Bill Text: PA HB1402 | 2009-2010 | Regular Session | Introduced

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Bill Title: Authorizing the implementation of keno games at certain retail liquor establishments; providing for collection of revenues; imposing duties on the Bureau of Pennsylvania State Lottery; establishing an advisory committee; imposing a keno games tax; and making an appropriation.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2010-09-28 - Referred to GAMING OVERSIGHT [HB1402 Detail]

Download: Pennsylvania-2009-HB1402-Introduced.html

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PRINTER'S NO. 4380
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1402 Session of2010
INTRODUCED BY PALLONE, HARHAI, JOHNSON, SAINATO AND SOLOBAY, SEPTEMBER 28, 2010
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, SEPTEMBER 28, 2010
AN ACT
Amending the act of August 26, 1971 (P.L.351, No.91), entitled
"An act providing for a State Lottery and administration
thereof; authorizing the creation of a State Lottery
Commission; prescribing its powers and duties; disposition of
funds; violations and penalties therefor; exemption of prizes
from State and local taxation and making an appropriation,"
authorizing the implementation of keno games at certain
retail liquor establishments; providing for collection of
revenues; imposing duties on the Bureau of Pennsylvania State
Lottery; establishing an advisory committee; imposing a keno
games tax; and making an appropriation.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of August 26, 1971 (P.L.351, No.91),
known as the State Lottery Law, is amended by adding a chapter
to read:
CHAPTER 4
KENO GAMES
Section 401. Scope.
This chapter relates to keno games.
Section 402. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Advisory committee." The Keno Games Advisory Committee
established in section 405.
"Applicant." A licensed corporation which applies for a keno
license under this chapter.
"Bureau." The Bureau of Pennsylvania State Lottery of the
Commonwealth.
"Department." The Department of Revenue of the Commonwealth.
"Fund." The State Lottery Fund.
"Gross income." The total amount of cash, vouchers or tokens
collected for a keno game operated by a licensee, minus the
total value of coins and tokens won by a player.
"Keno." A game of chance using 80 numbers in which 20 random
numbers are drawn and players may win cash prizes based on how
many numbers they match to the numbers randomly drawn by the
licensee.
"Keno license." A license authorizing a licensed corporation
to conduct keno games in its licensed premises.
"Licensed corporation." A corporation or other entity that
holds a retail liquor license under the act of April 12, 1951
(P.L.90, No.21), known as the Liquor Code.
"Licensee." A licensed corporation that has obtained a keno
license from the bureau under this chapter.
"Secretary." The Secretary of Revenue of the Commonwealth.
Section 403. Keno games system.
A keno games system is established and shall be administered
by the bureau in accordance with this chapter.
Section 404. Bureau of Pennsylvania State Lottery.
(a) General powers.--
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(1) The bureau shall establish, administer and ensure
the integrity of keno games and shall have jurisdiction over
the location and operation of keno games.
(2) The secretary shall employ an executive director,
deputies, secretaries, officers and representatives as
necessary, who shall serve at the secretary's pleasure. The
secretary shall employ other employees as the secretary sees
fit and whose duties and compensation shall be prescribed by
the secretary.
(b) Specific powers.--The bureau shall have the following
powers and duties:
(1) Investigate, evaluate and decide upon applications
for all keno licenses provided for in this chapter.
(2) Issue keno licenses under section 406.
(3) Promulgate regulations as the bureau deems necessary
to carry out the policy and purposes of this chapter and to
enhance the credibility and integrity of keno games in this
Commonwealth. Notwithstanding any other provision of law to
the contrary and in order to facilitate the prompt
implementation of this chapter, regulations promulgated by
the bureau during the first year of its existence shall not
be subject to notice of proposed rulemaking pursuant to
section 201 of the act of July 31, 1968 (P.L.769, No.240),
referred to as the Commonwealth Documents Law. Regulations
shall include:
(i) Financial reporting and internal control
requirements for the operations of licensees that relate
to keno games.
(ii) Manner in which gross revenue must be computed
and reported by the licensee.
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(iii) Procedures to be followed by licensees for
cash transactions affecting keno games.
(iv) Criteria and conditions for the operation of
the keno games system.
(4) Administer oaths, examine witnesses and issue
subpoenas to compel attendance of witnesses and production of
documents.
(5) Provide for the assessment and collection of fines
and penalties for violations of this chapter. Fines and
penalties shall be credited for deposit to the fund.
(6) Revoke or suspend a keno license provided for in
this chapter if the bureau finds by a preponderance of the
evidence that:
(i) a licensee under this chapter, its officers,
employees or agents do not comply with the provisions of
this chapter or the regulations of the bureau; and
(ii) it would be in the public interest, convenience
or necessity to revoke or suspend the keno license.
(7) Restrict access to confidential information obtained
under this chapter and ensure that the confidentiality of
information is maintained and protected.
(8) Require audits of the financial statements of the
operations of licensees that relate to keno games.
(9) Require periodic financial reports from licensees
consistent with standards and intervals prescribed by the
bureau.
(10) Enforce the prescribed hours for the conduct of
keno games, so that licensees may conduct keno games on any
day, except Christmas day, between the hours of 10 a.m. on
one day until 2 a.m. the next day.
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(11) Prohibit the offering of free alcohol or free malt
or free brewed beverages to patrons participating in keno
games.
(12) Prohibit persons under 21 years of age from
participating in keno games.
Section 405. Advisory committee.
(a) Establishment.--There is established an advisory
committee within the department, to be known as the Keno Games
Advisory Committee. The advisory committee shall:
(1) assist the bureau in developing and discussing
proposed regulation, final regulation and policy guidance;
and
(2) provide continuing advice on implementing and
administering the provisions of this chapter.
(b) Membership.--The advisory committee shall consist of the
following members:
(1) The chairman of the Pennsylvania Liquor Control
Board or a designee.
(2) The secretary or a designee.
(3) One member appointed by the Governor with the advice
and consent of the Senate who must be representative of the
interests affected by this chapter.
(4) Four legislative members: one appointed by the
Majority Leader of the Senate, one appointed by the Minority
Leader of the Senate, one appointed by the Majority Leader of
the House of Representatives and one appointed by the
Minority Leader of the House of Representatives, all of whom
must be representative of the interests affected by this
chapter.
(c) Terms.--
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(1) Members under subsection (b)(1) and (2) shall serve
ex officio.
(2) The initial members of the committee under
subsection (b)(3) and (4) shall be appointed within 60 days
of the effective date of this chapter. Of the initial
appointees:
(i) the member appointed by the Governor shall serve
a one-year term;
(ii) the members appointed by the Majority Leader of
the Senate and the Minority Leader of the Senate shall
serve two-year terms; and
(iii) the members appointed by the Majority Leader
of the House of Representatives and the Minority Leader
of the House of Representatives shall serve three-year
terms.
(3) Following expiration of the initial term under
paragraph (2), a member appointed under subsection (b)(3)
shall serve a three-year term.
(d) Quorum.--Four members constitute a quorum.
(e) Chairperson.--A chairperson shall be chosen by a
majority vote of the members present at a regularly scheduled
meeting. A person employed by the Commonwealth may not chair the
advisory committee.
(f) Expenses.--Members of the advisory committee shall be
reimbursed for their travel expenses to attend advisory
committee meetings. Employees of the Commonwealth shall only be
entitled to the compensation and expenses they receive as public
employees.
(g) Support.--The department shall provide the appropriate
administrative and technical support needed by the advisory
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committee in order to accomplish its objectives.
Section 406. Issuance of keno licenses.
(a) Authorization.--The bureau may issue a keno license to a
licensed corporation that desires to conduct keno games in its
licensed premises if the licensed corporation makes application
to the bureau and abides by all of the provisions of this
chapter and regulations promulgated under this chapter. None of
the keno licenses provided for in this chapter shall be
transferable or assignable.
(b) Restriction.--No applicant that has been convicted in
any jurisdiction of a felony, crime of moral turpitude or
gambling offense may be issued a keno license under this
chapter.
(c) Suspension.--The bureau shall suspend the keno license
of a licensee which fails to satisfy the requirements of this
chapter during the term of the keno license until those
requirements are satisfied.
Section 407. Application.
(a) General rule.--A licensed corporation meeting the
requirements of section 406 which desires to conduct keno games
in its licensed premises must file an application form with the
bureau.
(b) Form.--The bureau shall develop an application form
which collects information as deemed necessary by the bureau.
Section 408. Accounting controls and audits.
(a) Approval.--A licensed corporation which desires to
conduct keno games in its licensed premises must first obtain
approval of its internal control systems and audits from the
bureau.
(b) Minimum requirements.--At a minimum, the following
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internal controls and audits are required:
(1) The safeguarding of its assets and revenues,
especially the recording of cash and evidences of
indebtedness related to the keno games.
(2) The provision of reliable records; accounts; and
reports of transactions, operations and events. This
paragraph includes reports to the bureau which relate to the
keno games.
(3) A procedure under which assets which relate to keno
games operations are safeguarded.
(4) Accurate and reliable financial records which relate
to keno games operation.
(5) Performance of transactions which relate to keno
games operations only in accordance with the management's
general or specific authorization.
(6) Accurate recording of transactions which relate to
keno games operations to:
(i) permit proper and timely reporting of gaming
revenue and of fees and taxes; and
(ii) maintain accountability for assets.
(7) Access to assets which relate to keno games
operations only in accordance with management's specific
authorization.
(8) Recorded accountability for assets which relate to
keno games operations compared with actual assets at
reasonable intervals and appropriate action with respect to
any discrepancies.
(9) Appropriate segregation and performance, in
accordance with sound practices by competent, qualified
personnel, of functions which relate to keno games
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operations.
(c) Internal control.--A licensed corporation which seeks to
conduct keno games in its licensed premises must describe, in
the manner the bureau may approve or require, its administrative
and accounting procedures which relate to keno games operations
in detail in a written system of internal control and must
submit a copy of its written keno games operations to the
bureau. Each written keno games operation must include:
(1) An organizational chart depicting appropriate
segregation of functions.
(2) A description of the responsibilities of each
position shown on the organizational chart.
(3) A detailed narrative description of the
administrative and accounting procedures designed to satisfy
the requirements of subsection (b).
(4) A written statement signed by the chief financial
officer of the licensed corporation and the chief executive
officer of the licensed corporation attesting that the
operation satisfies the requirements of this section.
(5) Any other item that the bureau may require.
Section 409. Keno games tax.
(a) Imposition of tax.--Each licensed corporation shall pay
a tax in the amount of 60% of the net income arising from the
keno games after payment of prizes.
(b) Payment and credit.--The tax imposed by this section
shall be paid by the licensed corporation through the department
for credit to the fund monthly on or before the 20th day of the
month next succeeding the month in which the tax accrues.
(c) Administrative expenses.--No more than 10% of the tax
credited to the fund under subsection (b) may be used for the
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administrative expenses of the system as incurred by the bureau.
(d) Tax reconciliation.--If the amount of tax required to be
reported and paid under this section is later determined to be
greater or less than the amount actually reported and paid by
the licensed corporation, the bureau shall:
(1) assess and collect the additional tax determined to
be due with interest on the tax until paid; or
(2) provide for a refund of any overpayment, with
interest on the overpayment, to the licensed corporation.
(e) Disposition of revenue.--Revenue generated from the tax,
minus administrative expenses under subsection (c), shall be
used as follows:
(1) Except as set forth in this subsection, equal
amounts of the revenue shall be transferred into:
(i) the Public School Employees' Retirement Fund;
and
(ii) the State Employees' Retirement Fund.
(2) When one of the funds specified in paragraph (1) is
declared actuarially sound, all of the revenue shall be
transferred into the other fund specified in paragraph (1).
(3) When both of the funds specified in paragraph (1)
are declared actuarially sound, all of the revenue shall be
transferred into the Property Tax Relief Fund.
Section 410. Declaration of exemption from Federal laws
prohibiting gambling devices.
This chapter constitutes the Commonwealth's exemption under
section 2 of the Gambling Devices Transportation Act (64 Stat.
1134, 15 U.S.C. § 1172).
Section 411. Annual report.
The bureau shall, within 18 months of the effective date of
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this chapter and each year thereafter, submit a report to the
Governor and the Secretary of the Senate and the Chief Clerk of
the House of Representatives on:
(1) The general operation of the bureau under this
chapter.
(2) Taxes.
(3) Fees, fines and other revenues collected and
disbursed.
(4) Number and result of hearings conducted under this
chapter.
(5) Other information that the bureau deems necessary or
appropriate.
Section 2. The sum of $1,500,000, or as much thereof as may
be necessary, is hereby appropriated to the Department of
Revenue for the establishment of the keno games system within
the Bureau of Pennsylvania State Lottery. The department shall
reimburse the General Fund from the revenue generated within the
first year of the conduct of keno games.
Section 3. This act shall take effect in 60 days.
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