RULES AND REGULATIONS
Title 58—RECREATION
PENNSYLVANIA GAMING CONTROL BOARD
[ 58 PA. CODE CHS. 435a AND 437a ]
Vendor Revisions
[40 Pa.B. 975]
[Saturday, February 20, 2010]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. § 1321 (relating to additional licenses and permits and approval of agreements), amends Chapters 435a and 437a (relating to employees; and vendor certification and registration).
Purpose of the Final-form Rulemaking
The final-form rulemaking contains numerous amendments to Chapters 435a and 437a which are designed to improve the clarity of these chapters, reduce unnecessary filing requirements and improve the overall effectiveness of the Board's oversight of vendors based on the Board's experience to date.
Explanation of Amendments to Chapters 435a and 437a
Throughout this final-form rulemaking, the Board has made minor language changes to improve the clarity of the regulations. For example, the Board has replaced the term ''business'' with ''goods or services'' to track more closely the language in the statute.
In Chapter 435a a new § 435a.9a (relating to vendor employee temporary access credentials) has been added which codifies the Bureau of Licensing's policy for issuing temporary credentials to employees of vendors that are construction companies to complete work under the original contract, change orders, punch lists, make periodic repairs or do warranty work. This provides a controlled mechanism for contractors to complete work or make repairs under the supervision of the slot machine licensee's security department instead of requiring these employees to obtain a gaming permit or nongaming registration.
In § 437a.1 (relating to general vendor requirements), the monetary thresholds that trigger the registration or certification requirements have been revised. Under these amendments, vendors who provide less than $15,000 worth of goods or services in a 12-month period will continue to be exempt from the registration or certification requirements. A new subsection (h) has been added which requires slot machine applicants and licensees to file a one-page Notification of Material Vendor Form for any vendor that is not required to be registered or certified that has provided goods or services that are valued at $15,000 or more in a consecutive 12-month period. This will allow the Board to track low dollar value vendor transactions without requiring small vendors to complete an extensive application.
Under subsection (a), if a vendor provides goods or services to one or more slot machine applicants or licensees worth $100,000 up to $500,000 in a 12-month period, the vendor will be required to be registered. Under subsection (b), if a vendor provides goods or services worth more than $500,000 in a 12-month period to one or more slot machine applicants or licensees, the vendor will be required to be certified. These changes will significantly reduce the number of vendors who will have to obtain registrations or certifications which will make it easier for small businesses in this Commonwealth to provide services to slot machine applicants and licensees.
Also in subsection (a), vendors whose employees will be working on the gaming floor or in restricted areas will now, in most cases, be required to be registered. Under the current regulation, these vendors are required to be certified. This change will reduce application costs for vendors. Additionally, an exemption to the registration requirement has been added where registration will not be required if the following conditions are met: the vendor's employee's access to the gaming floor is for no more than 24 hours in a 72-hour period, once in any 3-month period; the vendor's employees sign-in with the slot machine licensee's security department and the Board's casino compliance representatives; and the vendor has received written approval from the Bureau of Licensing.
A new subsection (c) has been added that requires registration or certification as a vendor if a person provides goods or services that have a total dollar value that exceeds the respective dollar thresholds to an intermediary, holding company or affiliate of a slot machine licensee, if those goods or services are for the benefit of or use by the slot machine licensee.
It is not uncommon for entities that operate multiple casinos in multiple jurisdictions to consolidate the purchase of goods or services for their multiple properties. These provisions will ensure that a vendor that provides goods and services in this manner, that are ultimately to be used by a slot machine licensee in this Commonwealth, shall obtain Pennsylvania certification or registration if the value of the goods or services exceeds the applicable dollar thresholds.
Section 437a.1(d) has been amended to clarify the exemptions in paragraphs (8) and (12) and add one new exemption.
The new exemption, which has been added as paragraph (15), exempts individuals licensed by a Federal or State agency if that agency's licensing requirements are similar to the Board's. The goal of this provision is to reduce redundant licensing burdens.
Section 437a.1(e) has been added which allows the Board to request information from anyone claiming an exemption under subsection (d) to verify the person's exempt status. This provision is necessary to allow the Board to ensure that the person is eligible for the exemption the person has claimed.
A new subsection (g) has been added which will create a new process to be used, instead of the registration or certification process, for vendors that are listed on a major stock exchange. For these vendors, the Board does not believe certification or registration is necessary because, to be listed on one of the named stock exchanges, the vendor must meet certain regulatory requirements similar to those that a certified or registered vendor would have to meet. Therefore, certification or registration by the Board would be redundant. However, these vendors will still have to comply with the applicable requirements in § 437a.7 (relating to registered and certified vendor responsibilities) and immediately notify the Board if they cease to be listed on the major stock exchange.
The requirement that currently is contained in subsection (b)(4) that authorizes the Board to require a vendor to be certified if the Board determines certification is necessary to protect the integrity of gaming, has been moved to the new subsection (i) and expanded to allow the Board to require either registration or certification.
Section 437a.2(b) (relating to vendor registration applications), has been amended to require the submission of a nonrefundable application fee and to require the submission of fingerprints for officers, certain owners and sales persons who will have direct contact with slot machine applicants and licensees. The fee will go toward covering the costs of the investigation conducted on the applicant and the fingerprints will allow the Board to conduct a criminal history check of these individuals. A new subsection (c) has been added which gives the Board discretion to require fingerprints from additional individuals who are involved with the vendor. A new subsection (d) has also been added which will require the individuals listed in subsections (b)(4) or (c) to be found qualified by the Board. The provisions that formerly appeared as subsections (c) and (d) are now subsections (e) and (f).
Existing § 437a.3(a)(3) (relating to vendor certification applications), has been deleted and the remaining subsection has been renumbered. The Board does not believe this information is necessary to evaluate an applicant for vendor certification.
Section 437a.3(d)(3) has been amended to require that a person seeking a waiver from certification based on a single transaction, not have a continuing business relationship with the slot machine applicant or licensee as well as not having a continuing onsite presence at the licensed facility. This new language has been added to clarify the intent of the single transaction waiver provision and to prevent any potential misuse of the single transaction waiver.
Section 437a.3(e) is being deleted and the remaining subsections renumbered. Based on the Board's experience and the increased monetary levels required for certification, the Board does not believe this provision is needed.
Section 437a.4 (relating to qualification of individuals and entities) has been totally rewritten to improve the clarity of these requirements, eliminate unnecessary filings and to replace the term ''certification'' with ''qualification.'' The new requirement in subsection (a)(1) corresponds to the former requirements in existing subsections (a) and (b). New subsection (a)(2) requires anyone with an ownership or beneficial interest of 10% or more (instead of 5% which is currently required) to file a Pennsylvania Personal History Disclosure Form. Subsection (a)(3) is a revision of existing subsection (f) which continues the requirement that salespersons be qualified, but eliminates the requirement for qualification of their supervisors.
The new subsection (b) requires that any entity that owns 20% or more of a certified vendor or applicant for certification to file a Vendor Certification Form—Private Holding Company and be found qualified by the Board.
Subsection (c) lists individuals who may be required to file a Pennsylvania Personal History Disclosure Form and be found to be qualified if the Board determines that it is necessary to protect the public or to enhance the integrity of gaming.
A new subsection (d) has also been added to this section which will allow the Bureau of Licensing to issue a temporary credential to the individuals who are required to be qualified under this section. This will allow these individuals to work in a licensed facility prior to the completion of the application process.
The net effect of these revisions will be to reduce the number of individuals who will be required to file the Pennsylvania Personal History Disclosure Form and be found qualified by the Board.
In § 437a.6 (relating to registration and certification term and renewal), has had minor wording changes have been made to improve clarity.
In § 437a.7 the provisions requiring permitting and registration of certain employees have been revised to include registered vendors as well as certified vendors. Additionally, subsection (c) has been amended to add a new paragraph (4) that requires the offsite supervisor of a registered or certified vendor's employees who work at a licensed facility to obtain a nongaming registration. While these individuals will not normally be working in the licensed facility, because they will be responsible for vendor's employees who are working in the licensed facility, having these individuals obtain a nongaming permit is appropriate.
The Board has also added a new subsection (e), which in concert with the proposed new § 435a.9(a) (relating to permission to conduct business prior to certification or registration), codifies the Bureau of Licensing's policy for issuing temporary credentials to employees of construction company vendors to complete work under the original contract, change orders, punch lists, make periodic repairs or do warranty work. As stated previously, this provides a controlled mechanism for contractors to complete work or make repairs under the supervision of the slot machine licensee's security department instead of having these employees go through the process of obtaining a gaming permit or nongaming registration.
In § 437a.8 (relating to authorized vendor list; prohibited vendors), subsection (a) has been amended to clarify that the authorized vendor list will include persons who have completed the registration or certification process, persons who have filed a Publicly Traded Vendor Form and persons who have been given permission to conduct business with a slot machine licensee or applicant while their applications are being reviewed.
Subsection (b) has been amended to explicitly state that a slot machine licensee or applicant may not do $100,000 or more worth of business with a person within a 12-month period or do business with a vendor that would require the vendor's employees to be working on the gaming floor or in a restricted area unless the person is on the authorized vendor list. This prohibition does not apply to services provided under § 437a.1(a)(2) or (d) or § 437a.10 (relating to emergency vendor).
Subsection (c) has been amended to improve the clarity of the subsection and to delete existing paragraphs (4) and (5) which are redundant.
Subsection (d) has been amended to make the petitioner responsible for all costs related to a petition for removal from the prohibited vendors list. Similarly, a new subsection (e), which allows the Board to impose fines or other sanctions in connection with a petition for removal from the prohibited vendor list, has been added. These provisions have been added to address problems that the Board has had with vendors who have been uncooperative and who have tried to provide services without complying with the Board's regulations.
In § 437a.9 subsection (a) has been amended by replacing ''Board'' with ''Bureau of Licensing.'' The Bureau of Licensing has been responsible for processing these requests. This change will codify this delegation of authority from the Board to the Bureau of Licensing.
Subsection (a) has also been amended by adding a new paragraph (3) which expands upon the criteria that must be met for vendors to provide goods and services before the review of their application has been completed. Paragraph (3) requires an applicant to agree that the Bureau of Licensing may rescind the authorization with or without prior notice if the applicant's suitability is at issue or the applicant fails to cooperate in the application process. While the Board recognizes that slot machine licensees may need a vendor's services before the application process is complete, the Board's ultimate responsibility is to protect the integrity of gaming. Therefore, if a problem arises during the investigation of the vendor, it is essential that the Bureau of Licensing be able to immediately rescind the interim authorization it has granted.
Subsections (d) and (e), which limit the permission to conduct business to a period of 6 months unless the permission is extended for an additional 6 months for good cause shown, have been deleted. These provisions imposed unnecessary administrative burdens on vendors, slot machine applicants and licensees and the Board. The Board believes that once the need for the goods or services has been established, no further action is needed until a final decision is made on the vendor's application for certification or registration.
In § 437a.11(c) (relating to slot machine applicants' and licensees' duty to investigate), pertaining to contracts or agreements between an applicant for or holder of a slot machine license and an applicant for or holder of a vendor certification or registration, has been deleted. This provision repeats the requirements in § 441a.13(c) (relating to Board review of agreements and records of agreements) and is therefore unnecessary.
Comment and Response Summary
Notice of proposed rulemaking was published at 39 Pa.B. 4894 (August 15, 2009).
During the public comment period, the Board received a letter from International Gaming Technology thanking the Board for the opportunity to comment, but not offering any comments on the substance of the rulemaking. Comments on the proposed rulemaking were received from Greenwood Gaming and Entertainment, Inc. (Greenwood), Downs Racing, L.P. (Downs) and NCR Corporation (NCR). By letter dated October 12, 2009, the Independent Regulatory Review Commission (IRRC) also submitted comments on this rulemaking.
In § 435a.9a(c), Greenwoods and Downs suggested that the number of days that a vendor's employee be allowed to work on the gaming floor without being required to obtain a nongaming registration be increased from 12 days to 20 or 30 days respectively. IRRC asked the Board to explain why the 12 days in a 12-month period is reasonable.
Currently, the Board requires all employees of vendors who will be working on the gaming floor or in a restricted area to obtain a nongaming employee credential. While this only involves the one-time filing of an application and payment of the $60 registration fee, the Board has observed that there are instances when a vendor's employees may only need to be on the gaming floor on a one-time basis or for only a short period of time. This is particularly true when the employees are completing change orders, punch list items or are doing warranty work.
The provisions of § 435a.9a, and other revisions in this rulemaking, have been designed to provide some regulatory relief from the normal registration requirement for these employees. Initially, the Board considered limiting this exemption to 5 or 10 days in a year, but expanded it to 12 days in 12 months to include situations in which an employee might have to be at a licensed facility for a short period of time once a month. However, the Board's primary responsibility is to protect the integrity of gaming. For this reason, the Board does not believe that individuals who are going to be on the gaming floor or in a restricted area for an extended period of time, such as 20 or 30 days, should be exempted from registration. Additionally, because the cost and time required to obtain a nongaming employee registration is low, the Board does not believe the registration requirement imposes an unreasonable burden on registered or certified construction company vendors. Therefore, the Board has not expanded the time period for this exemption.
IRRC also asked the Board to explain why it included the time restrictions in § 437a.1(a)(2)(i).
Currently, a vendor whose employees will have access to the gaming floor or restricted areas shall be certified. Through this rulemaking, the Board has relaxed this requirement so that a vendor whose employees will be on the gaming floor or in restricted areas will only be required to be registered, if the value of the goods and services provided exceeds $500,000.
The purpose of the provision in subsection (a)(2) is to provide an additional limited exemption from the requirement that a vendor be registered, when their employees will be on the gaming floor. The Board is aware of situations in which vendors have needed to have their employees on the gaming floor for a very short period of time on a nonrecurring basis. The use of the no more than 24 hours within a 72-hour period no more than once in a 3-month period criteria will allow these vendors to provide their goods and services without having to obtain a vendor registration. However, vendors whose employees will be on the gaming floor for longer time periods or on a recurring basis shall be required to be registered regardless of the value of the goods or services required. This is because the employees' presence on the gaming floor constitutes a potential threat to the integrity of gaming.
Also regarding § 437a.1, both Greenwood and Downs asked that subsection (c) be amended to clarify that only the value of the goods or services received by the slot machine licensee should be used to determine if registration or certification would be required. That was the Board's intent, so the language of subsection (c) has been amended as suggested by the commentators.
NCR suggested that the exemption for publicly traded companies in § 437a.1(d)(15) be expanded to include publicly traded companies that have employees who are required to obtain a gaming permit or nongaming employee registration. IRRC also asked why the Board decided not to treat all publicly traded companies the same.
To address the comments on the limited application of the exemption for vendors listed on a major stock exchange, the Board has deleted the proposed exemption language in subsection (d)(15) and replaced it with a new subsection (g). Under this revision, all vendors listed on a major stock exchange will be able to file a Publicly Traded Vendor Form instead of an application for registration or certification. But these vendors will still be required to comply with § 437a.7. This will substantially reduce the administrative burden on these vendors while still preserving the oversight provisions for their employees who will be working at a licensed facility. Also as part of this revision, the provision that appeared as subsection (g) in the proposed rulemaking has been moved to a new subsection (i).
In § 437a.2, Downs suggested that subsection (b)(4)(i) be amended to exclude owners and directors who are not involved with the management or control of an applicant for vendor registration from the requirement that they submit fingerprints. Downs also suggested that a similar amendment be made to § 437a.4(a)(1) which requires owners and directors to complete a Pennsylvania Personal History Disclosure Form.
The Board has not elected to make this suggested change to § 437a.2(b)(4)(i) or § 437.4(a)(1). If such a provision was added, the individuals would have to file some form of waiver request explaining how they are not involved in the operations of the applicant. This would take more time and, in many cases, be more expensive for these individuals then the submission of fingerprints or the Pennsylvania Personal History Disclosure Form.
In § 437a.2, both IRRC and Downs stated that the requirement in subsection (b)(4)(iii) does not clearly identify which individuals must submit fingerprints. They believe the phrase ''each individual who has the power to control or influence the affairs of the registered vendor applicant'' is vague and should be deleted, defined or replaced with more specific language concerning who must be fingerprinted. Similar comments were filed by IRRC and Downs concerning § 437a.4(a)(3) which would require these individuals to submit a Pennsylvania Personal History Disclosure Form as part of the application process for certified vendors.
The Board has found that the myriad of organizational structures used by applicants makes it difficult to make a complete list of all of the individuals who may have a significant interest or role in a vendor's operations. The intent behind this provision was to allow the Board some flexibility to obtain fingerprints or the Pennsylvania Personal History Disclosure Form from additional individuals who are involved with the vendor depending on the degree of their involvement. However, the Board agrees that this phrase could be interpreted in a number of different ways which would make it difficult for individuals to determine if it applies to them. To address both the Board's intent and to eliminate possible confusion among the applicants, the Board has deleted § 437a.2 (b)(4)(iii), but added a new subsection (c), which is similar to the existing requirement in § 437a.4(d)(4), that will allow the Board the ability to require an individual to submit fingerprints if that person meets certain criteria and the Board determines that requiring fingerprints is necessary to protect the public interest or to enhance the integrity of gaming. To accommodate this revision, the provisions that previously appeared as subsections (c) and (d) have been moved to subsections (e) and (f) and former subsection (e) now appears as subsection (d). In § 437a.4, for the reasons stated within this preamble, subsection (a)(3) has also been deleted.
In § 437a.7, Downs and IRRC questioned the need to expand subsections (b) and (c) to include registered vendors and expressed concerns that the costs of this revision might exceed its benefits. Downs also expressed a concern about the possible fiscal impact of the new provision contained in subsection (c)(4).
The Board disagrees that the revisions to subsections (b) and (c) represent an expansion of current regulatory requirements which may lead to increased costs. Under the current Board regulations, a vendor who has employees that would be required to obtain a gaming permit or nongaming registration, must be a certified vendor regardless of the value of the goods or services provided. As previously noted, in this rulemaking that requirement has been changed so that a vendor will only have to be registered. This will result in a significant savings to these vendors. The amendments to subsections (b) and (c) simply recognize this reduced regulatory requirement.
Concerning the addition of offsite supervisors to the list of vendor employees who will be required to obtain a nongaming employee registration, the Board does not agree that this will impose an unreasonable financial burden on vendors. These individuals are responsible for directing the work done by the vendor's employees who will be working at the licensed facility. Accordingly, the Board does not believe that this minimal level of scrutiny is unwarranted. Additionally, the Board does not believe the one-time cost of $60 for registration is excessive.
Greenwood and Downs both objected to the requirement in § 437a.8(b) which explicitly requires slot machine licensees to only use vendors on the authorized vendor list unless the amount of business will be below $100,000 or when they are responding to an emergency situation. They believe it will hinder their ability to do business with new vendors who are not on the authorized vendor list.
This requirement merely reflects the Board's current policy that a slot machine licensee or applicant may only use vendors who have been approved or have received interim authority to provide goods and services under § 437a.9. Therefore, the amendments to this section will have no negative impact on which vendors a slot machine licensee may use. Additionally, raising the threshold for registration to $100,000 and the other changes throughout this rulemaking, which reduce the requirements related to registration or certification, will make it easier for slot machine licensees to try new vendors.
In § 437a.9, IRRC and Greenwood asked how subsection (a)(3) and (4) would work in relation to the new subsections (b) and (c) that were added by the final adoption of Regulation No. 125-97. See 39 Pa.B. 5559 (September 26, 2009). Greenwood also expressed concern that the new requirements in subsection (a)(3) and (4) would add substantial amounts of time to the process for receiving interim authorization to conduct business and limit the ability of new businesses to conduct business with slot machine licensees. Additionally, Greenwood suggested that subsection (a)(3) should be amended to recognize the wind-up period that can be established by the Bureau of Licensing when it sends a notice of rescission of interim authority to conduct business.
The Board disagrees that the amendments to § 437a.9 will increase the amount of time required to obtain interim authorization to conduct business with a vendor. First of all, vendor applicants are not automatically allowed to provide goods or services as soon as they submit an application and the slot machine licensee certifies that it has conducted its due diligence review. Instead, a preliminary review of the applicant is conducted by the Bureau of Licensing. The provisions in this rulemaking reflect the internal procedures that are currently being used by the Board to process these requests. Accordingly, the time required to receive interim authorization to conduct business under this rulemaking will not change.
On the comment concerning how subsection (a)(3) relates to subsection (b), subsection (a)(3) states that a vendor's interim authority may be revoked if suitability issues arise or the applicant fails to cooperate in the application process. Subsection (b) specifies that when permission to conduct business granted under subsection (a) has been rescinded, the vendor and slot machine licensee shall cease doing business on the date specified in the notice provided under subsection (c). In essence, subsections (a), (b) and (c) lay out the sequence of activities that will occur. For this reason, there is no need to add additional language to subsection (a).
While the Board has proposed no substantive changes to § 437a.11, both IRRC and Downs suggested that the Board amend subsection (c) to limit the duty of slot machine licensees to inform the Board about actions of vendors that constitute a violation of the act or the Board's regulations to actions that they have actual knowledge of.
The Board has not adopted the change suggested by IRRC and Downs. The Board believes that it is appropriate to require a slot machine licensee to report any information it has concerning what may be inappropriate behavior on the part of a vendor. The Board will then evaluate that information, and based on its own investigation, determine whether or not the vendor has violated the act or the Board's regulations. If this section was revised as suggested, slot machine licensees' would be placed in a situation of either ignoring some activity that may be inappropriate or having to conduct an investigation to make a determination as to whether or not the vendor has committed a violation. Neither of these options would be in the public interest.
Additional Revisions
Throughout the final-form regulations, additional minor editorial changes have been made to enhance the clarity of the final-form regulations.
Section 435a.9a(a) has been deleted. Instead of having requirements within this section and in Chapter 437a, § 437a.4(d) has been amended to address temporary credentials for individuals who are required to be qualified. Additionally, the time limits in proposed subsections (b) and (c) have been deleted because the Board does not see a need for them. As a result of these deletions, proposed § 435a.9b is now § 435a.9a.
Section 437a.1(f) has been revised to also cross reference § 441a.14 (relating to master purchasing and disbursement report) to make it clear that business conducted with a vender that is exempt under subsection (d) is reflected in the master purchasing and disbursement report. Subsection (h) has also been revised to improve its clarity and update the name of the form required by this subsection. It has been revised to tie the requirement to file a Notification of Material Vendor Form to the actual provision of goods or services and a time frame has been added (prior to the date of the payment to the vendor that exceeds the $15,000 threshold) for the submission of this form.
Section 437a.2(f) has been deleted because it simply repeats the provision in § 435a.9a and therefore is not necessary.
Proposed § 437a.4(c) has been deleted. It is no longer needed because of the revisions that are now contained in § 437a.1(g). In what is now subsection (c), the Vendor Certification Form—Private Holding Company Form has been added because this is the form an entity, as opposed to an individual, would be required to fill out. In subsection (c)(1), the phrase ''not otherwise required to be qualified'' has been added because in some instances these entities are required to be qualified. In addition to the revisions contained in subsection (d) that were previously discussed, a new subsection (e) has been added to address the issuance of permanent credentials to individuals who are found to be qualified. This subsection is needed because neither the existing regulations nor the proposed rulemaking contain any provisions pertaining to the issuance of permanent credentials for these individuals.
Section 437a.8(a) has been revised to improve its clarity and make it consistent with the new § 437a.1(g). Subsection (b) has been modified to also make it clear that a slot machine licensee may not use a vendor, except as provided in § 437a.1(a)(2), (d) and (g), that is not on the authorized vendor list if the vendors employees will be working on the gaming floor or in a restricted area. This will make the language in this section consistent with the requirements in § 437a.1. Subsection (c)(1) has been broadened to include noncompliance with any of the provisions of this chapter, rather than just failure to apply for registration or certification, as a reason for placing a vendor on the prohibited vendor list. Additionally, a new paragraph (4) has been added which includes the failure of the vendor to provide required information to a slot machine applicant or licensee that the slot machine applicant or licensee needs to comply with provisions of this chapter as a basis for placing the vendor on the prohibited vendor list. Both of these changes are designed to improve vendor compliance.
Proposed § 437a.9(a)(4) has been deleted because it no longer reflects Board practice. Currently, the Bureau of Licensing may give a vendor permission to conduct business on an interim basis, based on its preliminary review before the Bureau of Investigations (BIE) has completed its investigation. This will enable vendor applicants to receive interim authorization to conduct business sooner.
Finally, § 437a.11(c) has been revised to add vendors who will not be required to be registered or certified under the new § 437a.1(g).
Affected Parties
Slot machine licensees will have clearer requirements concerning vendors from whom they may purchase goods and services. Vendors will benefit from the improved clarity of these amendments and the reduction or elimination of registration or certification requirements for many vendors.
Fiscal Impact
Commonwealth
While the Board will receive fewer applications from vendors for certification or registration, the final-form rulemaking will have no significant fiscal impact on the Board or other agencies of this Commonwealth. This is because the Board recovers its licensing and investigation costs from applicants.
Political Subdivisions
This final-form rulemaking will have no fiscal impact on political subdivisions of this Commonwealth.
Private Sector
A vendor that provides goods or services to a slot machine licensee or applicant through a parent corporation or affiliate will now have to be registered or certified if the value of those goods or services exceeds the applicable monetary thresholds. Other vendors who meet the new exemption criteria will no longer be required to be registered or certified and a number of individuals who were previously required to be certified under § 437a.4, will no longer be required to obtain the individual certification. As a whole, the changes in this rulemaking are anticipated to result in a net decrease in costs to vendors.
General Public
This final-form rulemaking will have no fiscal impact on the general public.
Paperwork requirements
Vendors that provide goods or services to a slot machine licensee or applicant through a parent corporation or affiliate will now have to file applications for registration or certification if the value of those goods or services exceeds the applicable monetary thresholds. Other vendors who meet the new exemption criteria will no longer be required to file applications to be registered or certified and a number of individuals who were previously required to be certified under § 437a.4, will no longer be required to file a Pennsylvania Personal History Disclosure Form. As a whole, the changes in this rulemaking are anticipated to result in a net decrease in filings required by vendors.
Effective Date
The final-form rulemaking will become effective upon final-form publication in the Pennsylvania Bulletin.
Contact Person
The contact person for questions about this final-form rulemaking is Richard Sandusky, Director of Regulatory Review at (717) 214-8111.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on July 30, 2009, the Board submitted a copy of the proposed rulemaking, published at 39 Pa.B. 4894 (August 15, 2009), and a copy of the Regulatory Analysis Form to IRRC and the House Gaming Oversight Committee and the Senate Community, Economic and Recreational Development Committee (Committees).
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 Committees and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), the final-form rulemaking was deemed approved by the Committees on January 6, 2010. Under section 5.1(e) of the Regulatory Review Act, IRRC met on January 7, 2010, and approved the final-form rulemaking.
Findings
The Board finds that:
(1) Public notice of intention to adopt these amendments was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) referenced to the Commonwealth Documents Law (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 Chapters 435a and 437a, are amended by amending § 437a.6 to read as set forth at 39 Pa.B. 4894; and by amending §§ 437a.1—437a.4, 437a.7—437a.9 and 437a.11, and by adding § 435a.9a to read as set forth in Annex A.
(b) The Chairperson of the Board shall certify this order, 39 Pa.B. 4894 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.
GREGORY C. FAJT,
Chairperson(Editor's Note: The proposal to add § 435a.9b, included in the proposed rulemaking at 39 Pa.B. 4894, has been withdrawn by the Board.)
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 40 Pa.B. 575 (January 23, 2010).)
Fiscal Note: Fiscal Note 125-100 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 58. RECREATION
PART VII. GAMING CONTROL BOARD
Subpart B. LICENSING, PERMITTING, CERTIFICATION AND REGISTRATION
CHAPTER 435a. EMPLOYEES § 435a.9a. Vendor employee temporary access credentials.
(a) The Board's casino compliance representatives at a licensed facility may issue a Vendor Employee Temporary Access Credential to an employee of a registered or certified vendor that is a construction company that is completing work on the gaming floor or in a restricted area under the registered or certified vendor's original contract, change orders or punch lists, or to complete periodic repairs or warranty work if:
(1) The employee's duties of employment or incidental activities related to employment do not require the employee to touch or have contact with a slot machine or associated equipment other than exterior cleaning.
(2) The employee will be under the supervision of an employee of the slot machine licensee's security department who is authorized to have access to the area where the work is being performed.
(b) To receive a Vendor Employee Temporary Access Credential, the employee of the registered or certified vendor that is a construction company shall surrender his driver's license or other photo identification.
(c) A Vendor Employee Temporary Access Credential will not be issued to an employee of a registered or certified vendor that is a construction company for more than 12 days in a 12-month period.
(d) Employees of a manufacturer, manufacturer designee or supplier may not be issued a Vendor Employee Temporary Access Credential.
CHAPTER 437a. VENDOR CERTIFICATION
AND REGISTRATION§ 437a.1. General vendor requirements.
(a) A vendor or person seeking to conduct business with a slot machine applicant or licensee, except as provided in § 437a.10 (relating to emergency vendor), shall apply to the Board for registration if:
(1) The total dollar amount of the goods or services to be provided to a single slot machine applicant or licensee or to multiple slot machine applicants or licensees will be or is anticipated to be equal to or greater than $100,000 but less than or equal to $500,000 within a consecutive 12-month period.
(2) The employees of the vendor or person seeking to conduct business with a slot machine applicant or licensee will be working on the gaming floor or in restricted areas unless all of the following conditions are met:
(i) The employees will be on the gaming floor for less than 24 hours within a 72-hour period no more than once in any consecutive 3-month period.
(ii) The employees sign-in with the security department at the licensed facility and the Board's casino compliance representatives prior to entering the gaming floor.
(iii) The vendor has received written approval from the Bureau of Licensing for the vendor's employees to be on the gaming floor.
(b) A vendor or person seeking to conduct business with a slot machine applicant or licensee, except as provided in § 437a.10, shall apply to the Board for certification if the total dollar amount of the goods or services to be provided to a single slot machine applicant or licensee or to multiple slot machine applicants or licensees will be or is anticipated to be greater than $500,000 within a consecutive 12-month period.
(c) A person that provides goods or services indirectly to a slot machine applicant or licensee through an intermediary, holding company or affiliate of the slot machine applicant or licensee shall be required to be registered or certified if the cost of the goods or services provided to the slot machine applicant or licensee exceeds the monetary thresholds in subsections (a) and (b).
(d) The following persons are exempt from the vendor registration and the vendor certification requirements of this chapter:
(1) Public utilities which provide only one or more of the following services to a slot machine applicant or licensee:
(i) Water.
(ii) Sewerage.
(iii) Electricity.
(iv) Natural gas.
(2) Insurance companies providing insurance to a slot machine applicant or licensee and its employees.
(3) Employee benefit and retirement plans including incorporated 401K plans and employee stock purchase programs.
(4) National, state or local professional associations that receive funds from the slot machine applicant or licensee for the cost of enrollment, activities and membership.
(5) State, Federal and municipal operated agencies.
(6) Manufacturers and suppliers of liquor, wine and beer regulated by the Liquor Control Board.
(7) State and Federally chartered banks or savings and loan associations where funds are deposited by slot machine licensees, notwithstanding those sources or transactions provided to a slot machine licensee which require Board approval.
(8) Providers of professional services including accountants, attorneys, engineers and architects, when acting in their respective professional capacities.
(9) Telecommunication service providers.
(10) Shipping services.
(11) Persons that engage in efforts to influence legislative action or administrative action on behalf of a principal for economic consideration.
(12) Schools regulated by the Department of Education.
(13) Professional entertainers, sports figures and other celebrities engaged by a slot machine licensee to appear at a slot machine licensee-sponsored special entertainment or promotional event.
(14) Newspapers, television stations, radio stations and providers of simulcast services that contract with slot machine applicants or licensees.
(15) Any person not otherwise exempt under this subsection that is licensed by a Federal or state agency if the agency's licensing requirements are determined by the Bureau of Licensing to be substantially similar to those of the Board.
(e) The Board may request information or assurances from any person listed in subsection (d) to determine the validity of the person's exempt status.
(f) Subsection (d) does not relieve a slot machine applicant or licensee of reporting obligations required under §§ 441a.12 and 441a.14 (relating to maintaining agreements; filing of agreements; and master purchasing and disbursement report).
(g) A person, or subsidiary of a person, that has a class of equity securities listed on the New York Stock Exchange, the NASDAQ Stock Market, the American Stock Exchange or a foreign stock exchange determined by the Bureau of Licensing to have similar listing requirements may be authorized to provide goods or services to slot machine applicants and licensees without applying for registration or certification if the person or subsidiary of the person submits a completed Publicly Traded Vendor Form to the Board accompanied by the filing fee posted on the Board's web site (www.pgcb.state.pa.us). A person or subsidiary of a person that is authorized to provide goods and services under this subsection shall be required to:
(1) Comply with § 437a.7 (relating to registered and certified vendor responsibilities).
(2) Immediately notify the Board if the person or subsidiary of the person ceases to have a class of equity securities listed on the New York Stock Exchange, the NASDAQ Stock Market, the American Stock Exchange or a foreign stock exchange determined by the Bureau of Licensing to have similar listing requirements.
(h) A slot machine applicant or licensee shall complete and submit to the Bureau of Licensing a Notification of Material Vendor Form prior to compensating a vendor $15,000 or more within a consecutive 12-month period. A slot machine applicant or licensee shall not be required to submit a Notification of Material Vendor Form to the Bureau of Licensing if either of the following apply to the vendor to be compensated:
(1) The vendor is exempt under subsection (d).
(2) The vendor is listed on the Board's authorized vendor list.
(i) A vendor of a slot machine applicant or licensee whose compensation does not exceed the monetary thresholds contained in this section or who is otherwise not required to be registered or certified under subsection (d) or (g) may be required to be registered or certified if the Board determines that registration or certification is necessary to protect the integrity of gaming.
§ 437a.2. Vendor registration applications.
(a) A vendor seeking registration shall do one of the following:
(1) Complete an original and four copies of a Vendor Registration Form—Sponsored. The original and copies and the fee toward the cost of the investigation of the applicant posted on the Board's web site (www.pgcb. state.pa.us) shall be submitted to the Bureau of Licensing by the slot machine applicant or licensee for whom the vendor will provide goods or services unless otherwise directed by the Board.
(2) Complete an original and four copies of a Vendor Registration Form—Unsponsored. The original and copies and the fee toward the cost of the investigation of the applicant posted on the Board's web site (www.pgcb. state.pa.us) shall be submitted to the Bureau of Licensing by the vendor unless otherwise directed by the Board.
(b) In addition to the materials required under subsection (a), an applicant for a vendor registration shall:
(1) Submit the nonrefundable application fee posted on the Board's web site (www.pgcb.state.pa.us).
(2) 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.
(3) Comply with the general application requirements in Chapters 421a and 423a (relating to general provisions; and applications).
(4) Submit fingerprints of the following individuals to the Board in a manner prescribed by BIE:
(i) Each officer and director of the registered vendor applicant. For purposes of this subparagraph, the term ''officer'' means a president, chief executive officer, a chief financial officer and a chief operating officer, and any person routinely performing corresponding functions with respect to an organization whether incorporated or unincorporated.
(ii) Each individual who has a direct or indirect ownership or beneficial interest of 10% or more in the registered vendor applicant.
(iii) Each salesperson of a registered vendor applicant who solicits business from, or has regular contact with, any representatives of a slot machine applicant or licensee or any employee of a registered vendor applicant who will be engaging in that conduct.
(c) A person who holds any direct or indirect ownership or beneficial interest in a registered vendor or applicant for vendor registration, or has the right to any profits or distributions directly or indirectly, from the registered vendor or applicant for vendor registration may be required to submit fingerprints if the Board determines that the submission of fingerprints of the person is necessary to protect the public interest or to enhance the integrity of gaming in this Commonwealth.
(d) Each of the individuals required to submit fingerprints under subsection (b)(4) or (c) must be found qualified by the Board.
(e) An applicant for a vendor registration will be required to reimburse the Board for costs incurred by the Board in conducting the review of the application.
(f) A vendor registration will not be issued until all fees have been paid.
§ 437a.3. Vendor certification applications.
(a) A vendor seeking certification shall complete and the slot machine applicant or licensee for whom the vendor will provide goods or services shall submit:
(1) An original and four copies of a Vendor Certification Application and Disclosure Information Form unless otherwise directed by the Board.
(2) The nonrefundable application fee posted on the Board's web site (www.pgcb.state.pa.us).
(3) Applications and release authorizations for each individual required to be qualified under § 437a.4 (relating to qualification of individuals and entities).
(b) In addition to the materials required under subsection (a), an applicant for a vendor certification shall:
(1) Promptly provide information requested by the Board relating to is 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) A vendor certification will not be issued until all fees have been paid.
(d) A person required to be a certified vendor under this chapter may request that the Board waive its obligation to be certified by filing a Single Transactional Waiver Form. To be eligible to receive this waiver from the requirements of certification, the person shall demonstrate that the person is proposing to engage in a single transaction with a slot machine applicant or licensee and satisfies the following requirements:
(1) The person's required performance under the contract with the slot machine applicant or licensee does not require the person's employees to be on the gaming floor or in a restricted area.
(2) The person has not filed a Single Transactional Waiver Form with the Board within 2 years of the current waiver request.
(3) The person will not have a continuing business relationship with the slot machine applicant or licensee or have a continuing onsite presence at the licensed facility.
(e) The Board may, in response to misrepresentations or a change in circumstances, revoke a waiver granted under this section and require the recipient of the waiver to comply with the vendor certification requirements of this chapter.
(f) A person who has requested a waiver under this section may not provide goods or services to a slot machine applicant or licensee prior to Board approval of the person's waiver request.
§ 437a.4. Qualification of individuals and entities.
(a) The following individuals shall be required to submit a Pennsylvania Personal History Disclosure Form and be found qualified by the Board:
(1) Each officer and director of a certified vendor or applicant for vendor certification. For the purposes of this paragraph, the term ''officer'' means a president, chief executive officer, a chief financial officer and a chief operating officer and any person routinely performing corresponding functions with respect to an organization whether incorporated or unincorporated.
(2) Each individual who has a direct or indirect ownership or beneficial interest of 10% or more in the certified vendor or applicant for vendor certification. A certified vendor or applicant for vendor certification shall provide information or documentation requested by the Board necessary to determine compliance with this paragraph.
(3) Each salesperson of a certified vendor or applicant for vendor certification who solicits business from, or has regular contact with, any representatives of a slot machine applicant or licensee or any employee of a certified vendor or applicant for vendor certification who will be engaging in that conduct.
(b) Each entity that directly owns 20% or more of the voting securities of a certified vendor or person applying for vendor certification shall be required to file a Vendor Certification Form—Private Holding Company with the Board and be found qualified by the Board.
(c) The following persons may be required to submit a Vendor Certification Form—Private Holding Company or a Pennsylvania Personal History Disclosure Form and be found qualified by the Board if the Board determines that the qualification of the person is necessary to protect the public interest or to enhance the integrity of gaming in this Commonwealth:
(1) An intermediary or holding company of a certified vendor or applicant for vendor certification not otherwise required to be qualified.
(2) An officer or director of an intermediary or holding company of a certified vendor or applicant for vendor certification.
(3) An employee of a certified vendor or applicant for vendor certification.
(4) A person who holds any direct or indirect ownership or beneficial interest in a certified vendor or applicant for vendor certification, or has the right to any profits or distribution, directly or indirectly, from the certified vendor or applicant for vendor certification.
(5) A trustee of a trust that is required to be found qualified under this section.
(d) The Bureau of Licensing may issue a temporary credential to an individual who is required to be qualified by the Board under this section if:
(1) The individual's presence in the licensed facility is needed.
(2) The company with which the individual is associated is on the Authorized Vendor List.
(e) The Bureau of Licensing will issue a permanent credential to an individual who has been found to be qualified under this section if the vendor has been certified.
§ 437a.7. Registered and certified vendor responsibilities.
(a) A holder of a vendor certification or registration 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 the holder of a vendor certification or registration ineligible, unqualified or unsuitable to hold a certification or registration under the standards and requirements of the act and of this part.
(b) An employee of a registered or certified vendor shall be required to obtain an occupation permit under § 435a.3 (relating to occupation permit) if:
(1) The employee is the onsite supervisor of other employees of the vendor whose duties of employment or incidental activities related to employment require the employees to be on the gaming floor or in a restricted area.
(2) The employee's duties of employment or incidental activities related to employment require the employee to be on the gaming floor or in a restricted area and require the employee to touch or have contact with a slot machine or associated equipment.
(c) An employee of a registered or certified vendor that is not required to obtain an occupation permit under subsection (b) shall be required to obtain a nongaming employee registration under § 435a.5 (relating to nongaming employee registration) if:
(1) The employee is the onsite supervisor of other employees who are involved in the construction of a licensed facility.
(2) The employee's duties of employment or incidental activities related to employment require the employee to be on the gaming floor but do not require the employee to touch or have contact with a slot machine or associated equipment other than exterior cleaning.
(3) The employee's duties of employment or incidental activities related to employment require the employee to be in a restricted area, but do not require the employee to touch or have contact with a slot machine or associated equipment other than exterior cleaning and the employee is under the constant supervision of an employee of the slot machine licensee who is licensed or permitted and who is authorized to be in the restricted area.
(4) The employee is the offsite supervisor of employees of the registered or certified vendor working at the licensed facility.
(d) Employees of a registered or certified vendor who are not required to obtain an occupation permit or a nongaming employee registration under subsection (b) or (c) may be required to obtain an occupation permit or nongaming employee registration if the Board determines, after a review of the work being performed, that obtaining a permit or registration is necessary for the protection of the integrity of gaming.
(e) Workers employed by a registered or certified vendor that is a construction company who are completing work on the gaming floor or in a restricted area under their original contract, change orders, punch lists, periodic repairs or warranty work will not be required to comply with the requirements in subsection (b) or (c) if the following conditions are met:
(1) The employee's duties of employment or incidental activities related to employment do not require the employee to touch or have contact with a slot machine or associated equipment other than exterior cleaning.
(2) The employee is under the supervision of an employee of the slot machine licensee's security department who is authorized to have access to the area where the work is being performed.
(3) The employee has been issued a Vendor Employee Temporary Access Credential by one of the Board's casino compliance representatives at the licensed facility.
§ 437a.8. Authorized vendors list; prohibited vendors.
(a) The Board will maintain a list of authorized vendors and a list of prohibited vendors. The authorized list will contain the names of persons who:
(1) Have been registered or certified.
(2) Are eligible to file and have filed a completed publicly traded vendor form under § 437a.1(g) (relating to general vendor requirements).
(3) Have been permitted to conduct business with a slot machine licensee or applicant under § 437a.9 (relating to permission to conduct business prior to certification or registration).
(b) Except as permitted under § 437a.1(a)(2), (d) and (g) and § 437a.10 (relating to emergency vendor), a slot machine licensee or applicant may not purchase goods or services from a vendor, when the employees of the vendor will be working on the gaming floor or in a restricted area or compensate a vendor $100,000 or more within a consecutive 12-month period, unless the person is on the authorized vendor list. A slot machine licensee or applicant may not enter into an agreement or continue to do business with a vendor on the prohibited vendors list.
(c) The Board may place a person on the prohibited vendors list if:
(1) The vendor has failed to comply with this chapter.
(2) The vendor has failed to cooperate with the Board in the Board's review of the vendor's application for certification or registration.
(3) The vendor's application for certification or registration has been denied or the vendor has had its vendor certification or registration suspended or revoked.
(4) The vendor has failed to provide information to a slot machine applicant or licensee that is necessary for the slot machine applicant or licensee to comply with this chapter.
(d) A person seeking to be removed from the list of prohibited vendors shall file a petition for removal in accordance with § 493a.4 (relating to petitions generally) and shall be responsible for all costs associated with the person's petition for removal from the list of prohibited vendors. The petition must state the specific grounds believed by the petitioner to constitute good cause for removal from the prohibited vendors list and how the vendor has cured any deficiencies that led to the vendor being placed on the prohibited vendors list.
(e) The Board may impose a monetary penalty or other appropriate sanction in connection with the removal of a person from the list of prohibited vendors, or attach any reasonable condition to the removal of a person from the list of prohibited vendors.
§ 437a.9. Permission to conduct business prior to certification or registration.
(a) Notwithstanding § 437a.1 (relating to general vendor requirements), the Bureau of Licensing may authorize an applicant for a vendor certification or registration to conduct business with a slot machine applicant or licensee prior to the certification or registration of the vendor applicant if the following criteria are met:
(1) A completed Vendor Registration Form—Unspon- sored has been filed by the vendor, a completed Vendor Registration Form—Sponsored has been filed by the slot machine applicant or licensee or a completed Vendor Certification Application and Disclosure Information Form has been filed by the slot machine applicant or licensee in accordance with § 437a.2 or § 437a.3 (relating to vendor registration applications; and vendor certification applications).
(2) The slot machine applicant or licensee certifies that it has performed due diligence on the vendor.
(3) The applicant for vendor registration or certification agrees, in writing, that the grant of permission to conduct business prior to registration or certification does not create a right to continue to conduct business and that the Bureau of Licensing may rescind, at any time, the authorization granted pursuant to this section, with or without prior notice to the applicant, if the Bureau of Licensing determines that the suitability of the applicant is at issue or the applicant fails to cooperate in the application process.
(b) If the Office of Enforcement Counsel issues a Notice of Recommendation for Denial to an applicant for certification or registration, the Bureau of Licensing may rescind the permission granted to the applicant for certification or registraton to conduct business with a slot machine applicant or licensee under subsection (a). If the permission is rescinded, the applicant for certification or registration shall cease conducting business with the slot machine applicant or licensee by the date specified in the notice of the rescission by the Bureau of Licensing under subsection (c).
(c) The Bureau of Licensing will notify the applicant for certification or registration and the slot machine applicant or licensee by registered mail that permission for the applicant for certification or registration to conduct business with the slot machine applicant or licensee under subsection (a) has been rescinded and that the slot machine applicant or licensee shall cease conducting business with the applicant for certification or registration by the date specified in the notice.
§ 437a.11. Slot machine applicants' and licensees' duty to investigate.
(a) An applicant for or holder of a slot machine license shall investigate the background and qualifications of the applicants for vendor registration or certification with whom it intends to have a contractual relationship or enter into an agreement.
(b) An applicant for or holder of a slot machine license shall have an affirmative duty to avoid agreements or relationships with persons applying for vendor registration or certification whose background or association is injurious to the public health, safety, morals, good order and general welfare of the people of this Commonwealth, or who threaten the integrity of gaming in this Commonwealth
(c) An applicant for or holder of a slot machine license shall have a duty to inform the Board of an action by an applicant for or holder of a vendor registration or certification or a vendor that is eligible to file and has filed a completed publicly traded vendor form under § 437a.1(g) (relating to general vendor requirements), which the applicant for or holder of a slot machine license believes would constitute a violation of the act or this part.
[Pa.B. Doc. No. 10-322. Filed for public inspection February 19, 2010, 9:00 a.m.]
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