RULES AND REGULATIONS
PENNSYLVANIA GAMING CONTROL BOARD
[ 58 PA. CODE CHS. 401a, 429, 429a, 433, 433a, 435, 435a, 437, 437a, 441 AND 441a ]
Preliminary Provisions; Manufacturer Designees; Principal Licenses; Employees; Vendor Certification and Registration; Slot Machine Licenses
[37 Pa.B. 6265]
[Saturday, December 1, 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), (12), (13)--(20) and (23), 1205, 1209, 1301--1316, 1317.1, 1318, 1321, 1325--1331 and 1802, adopts Chapters 429a, 433a, 435a, 437a and 441a and rescinds Chapters 429, 433, 435, 437 and 441 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 433 and 435 at 35 Pa.B. 4045 (July 16, 2005); Chapter 437 at 35 Pa.B. 6411 (November 19, 2005); Chapter 441 at 35 Pa.B. 4543 (August 6, 2005); and Chapter 429 at 37 Pa.B. 1862 (April 21, 2007). Under 4 Pa.C.S. § 1203(b), the temporary regulations expired on July 5, 2007.
The Board is adopting Chapters 429a, 433a, 435a, 437a and 441a, amending Chapter 401a and rescinding Chapters 429, 433, 435, 437, and 441 to replace the Board's temporary regulations with the permanent regulations.
Explanation of Chapters 429a, 433a, 435a, 437a and 441a
Chapter 429a (relating to manufacturer designees) addresses the licensure of manufacturer designees. It specifies: who must obtain a manufacturer designee license; what a manufacturer designee may do; what restrictions are placed on a manufacturer designee; and lays out the application process for an initial manufacturer designee license and for additional manufacturer designee licenses. This chapter also sets forth the term of the manufacturer designee license, the process for license renewals and the responsibilities of a manufacturer designee. It also provides that a manufacturer designee will be deemed to be an agent of the manufacturer, that the manufacturer and the manufacturer designee will be held jointly and severally liable for violations of the regulations and the act committed by the manufacturer designee, and requires all agreements and amendments thereto to be submitted to the Board for Board approval.
Chapter 433a (relating to principal licenses) specifies who is required to be licensed as a principal, who may be exempted from licensure, and who may be eligible to receive a waiver. It contains the process for filing an application for a principal license, the responsibilities of applicants, the term of the principal license and the process for renewal of a principal license.
Chapter 435a (relating to employees) contains a number of general provisions that apply to individuals who are applicants for or holders of a key employee license, occupation permit or nongaming employee registration. This chapter also contains a process for filing a waiver from key employee licensure and the information that must be included. It also contains the process for renewal of a key employee license or gaming employee occupational permit.
Chapter 435a also contains the requirements related to Board credentials including who must obtain a credential, how an emergency credential can be obtained, and when temporary credentials for principals, key employees and nongaming employees may be issued. Additionally, this chapter requires that any lost credential be reported to the slot machine licensee's security department and that the slot machine licensee's security department must provide written notice to the Board of the lost credential. Lastly, this chapter allows employees to request a duplicate Board credential by submitting a Request for Duplicate PGCB Credential form to the Bureau of Licensing.
Chapter 437a (relating to vendor certification and registration) contains the criteria that will be used to determine if a vendor is required to obtain a vendor registration or vendor certification, has the procedures for filing an application for a vendor certification or registration, contains a list of providers who are exempt from the registration and certification requirements and allows vendors to seek a waiver of the registration and certification process by filing a Vendor Certification Waiver Application.
This chapter also requires certain individuals to be certified, allows certain subcontractors to file an Onsite Vendor Notification Form, and establishes the term of vendor certifications and registrations and the process for renewal of a certification or registration. It specifies the general responsibilities of certified and registered vendors and lists the employees of a certified vendor that are required to obtain an occupation permit or nongaming employee registration.
Additionally, Chapter 437a provides that the Board will maintain lists of approved and prohibited vendors, contains a list of the factors the Board will consider when it is determining whether or not to place a vendor on the prohibited vendor list, and specifies the petition process to be used by vendors who are seeking removal from the prohibited vendor list.
Finally, this chapter establishes the conditions under which a slot machine applicant or licensee may request that the Board allow a vendor to provide goods or services prior to completing the application process and that allow a slot machine applicant or licensee to use a vendor that is not registered or certified to respond to an emergency involving a threat to public health, welfare or safety or conditions beyond the control of the slot machine applicant or licensee.
Section 441a.1 (relating to definitions) contains definitions and provisions related to the application process for a slot machine license. It addresses what materials must be filed, outlines the bond or letter of credit requirements, mandates that the Board hold at least one public hearing on a slot machine license application, and specifies the procedures that will be used for slot machine licensing hearings and the criteria the Board will use to determine whether or not to grant a license.
Chapter 441a.1 (relating to slot machine licenses) also addresses a number of related items including: divestiture of interests held by an individual who is not eligible or suitable for licensure; notification of any changes in principals, key employees or financial sources; review of all written and oral agreements; the filing and content of the monthly Master Purchasing and Disbursement Reports; posting of the $1 million bond that slot machine licensees must obtain to comply with 4 Pa.C.S. § 1316 (relating to bond for issuance of slot machine license); the term of and the process for renewal of a slot machine license; and provisions pertaining to changes in ownership and restrictions on ownership of multiple slot machine licensees.
Chapter 441a also requires slot machine licensees to submit monthly employee status reports and requires slot machine licensees to report the termination of any employee if the circumstances surrounding the termination could be cause for suspension or revocation of the employee's license, permit or registration. It mandates that agreements that provide any form of payment related to earnings, profits or receipts from a slot machine licensee must be approved by the Board and provides that a slot machine licensee will be held jointly and severally liable for violations of 4 Pa.C.S. Part II (relating to the Pennsylvania Race Horse Development and Gaming Act) or the Board's regulations committed by its management company.
Additionally, Chapter 441a contains general provisions that apply just to Category 1 and Category 3 slot machine licensees. For Category 1 slot machine licensees, these include requirements for payments of funds required by 4 Pa.C.S. §§ 1404--1406 (relating to distributions from licensee's revenue receipts; Pennsylvania Race Horse Development Fund; and distributions from Pennsylvania Race Horse Development Fund). For Category 3 slot machine licensees there are provisions related to what is considered to be a well-established resort hotel, a requirement to submit a plan to control access to the gaming floor to ensure that unauthorized individuals are not permitted to enter the gaming floor and provisions which permit holders of memberships for amenities or patrons of amenities to be allowed access to the gaming floor.
Comment and Response Summary
Notice of proposed rulemaking was published at 37 Pa.B. 2695 (June 16, 2007).
The Board received comments from Down's Racing, LP (Down's), Greenwood Gaming and Entertainment, Inc. (Greenwood), HSP Gaming, LP (HSP) and International Game Technology (IGT) during the public comment period. On August 15, 2007, comments on the proposed rulemaking were received from the Independent Regulatory Review Commission (IRRC). These comments were reviewed by the Board and are discussed in detail as follows.
Both IRRC and IGT suggested that a definition of the term ''manufacturer designee'' be added to the regulations.
Subsequent to the publication of this proposed rulemaking, the final-form version of Chapter 401a (relating to preliminary provisions) was published. This chapter contains definitions of the terms ''manufacturer designee,'' ''manufacturer designee license'' and ''manufacturer designee licensee.'' Therefore, adding a definition of ''manufacturer designee'' to this chapter is not necessary.
IRRC also recommended that the Board add details on how soon the Board will act on an applicant and what recourse an applicant has if its application is denied.
The Board has not added a fixed time period within which an application will be acted on because it can vary significantly. While the Board will promptly begin its review of an application, the time required to complete its review will vary depending on the organizational structure of the applicant, how quickly the applicant provides any additional information requested by the Bureau of Licensing and the number of other applications that are under review.
The Board has also not added any provisions related to appeals. An appeal of the denial of a manufacturer designee application would be filed in Commonwealth Court and would have to be filed in accordance with the requirements established by the court.
In § 429a.6 (relating to manufacturer designee as agent), IRRC asked what the statutory authority was for the joint and several liability provision in subsection (b).
This provision is being adopted under the Board's general authority in 4 Pa.C.S. § 1202(b)(30) (relating to general and specific powers). This provision is necessary because the manufacturer designee acts as the manufacturer's agent. Without this provision a manufacturer could use a manufacturer designee to shield themselves from enforcement actions. However, 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 manufacturer should be liable for the actions of the manufacturer designee.
In § 433a.1 (relating to definitions), HSP suggested that the definition of the term ''applicant'' be amended by adding ''which is pending before the Board or the denial of which is subject to a pending appeal, or for which the period of time to appeal has not expired.'' to clarify when an applicant ceases to be an applicant. IRRC asked why the definition of ''applicant'' in this chapter differs from the definition in the act and in § 401a.3 (relating to definitions) and suggested that one consistent definition be used.
The Board has not adopted either suggestion. The Board considers that an applicant ceases to be an applicant when the Board disapproves the application. HSP's suggested change would extend the time that an applicant is still considered to be an applicant until any appeals are resolved or the time period to file an appeal has ended. In response to IRRC's comment, the Board has made the definition in this chapter narrower than the general definition because not all principals of applicants are required to be licensed. This definition encompasses only those entities whose principals must obtain a license.
IRRC also asked what the basis is for the 20% that is used in the definition of ''holding company'' and suggested that the Board add a definition of the term ''principal'' to this chapter.
Using 20% to replace the phrase ''significant part'' was done to give the regulated public a clear understanding of what the Board considers to be significant. Twenty percent was selected because it is within the range of percentages typically used to determine what a controlling interest is. It is also the percentage that is used in 4 Pa.C.S. § 1328(c) (relating to change in ownership or control of slot machine licensee) to determine what constitutes a change in control of a slot machine licensee. However, this definition has been deleted because it repeats the definition of ''holding company'' that was included in the final-form version of § 401a.3.
A definition of ''principal'' has not been added to this chapter because principal is defined in § 401a.3. Repeating the definition there is unnecessary.
In § 433a.3 (relating to individual ownership), HSP suggested that the Board delete subsection (c) and revise subsection (d) to exempt direct as well as indirect ownership interests of less than 1%.
The Board disagrees with this suggestion. Any owner of or direct beneficiary of any intermediary or holding company of a slot machine licensee should be required to obtain a principal license.
In subsection (f), HSP suggested that grantors who no longer have any obligations or rights; or who established the trust at least 1 year prior to the trust becoming an applicant; or the financial contribution by the grantor to the trust is under $1,000 not be required to obtain a principal license.
Section 1325(d)(1) of 4 Pa.C.S. (relating to license or permit issuance) requires all grantors to be licensed as principals. Accordingly, the Board lacks the statutory authority necessary to make the suggested changes.
In § 433a.3(g), IRRC asked why this provision (and similar provisions in §§ 433a.4(h) and 433a.6(d)) (relating to entity ownership; and lenders and underwritters) is needed.
The individuals in subsections (a)--(f) are required to be licensed. Individuals who fall under subsection (g) will be required to obtain a license only if the Board determines it is appropriate given the specific ownership structure of the applicant. This gives the Board some discretion and is consistent with the language of the act which defines a ''principal'' as '' . . . or other person or employee of an applicant, . . . deemed to be a principal'' by the Board.
In § 433a.7 (relating to trusts), IRRC suggested that the Board add a definition of the term ''similar business entity.''
This term, which is used in the act, is being used as a general catch-all to pick up any trust-like entities. Attempting to add an all-inclusive definition of this term would be difficult given the myriad of organizational structures that exist and would defeat the purpose of its use.
Also in § 433a.7, HSP suggested that subsection (b) be revised to exempt direct as well as indirect ownership interests of less than 1% and that the phrase ''as required under this chapter'' be added to subsection (d) to reflect the less than 1% exemptions suggested for inclusion in §§ 433a.3 and 433a.7.
The Board has not adopted either of these suggestions. The Board believes that any trust that holds a direct ownership interest in an applicant or licensee should be required to obtain a principal license. Additionally, since the Board has not adopted the recommended changes to § 433a.3(c) and (d) or § 433a.7(b), there is no need to add the suggested revision to subsection (d).
In § 433a.9 (relating to principal license term and renewal), HSP suggested that the Board change the renewal date for principal licenses to coincide with the renewal date of the licensee that the principal is associated with.
Because 4 Pa.C.S. § 1326 (relating to license renewal) establishes that all licenses and permits are subject to annual renewal, the Board can not, by regulation, change the renewal date of a principal license to correspond to the renewal date of the entity that it is associated with. However, because licenses remain in effect after expiration if a renewal application and fee have been received, the Bureau of Licensing will try to coordinate the submission of renewal applications of entities and their principals to the Board.
In Chapter 435a, IRRC suggested that the Board add provisions on the time period within which applications will be acted on, how applicants will be notified of the Board's decision and how an applicant can appeal a denial to §§ 435a.2, 435a.3 and 435a.5 (relating to key employee license; occupation permit; and key employee license and occupation permit term and renewal).
The Board has not added any time period within which an application will be acted on because it can vary significantly depending on the answers given by the applicant, how quickly the applicant provides any additional information requested by the Bureau of Licensing and the number of other applications that are under review.
The Board has also declined to add provisions related to how it provides notice of its decisions. All applications are acted on by the Board. If an application is approved, the applicant will receive an approval order or a credential, or both, from the Board. If an application is disapproved, the applicant will receive an order denying the applicant application. Since these are Board procedures that do not require actions by the applicants there is no reason to put these processes in the regulations.
The Board has also not added any provisions related to appeals. An appeal of the denial of an application would be filed in Commonwealth Court and would have to be filed in accordance with the requirements established by the court.
In § 435a.1(k) (relating to general provisions), IRRC asked what the Board's statutory authority is to require that applicants demonstrate that they are current on any financial obligations owed to the Commonwealth or any political subdivisions thereof, including court-ordered child support. Additionally, IRRC suggested that the regulation specify what documentation must be submitted to demonstrate compliance.
The authority for this requirement is contained in the Board's general authority in 4 Pa.C.S. § 1202(b)(30) and in the specific licensing requirements under 4 Pa.C.S. §§ 1311, 1311.1, 1311.2, 1318, 1321 and 1325. This is one of the factors that the Board will consider when determining whether or not an individual is suitable to receive a license or permit.
The Board does not believe additional provisions for demonstrating compliance are necessary. Applicants will demonstrate compliance through answers to questions on the various application forms and by completing a tax clearance form which authorizes the Board to do a tax check with the Departments of Revenue and Labor and Industry. The Board will verify this information through the tax clearance checks and credit checks that are done as part of the background investigation conducted by the Board.
In § 435a.6 (relating to Board credentials), IRRC suggested that the Board add the process for obtaining a Board credential.
Individuals who are required to obtain a credential are automatically issued a credential when their application for a license, permit or registration is approved. Because applicants don't have to do anything to obtain their credential, there are no procedures to add to this section.
In § 437a.1 (relating to general vendor requirements), HSP suggested that the Board add ''performing gaming related duties on the gaming floor'' to subsection (b)(3) so that vendors whose employees perform nongaming related duties on the gaming floor can be registered instead of certified.
The Board has not adopted this suggestion. To protect the integrity of gaming, any vendor whose employees will be working on the gaming floor should be certified.
Also in § 437a.1, IRRC suggested that the Board add the criteria the Board will use when requiring a vendor to be certified ''based on an analysis of the vendor's services'' and change ''associates'' to ''associations'' in subsection (c)(4).
The Board agrees with both of these suggestions and has added the phrase ''to ensure the integrity of gaming'' to subsection (b)(4) and replaced ''associates'' with ''associations'' in subsection (c)(4).
In § 437a.2 (relating to vendor registration applications), IRRC noted a misspelling in subsection (a) and questioned the Board's authority to limit the recovery of expenses related to investigations of registered vendors to $2,000 in subsection (c).
Placing the $2,000 cap on reimbursement of application review costs in the regulations was done to encourage small businesses to apply to become registered vendors. This was based on the fact that the Board does not envision that the investigation costs will ever exceed $2,000. However, as IRRC noted, 4 Pa.C.S. § 1208(1)(iii) (relating to collection of fees and fines) requires the Board to collect ''The reasonable and necessary costs and expenses incurred in any background investigation or other investigation or proceeding concerning any applicant, licensee, permittee or registrant . . . .'' from the applicant. Accordingly, the Board has deleted the phrase ''up to a maximum amount of $2,000'' in the final-form regulation. Additionally, the Board has corrected the misspelling in subsection (a).
In § 437a.4 (relating to individual certifications and investigations), HSP suggested that exemptions or waivers of principal certification be allowed for: persons who hold a beneficial interest or ownership of less than 5% of a certified vendor; officers and directors of publicly traded certified vendors; and officers of certified vendors that are not regularly and actively involved in the certified vendors business with a slot machine licensee.
To address the concerns expressed by HSP and to streamline the application process, the Board has deleted § 437a.4 and § 437a.5 (relating to construction subcontractors). In their place, the Board has inserted a new § 437a.4. Under this section a more limited number of persons will be required to apply for certification by filing a Pennsylvania Personal History Disclosure Form or be required to sign a Release Authorization. These new requirements will substantially reduce the costs for vendor applicants while still providing the information the Board needs to evaluate the suitability of an applicant.
In § 437a.11 (relating to slot machine applicants' and licensees' duty to investigate), IRRC questioned the reasonableness of and need for subsection (a) if a vendor is registered or certified by the Board. If this provision is retained, IRRC suggested that criteria that the slot machine applicant or licensee should use should be added to the regulation.
The Board agrees that there is no need for further review of approved vendors and has deleted the second sentence in subsection (a). That sentence had been intended to have slot machine applicants or licensees exercise ongoing oversight of vendors performing work for them. To clarify this, a new subsection (d) has been added which requires slot machine applicants or licensees to notify the Board of any actions by vendors which a slot machine applicant or licensee believes would constitute a violation of the act or the Board's regulations.
In § 441a.1, IRRC noted that the definition of ''applicant'' in this chapter differs from the definition in the Act and in § 401a.3 and suggested that a consistent definition be used. Additionally, IRRC asked if time-shares equal common ownership and how is the inclusion of time share units in the definition of ''guest rooms under common ownership'' consistent with the statutory definition of ''well-established resort hotel.''
The definition of ''applicant'' in this chapter is narrower than the general definition because in this chapter the term is only intended to include those entities that are applying for a slot machine license. Therefore no change has been made.
Concerning the inclusion of time share units, the Board notes that time share units may be owned by a resort hotel or by individuals. Only those units owned by the resort hotel would be included in the definition of ''guest rooms under common ownership.'' Many resort hotels offer time-share units in the hotel itself or as stand alone units at the resort, or both. At the public hearing conducted by the Board in March of this year, a number of commentators, including House and Senate staff, suggested that time-share units that meet the common ownership requirement could be included in the room count of the resort. The Board agrees that a time-share unit that is owned by the resort hotel and is available to the public for rental is no different from a room in the hotel.
In § 441a.5 (relating to license fee payment bond or letter of credit requirements), HSP suggested that the Board add the phrase ''and no appeal of such denial by the applicant is pending'' to subsection (f)(2)(i). This would require that anyone filing an appeal must still maintain his bond or letter of credit.
As previously stated, the Board considers that an applicant ceases to be an applicant when the Board disapproves its application. Accordingly, this suggested change has not been adopted.
In § 441a.7 (relating to licensing hearings for slot machine licenses), IRRC noted that subsection (b) refers to prehearing conferences, but the regulation does not provide any details about when or how they would be conducted. IRRC suggested that prehearing conference procedures be added or cross-referenced in this section. IRRC also asked how soon after the conclusion of the licensing hearings will the Board issue its final order.
The Board agrees with IRRC's suggestion relating to prehearing conferences and has added a new subsection (b) which states that prehearing conferences may be scheduled to address issues related to the licensing hearings and provides a cross-reference to § 491a.9 (relating to prehearing and other conferences).
Concerning the issuance of the Board's final order, the Board has not added a fixed time period to the regulation because the exact amount of time needed will vary depending on the number and complexity of the applications.
Also in § 441a.7, HSP suggested that subsection (h)(3) and (4) be revised so that applicants would not be required to file documents that have already been submitted to the Board or that contain confidential information.
The Board agrees, in part, with this suggestion and has added a new paragraph (5) to allow applicants to reference items already in the public record. No change was made for confidential information because the treatment of confidential information was addressed in proposed subsections (k) and (m).
In § 441a.16 (relating to slot machine license term and renewal) both Down's and Greenwood strongly recommended 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 renewal) of the act 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.''
It is the Board's intent that slot machine licensees will use renewal application forms which are essentially the same as the initial application forms. Slot machine licensees 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 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.
Down's and Greenwood also 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 slot machine licensees would create an unnecessary administrative burden on the Board which slot machine licensees would end up having to pay for. However, because the date a slot machine 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 slot machine license is due to expire. To remove this uncertainty, the Board will be adding the license expiration date to the listing of slot machine licensees which is available on the Board's website. This will allow slot machine 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 slot machine licensees in this regulation. The interests of slot machine licensees are protected because filing the required renewal materials ''extends'' the term of their current license, so there is no need for a deemed approval provision.
Finally, Down's stated that renewal requirements should only apply to licenses and permits because those are all that is mentioned in 4 Pa.C.S. § 1326.
Because this section applies to slot machine license renewals, this comment does not apply to this section. However, the Board notes that the regulations for certified and registered entities were promulgated under the Board's general authority which is also the statutory basis for renewal requirements for those entities.
Also in § 441a.16, IRRC suggested that the Board add additional detail on the renewal process.
In response to IRRC's suggestion, the Board has added the name of the renewal form.
In § 441a.20 (relating to slot machine license agreements), IRRC suggested that the process for the approval of these agreements, including time lines for review, be added to the regulation.
The Board agrees with this suggestion and has added a new subsection (b) which requires submission of agreements at least 60 days prior to the proposed effective date of the agreement. This should provide enough time for the Board to review an agreement. However, no agreement will be allowed to take effect until the Board has approved it.
In § 441.21 (relating to management contracts), IRRC asked what the Board's statutory authority for this section is.
The legal basis for this provision is the Board's general authority in 4 Pa.C.S. §§ 1202(b)(30), 1321 and 1325.
Also in this section, Down's suggested that the Board delete this section entirely or limit the liability of the management company to actions that fall within the scope of the management contract.
This section addresses the joint and several liability of slot machine licensees, not management companies. Liability of management companies for actions of slot machine licensees is addressed in § 440a.4(b) (relating to required provisions in management contract) of the Board's regulations. 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 a slot machine licensee should be liable for the actions of the management company.
In § 441a.23 (relating to Category 3 slot machine licensees), IRRC asked under subsection (a) if satellite amenities owned by the resort hotel qualify as being on the premises and suggested that this point be clarified in the regulations.
The definition of amenities in the act and the regulation uses the phrase ''at a resort hotel.'' Accordingly, amenities at satellite locations would not qualify. To provide greater clarity, the phrase ''on its premises'' is being replaced with ''at the resort hotel.''
IRRC also asked what the Board's authority is for subsection (d) which specifies when a patron of one of the resort hotel's amenities may be allowed on the gaming floor.
The authority for this provision is the Board's general authority in 4 Pa.C.S. § 1202(b)(30). The act, in 4 Pa.C.S. § 1305 (relating to category 3 slot machine licenses), limits access to the gaming floor to guests of the resort hotel and patrons of one or more amenities. However, the act is silent as to when or for how long the use of an amenity will entitle an individual to have access to the gaming floor. The Board does not believe that the General Assembly intended the one-time use of an amenity to entitle an individual to have unlimited access to the gaming floor. For this reason, subsection (d) limits the access to the gaming floor to a single, limited period of time, close to the time that the individual used the amenity.
Additional Revisions
In addition to the revisions previously discussed in this preamble, the Board has made a number of additional revisions.
In § 401a.3, the definition of ''regular or continuing basis'' has been deleted. This term had previously been used to define certified vendors but is no longer needed because the criteria defining a certified vendor are in § 437a.1.
In § 433a.1, the phrase ''member of an audit committee'' has been added to the definition of ''director'' to clarify that the requirements of this chapter that are applicable to directors will also apply to members of audit committees.
In § 433a.2 (relating to directors or officers), the Board has made two changes. First, a new subsection (d) has been added which requires senior surveillance or internal audit executives of a holding or intermediate company which has authority to direct the operations of a slot machine licensee to be licensed as a principal if the most senior executive in the reporting line reports directly to the independent audit committee of the board of directors of the holding or intermediary company. Second, in subsection (f) the Board has replaced the phrase ''may not'' with ''will not be required to'' to clarify that certain outside directors will not be required to be licensed as a principal unless the Board determines that licensure is necessary to protect the integrity of gaming in this Commonwealth.
In § 433a.6(b), the words ''manufacturer or supplier'' have been inserted after ''slot machine.'' This corrects a drafting error and exempts banks and other traditional lending institutions that provide financing to manufacturers or suppliers from having to be licensed as a principal. In § 433a.6(d), a number of changes were made to improve clarity. These include adding ''an applicant or'' to expand the scope of this subsection to include applicants as well as licensees; deleting the phrase ''to produce any information, documentation and assurances concerning the lender or underwriter;'' and replacing ''probable cause'' with ''reason.''
In § 435a.1, new language was added as a new subsection (j) to bar registrants employed by certified vendors or employees of a certified vendor who have direct contact with the employees of a licensed facility from gaming at a licensed facility where the vendor currently provides services. This is consistent with the restriction placed on registrants and employees of a slot machine licensee in subsection (i). Additionally, a new subsection (m) has been added which requires applicants for an occupation permit or nongaming employee registration to be at least 18 years of age.
In § 435a.2, two revisions were made. First, the phrase ''by clear and convincing evidence'' in subsection (e) was deleted. It is unnecessary because it repeats the general requirement that applies to all applicants under § 421a.1(h). Second, in subsection (f), the Board has deleted ''nontransferable'' and added ''valid for employment with any licensed entity'' to clarify that a key employee license is valid for employment with any licensed entity, not just the licensed entity for which it was originally obtained.
In § 435a.3(f), the Board has deleted ''nontransferable'' and added ''valid for employment with any licensed entity or certified vendor'' to clarify that an occupation permit is valid for employment with any licensed entity or certified vendor, not just the licensed entity or certified vendor for which it was originally obtained.
In § 435a.5, the Board has added a new subsection (e) which clarifies that an occupation permit is valid for employment with any licensed entity or certified vendor, not just the licensed entity or certified vendor for which it was originally obtained.
Two additional revisions were made to § 435a.6. First, in subsection (b)(1) the Board has deleted ''address'' from the list of items that are on a Board credential. The Board has determined that there is no need to have this information on the credential. Second, subsection (c) has been revised to require individuals who are required to obtain a Board credential, who are not state employees or employees of the slot machine licensee, to display, rather than just carry, their Board credential.
Section 435a.7 (relating to emergency credentials has been rewritten to shift the responsibility for issuance of emergency credentials from the slot machine licensee's security department to the onsite BIE agents. This will give the Board direct control over this process and reduce the administrative and recordkeeping burden on slot machine licensees.
In § 437a.1, the Board has made minor wording changes to improve clarity and subsections (e) and (f) relating to waivers have been relocated to § 437a.3 (relating to vendor certification applications).
In § 437a.3, revisions were made to subsection (a) to exempt intermediary and holding companies of publicly traded companies from the requirement of filing a vendor certification form and to conform with the changes made to § 437a.4. Additionally, new subsections (d)--(g) were added which allow for the filing of a Single Transaction Waiver Form or a Vendor Certification Waiver Form in limited circumstances. These changes will help to simplify the application process.
Proposed §§ 437a.4 and 437a.5 regarding to principal and key employee certifications have been deleted and replaced by a new § 437a.4 entitled ''Individual certifications and investigations.'' Under this scheme, a more limited number of individuals will be required to file either a Pennsylvania Personal History Disclosure Form or sign a Release Authorization which will allow the Board to conduct background checks. These changes will also simplify the application process and reduce costs for vendors and the Board.
A new § 437a.5, regarding construction subcontractors, has been added which establishes an abbreviated filing process for certain subcontractors who would otherwise be required to be certified or registered. It permits subcontractors who do not have an agreement with a slot machine applicant or licensee or the general contractor of a slot machine applicant or licensee to file an Onsite Subordinate Vendor Notification Form.
In § 437a.7(c), the Board has added ''The employee is the onsite supervisor of other employees who are involved in the construction of a licensed facility'' to the list of certified vendor employees that are required to obtain a nongaming employee registration.
In § 437a.9 (relating to permission to conduct business prior to certification or registration), the requirement in subsection (a)(3) that the slot machine applicant or licensee demonstrate good cause for allowing a vendor applicant to provide services prior to certification or registration has been deleted. The Board sees no need to impose this requirement on the slot machine applicants or licensees.
In § 441a.5(b), the Board has replaced the word ''required'' with ''permitted.''
In § 441a.7, a new subsection (s) has been added which establishes procedures for applicants to file objections during the slot machine licensing hearings. If objections are not filed, the applicant will be deemed to have waived its right to file objections. This provision is being added to respond to the Supreme Court's concern raised in the Pocono Manor appeal.
In § 441a.16, the term of licensure has been changed from ''1 year from the date of Board approval'' to ''1 year from the date of the issuance of the license by the Board.'' This will stagger the renewal dates for the slot machine licenses.
In § 441a.17 (relating to change in ownership or control of slot machine license and multiple slot machine license prohibition), the Board added the phrase ''by filing a Slot Machine Licensee's Notification of Proposed Transfer of Interest Form'' in subsection (a) so that licenses will know how to notify the Board of any proposed or contemplated change in ownership.
In § 441a.22 (relating to category 1 slot machine licenses), a new subsection (d) was added which requires Category 1 slot machine licensees to annually submit a report of planned future improvements to the backside area that will occur over the next 3 years. Existing subsection (d) which allows the Board to request interim reports is now subsection (e) and will apply to the reporting requirements in existing subsection (c) and the new subsection (d). This will allow the Board to more closely monitor improvements to the backside areas by the Category 1 slot machine licensees.
Additionally, minor wording changes have been made throughout these chapters to improve clarity.
Affected Parties
This final-form rulemaking imposes requirements on applicants for and holders of slot machine licenses, manufacturer designee licenses, principal and key employee licenses, vendor certifications or registrations, and on employees required to obtain an occupation permit or nongaming employee registration.
Fiscal Impact
Commonwealth
This final-form rulemaking will impose costs on the Board related to processing initial applications and renewals, conducting hearings and investigations and issuing licenses, permits, certifications and registrations. Where 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, certifications 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 slot machine licenses, manufacturer designee licenses, principal and key employee licenses, vendor certifications or registrations, and employees required to obtain an occupation permit or nongaming employee registration will be required to complete the applicable initial application and renewal forms. Category 1 slot machine licensees will now be required to annually submit a report of planned future improvements to the backside area of the racetrack that will occur over the next 3 years.
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 June 1, 2007, the Board submitted a copy of the proposed rulemaking, published at 37 Pa.B. 2695 (June 16, 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, 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 October 17, 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, IRRC met on October 18, 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 (relating to gaming).
Order
The Board, acting under 4 Pa.C.S. Part II, orders that:
(a) The regulations of the Board, 58 Pa. Code Part VII, are amended by deleting §§ 429.1--429.7, 433.101--433.109, 435.1, 435.3--435.6, 435.8--435.10, 437.1--437.3, 437.4a--437.4d, 437.5, 437.7, 437.10, 437.13, 441.1--441.3, 441.4a, 441.5a, 441.6a, 441.7a, 441.8, 441.9a--441.19a, 441.20 and 441.21a--441.23a, by adding final regulations in §§ 429a.1--429a.7, 433a.1--433a.9, 435a.1--435a.10, 437a.1--437a.11 and 441a.1--441a.23 and amending § 401a.3 to read as set forth in Annex A, with ellipses referring to existing text of the regulations.
(b) The Chairperson of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(c) This order shall take effect upon publication in the Pennsylvania Bulletin.
MARY DIGIACOMO COLLINS,
ChairpersonFiscal Note: Fiscal Note 125-64 remains valid for the final adoption of the subject regulations.
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 37 Pa.B. 5951 (November 3, 2007).)
Annex A
TITLE 58. RECREATION
PART VII. GAMING CONTROL BOARD
Subpart A. GENERAL PROVISIONS
CHAPTER 401a. PRELIMINARY PROVISIONS § 401a.3. Definitions.
The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Registered vendor--A vendor that is registered with the Board.
Restricted area--An area where access is limited and is specifically designated by the Board as restricted, including:
(i) The cashiers' cage.
(ii) The soft count room.
(iii) The surveillance monitoring room.
(iv) The slot machine storage and repair rooms.
(v) The progressive controller room.
(vi) The central control computer room.
(vii) The information technology department.
(viii) Any additional area that the slot machine licensee designates as restricted in its Board-approved internal controls.
* * * * *
Subpart B. LICENSING, PERMITTING, CERTIFICATION AND REGISTRATION
CHAPTER 429. [Reserved] §§ 429.1--429.7. [Reserved].
CHAPTER 429a. MANUFACTURER DESIGNEES Sec.
429a.1. Manufacturer designee general requirements. 429a.2. Manufacturer designee license applications and standards. 429a.3 Additional manufacturer designee licenses. 429a.4 Manufacturer designee license term and renewal. 429a.5. Responsibilities of a manufacturer designee. 429a.6. Manufacturer designee as agent. 429a.7. Manufacturer designee agreements. § 429a.1. Manufacturer designee general requirements.
(a) A manufacturer designee seeking to supply or repair slot machines and associated equipment for use in this Commonwealth shall apply to the Board for a manufacturer designee license.
(b) In accordance with section 1317.1 of the act (relating to manufacturer licenses), an applicant for or the holder of a manufacturer designee license or any of the applicant's or holder's affiliates, intermediaries, subsidiaries or holding companies, may not apply for or hold a slot machine license or supplier license.
(c) A licensed manufacturer designee may supply or repair slot machines or associated equipment manufactured by a manufacturer with whom the manufacturer designee has an agreement or has executed a contract authorizing the manufacturer designee to do so.
(d) Limitations will not be placed on the number of manufacturer designee licenses issued or when an application for a manufacturer designee license may be filed.
§ 429a.2. Manufacturer designee license applications and standards.
(a) An applicant for a manufacturer designee license shall submit:
(1) An original and three copies of the Manufacturer Designee Application and Disclosure Information Form unless otherwise directed by the Board.
(2) The nonrefundable application fee posted on the Board's website (pgcb.state.pa.us).
(3) A diversity plan as set forth in section 1325(b) of the act (relating to license or permit issuance) and Chapter 481a (relating to diversity).
(4) An application from every key employee under § 435a.2 (relating to key employee license) and principal under Chapter 433a (relating to principal licenses) as specified by the Manufacturer Designee Application and Disclosure Information Form.
(5) If applicable, copies of all filings required by the SEC during the 2 immediately preceding fiscal years, including all annual reports filed with the SEC, under sections 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.A. §§ 78m and 78o-6), quarterly reports filed with the SEC, under sections 13 or 15(d) of the Securities Exchange Act of 1934, current reports filed with the SEC, under sections 13 or 15(d) of the Securities Exchange Act of 1934, and proxy statements issued by the applicant.
(6) An affirmation that neither the applicant nor any of its affiliates, intermediaries, subsidiaries or holding companies, holds any direct or indirect ownership interest in any applicant for or holder of a slot machine license or supplier license, or employs, directly or indirectly, any person who satisfies the definition of a principal or key employee of a slot machine applicant or licensee or supplier applicant or licensee. In applying this provision to an applicant for a manufacturer designee license, the Board will not include interests that are held by individuals in any of the following manners:
(i) In mutual funds when the value of the interest owned does not exceed 1% of the total fair market value of the applicant or licensee and provided that the mutual fund is not a nondiversified fund invested primarily in entities operating in, or connected with, the gaming industry.
(ii) Through defined benefit pension plans.
(iii) Through deferred compensation plans organized and operated under section 457 of the Internal Revenue Code of 1986 (26 U.S.C.A. § 457).
(iv) In blind trusts over which the holder may not exercise any managerial control or receive income during the time period the holder is subject to these provisions.
(v) Through tuition account plans organized and operated under section 529 of the Internal Revenue Code of 1986 (26 U.S.C.A. § 529).
(vi) Through plans described in section 401(k) of the Internal Revenue Code of 1986 (26 U.S.C.A. § 401(k)).
(vii) An interest held by a spouse if an action seeking a divorce and dissolution of marital status has been initiated in any jurisdiction by either party to the marriage.
(7) A sworn or affirmed statement that the applicant has developed and implemented internal safeguards and policies to prevent a violation of section 1513 of the act (relating to political influence) and a copy of the safeguards and policies.
(b) In addition to the materials required under subsection (a), an applicant for a manufacturer designee license shall:
(1) Promptly provide information requested by the Board relating to its application or regulation and cooperate with the Board in investigations, hearings, and enforcement and disciplinary actions.
(2) Comply with the general application requirements in Chapters 421a and 423a (relating to general provisions; and applications).
(c) An applicant for a manufacturer designee license will be required to reimburse the Board for any additional costs, based on the actual expenses incurred by the Board, in conducting the background investigation.
(d) In determining whether an applicant will be licensed as a manufacturer designee under this section, the Board will consider the following:
(1) The financial fitness, good character, honesty, integrity and responsibility of the applicant.
(2) If all principals of the applicant are individually eligible and suitable under the standards in section 1317.1 of the act (relating to manufacturer licenses).
(3) The integrity of all financial backers.
(4) The suitability of the applicant and all principals and key employees of the applicant based on the satisfactory results of:
(i) A background investigation of all principals and key employees or their equivalent in other jurisdictions.
(ii) A current tax clearance review performed by the Department.
(iii) A current Unemployment Compensation Tax clearance review and a Workers Compensation Tax clearance review performed by the Department of Labor and Industry.
§ 429a.3. Additional manufacturer designee licenses.
(a) A licensed manufacturer designee whose license is in good standing may apply for an additional manufacturer designee license for a different licensed manufacturer by submitting:
(1) An original and three copies of the Additional Manufacturer Designee Application and Disclosure Information Form unless otherwise directed by the Board.
(2) The nonrefundable application fee posted on the Board's website (www.pgcb.state.pa.us).
(b) An applicant for an additional manufacturer designee license shall also comply with § 429a.2(b)(1), (2) and (c) (relating to manufacturer designee license applications and standards).
§ 429a.4. Manufacturer designee license term and renewal.
(a) A manufacturer designee license or renewal shall be valid for 1 year from the date on which the license or renewal is approved by the Board.
(b) A renewal application and renewal fee shall be filed at least 2 months prior to the expiration of the current license.
(c) A manufacturer designee license for which a completed renewal application and fee has been received by the Board will continue in effect for an additional 6-month period or until acted upon by the Board, whichever occurs first.
§ 429a.5. Responsibilities of a manufacturer designee.
(a) A holder of a manufacturer designee license shall have a continuing duty to:
(1) Provide information requested by the Board relating to licensing or regulation; cooperate with the Board in investigations, hearings, and enforcement and disciplinary actions; and comply with conditions, restrictions, requirements, orders and rulings of the Board in accordance with the act.
(2) Report a change in circumstances that may render a holder of a manufacturer or manufacturer designee license ineligible, unqualified or unsuitable to hold a license under the standards and requirements of the act and of this part.
(3) Provide a copy of all SEC filings listed in § 427a.2(a)(5) (relating to manufacturer license applications and standards) that are filed after the date of issuance of its license. The copy shall be submitted no later than 30 days after the date of filing with the SEC.
(b) A holder of a manufacturer designee license shall establish a place of business in this Commonwealth.
(c) An employee of a licensed manufacturer designee whose duties of employment or incidental activities related to employment require the employee to be on the gaming floor or in a restricted area shall be required to obtain an occupation permit under § 435a.3 (relating to occupation permit).
§ 429a.6. Manufacturer designee as agent.
(a) Notwithstanding any provision to the contrary in a contract between a licensed manufacturer and a licensed manufacturer designee, the licensed manufacturer designee shall be deemed to be an agent of the licensed manufacturer for the purposes of imposing liability for any act or omission of the licensed manufacturer designee in violation of the act or this part.
(b) Notwithstanding any provision to the contrary in a contract between a licensed manufacturer and a licensed manufacturer designee, the licensed manufacturer may be jointly and severally liable for any act or omission by the licensed manufacturer designee in violation of the act or this part, regardless of actual knowledge by the licensed manufacturer of the act or omission.
§ 429a.7. Manufacturer designee agreements.
(a) Agreements between a licensed manufacturer and a licensed manufacturer designee shall be submitted to the Bureau of Licensing for approval. An agreement between a licensed manufacturer and a licensed manufacturer designee will not become effective and a manufacturer designee license will not be issued until the Bureau of Licensing has reviewed and approved the terms and conditions of the agreement.
(b) Amendments to agreements between a licensed manufacturer and a licensed manufacturer designee shall be submitted to the Bureau of Licensing for approval at least 30 days prior to the effective date of the proposed amendment. The amendment may not become effective until the Bureau of Licensing has reviewed and approved the terms and conditions of the amendment.
(c) An agreement between a licensed manufacturer and a licensed manufacturer designee submitted for Bureau of Licensing review and approval must enumerate with specificity the responsibilities of the licensed manufacturer and the licensed manufacturer designee.
(d) Agreements must contain a provision that describes with particularity any terms related to compensation of the licensed manufacturer or the licensed manufacturer designee.
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