RULES AND REGULATIONS
PENNSYLVANIA GAMING CONTROL BOARD
[ 58 PA. CODE CHS. 421, 421a, 423, 423a, 425,
425a, 427, 427a, 431, 431a, 436, 436a, 438,
438a, 439, 439a, 440 AND 440a ]
General Provisions; Applications; Licensed Entity Representatives; Manufacturer Licenses; Supplier Licenses; Horsemen's Organizations; Labor Organizations; Junket Enterprises; Management Companies
[37 Pa.B. 5752]
[Saturday, October 27, 2007]The Pennsylvania Gaming Control Board (Board), under its general authority in 4 Pa.C.S. § 1202(b)(30) (relating to general and specific powers) and the specific authority in 4 Pa.C.S. §§ 1202(b)(9), (13)--(20) and (23), 1202.1(b) and (e), 1205, 1311.1, 1311.2, 1317, 1317.1, 1319, 1321(a)(1) and (2), 1325, 1326, 1331 and 1406, rescinds Chapters 421, 423, 425, 427, 431, 436, 438, 439 and 440 and adds Chapters 421a, 423a, 425a, 427a, 431a, 436a, 438a, 439a and 440a to read as set forth in Annex A.
Purpose of the Final-Form Rulemaking
Under 4 Pa.C.S. § 1203 (relating to temporary regulations), the Board initially adopted temporary regulations in Chapters 421, 423, 427 and 431 at 35 Pa.B. 4045 (July 16, 2005), Chapter 425 at 37 Pa.B. 21 (January 5, 2007), Chapter 436 at 36 Pa.B. 3409 (July 1, 2006), Chapter 438 at 36 Pa.B. 3951 (July 22, 2006), Chapter 439 at 35 Pa.B. 6619 (December 3, 2005) and Chapter 440 at 36 Pa.B. 679 (February 4, 2006). Under 4 Pa.C.S. § 1203(b), the temporary regulations expired on July 5, 2007.
The Board is adopting Chapters 421a, 423a, 425a, 427a, 431a, 436a, 438a, 439a and 440a to replace the Board's temporary regulations with the permanent regulations.
Explanation of Chapters 421a, 423a, 425a, 427a, 431a, 436a, 438a, 439a and 440a.
Chapter 421a (relating to general provisions) contains general requirements that apply to all applicants. It also contains criteria the Board may use to deny an initial or renewal application or suspend or revoke a license, permit, certification or registration; provides that the Board may make inquires or conduct investigations of applicants for or holders of a license, permit, certification or registration; outlines the procedures for conducting presuitability determinations of potential purchasers of an applicant for or holder of a license; and articulates how the Board will implement 4 Pa.C.S. § 1102(5) (relating to legislative intent) to prevent undue concentration of economic opportunities and control in gaming.
Chapter 423a (relating to applications) contains general provisions that apply to applications generally; outlines the process for preliminary review of applications and the general process that will apply to the review of applications after they have been accepted for filing. It also addresses how deficient applications will be handled; specifies how withdrawals of applications will be processed; provides that the Board may require a Statement of Conditions; imposes restrictions on reapplications by an applicant whose application was denied or by the holder of a license, permit, certification or registration if their license, permit, certification or registration was revoked.
Chapter 425a (relating to licensed entity representatives) requires licensed entity representatives to file a Licensed Entity Representative Registration Form and update their information on an ongoing basis. It also provides that the Board will maintain a list of licensed entity representatives which will be available at its offices and on the Board's website.
Chapter 427a (relating to manufacturers) provides general requirements pertaining to manufacturers; specifies what is required from an applicant for a manufacturer's license; specifies the term of a manufacturer's license and the renewal process; lays out the process for an alternative review of a manufacturer's license application based on the applicant's licensure in another jurisdiction; and sets forth the responsibilities of licensed manufacturers.
Chapter 431a (relating to supplier licenses) provides general requirements pertaining to suppliers; lists what is required from an applicant for a supplier's license; specifies the term of a supplier's license and the renewal process; contains supplier responsibilities; and requires suppliers to maintain a log book to register all individuals who enter the supplier's principal place of business and any facility where slot machines are stored.
Chapter 436a (relating to horsemen's organizations) contains definitions of terms that are only used in this chapter; requires each horsemen's organization to file a Horsemen's Organization Registration Statement; requires each officer, director or representative to file a Horsemen's Permit Application Form; outlines the responsibilities of horsemen's organizations and officers, directors or representatives; specifies fiduciaries' responsibilities; and requires that all health and benefit plan contracts must be submitted to and approved by the Board.
Chapter 438a (relating to labor organizations) contains definitions of terms that are only used in this chapter; requires each labor organization to file a Labor Organization Form; and requires every labor organization officer, agent, and management employee to file a Labor Organization Permit Application Form.
Chapter 439a (relating to junket enterprises) contains definitions of terms that are only used in this chapter; contains general provisions applicable to junket enterprises and application requirements; specifies the term of a junket enterprise license and the renewal process; requires junket representatives to be registered and delineates application requirements; requires junket schedules and changes thereto to be submitted to the Bureau of Corporate Compliance and Internal Controls; requires the preparation of junket arrival reports; requires preparation of junket final reports; requires the preparation of monthly junket reports; requires the preparation of a report pertaining to the purchase of patron lists; and lists activities that junket enterprises and representatives may not participate in.
Chapter 440a (relating to management companies) contains general requirements pertaining to management companies; lists what is required from an applicant for a management company license; specifies the term of a management company license and the renewal process; states that a management company will be deemed to be an agent of the slot machine licensee for any violations and that the management company will be jointly and severally liable for violations of the slot machine licensee; and specifies that all management contracts and amendments must be submitted to and approved by the Board before they can go into effect.
Comment and Response Summary
Notice of proposed rulemaking was published at 37 Pa.B. 2197 (May 12, 2007).
The Board received comments from Downs Racing, LP (Downs), Greenwood Gaming and Entertainment, Inc. (Greenwood) and Keystone Gaming Technologies, Inc. (KGT) during the public comment period. On July 11, 2007, comments on the proposed rulemaking were received from the Independent Regulatory Review Commission (IRRC). On July 12, 2007, comments on the proposed rulemaking were received from Representative Paul Clymer, Republican Chairperson of the House Gaming Oversight Committee. These comments were reviewed by the Board and are discussed in detail as follows.
Both Greenwood and Downs filed general comments pertaining to the renewal process. Both slot machine licensees strongly recommend that they only be required to file material updates of information contained in their initial application. They argue that this would be consistent with the language of 4 Pa.C.S. § 1326 (relating to license renewals) which states ''The application renewal shall include an update of the information contained in the initial and any prior renewal applications . . .''. They also suggest that the Board define the term ''material'' as ''updates which could have an effect on a continuing finding of suitability.''
The renewal of slot machine licenses is addressed in Chapter 441a (relating to slot machine licenses) published at 37 Pa.B. 2695 (June 16, 2007). However, the concerns raised are valid for all renewals. It is the Board's intent for all licensees and permittees to use renewal application forms which are essentially the same as the initial application forms. But the Board agrees there is no need to resubmit information that has not changed. Licensees and permittees will only be required to provide information that has changed; everything else can be marked ''No Update.'' This will substantially reduce the amount of time required to complete the renewal forms.
The Board is also considering requiring a full submission periodically, perhaps every 5 years. This would be done to insure that no significant information has inadvertently not been provided to the Board. Comments from licensees and permittees on this type of requirement and an appropriate frequency for these complete submissions are invited.
The Board has not added a definition of ''material'' because the Board wants all of the information that has changed. It is the responsibility of the Board to review anything that has changed and determine whether or not it could have an effect on a continuing finding of suitability.
Greenwood and Downs both suggest that Chapters 421a and 423a should contain more specific details on renewals and that renewals should only be required for licenses and permits.
The Board does not concur with either of these suggestions. Chapters 421a and 423a are general requirements that apply to all applicants for and holders of licenses, permits, certifications and registrations. They are not intended to provide the specific requirements for a particular entity. Specific requirements are addressed in the specific chapters for each type of applicant for and holder of a license, permit, certification and registration.
Greenwood and Downs are correct that 4 Pa.C.S. § 1326 only applies to licensees and permittees, but 4 Pa.C.S. § 1326 is silent on and therefore does not apply to other entities regulated by the Board. It is under its general authority and 4 Pa.C.S. § 1321 (relating to additional licenses and permits and approval of agreements) that the Board has adopted regulations to regulate other entities. For example, the Board established certification and registration requirements for vendors. These certifications and registrations are good for 4 years before they must be renewed. The argument that 4 Pa.C.S. § 1326 somehow bars the Board from establishing renewal requirements for other entities that the Board regulates is not persuasive.
Greenwood and Downs final two general comments suggested that the Board send a notice to all licensees 120 days prior to the expiration of their license and that renewal applications be deemed approved unless expressly denied by the Board.
The Board has not adopted either of these suggestions. Sending a notice to all licensees would create a significant administrative burden on the Board which licensees would end up having to pay for. However, because the date a license is approved and the date it is issued can differ, the Board understands and agrees that there can be some uncertainty concerning when a license is due to expire. To remove this uncertainty, the Board will be adding the license expiration date to the listing of licensees which is available on the Board's website. This will allow licensees to easily verify the expiration date of their license so they will know when their renewal applications are due.
The Board is not adopting the suggestion that applications be deemed approved because it conflicts with the statute and is unnecessary. Section 1326 of 4 Pa.C.S. states ''A permit or license for which a completed renewal application and fee, if required, has been received by the board will continue in effect unless and until the board sends written notification to the holder of the permit or license that the board has denied the renewal of such permit or license.'' This is the language that the Board has carried over into the renewal requirements for various entities in this regulation. The interests of licensees or permittees are protected because filing the required renewal materials ''extends'' the term of their current license or permit, so there is no need for a deemed approval provision.
IRRC offered two general comments. First, IRRC suggested that the Board add a reference to the Board's website wherever the regulations require payment of a fee.
The Board has adopted this suggestion and has added a reference to the Board's website where payment of a fee is required in Chapters 427a, 431a, 436a, 438a, 439a and 440a.
Second, IRRC noted that the term ''entity'' is used throughout the regulations but is not defined in the act or regulations.
The term ''entity'' refers to anything other than a natural person. This is consistent with its common usage and its usage has not been a source of confusion. Therefore, the Board has not added a definition for this term.
In § 421a.1 (relating to general requirements), IRRC had two comments. In subsection (a), IRRC stated that the last sentence, which reads ''No person holding a license, permit, certification or registration, renewal or other approval is deemed to have any property rights.'' is overly broad.
The Board intended that this provision only apply to the ''license, permit, certification or registration, renewal or other approval.'' Language has been added to this subsection to clarify its scope.
In subsection (c), IRRC asked the Board to explain the statutory authority for and need for applicants to agree to the extensive waiver.
The authority for this provision is contained in the Board's general rulemaking authority in 4 Pa.C.S. § 1202(30) and 4 Pa.C.S. § 1308 (relating to applications for a license or permit) and is consistent with the doctrine of sovereign immunity. These provisions were added to eliminate frivolous lawsuits from applicants relating to the disclosure of information obtained during investigations that is not willfully unlawful.
In § 421a.1(c)(2), Representative Clymer asked if this provision was in conflict with 4 Pa.C.S. § 1206(f) (relating to Board minutes and records).
The Board does not believe that there is a conflict. Section 1206(f) of 4 Pa.C.S. bars the Board from requiring an applicant to waive confidentiality related to personal information supplied to determine the applicant's character. Subsection (c)(2) addresses the liability of the Board, the Pennsylvania State Police and other Commonwealth agencies if any of that information is disclosed. Therefore, these provisions deal with different aspects of the confidentiality of this information.
In § 421a.1(f), Representative Clymer suggested that applicants should be required to notify the Board of any changes in information.
The obligation imposed in this provision has two components. The first requires notification of any changes in information supplied and the second requires notice of changes in circumstances which would not have been included in information previously supplied. To clarify these duties, this sentence has been split into two sentences.
In § 421a.1(i), Representative Clymer asked if this subsection referred to monetary or administrative liability and how fines would be assessed and collected.
It could be either or both. Whether a violation would result in a fine or a suspension or revocation will depend on the nature of the violation. How fines might be assessed will also depend on the facts surrounding the violation.
In § 421a.2 (relating to disqualification criteria), IRRC suggested that in subsection (a)(5) the Board replace the phrase ''applicable Federal and state laws or regulations'' with references to the specific applicable laws and regulations or delete this provision.
This reference was intended to be broad, not limited to specific statutes or regulations. To clarify the Board's intent the word ''applicable'' has been deleted.
In § 421a.3 (relating to investigations; supplementary information), IRRC asked if the ''phrase'' or at anytime ''thereafter'' meant that the Board would conduct investigations after an application has been approved. If so, IRRC suggested that this language should be placed in another section of the Board's regulations.
This provision does apply after an application has been approved. The Board has a continuing obligation to insure the integrity of gaming and may conduct investigations that could result in fines, suspension or revocation of a successful applicant's license, permit, certification or registration. Investigations are addressed in Chapter 405a (relating to Bureau of Investigations and Enforcement), but having this provision in this chapter as well makes it clear to applicants that they will have a continuing obligation, both as applicants for and holders of a license, permit, certification or registration, to cooperate in investigations.
In § 421a.4(b) (relating to presuitability detemination), Representative Clymer noted that the phrase ''upon request of the Board'' could imply that reimbursement for the cost of an investigation is discretionary and suggested that this phrase be deleted.
The Board agrees with this suggestion and has deleted ''upon request of the Board.''
In § 421a.5(c)(11) (relating to undue concentration of economic opportunities and control), IRRC noted that the phrase ''Other evidence deemed relevant by the Board'' is vague and suggested that the Board amend this provision to indicate what the evidence should pertain to.
The Board agrees with this suggestion and has revised the language to be more specific.
In § 423a.1 (relating to general requirements), IRRC suggested that the phrase ''in a form prescribed by the Board'' in subsection (e) should be replaced with the name of the form and information on how to obtain the form should be added.
Because of the variation that exists in applications, the Board does not believe it is reasonable to try to use one form to submit changes in information. Accordingly, the Board has deleted this phrase to allow applicants to supply the information in the form that is the most convenient for them.
In § 423a.1(h), Representative Clymer opined that a summary would be unacceptable because it may not contain all of the pertinent information.
The Board disagrees. For some documents a summary may be all that is needed. Since the Board has the discretion to require a full translation or a summary, no revisions were made to the substance of this subsection. However, the second sentence was moved to the end of the section to clarify that the translator's verification of accuracy applies to both full translations and summaries.
In §§ 423a.2 and 423a.3 (relating to preliminary submission review; and application processing), IRRC recommended that specific time frames be added for the preliminary submission review and the review of applications.
The Board has not adopted this recommendation because this chapter covers applications for licenses that can be hundreds of pages as well as one page registrations. For example, a simple registration may take only a day to process while an application for a slot machine license will take several months. For this reason, establishing fixed time frames for these reviews is not feasible.
In § 423a.2(a)(2), IRRC asked what ''additional information and accompanying documentation required by the act or the Board's regulations . . .'' is to be included with an application.
The additional information will vary depending on what type of license, permit, certification or registration is being sought. For example, the act and the Board's regulations require much more information from an applicant for a slot machine license than is required from an applicant for a gaming permit. Specific information relating to what is required is contained in the instructions for each application.
In § 423a.2(c), IRRC asked how would the Board set ''the time period set by the Board'' and how an applicant would be notified of the time period.
The time period will vary depending on what the deficiency is. When a deficiency is noted, the Board will send a letter to the applicant that will give the applicant a reasonable period of time to cure the deficiency. For something like a missing signature it could be a few days; if a major item is missing, the time period to supply the item could be weeks.
In § 423a.4 (relating to deficient applications), Representative Clymer suggested that there should be an upper limit on the time allowed to cure deficiencies under subsection (a) to avoid indefinite suspension of the process. Also on this section, IRRC had two concerns. In subsection (a), IRRC asked how the Board would set ''the time period set by the Board'' and how the applicant would be notified of the time period.
The Board has not set a time period or established a maximum time limit because the time allowed to cure a deficiency will vary depending on what the deficiency is. When a deficiency is noted, the Board will send a letter to the applicant that will give the applicant a reasonable period of time to cure the deficiency. For something like a missing signature it could be a few days; if a major item is missing, the time period allotted to supply the item could be weeks.
In subsection (b), IRRC suggested that if the Board intended a failure to cure deficiencies to result in a denial of the application, the language in this subsection should be similar to the language used in subsection (a).
The Board agrees with this suggestion and amended the language in subsection (b) to be similar to what appears in subsection (a).
On § 423a.5 (relating to application withdrawal), IRRC raised four questions. First IRRC asked why a petition is necessary as opposed to allowing the applicant to just withdraw the application by sending the Board a letter.
There are several reasons why the Board has elected to use the more formal petition process as opposed to allowing the applicant to just send a letter. First, the review of an application is a time intensive activity that should not be taken lightly by an applicant. Second, applicants have an obligation to pay investigative costs. These costs must be paid before a withdrawal will be considered. Additionally, a withdrawal may be with or without prejudice which can affect when the applicant may file another application.
Next, IRRC asked when, under subsection (d), would a request for withdrawal be denied.
There may be instances when an applicant, based on what the Board has uncovered in its investigation, anticipates that the Board will deny its application. In this case, an applicant may attempt to withdraw the application to avoid the 5-year restriction on reapplication. Depending on the specific fact situation, the Board may want to deny the application as opposed to approving the withdrawal with prejudice.
IRRC also asked what criteria the Board will use to determine whether or not to impose restrictions on an applicant whose petition for withdrawal has been granted without prejudice.
The decision as to whether or not to impose restrictions will be based upon the results of the review of the application and the results of any investigations that have been completed at the time of the petition for withdrawal. If there are problems, the Board may impose a restriction on reapplication that would be sufficient to allow the applicant to rectify the problem.
Finally, IRRC asked why the Board had not established a time frame for the review of withdrawal petitions.
Again, because this chapter covers applications that can vary substantially both in length and complexity, establishing a fixed time frame for the review of petitions for withdrawal is not feasible
In § 423a.5(e), Representative Clymer suggested that the Board add ''at the request of the applicant.''
This provision was not intended to be triggered by a request from an applicant. An applicant may file a petition for withdrawal for any reason under subsection (a). The intent of this provision is to allow the Board to treat a deficient application as an application that has been withdrawn rather than disapproving the application. This would allow an applicant to avoid being subject to the 5-year bar on reapplication that comes with a disapproval. The language has been revised to clarify this intent.
In § 423a.7 (relating to restriction on application after denial or revocation), IRRC asked what the bases are for the 5 and 2-year provisions. Additionally, IRRC asked if two different time periods and the petition process are necessary. If they aren't, IRRC suggested that the Board just use 2 years.
The application process can be extremely time intensive and costly for both the Board and applicants. The 5-year ban is designed to provide a strong incentive for unqualified applicants to not apply and for successful applicants to comply with the Board's regulations to avoid a revocation. In many cases the reason for a denial or revocation would be serious enough that it is unlikely that a 2-year restriction would provide enough time for the applicant to satisfactorily address the reason for the denial or revocation. Additionally, a 5-year ban is also what is commonly used in other gaming jurisdictions.
Allowing an applicant to file a petition after 2 years provides an opportunity for a person whose application was denied or license, permit, certification or registration was revoked, to seek permission to reapply before 5 years expire if they can demonstrate that they have addressed the reason for the denial or revocation. This gives the Board some latitude to tailor the length of the reapplication bar to the seriousness of the circumstances that caused the denial or revocation and the subsequent corrective actions of the applicant. This provision is also used in some other gaming jurisdictions.
In § 423a.7, Representative Clymer asked why subsection (c) doesn't also apply to applicants' whose applications were withdrawn with prejudice.
An application may be denied for a variety of reasons, some much more serious than others. By contrast, a withdrawal with prejudice is rarely used and is only used when the problems with an application are extremely serious. In these cases, the Board believes that the full 5-year restriction on filing a new application should apply.
In § 427a.2 (relating to manufacturer license applications and standards), Representative Clymer noted that it was unclear as to whether the phrase ''as determined by the Board'' in subsection (a)(4) referred to who must submit an application or to what information must be supplied.
This phrase is intended to mean other persons the Board determines should be licensed as key employees or principals. To clarify this point, the phrase ''and other persons'' has been inserted before ''as determined by the Board.''
Also in § 427a.2, Representative Clymer asked what would happen under subsection (a)(7)(vii) if the divorce action is withdrawn or if the applicant receives a prohibited interest as part of the property settlement.
In either case, the applicant would have to notify the Board of this change under § 421a.1(f) and the individual would no longer be eligible to apply for a manufacturer license.
In § 427a.2, KGT recommended deletion of subsection (b)(3) which requires an applicant to demonstrate it ''has the ability to manufacture, build, rebuild, repair, . . . or otherwise make modifications'' to slot machines or associated equipment. IRRC also questioned the need for this provision.
This provision paraphrases the statutory definition of a ''manufacturer'' which is a person who ''manufactures, builds, rebuilds, fabricates, assembles, produces, programs, designs or otherwise makes modifications . . .'' Additionally, 4 Pa.C.S. § 1317.1(b)(5) (relating to manufacturer licenses) requires that applications include the ''types of slot machines or associated equipment to be manufactured or repaired.'' Therefore this provision is consistent with the mandates of the act.
The Board does not agree that this requirement poses an undue burden on new companies that want to become manufacturers. The act makes it clear that there can be no limitation on the number of manufacturer licenses issued by the Board. Furthermore, the Board has approved every application for a manufacturer license that it has received from applicants that meet the standards set forth in the act. For these reasons, subsection (b)(3) remains in the final-form regulation.
In § 427a.5(a)(2), Representative Clymer suggested that a manufacturer licensee should be required to report any changes in circumstances and allow the Board to determine how each change might affect the license.
The Board disagrees with this suggestion. This would impose an excessive reporting requirement on licensees that is not needed given the other reporting requirements and the fact that detailed renewal applications must be filed annually.
In § 427a.5(c), Greenwood suggested that the Board delete the requirement that a slot machine licensee must have a written agreement with a manufacturer before the slot machine licensee can service or repair slot machines or associated equipment purchased from that manufacturer. IRRC also questioned the need for this provision.
Given the amendments to the act contained in Act 135 of 2006, the Board agrees that there is no need for this requirement and has deleted the language requiring a written agreement in this subsection and in § 431a.4(f). The phrase ''a slot machine licensee or'' in § 427a.1(d) has also been deleted to conform to this change.
In § 427a.5(d), IRRC asked what the need was for this provision and why it is in this section.
This provision was put in this chapter to make it clear to manufacturers (as well as slot machine licensees) that manufacturers do not have the sole authority to perform these functions.
Also in § 427a.5(d), Representative Clymer suggested adding semicolons to provide greater clarity in the list.
The Board agrees with this suggestion and has inserted semicolons where appropriate.
In § 431a.2 (relating to supplier license applications and standards), Representative Clymer noted that it was unclear as to whether the phrase ''as determined by the Board'' in subsection (a)(4) referred to who must submit an application or to what information must be supplied.
This phrase is intended to mean other persons the Board determines should be licensed as key employees or principals. To clarify this point, the phrase ''and other persons'' has been inserted before ''as determined by the Board.''
Also in § 431a.2, Representative Clymer asked what would happen under subsection (a)(7)(vii) if the divorce action is withdrawn or if the applicant receives a prohibited interest as part of the property settlement.
In either case, the applicant would have to notify the Board of this change under § 421a.1(f) and the individual would no longer be eligible to apply for a supplier license.
In § 431.4(d)(2) (relating to supplier license term and renewal), Representative Clymer suggested that a supplier licensee should be required to report any changes in circumstances and allow the Board to determine how each change might affect the license.
The Board disagrees with this suggestion. This would impose an excessive reporting requirement on licensees that is not needed given the other reporting requirements and the fact that detailed renewal applications must be filed annually.
In § 431a.4 (relating to responsibilities of a supplier), IRRC questioned the need for subsections (g) and (h) and why are they in this section.
These subsections are in this section to make it clear to suppliers (as well as to slot machine and manufacturer licensees) that suppliers do not have the sole authority to perform these functions.
Also in § 431a.4(g), Representative Clymer suggested adding semicolons to provide greater clarity in the list.
The Board agrees with this suggestion and has inserted semicolons where appropriate.
In § 431a.5 (relating to supplier log books), IRRC had two questions. The first question was why log books are needed and why the log books must be made available to the Department of Revenue and the Pennsylvania State Police.
Generally, no one without a gaming permit is allowed to have any contact with slot machines. Because suppliers would have slot machines on their premises there is a need to control access to make sure no one without a license or permit has access to the slot machines. The log book provides a method for monitoring compliance.
Because of the Department of Revenue's responsibilities for the central computer system and the possibility of criminal behavior that would be investigated by the Pennsylvania State Police, the Board believes both of these agencies should have access to the log books.
In Chapter 436a (relating to horsemen's organizations), IRRC questioned the need for horsemen's organizations to register and for officers, directors and representatives to obtain permits. IRRC also asked what the statutory authority was for these requirements.
The Board's authority for these regulations is derived from the Board's general authority under 4 Pa.C.S. § 1202(30) and from 4 Pa.C.S. § 1406. Section 1406(a)(1)(iii) of 4 Pa.C.S. requires that 4% of the distributions from the Pennsylvania Race Horse Development Fund be used for benefits for members of horsemen's organizations. The registration requirement is needed to identify the horsemen's organizations at each of the Category 1 licensed facilities that will be administering these funds. Requiring permits for the individuals who will be responsible for the disbursement of these funds allows the Board to review the backgrounds of these individuals to minimize the potential for misuse of these funds and to insure compliance with 4 Pa.C.S. § 1406.
In § 436a.1 (relating to definitions), IRRC asked why the definition of ''horsemen'' in this chapter is different from the definition of ''Horsemen of this Commonwealth'' in the act.
The term ''Horsemen of this Commonwealth'' in the act is a general term which includes horsemen and trainers and employees of trainers. The definition of ''horsemen'' in this chapter is intended to be more narrow, including just the horsemen and trainers. This also reflects how the term is commonly used in the industry.
In Chapter 438a (relating to labor organizations), IRRC questioned the need for labor organizations to file a Labor Organization Notification Form and for officers, agents and management employees to obtain permits. IRRC also asked what the statutory authority was for these requirements.
The Board's authority for these regulations is derived from the Board's general authority under 4 Pa.C.S. § 1202(30). Labor organizations can have a substantial impact on the operations of a licensed facility. For this reason, the Board needs to know what labor organizations represent employees at each of the licensed facilities and which groups of employees they represent. The Labor Organization Notification Form provides this information. The requirement for permits applies to those individuals in the labor organization who are directly involved with the licensed facilities. Because of this direct relationship and the potential impact it can have on the operations of a licensed facility, background checks on these individuals are need to insure the integrity of gaming operations.
In § 439a.1 (relating to definitions), IRRC noted that there were substantive provisions in the definition of ''junket'' related to the selection or approval of a person to participate in a junket. IRRC recommended that these provisions be deleted from the definition and moved to another section in this chapter.
The Board agrees with this suggestion and has moved the substantive provisions from the definition of ''junket'' to § 439a.2 (relating to junket enterprise general requirements).
In § 440a.4(b) (relating to management company responsibilities), Downs suggested that the Board limit the scope of the joint and several liability to acts that are within the purview of the contract or direct operation of the casino. IRRC also questioned the reasonableness of this requirement and the legal basis for it.
The Board agrees that it would be unreasonable to impose an absolute liability standard on a management company for acts over which it clearly has no ability to control. However, the relationship between a management company and a slot machine licensee is one where each entity must be vigilant concerning the actions of the other party to the contract. Accordingly, the Board has replaced the word ''shall'' with ''may.'' This will allow the Board to determine, based on the specific facts of a given situation, if the management company should be liable for actions of the slot machine licensee. The legal basis for this provision is the Board's general authority in 4 Pa.C.S. §§ 1202(30), 1321 and 1325.
Additional Revisions
In addition to the revisions discussed previously, the Board has made several additional revisions.
In § 423a.5(a), the Board replaced the phrase ''at any time prior to issuance by the Board of its determination with respect to the application'' with ''at any time prior to the Board taking action on the application'' to clarify when a request to withdraw an application may be filed.
In § 423a.5(d)(2), the Board clarified the language indicating that it may impose restrictions on new applications from an applicant whose petition to withdraw has been granted without prejudice.
In § 427a.2(a), the Board added a new paragraph (5) requiring the filing of a Gaming Employee Application and Disclosure Information Form for each of the manufacturer's known gaming employees to mirror the current requirement in the Manufacturer Application and Disclosure Information Form.
Section 427a.2(a)(7) has been revised to better conform with the requirements in the act.
To improve clarity in § 427a.3(b) (relating to manufacturer license term and renewal), the Board has inserted the name of the renewal form manufacturers are required to use which is the Manufacturer License Renewal Application Form.
In § 427a.4(a) (relating to alternative manufacturer licensing standards), the Board replaced the phrase ''written request'' with the name of the form to be used by a manufacturer seeking to use alternate licensing standards which is the Manufacturer Application and Disclosure Information Form Addendum 1.
To improve clarity in § 431a.2(a), the Board added a new paragraph (5) requiring the filing of a Gaming Employee Application and Disclosure Information Form for each of the supplier's known gaming employees to mirror the current requirement in the Supplier Application and Disclosure Information Form.
In § 431a.3(b) (relating to supplier license term and renewal), the Board has inserted the name of the renewal form suppliers are required to use which is the Supplier License Renewal Application Form.
In § 431a.4, the Board replaced an incorrect citation to § 427a.2(a)(5).
The material in §§ 436a.2(d) and 436a.3(d) (relating to horsemen's organization registration; and permitting of officers, directors, representatives and fiduciaries) relating to terms and renewals of registrations and permits have both been split into three separate subsections to improve clarity.
In § 438a.1 (relating to definitions), the definition of ''labor organization'' has been amended by inserting ''who are required to obtain a license, permit or registration from the Board'' after ''employees'' to clarify which labor organizations must comply with this chapter. Additionally, the definition of ''labor organization officer'' has been revised to clarify who must obtain a permit under § 438a.3.
In § 438a.2 (relating to labor organization officers, agents and management employees), clarifying language has been added requiring the initial and any revisions to the Labor Organization Notification Form to be filed with the Bureau of Licensing.
In § 438a.3(d), the material relating to terms and renewals of permits has been split into three separate subsections to improve clarity.
Additionally, minor wording changes have been made throughout the chapter to improve clarity.
Finally, the Board is renumbering the statement of policy at Chapter 436a (relating to use of funds allocated to horsemen's organizations--statement of policy). The current numbering will be changed to Chapter 436b (relating to use of funds allocated to horsemen's organizations).
Affected Parties
This final-form rulemaking imposes requirements on applicants for and holders of slot machine licenses, licensed entity representative registrations, manufacturer licenses, supplier licenses, horsemen permits and registrations, labor organization permits, and junket enterprise licenses, junket representative registrations and management company licenses.
Fiscal Impact
Commonwealth
This final-form rulemaking will impose costs on the Board related to processing initial applications and renewals, conducting investigations and issuing licenses, permits and registrations. When applicable, the Pennsylvania State Police will also experience costs associated with investigations of applicants.
Political Subdivisions
This final-form rulemaking will have no fiscal impact on political subdivisions of the Commonwealth.
Private Sector
Applicants for the various licenses, permits and registrations will incur costs to complete the applicable applications and pay the applicable application fees and additional costs associated with investigations.
General Public
This final-form rulemaking will have no significant fiscal impact on the general public.
Paperwork requirements
Applicants for and holders of licensed entity representative registrations, manufacturer licenses, supplier licenses, horsemen permits and registrations, labor organization permits, junket enterprise licenses, junket representative registrations and management company licenses will be required to complete the applicable initial application and renewal forms.
Effective Date
The final-form rulemaking will become effective upon publication in the Pennsylvania Bulletin.
Contact Person
The contact person for questions about this final-form rulemaking is Richard Sandusky, Director of Regulatory Review, (717) 214-8111.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a), on April 26, 2007, the Board submitted a copy of the proposed rulemaking, published at 37 Pa.B. 2197 (May 12, 2007), and a copy of the Regulatory Analysis Form to IRRC and the Chairpersons of the House Gaming Oversight Committee and the Senate Committee on Community, Economic and Recreational Development.
Under section 5(c) of the Regulatory Review Act (71 P. S. § 745.5(c)), IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Board has considered all comments received from IRRC, the House and Senate Committees and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on September 19, 2007, the final-form rulemaking was deemed approved by the House Gaming Oversight Committee and the Senate Committee on Community, Economic and Recreational Development. Under section 5.1(e) of the Regulatory Review Act (71 P. S. § 745.5a(e)), IRRC met on September 20, 2007, and approved the final-form rulemaking.
Findings
The Board finds that:
(1) Public notice of intention to adopt these chapters was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The final-form rulemaking is necessary and appropriate for the administration and enforcement of 4 Pa.C.S. Part II the Pennsylvania Race Horse Development and Gaming Act.
Order
The Board, acting under the 4 Pa.C.S. §§ 1101--1904, orders that:
(a) The regulations of the Board, 58 Pa. Code Part VII, are amended by deleting §§ 421.1--421.5, 423.1--423.8, 425.1, 427.1--427.5, 431.1--431.5, 436.1--436.7, 438.1--438.4, 439.1--439.11 and 440.1--440.4 and by adding final regulations in §§ 421a.1--421a.5, 423a.1--423a.7, 425a.1, 427a.1--427a.5, 431a.1--431a.5, 436a.1--436a.6, 438a.1--438a.3, 439a.1--439a.12 and 440a.1--440a.5 to read as set forth in Annex A.
(b) The statement of policy in §§ 436a.1--436a.6 is renumbered as §§ 436b.1--436b.6.
(c) The Chairperson of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
MARY DIGIACOMO COLINS,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 37 Pa.B. 5447 (October 6, 2007).)
Fiscal Note: Fiscal Note 125-61 remains valid for the final adoption of the subject regulations.
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