PRINTER'S NO. 1269
No. 1020 Session of 2001
INTRODUCED BY TOMLINSON, WAGNER, STOUT, CONTI AND TARTAGLIONE,
JUNE 21, 2001
REFERRED TO STATE GOVERNMENT, JUNE 21, 2001
AN ACT
1 Authorizing certain racetrack gaming; providing for
2 disbursements of revenues; establishing the Racetrack Gaming
3 Control Board and the State Gaming Fund; imposing duties on
4 the State Horse Racing Commission; imposing a slot machine
5 tax; and making an appropriation.
6 TABLE OF CONTENTS
7 Section 1. Short title.
8 Section 2. Legislative intent.
9 Section 3. Definitions.
10 Section 4. Racetrack Gaming Control Board established.
11 Section 5. Board's powers.
12 Section 6. Authorized slot machine licenses.
13 Section 7. Slot machine license application.
14 Section 8. Slot machine accounting controls and audits.
15 Section 9. Supplier licenses and applications.
16 Section 10. Occupation permit and applications.
17 Section 11. Additional licenses and permits.
18 Section 12. Slot machine tax; State Gaming Fund; distributions
19 from fund.
1 Section 13. Pennsylvania Standardbred Breeders' Development
2 Fund.
3 Section 14. Additional revenue disbursements.
4 Section 15. Declaration of exemption from Federal laws
5 prohibiting slot machines.
6 Section 16. State Horse Racing Commission.
7 Section 17. Appropriation.
8 Section 18. Effective date.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Short title.
12 This act shall be known and may be cited as the Racetrack
13 Gaming Act.
14 Section 2. Legislative intent.
15 The General Assembly hereby finds and declares it to be the
16 public policy of this Commonwealth as follows:
17 (1) The General Assembly recognizes that several
18 neighboring states of this Commonwealth have approved gaming
19 devices at licensed racetrack facilities.
20 (2) This competition is adversely affecting the racing
21 industry in this Commonwealth, which is a significant
22 component of this Commonwealth's agricultural industry and a
23 major contributor to the preservation of 520,000 acres of
24 open space and agricultural land devoted to breeding, raising
25 and training horses.
26 (3) This competition threatens the 35,000 jobs that
27 Pennsylvania racing supports.
28 (4) This competition jeopardizes the $752,000,000 total
29 annual economic output and the capital facilities worth an
30 estimated $1,200,000,000 that Pennsylvania racing produces in
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1 this Commonwealth.
2 (5) The General Assembly believes that permitting
3 limited gaming by the installation and operation of slot
4 machines at Pennsylvania's racetracks enhances their existing
5 business purposes of preserving live racing, wagering,
6 tourism, entertainment and employment.
7 (6) The General Assembly declares the following
8 objectives:
9 (i) Ensure that this Commonwealth's horse racing
10 industry remains competitive with neighboring states.
11 (ii) Positively assist this Commonwealth's horse
12 racing industry to produce additional tax revenues and to
13 create new jobs.
14 (iii) Promote the further growth of tourism by
15 offering limited forms of regulated gaming at licensed
16 racetracks where live horse racing takes place.
17 (iv) Strictly monitor and control any limited gaming
18 activity by the regulation and licensing of all specified
19 locations, persons, associations, practices and
20 activities.
21 (v) Strictly monitor and control the manufacturers
22 and distributors of any slot machine installed at
23 racetracks.
24 (vi) Establish strict financial integrity and
25 eligibility requirements which would include public
26 disclosure of ownership and interest.
27 (vii) Prohibit slot machines at nonprimary locations
28 without further action by the General Assembly.
29 (viii) Take into consideration the social effect of
30 such gaming and any potential for addictive behavior.
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1 Section 3. Definitions.
2 The following words and phrases when used in this act shall
3 have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Associated equipment." Any equipment or mechanical,
6 electromechanical or electronic contrivance, component or
7 machine used in connection with gaming, including links which
8 connect to progressive slot machines, equipment which affects
9 the proper reporting of gross revenue, computerized systems for
10 monitoring gaming devices and devices for weighing or counting
11 money.
12 "Board." The Racetrack Gaming Control Board established
13 under section 4.
14 "Fund." The State Gaming Fund established under section 12.
15 "Gaming employee." Any employee, including, but not limited
16 to:
17 (1) cashiers;
18 (2) change personnel;
19 (3) counting room personnel;
20 (4) floormen;
21 (5) hosts or other persons authorized to extend
22 complimentary services;
23 (6) machine mechanics;
24 (7) security personnel; and
25 (8) supervisors or managers.
26 The term also includes employees of a person holding a
27 supplier's license whose duties are directly involved with
28 manufacture, repair or distribution of slot machines under this
29 act. The term does not include bartenders, cocktail servers or
30 other persons engaged solely in preparing or serving food or
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1 beverage, secretarial personnel, janitorial, stage, sound and
2 light technicians and other nongaming personnel.
3 "Gross revenue." The total of cash or the cash equivalent
4 received by a slot machine minus the total of:
5 (1) Cash or the cash equivalent paid out to patrons as a
6 result of playing a slot machine.
7 (2) Cash paid to purchase annuities to fund cash paid to
8 patrons over several years by independent administrators as a
9 result of playing a slot machine.
10 (3) Any personal property distributed to a patron as the
11 result of playing a slot machine but not travel expenses,
12 food, refreshments, lodging or services. The term does not
13 include counterfeit money or tokens, coins of other countries
14 which are received in slot machines, except to the extent
15 that they are readily convertible to official currency, cash
16 taken in fraudulent acts perpetrated against a slot machine
17 licensee for which the licensee is not reimbursed or cash
18 received as entry fees for contests or tournaments in which
19 the patrons compete for prizes.
20 "Licensed corporations." Corporations that have obtained a
21 license from either the State Horse Racing Commission or the
22 State Harness Racing Commission to conduct thoroughbred or
23 harness horse race meetings respectively with pari-mutuel
24 wagering.
25 "Nonprimary location." Any facility in which pari-mutuel
26 wagering is conducted by licensed corporations other than the
27 racetrack location.
28 "Person." A natural person, corporation, organization,
29 business trust, estate, trust, partnership, association or any
30 other legal entity.
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1 "Progressive jackpot." A prize that increases as one or more
2 slot machines are connected to a progressive system.
3 "Progressive system." A computerized system linking gaming
4 devices in one or more licensed establishments and offering one
5 or more common progressive jackpots.
6 "Race Horse Industry Reform Act." The act of December 17,
7 1981 (P.L.435, No.135), known as the Race Horse Industry Reform
8 Act.
9 "Racetrack." The physical facility where a licensed
10 corporation conducts thoroughbred or harness race meetings
11 respectively with pari-mutuel wagering.
12 "Slot machine." Any mechanical, electrical or other device,
13 contrivance or machine approved by the board which, upon
14 insertion of a coin, token or similar object therein or upon
15 payment of any consideration whatsoever, is available to play or
16 operate, the play or operation of which, whether by reason of
17 the skill of the operator or application of the element of
18 chance, or both, may deliver or entitle the person playing or
19 operating the machine to receive cash or tokens to be exchanged
20 for cash or to receive merchandise or any thing of value
21 whatsoever, whether the payoff is made automatically from the
22 machine or in any other manner.
23 "Slot machine license." A license authorizing a licensed
24 corporation to place and operate slot machines at its racetrack
25 pursuant to this act.
26 "Slot machine licensee." A licensed corporation which
27 obtains a slot machine license.
28 "Supplier." A person who manufactures, assembles, produces,
29 programs, sells, leases, markets, offers or otherwise produces,
30 distributes or makes modifications to any slot machine for use
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1 or play in this Commonwealth.
2 Section 4. Racetrack Gaming Control Board established.
3 (a) Board established.--There is hereby established a
4 Racetrack Gaming Control Board as a departmental administrative
5 board within the Department of Revenue.
6 (b) Membership.--The board shall consist of the following
7 five members:
8 (1) Three members who shall be appointed by the Governor
9 with the advice and consent of the Senate.
10 (2) The chairperson of the State Horse Racing
11 Commission.
12 (3) The chairperson of the State Harness Racing
13 Commission.
14 The Secretary of Revenue and Secretary of Agriculture shall
15 serve as nonvoting ex officio members.
16 (c) Compensation.--The Executive Board shall establish the
17 compensation of the members and employees of the board in
18 accordance with section 709 of the act of April 9, 1929
19 (P.L.177, No.175), known as The Administrative Code of 1929. All
20 members shall be reimbursed for all necessary and actual
21 expenses.
22 (d) Chairman.--The chairman shall be selected by the
23 Governor to serve a term designated by the Governor.
24 (e) Terms.--The governor shall appoint the initial three
25 appointees within 60 days of the effective date of this act. The
26 three members of the board appointed by the Governor shall each
27 serve three-year terms, except that the initial appointees shall
28 have staggered terms so that one member shall be appointed for a
29 one-year term, one member shall be appointed for a two-year term
30 and one member shall be appointed for a three-year term.
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1 (f) Qualifications.--The three members of the board
2 appointed by the Governor shall have the following
3 qualifications:
4 (1) One member shall be a person having a minimum of
5 five years of responsible administrative experience in public
6 or business administration and possessing broad management
7 skills.
8 (2) One member shall be a certified public accountant
9 licensed to practice in this Commonwealth.
10 (3) One member shall possess substantial experience of a
11 senior nature in law enforcement.
12 Section 5. Board's powers.
13 (a) General powers.--The board shall establish, administer
14 and ensure the integrity of slot machines at racetracks and
15 shall have jurisdiction over the location and operation of slot
16 machines at racetracks. The board shall employ an executive
17 director, deputies, secretaries, officers and representatives as
18 it may deem necessary, who shall serve at the board's pleasure.
19 The board shall also employ other employees as they see fit and
20 whose duties and compensation shall be prescribed by the board.
21 Legal counsel for the board shall be appointed in accordance
22 with the act of October 15, 1980 (P.L.950, No.164), known as the
23 Commonwealth Attorneys Act. The board shall be subject to the
24 provisions of the act of April 9, 1929 (P.L.177, No.175), known
25 as The Administrative Code of 1929, as to classification and
26 compensation for all its employees and conduct its activities
27 consistent with the practices and procedures of Commonwealth
28 agencies.
29 (b) Specific powers.--The board shall have the following
30 specific powers and duties:
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1 (1) Investigate, evaluate and decide upon applications
2 for all licenses provided for in this act.
3 (2) Issue slot machine licenses pursuant to the
4 provisions of section 6.
5 (3) Promulgate regulations as the board deems necessary
6 to carry out the policy and purposes of this subchapter and
7 to enhance the credibility and integrity of racetrack gaming
8 devices in this Commonwealth. Notwithstanding any other
9 provision of law to the contrary and in order to facilitate
10 the prompt implementation of this act, regulations
11 promulgated by the board during the first year of its
12 existence shall not be subject to notice of proposed
13 rulemaking pursuant to section 204 of the act of July 31,
14 1968 (P.L.769, No.240), referred to as the Commonwealth
15 Documents Law. Regulations adopted after the one-year period
16 shall be promulgated, adopted and published as provided by
17 law.
18 (4) The board or designated officers, employees or
19 agents of the board shall have the power to administer oaths,
20 examine witnesses and may issue subpoenas to compel
21 attendance of witnesses and production of all relevant and
22 material reports, books, papers, documents and other
23 evidence.
24 (5) Levy and collect fees from the various licensees and
25 permittees sufficient to fund all of the operations of the
26 board. The fees shall be paid to the State Treasury through
27 the Department of Revenue and credited to the board for its
28 operations.
29 (6) Levy and collect an annual payment by slot machine
30 licensees of $150 per slot machine in operation as of
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1 September 1 of each calendar year beginning with September 1
2 after the effective date of this section. This fee shall be
3 deposited into a restricted receipts account to be annually
4 appropriated by the General Assembly for programs designated
5 by the General Assembly to provide treatment to compulsive
6 gamblers.
7 (7) Provide for the assessment and collection of fines
8 and penalties for violations of this act. All fines and
9 penalties shall be credited for deposit to the General Fund.
10 (8) Revoke or suspend any license provided for in this
11 act if the board finds by a preponderance of the evidence
12 that a licensee under this act, its officers, employees or
13 agents do not comply with the provisions of this act or the
14 rules and regulations of the board and that it would be in
15 the public interest, convenience or necessity to revoke or
16 suspend the license. None of the licenses provided for in
17 this act are transferable or assignable in any manner.
18 (9) Restrict access to confidential information obtained
19 under this act and ensure that the confidentiality of
20 information is maintained and protected.
21 (10) Prescribe financial reporting and internal control
22 requirements for slot machine licensees operating slot
23 machines pursuant to section 6.
24 (11) Prescribe the manner in which gross revenue must be
25 computed and reported by the slot machine licensee relating
26 to slot machines.
27 (12) Require audits of the financial statements of all
28 slot machine licensees operating slot machines.
29 (13) Require periodic financial reports from each slot
30 machine licensee consistent with standards and intervals
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1 prescribed by the board.
2 (14) Prescribe the procedures to be followed by slot
3 machine licensees for cash transactions affecting slot
4 machines.
5 (15) Prescribe criteria and conditions for the operation
6 of slot machine progressive systems.
7 (16) Enforce the prescribed hours for the operation of
8 slot machines, so that slot machine licensees may operate
9 slot machines on any day, except Christmas day, between the
10 hours of 10 a.m. on one day until 2 a.m. the next day.
11 (17) Prohibit the offering of free alcohol or free malt
12 or free brewed beverages to patrons operating or using slot
13 machines.
14 (18) Prohibit wagering by persons under 21 years of age
15 on slot machines.
16 (19) Establish procedures for the inspection and
17 certification of each slot machine prior to being placed into
18 use at the racetrack by a slot machine licensee. No slot
19 machine may be set to pay out less than 87% or more than 95%
20 of all wagers on an average annual basis unless specifically
21 approved otherwise by the board.
22 (c) Reports.--The following reports shall be required
23 annually:
24 (1) 18 months after the effective date of this act and
25 every year on that date thereafter, the board, in conjunction
26 with the Department of Revenue shall issue a report to the
27 Governor and the General Assembly on the general operation of
28 the board, including, but not limited to, all taxes, fees,
29 fines and other revenues collected and, where appropriate,
30 disbursed, all hearings conducted and the results of, and
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1 other information that the board deems necessary and
2 appropriate.
3 (2) 18 months after the effective date of this act and
4 every year on that date thereafter, the Legislative Budget
5 and Finance Committee shall issue a report to the General
6 Assembly analyzing the impact, if any, of this act on the
7 State Lottery.
8 Section 6. Authorized slot machine licenses.
9 (a) Eligibility.--A licensed corporation shall be entitled
10 to receive a slot machine license to place and operate slot
11 machines at its racetrack if that licensed corporation meets all
12 of the following:
13 (1) The licensed corporation has conducted live racing
14 or its predecessor has conducted live racing within the two
15 years immediately preceding the enactment of this act.
16 (2) The licensed corporation maintains its license to
17 conduct racing in good standing with the appropriate
18 commission.
19 (3) The licensed corporation continues to provide for
20 live horse racing as provided for in the Race Horse Industry
21 Reform Act.
22 (4) The licensed corporation abides by all of the
23 provisions and regulations of this act.
24 (b) Limitations.--The issuance of a slot machine license
25 shall entitle the licensee to operate slot machines within the
26 approved facility. Authorization to continue the operation of
27 slot machines shall be limited to those slot machine licensees:
28 (1) That have a written live racing agreement with a
29 horsemen's organization representing a majority of owners and
30 trainers at the racetrack where the licensed corporation
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1 conducts racing dates.
2 (2) That have scheduled 95% of the total number of horse
3 or harness racing days scheduled in 1986 by it or its
4 predecessor at the racetrack where the licensed corporation
5 conducts racing dates.
6 (3) That, subject to actions or activities beyond the
7 control of the licensee, conduct not fewer than eight live
8 races per race date during each meet at the racetrack where
9 the licensed corporation conducts racing dates, except for
10 thoroughbred tracks on the day designated as Breeder's Cup
11 Event Day, when the racetrack shall hold a minimum of five
12 live races. The horsemen's organizations representing a
13 majority of owners and trainees at a racetrack may consent to
14 waiving or modifying the provisions pertaining to the
15 required number of racing days under subsection (b)(2) and
16 races per day scheduled in this subsection by the licensed
17 corporation at that racetrack.
18 (4) Notwithstanding the provisions of paragraph (1), in
19 the event that a written live racing agreement has not been
20 entered into, permission for any slot machine licensee to
21 operate slot machines shall be granted provided that the
22 licensed corporation has continued to conduct live racing or
23 has scheduled to conduct live racing in accordance with
24 paragraphs (2) and (3) and keeps its racetrack open to the
25 general population of owners, trainers and horses currently
26 stabled there for training and stabling on a regular basis
27 during the periods when it is normally open for live racing
28 and during such period pays as purses the applicable
29 statutory percentages of the licensed corporations' retention
30 of moneys from pari-mutuel pools or, if the percentages are
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1 not mandated by statute, pays as purses 50% of the licensed
2 corporations' retention of moneys from pari-mutuel pools or
3 50% of the licensed corporations' share of moneys from the
4 simulcasting of its live races to other locations, plus the
5 applicable purse revenue for operating a gaming device
6 license under this section.
7 (c) Prohibited.--No applicant that has been convicted, in
8 any jurisdiction of a felony, crime of moral turpitude or
9 gambling offense may be issued a slot machine license under this
10 act.
11 Section 7. Slot machine license application.
12 (a) Application.--Any licensed corporation which meets the
13 requirements of section 6 that desires to install slot machines
14 and operate or alter the number of or location of slot machines
15 within its racetrack shall file an application form with the
16 board.
17 (b) Form.--Pursuant to subsection (a), an application form
18 shall be developed by the board.
19 (c) Requirements.--The application form for a license shall
20 include, but not be limited to:
21 (1) The name and address of the licensed corporation.
22 (2) The proposed location of the gaming devices within
23 the racetrack facility. No application shall be approved
24 which contains a request for placement of slot machines in a
25 hotel, motel or other overnight sleeping facility.
26 (3) The number of slot machines requested. An applicant
27 shall receive approval by the board for the operation of up
28 to 2,000 slot machines.
29 (4) The justification and explanation for the number and
30 location of the gaming devices within the racetrack facility.
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1 (5) The current standing of the licensed corporation's
2 racetrack license.
3 (6) A specified comment section for the respective
4 commission regulating the applicant to make comments and
5 suggestions.
6 (7) Any other information determined to be essential by
7 the board.
8 Section 8. Slot machine accounting controls and audits.
9 (a) Approval.--Each licensed corporation which desires to
10 install and operate slot machines at its racetrack shall first
11 obtain approval of its internal control systems and audits from
12 the board.
13 (b) Minimum requirements.--At a minimum, the internal
14 controls and audits shall consist of:
15 (1) The safeguarding of its assets and revenues,
16 especially the recording of cash and evidences of
17 indebtedness related to the slot machines.
18 (2) The provision of reliable records, accounts and
19 reports of transactions, operations and events, including
20 reports to the board related to the slot machines.
21 (3) The ensuring that all slot machines within each
22 racetrack facility are directly connected to each racetrack's
23 central computerized system and can provide details of all
24 transactions, including, but not limited to, coin in, coin
25 out, jackpots, machine door openings and power failures.
26 (4) A procedure whereby assets are safeguarded.
27 (5) Financial records are accurate and reliable.
28 (6) Transactions are performed only in accordance with
29 the management's general or specific authorization.
30 (7) Transactions are recorded adequately to permit
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1 proper and timely reporting of gaming revenue and of fees and
2 taxes and to maintain accountability for assets.
3 (8) Access to assets is permitted only in accordance
4 with management's specific authorization.
5 (9) Recorded accountability for assets is compared with
6 actual assets at reasonable intervals and appropriate action
7 is taken with respect to any discrepancies.
8 (10) Functions, duties and responsibilities are
9 appropriately segregated and performed in accordance with
10 sound practices by competent, qualified personnel.
11 (c) Internal control.--Each licensed corporation which seeks
12 to operate slot machines at its racetrack shall describe, in the
13 manner the board may approve or require, its administrative and
14 accounting procedures in detail in a written system of internal
15 control. Each licensed corporation which seeks to operate slot
16 machines at its racetracks shall submit a copy of its written
17 system to the board. Each written system shall include:
18 (1) An organizational chart depicting appropriate
19 segregation of functions and responsibilities.
20 (2) A description of the duties and responsibilities of
21 each position shown on the organizational chart.
22 (3) A detailed narrative description of the
23 administrative and accounting procedures designed to satisfy
24 the requirements of subsection (a).
25 (4) A written statement signed by the chief financial
26 officer of the licensed corporation and the chief executive
27 officer of the licensed corporation attesting that the system
28 satisfies the requirements of this section.
29 (5) Any other item that the board may require.
30 Section 9. Supplier licenses and applications.
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1 (a) Application.--Any person that desires to supply slot
2 machines or associated equipment to a slot machine licensee
3 shall apply to the board for a supplier license.
4 (b) Requirements.--The application for a supplier license
5 shall include, but not be limited to:
6 (1) The name and business address of the person.
7 (2) The length of time the person has been in the
8 business related to the application.
9 (3) The background and financial standing of the person.
10 (4) Details of any supplier license granted by other
11 jurisdictions where gaming is legal.
12 (5) The type of goods and services to be supplied.
13 (6) Any other information and details the board may
14 require.
15 (c) License issuance.--
16 (1) Any supplier that the board determines is qualified
17 to receive a supplier license under the provisions of this
18 section may be issued a license.
19 (2) A license shall not be granted unless the board
20 finds that the applicant satisfies all of the following
21 criteria:
22 (i) The applicant is a person of good character,
23 honesty and integrity. In making this determination, the
24 board shall include a review of the applicant's criminal
25 history as compiled by the Pennsylvania State Police. If
26 the applicant has been convicted, in any jurisdiction, of
27 a felony, a crime related to the activities of gambling
28 or a crime of moral turpitude, then the board shall not
29 issue a license under this section.
30 (ii) The applicant is a person whose prior
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1 activities, criminal record, if any, reputation, habits
2 and associations do not pose a threat to the public
3 interest or to the effective regulation and control of
4 gaming or create or enhance the dangers of unsuitable,
5 unfair or illegal practices, methods and activities in
6 the conduct of gaming or the carrying on of the business
7 and financial arrangements incidental to it.
8 (iii) The applicant in all other respects is
9 qualified to be licensed or found suitable consistent
10 with the laws of this Commonwealth.
11 Section 10. Occupation permit and applications.
12 (a) Application.--Any person that desires to be a gaming
13 employee shall apply to the board for an occupation permit. A
14 person may not be employed as a gaming employee unless the
15 person holds an appropriate occupation permit issued under this
16 section.
17 (b) Requirements.--The application for an occupation permit
18 shall include, but not be limited to:
19 (1) The name and home address of the person.
20 (2) The previous employment history of the person.
21 (3) Any criminal record of the person.
22 (4) The nature and scope of the proposed duties of the
23 person.
24 (5) Any other information and details the board may
25 require.
26 (c) License issuance.--
27 (1) Any person that the board determines to be qualified
28 to receive an occupation permit under the provisions of this
29 section may be issued a permit.
30 (2) A permit shall not be granted unless the board finds
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1 that the applicant satisfies all of the following criteria:
2 (i) The applicant is a person of good character,
3 honesty and integrity. In reviewing remaining criminal
4 convictions, the board shall evaluate the seriousness and
5 nature of the offense, the date of the offense and the
6 applicant's evidence of rehabilitation and the occupation
7 for which the applicant seeks a permit in making its
8 determination under this section.
9 (ii) The applicant is a person whose prior
10 activities, criminal record, if any, reputation, habits
11 and associations do not pose a threat to the public
12 interest or to the effective regulation and control of
13 gaming or create or enhance the dangers of unsuitable,
14 unfair or illegal practices, methods and activities in
15 the conduct of gaming or the carrying on of the business
16 and financial arrangements incidental to it.
17 (iii) The applicant is in all other respects
18 qualified to be licensed or found suitable consistent
19 with the laws of this Commonwealth.
20 Section 11. Additional licenses and permits.
21 (a) Suitability.--The board may determine the suitability of
22 any person who furnishes services or property to a slot machine
23 licensee related to slot machines at its racetrack under any
24 arrangements under which that person receives payments based
25 directly or indirectly on earnings, profits or receipts from the
26 slot machines. The board may require any person to comply with
27 the requirements of this act and the regulations of the board.
28 (b) Requirements.--The board may require a license or permit
29 from any person who satisfies any one of the following criteria:
30 (1) The person does business on the premises.
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1 (2) The person does business with a slot machine
2 licensee as a ticket purveyor, a tour operator, the operator
3 of a bus program, or the operator of any other type of travel
4 program or promotion related to slot machines.
5 (3) The person provides any goods or services to a slot
6 machine licensee related to slot machines at the racetrack
7 for a compensation which the board finds to be
8 disproportionate to the value of the goods or services.
9 (c) Agreement.--Any agreement which entitles a person to
10 conduct a business with a slot machine licensee relating to slot
11 machines is subject to the approval of the board. Every
12 agreement shall be in writing and include a provision for its
13 termination without liability on the part of the slot machine
14 licensee upon a finding by the board that the agreement is not
15 approved or that it is terminated. Failure to expressly include
16 this condition in the agreement is not a defense in any action
17 brought under this section to terminate the agreement.
18 Section 12. Slot machine tax; State Gaming Fund; distributions
19 from fund.
20 (a) Fund established.--There is hereby established the State
21 Gaming Fund.
22 (b) Tax.--All slot machine licensees shall pay a tax in the
23 amount of 30% of the gross revenue arising from the operation of
24 the slot machines.
25 (c) Payment and credit.--The tax imposed by this section
26 shall be paid by the slot machine licensees through the
27 department for credit to the fund monthly on or before the 20th
28 day of the month next succeeding the month in which the tax
29 accrues.
30 (d) Distribution.--The board shall distribute moneys from
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1 the fund together with the interest earned thereon at least once
2 annually on September 1, 1999, and each September 1 thereafter
3 to the State Treasurer for deposit in the following manner:
4 (1) 50% shall be directed to funding public education
5 programs in all 501 school districts in this Commonwealth and
6 distributed in accordance with the formula set forth in
7 section 2502 of the act of March 10, 1949 (P.L.30, No.14),
8 known as the Public School Code of 1949. Of this 50%, the sum
9 of $5,000,000 shall be allocated to fund the temporary
10 special aid to school districts suffering loss of tax revenue
11 due to reduction in assessed valuation of taxable property
12 pursuant to section 2502.30 of the Public School Code of
13 1949.
14 (2) 6% shall be transferred to the State Fire
15 Commissioner in order to establish and fund the Volunteer
16 Fire Company Grant Program. This program shall operate under
17 the guidelines and procedures promulgated by an oversight
18 board composed of the State Fire Commissioner and one member
19 appointed by each of the following: the President pro tempore
20 of the Senate, the Minority Leader of the Senate, the Speaker
21 of the House of Representatives and the Minority Leader of
22 the House of Representatives.
23 (3) 29% shall be transferred to the Department of Aging
24 for augmentation of the PACE program.
25 (4) 5% shall be distributed among the counties hosting a
26 racetrack which operates slot machines based upon the
27 licensed corporation's percentage of contribution to the
28 fund. If the racetrack is located in two or more counties,
29 the amount available shall be distributed on a pro rata basis
30 determined by the percentage of acreage located in each
20010S1020B1269 - 21 -
1 county to the total acreage in all counties occupied by the
2 racetrack.
3 (5) 5% shall be distributed among the municipalities
4 hosting a racetrack which operates slot machines based upon
5 the licensed corporation's percentage of contribution to the
6 fund. If the racetrack is located in two or more
7 municipalities, the amount available shall be distributed on
8 a pro rata basis determined by the percentage of acreage
9 located in each municipality to the total acreage in all
10 municipalities occupied by the racetrack.
11 (6) 5% shall be distributed equally among the school
12 districts hosting a racetrack which operates slot machines
13 based upon the licensed corporation's percentage of
14 contribution to the fund. If the racetrack is located in two
15 or more school districts, the amount available shall be
16 distributed on a pro rata basis determined by the percentage
17 of acreage located in each school district to the total
18 acreage in all school districts occupied by the racetrack.
19 (e) Tax reconciliation.--If the amount of tax required to be
20 reported and paid pursuant to this section is later determined
21 to be greater or less than the amount actually reported and paid
22 by the licensed corporation, the board shall:
23 (1) assess and collect the additional tax determined to
24 be due with interest thereon until paid; or
25 (2) provide for a refund of any overpayment, with
26 interest thereon, to the licensed corporation.
27 Section 13. Pennsylvania Standardbred Breeders' Development
28 Fund.
29 (a) Account created.--There is hereby created a restricted
30 account in the State Racing Fund to be known as the Pennsylvania
20010S1020B1269 - 22 -
1 Standardbred Breeders' Development Fund which shall consist of
2 the money appropriated under the provisions of section 15 and
3 which shall be administered by the State Harness Racing
4 Commission.
5 (b) Awards.--After the deduction of expenses related to the
6 administration and development of the Pennsylvania Standardbred
7 Breeders' Development Fund program incurred by the Pennsylvania
8 Standardbred Breeders' Association, the State Harness Racing
9 Commission shall, by rule or regulation, provide for
10 Pennsylvania Stallion Award, Pennsylvania Bred Award and
11 Pennsylvania Sired and Bred Award as follows:
12 (1) The Pennsylvania Stallion Award as calculated in
13 subsection (c)(2) shall be paid to the owner or, if
14 applicable, the syndicate manager to be distributed to the
15 owners of a standardbred stallion standing in Pennsylvania
16 based upon the winnings of any standardbred horse sired by
17 the standardbred stallion standing in Pennsylvania in any
18 Pennsylvania pari-mutuel or fair race. The total winnings by
19 all Pennsylvania-sired standardbred horses in all
20 Pennsylvania pari-mutuel or fair races shall bear a weight
21 factor of one in the distribution formula set forth in
22 subsection (c)(2).
23 (2) The Pennsylvania Bred Award as calculated in
24 subsection (c)(2) shall be paid to the breeder of record of a
25 Pennsylvania-bred standardbred horse. A Pennsylvania bred
26 standardbred horse shall be a standardbred horse foaled and
27 remaining in Pennsylvania at least 90 consecutive days after
28 foaling but sired by a stallion standing outside
29 Pennsylvania. The award shall be paid to the breeder of
30 record of a Pennsylvania-bred standardbred horse based upon
20010S1020B1269 - 23 -
1 the winnings of the Pennsylvania-bred standardbred horse in
2 any Pennsylvania pari-mutuel or fair race. The total winnings
3 by all Pennsylvania-bred standardbred horses in all
4 Pennsylvania pari-mutuel or fair races shall bear a weight
5 factor of two in the distribution formula set forth in
6 subsection (c)(2).
7 (3) The Pennsylvania Sired and Bred Award as calculated
8 in subsection (c)(2) shall be paid to the breeder of record
9 of a Pennsylvania-sired and Pennsylvania-bred standardbred
10 horse. A Pennsylvania-sired and Pennsylvania-bred
11 standardbred horse shall be a standardbred horse foaled and
12 remaining in Pennsylvania at least 90 consecutive days after
13 foaling and sired by a stallion standing in Pennsylvania. The
14 award shall be paid to the breeder of record of a
15 Pennsylvania-sired and Pennsylvania-bred standardbred horse
16 based upon the winnings of the Pennsylvania-sired and
17 Pennsylvania-bred standardbred horse in any Pennsylvania
18 pari-mutuel or fair race. The total winnings by all
19 Pennsylvania-sired and Pennsylvania-bred standardbred horses
20 in all Pennsylvania pari-mutuel or fair races shall bear a
21 weight factor of seven in the distribution formula set forth
22 in subsection (c)(2).
23 (c) Adjustment factor.
24 (1) The adjustment factor shall be calculated as
25 provided in this subsection. At the end of each calendar
26 year, the total purses won in Pennsylvania pari-mutuel or
27 fair races by horses qualifying under each of the categories
28 in subsection (b) shall be determined. After the total purses
29 won by horses in each category are determined, the weighting
30 factors described in subsection (b) shall be applied to the
20010S1020B1269 - 24 -
1 total amount in each category, resulting in a weighted total
2 amount for each category. The weighted total amount in each
3 category shall be aggregated into a weighted grand total. The
4 total amount in the Pennsylvania Standardbred Breeders'
5 Development Fund at the end of each year, after deduction of
6 expenses described in subsection (e), shall be divided by the
7 weighted grand total, resulting in an adjustment factor.
8 (2) The total category awards and individual awards
9 shall be calculated as provided in this subsection. The
10 adjustment factor determined in subsection (c)(1) shall be
11 multiplied by the weighted total amount described in
12 subsection (c)(1) for each award category to determine the
13 total amount available for awards in each category. In order
14 to determine individual awards for each of the categories
15 described in subsection (b), the amount of money won in the
16 Pennsylvania pari-mutuel or fair race by the qualifying
17 standardbred horse shall be multiplied by the weighting
18 factor attributable to the particular category and the
19 adjustment factor.
20 (d) Award calculations.--The individual awards for each
21 category under subsection (b) shall be paid after calculation of
22 the foregoing amounts, which payment shall be made during the
23 calendar year following the year in which the applicable purses
24 were won.
25 (e) Registration.--The Pennsylvania Standardbred Breeders'
26 Association shall be the sole responsible body for the
27 registration and records of Pennsylvania stallions, Pennsylvania
28 bred and Pennsylvania sired and bred. The Pennsylvania
29 Standardbred Breeders' Association shall advise the State
30 Harness Racing Commission, when called upon, and shall determine
20010S1020B1269 - 25 -
1 the qualifications for Pennsylvania stallions, Pennsylvania bred
2 and Pennsylvania sired and bred. Its registration and records
3 are hereby declared official Pennsylvania records. At the close
4 of each calendar year, the Pennsylvania Standardbred Breeders'
5 Association shall submit to the State Harness Racing Commission
6 for its approval an itemized budget of projected expenses for
7 the ensuring year relating to the administration and development
8 of the Pennsylvania Standardbred Breeders' Development Fund
9 program. The State Harness Racing Commission on no more than a
10 quarterly basis shall reimburse from the fund the Pennsylvania
11 Standardbred Breeders' Association for those expenses actually
12 incurred in the administration and development of the
13 Standardbred Breeders' Development Fund program.
14 Section 14. Additional revenue disbursements.
15 (a) Disbursements.--Each slot machine licensee, after the
16 monthly payment of the slot machine tax, shall distribute from
17 the balance of the monthly gross revenues arising from the
18 operation of the slot machines of that licensee the following
19 amounts indicated in subsection (b).
20 (b) Two thousand or fewer slot machines.--If an average of
21 2,000 or fewer slot machines are operated by the slot machine
22 licensee at its racetrack during the month such gaming revenues
23 are received:
24 (1) 14% of the balance under subsection (a) is to be
25 used as additional moneys to fund the purses for the live
26 races at that racetrack, in addition to existing purse
27 agreements.
28 (2) (i) From licensed corporations that operate gaming
29 devices at thoroughbred racetracks, 3.5% of the balance
30 under subsection (a) is to be paid into the Pennsylvania
20010S1020B1269 - 26 -
1 Breeding Fund as described in section 223 of the Race
2 Horse Industry Reform Act and distributed as directed
3 therein; or
4 (ii) from licensed corporations that operate gaming
5 devices at standardbred racetracks:
6 (A) 1/2 of 3.5% of the balance under subsection
7 (a) is to be paid to the Pennsylvania Sire Stakes
8 Fund as described in section 224 of the Race Horse
9 Industry Reform Act and distributed as directed
10 therein.
11 (B) 1/2 of 3.5% of the balance under subsection
12 (a) is to be paid to the Pennsylvania Standardbred
13 Breeders' Development Fund established in section 13
14 and distributed to the Pennsylvania Stallion Awards,
15 Pennsylvania Bred Awards and Pennsylvania Sired and
16 Bred Awards as directed therein.
17 (3) 1/2% of the balance under subsection (a) is to be
18 used to fund health and pension benefits for the members of
19 the horsemen's organizations representing the owners and
20 trainers at the racetrack of that licensed corporation and,
21 also to fund health insurance and benefits to active and
22 disabled thoroughbred jockeys or standardbred drivers who are
23 or were members of the thoroughbred jockeys' or standardbred
24 drivers' organization at the racetrack of that licensed
25 corporation as follows:
26 (i) $250,000 annually from each licensed corporation
27 is to be paid to the thoroughbred jockeys' or
28 standardbred drivers' organization at the racetrack of
29 that licensed corporation for health insurance, life
30 insurance or other benefits to active and disabled
20010S1020B1269 - 27 -
1 thoroughbred jockeys or standardbred drivers in
2 accordance with the rules of that organization for
3 eligibility for such benefits.
4 (ii) The balance of the 0.5% after the annual
5 payment under subparagraph (i) is to be paid to the
6 horsemen's organization at the racetrack of that licensed
7 corporation for health and pension benefits for its
8 members in accordance with the rules of that organization
9 for eligibility for such benefits.
10 Section 15. Declaration of exemption from Federal laws
11 prohibiting slot machines.
12 (a) Declaration.--Pursuant to section 2 of the act of
13 January 2, 1951 (64 Stat. 1134, 15 U.S.C. § 1172), the
14 Commonwealth declares that it is exempt from section 1134 of
15 that act.
16 (b) Legal shipments.--All shipments of slot machines, into
17 this Commonwealth, the registering, recording and labeling of
18 which has been effected by the supplier of those devices, in
19 accordance with sections 5 and 7 of the act of January 2, 1951
20 (64 Stat. 1134, 15 U.S.C. §§ 1175 and 1177), shall be deemed
21 legal shipments of slot machines into this Commonwealth.
22 Section 16. State Horse Racing Commission.
23 The commission shall insure that:
24 (1) Each licensed thoroughbred corporation's racing
25 secretary or designated official for developing the condition
26 book for that corporation shall provide at least once a month
27 conditions of restricted entry to registered Pennsylvania
28 breds. The three bottom level claiming and nonclaiming
29 conditions at said corporation's facility shall be written
30 into the condition book or as an overnight extra condition so
20010S1020B1269 - 28 -
1 as to effectuate the intent of this paragraph.
2 (2) Any Pennsylvania bred which advances through any
3 restricted registered Pennsylvania bred condition, as set
4 forth in paragraph (1) shall, notwithstanding restricted
5 entry victory, be eligible for nonmaiden conditions in
6 similar open claiming and nonclaimimg allowance events of
7 Pennsylvania-licensed corporations and said corporations
8 shall write their condition books and overnight extra
9 conditions to reflect the same.
10 (3) Notwithstanding any statute, regulation or agreement
11 to the contrary, paragraphs (1) and (2) shall not be violated
12 or waived by any licensed corporation or other statutorily
13 authorized agency or body.
14 Section 17. Appropriation.
15 The sum of $2,000,000 is hereby appropriated to the Racetrack
16 Gaming Control Board for the fiscal year July 1, 2001, to June
17 30, 2002, to implement and administer the provisions of this
18 act.
19 Section 18. Effective date.
20 This act shall take effect immediately.
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