
9 (3) Forty percent to local governments to be used for
10 property tax relief as set forth in section 10.
11 (b) Collection.--Net revenues shall be collected by the
12 machine owner for each licensed video poker machine.
13 (c) Reports.--The machine owner shall make a report to the
14 county treasurer and the Commonwealth each month with the
15 following information:
16 (1) Serial number of each video poker machine electronic
17 accounting device.
18 (2) Name and address of the premises where the machine
19 is located.
20 (3) Computer printout of the net revenue of each machine
21 taken directly from the electronic accounting device.
22 Section 10. Local government revenues.
23 (a) Distribution.--The owner of each video poker machine
24 shall send a monthly report and the 40% of machine net revenues
25 to the treasurer of the county where the machines are located to
26 be distributed within 30 days as follows:
27 (1) Forty percent to school districts.
28 (2) Fifty percent to municipalities other than counties.
29 (3) Ten percent to counties.
30 (b) Purpose.--It is the intent of the General Assembly that
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1 the moneys distributed to the local governments in this section
2 be used to reduce property taxes.
3 Section 11. Creation of account.
4 Revenues from licenses and fines under this act shall be
5 placed in a restricted revenue account to fund the operation of
6 the department as required by this act, including, but not
7 limited to, salaries and administrative expenses. The department
8 shall allocate a minimum of $1,000,000 annually to be used for
9 treatment of compulsive gamblers in accordance with regulations
10 to be adopted by the department.
11 Section 12. Preemption of local taxes and license fees.
12 (a) Preemption.--Video poker machines and coin-operated
13 amusement machines shall be exempt from taxes levied under the
14 act of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as
15 the Sterling Act, the act of December 31, 1965 (P.L.1257,
16 No.511), known as The Local Tax Enabling Act, or the act of
17 April 13, 1972 (P.L.184, No.62), known as the Home Rule Charter
18 and Optional Plans Law.
19 (b) Fees restricted.--Coin-operated amusement games,
20 excluding video poker machines, may be licensed by local
21 political subdivisions, including home rule charter or optional
22 plan municipalities, for a total of up to, but not exceeding,
23 $50 per machine per year.
24 Section 13. Existing machines.
25 Machines manufactured and sold to machine owners or
26 distributors prior to the effective date of this act shall be
27 exempt from the foregoing manufacturing provision of this act.
28 These machines shall be considered to have been manufactured,
29 distributed, sold and used legally in this Commonwealth.
30 Section 14. Exemption from State gambling laws.
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1 Video poker machines shall be exempt from State gambling
2 laws.
3 Section 15. Exemption from Federal regulation.
4 The General Assembly declares that the Commonwealth is exempt
5 from section 2 of the Gambling Devices Transportation Act (64
6 Stat. 1134, 15 U.S.C. § 1172). Shipments of video devices into
7 this Commonwealth in compliance with sections 3 and 4 of the
8 Gambling Devices Transportation Act (64 Stat. 1134, 15 U.S.C. §§
9 1173 and 1174) shall be deemed legal shipments into this
10 Commonwealth.
11 Section 16. Effective date.
12 This act shall take effect immediately.
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