Small Games of Chance Act

Small Games of Chance Act

(House Bill 169)

 

Status Update

Overwhelmingly enacted by the House and sent to the Senate during the past several legislative sessions, House Bill 169 was referred to the Pennsylvania House Gaming Oversight Committee on Jan. 19, 2011.

Summary

As you may know, the Local Option Small Games of Chance Act was enacted in 1988 as a means for nonprofit associations, charitable organizations or other civic groups to raise funds. In order to prevent the commercialization of small games of chance, several guidelines and regulations have been established to regulate these games.

However, since the time of enactment of this law, several issues have come before the organizations that conduct small games of chance.     

As a result, over the past few years, legislation has been introduced  and adopted by the House to update the Small Games of Chance Act.

House Bill 169 includes the following updates:

 

·         Redefines a “daily drawing” by adding that no more than one chance per individual may be sold per drawing. The definition does not restrict an eligible organization from conducting more than one drawing per day.

 

·         Defines “general operating expenses” as expenses which are associated with property owned or leased by an organization and used for public interest purposes or small games of chance, such as real property taxes, utilities, heating and air conditioning, water and sewer, property insurance, liability insurance and other expenses as provided in regulation by the Department of Revenue. The term does not include wages, alcohol purchases or payment of any fine levied against the organization.

 

·         Defines “monthly drawing” as a game in which a member receives a number or numbers as a chance to win a prize by a random drawing during that operating month. Monies from the jackpot may be carried over from month-to-month if there is no winner. Chances for a monthly drawing may not be sold for more than $1.

 

·         Defines “vertical wheel” as a wheel that spins on a vertical axis as players place coins or chips on a color, number or word as the wheel spins. The winner is the person whose coins or chips are on the color, number or word when the pointer stops on the wheel.

 

·         Allows an organization to raise funds for general operating expenses, as well as public interest purposes (55% public interest, 40% general operating, 5% remitted to department headquarters of the eligible organization).

 

·         Increases the allowable prize limit for a daily drawingfrom$500 to $1,000.   Exceptions to this limit, such as special permits allowing larger prizes and carryover drawings, still apply.

 

·         Increases the weekly prize limit from $5,000 to $25,000.

 

·         Creates a $50,000 limit for monthly drawings.

 

·         Payouts of less than $26 willnot count toward the weekly prize limit.

 

·         For raffles, the prize limit is raised from $500 to $1,000.

 

·         Removes a provision in which an eligible organization cannot conduct daily drawings during a period when a weekly drawing is taking place, or hold a weekly drawing during a time when a daily drawing is taking place.

 

·         Allows for progressive games with a maximum cash value of $5,000. Progressive games are those in which a winning ticket awards the ticket holder with an additional chance at another game.

 

·         Permits an association that performs emergency services to hold one drawing per year with an award of $50,000 for the purpose of raising funds to purchase emergency service equipment.

 

·         Allows insured games, which are games sold by a licensed distributor and backed by a valid insurance contract issued by an insurance company licensed by the Insurance Department to do business in the Commonwealth of Pennsylvania as an insurance company.

 

·         Requires a licensed distributor to pay 1% surcharge on the amount of all games sales to the General Fund.

 

·         Requires associations to report to the Department of Revenue on prizes awarded of $600 or more, as required by the Tax Reform Code.

 

·         Increases license fees from $100 annually to $300 biennially; limited occasion permits will increase from $10 to $30 biennially.

 

·         Allows more than one eligible organizations to use the same location to conduct small games of chance as long as each eligible organization is separately licensed and prize limits are applied separately to each association.

 

·         An eligible organization may sell on its licensed premise raffle tickets of another eligible organization that has a limited occasion license.

 

·         At the time of application for a license or renewal, requires associations to submit to the licensing a financial report detailing the associations’ operations over the previous 12 months.

 

·         Each application must include a criminal history record from the State Police of the executive officer or secretary, organization treasurer and all other responsible persons listed on the application.

 

·         Allows advertisements for small games of chance.  Such advertisements are limited to publications to members of the eligible organization or signs on the premises of the eligible organization.

 

·         Requires the Department of Revenue to investigate and enforce violations of the Act in accordance with the Fiscal Code and the Tax Reform Code.

 

·         Provides that any law enforcement agency can investigate potential small games of chance violations, but the results from the investigation would be released to the county District Attorney for enforcement proceedings.

 

As a long time supporter of our local volunteer fire departments, veterans organizations, and the many other outstanding charitable, non-profit organizations that serve our communities, I will continue to support this legislation and will do everything I can to secure final passage before the end of the 2011-12 legislative session.