RULES AND REGULATIONS
Title 58—RECREATION
PENNSYLVANIA GAMING CONTROL BOARD
[ 58 PA. CODE CHS. 401a, 437a AND 441a ]
Gaming Service Providers and Slot Machine Licenses
[43 Pa.B. 4096]
[Saturday, July 20, 2013]The Pennsylvania Gaming Control Board (Board), under the 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. §§ 1317.2 and 1321 (relating to gaming service provider; and additional licenses and permits and approval of agreements) amends Chapters 401a, 437a and 441a (relating to preliminary provisions; gaming service provider certification and registration; and slot machine licenses) to read as set forth in Annex A.
Purpose of the Final-Form Rulemaking
With this final-form rulemaking, the Board is amending several sections to limit the types of agreements that operators are required to file with the Board, specify which types of agreements require Board approval prior to implementation and exempt professional sports teams from the gaming service provider certification and registration requirements.
Explanation of § 401a.3
In § 401a.3 (relating to definitions), the definition of ''nongaming employee'' is amended to reflect that not only certified but also registered gaming service providers as well as manufacturers, designees and suppliers may have nongaming employees. Additionally, a nongaming employee may now have contact with a slot machine provided that the contact does not affect play of the game. This was added because servers clear food and beverage requests generated from the slot machine, which was not previously allowed.
Explanation of Chapter 437a
Section 437a.1 (relating to general gaming service provider requirements) is amended to exempt professional sports teams of Major League Baseball, the National Football League, the National Basketball Association and the National Hockey League from the gaming service provider registration and certification requirements. Several licensed facilities have recently contracted with professional teams to purchase tickets for patron use and to provide advertising during sporting events.
After reviewing the agreements and the requirements and exemptions in other gaming jurisdictions, the Board does not believe it is necessary for the protection of the public or the integrity of gaming to require professional sports teams to file for registration or certification as a gaming service provider.
Additionally, § 437a.9(a)(3) (relating to permission to conduct business prior to certification or registration) is amended to reflect that the Bureau of Licensing is informed, but does not determine, that an applicant's suitability may be at issue.
Explanation of Chapter 441a
In § 441a.12 (relating to maintaining agreements; filing of agreements), the types of agreements are amended so that slot machine licensees are now required to file. Specifically, operators are required to maintain written agreements and the records associated with oral agreements with licensed manufacturers, suppliers, franchisees and gaming service providers but are no longer required to file all agreements with the Board. However, the Board may require operators to submit agreements or records upon request.
Section 441a.13 (relating to Board approval of agreements) specifies which agreements require Board approval, such as corporate overhead agreements, shared services agreements and agreements that provide for the management of all or part of the gaming operations of a licensed facility.
Section 441a.14 (relating to master purchasing and disbursement report) is amended for clarity and to reflect Board practice. Operators are versed on the reporting, coding and submission process in this section.
Language added to § 441a.16 (relating to slot machine license term and renewal) specifies that a license is valid for 3 years from the date of issuance of an initial license. This was added because the initial license is not issued immediately after it is approved by the Board but is issued only after the Board's order awarding the license becomes final, binding, nonappealable and not subject to pending legal challenge. See 4 Pa.C.S. § 1103 (relating to definitions).
Section 441a.20 is rescinded as it was inconsistent with or duplicative of §§ 441a.12 and 441a.13.
Comment and Response Summary
Notice of the proposed rulemaking was published at 42 Pa.B. 2962 (May 26, 2012). The Board did not receive comments from the public during the comment period. On July 25, 2012, the Board received comments from the Independent Regulatory Review Commission (IRRC) on the proposed rulemaking.
IRRC comments
In regard to § 441a.12, IRRC raised a concern that deleting the requirement that licensees submit contracts to the Board, which was required under former § 441a.12(c), would not be consistent with the objectives of 4 Pa.C.S. Part II (relating to gaming).
For clarity and in response to IRRC's comments, language was added in subsection (b), which mirrors the amended language in § 441a.13 regarding approval of agreements, specifying which contracts shall be filed with the Board. Those contracts include the following: agreements regarding slot machines, table games and associated equipment; corporate overhead agreements or shared services agreements whereby a slot machine licensee's holding company or affiliate is acting as a gaming service provider; management contracts whereby another entity is controlling or managing gaming operations; agreements that are tied to profits or earnings of the licensee; and amendments thereto.
Additionally, with respect to the submission of contracts, when slot machine licensees enter into contracts with gaming service providers, gaming related gaming service providers, manufacturers, suppliers or management companies, the gaming service provider, gaming related gaming service provider, manufacturer or supplier submits with its application materials a copy of the tentative agreement. Thereafter, slot machine licensees provide a monthly disbursement report which lists all disbursements to every gaming service provider (and those exempt from gaming service provider requirements), gaming related gaming service provider, manufacturer, supplier and management company. If there is a question regarding a disbursement amount that is not associated with a contract that was submitted to the Board, Board staff may request additional information. With these mechanisms in place, and based on the Board's experience to date, the Board believes that the integrity of gaming will be protected.
IRRC also commented that proposed language in subsection (b) (final-form subsection (c)) contains language that states that the Board may require a slot machine licensee to submit a copy of an agreement to the Board. As previously specified, if there is a question regarding a disbursement amount, Board staff may request that the contract or description of the oral agreement be submitted for review.
Additional revisions
In § 401a.3, the definition of ''gaming employee'' is amended. The edits were necessary in light of the amendments made to the definition of ''nongaming employee'' because when read together, both definitions appeared to cover some of the same individuals.
In § 441a.13, the ''submit to the Board'' language was deleted in subsection (a). That language is unnecessary in this section in light of the amendments to § 441a.12(b), which now requires that the enumerated agreements be submitted to the Board.
Section 441a.13(a)(3) was amended for clarity to reflect that contracts whereby a person has a right to receive payment contingent upon profits or earnings from a slot machine licensee require Board approval.
Affected Parties
Professional sports teams of Major League Baseball, the National Football League, the National Basketball Association and the National Hockey League are no longer required to file for gaming service provider registration or certification. Additionally, operators are no longer required to file certain agreements with the Board.
Fiscal Impact
Commonwealth. It is not anticipated that this final-form rulemaking will have a fiscal impact on the Board or other Commonwealth agencies.
Political subdivisions. This final-form rulemaking will not have fiscal impact on political subdivisions of this Commonwealth.
Private sector. Professional sports teams will benefit from the exemption as they are no longer required to apply and submit to an investigation as a gaming service provider. Additionally, operators will benefit as they are no longer required to file with the Board every agreement entered into with a licensed manufacturer, supplier, franchisee or gaming service provider.
General public. This final-form rulemaking will not have fiscal impact on the general public.
Paperwork Requirements
This final-form rulemaking eliminates the need to file with the Board every agreement entered into with a licensed manufacturer, supplier, franchisee or gaming service provider unless the agreement is related to: the acquisition of slot machines, table games and associated equipment; corporate overhead agreements or shared services agreements; management contracts; agreements that are tied to profits or earnings of the licensee; or requested by Board staff.
Effective Date
The final-form rulemaking will become effective upon publication in the Pennsylvania Bulletin.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on May 16, 2012, the Board submitted a copy of the notice of proposed rulemaking, published at 42 Pa.B. 2962, to IRRC and the Chairpersons of the House Gaming Oversight Committee and the Senate Community, Economic and Recreational Development Committee for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the House and Senate 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 Department has considered all comments 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 June 19, 2013, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on June 20, 2013, 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) (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.
Order
The Board, acting under 4 Pa.C.S. Part II, orders that:
(a) The regulations of the Board, 58 Pa. Code Chapters 401a, 437a and 441a, are amended by deleting § 441a.20 and amending §§ 401a.3, 437a.1, 437a.9, 441a.12, 441a.13, 441a.14 and 441a.16 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(Editor's Note: Amendments to § 435a.5 included in the proposed rulemaking published at 42 Pa.B. 2962 have been withdrawn by the Board.)
(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.
WILLIAM H. RYAN, Jr.,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 43 Pa.B. 3857 (July 6, 2013).)
Fiscal Note: Fiscal Note 125-161 remains valid for the final adoption of the subject regulations.
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:
* * * * * Gaming employee—
(i) An employee of a slot machine licensee, including:
(A) Cashiers.
(B) Change personnel.
(C) Count room personnel.
(D) Slot attendants.
(E) Dealers of croupiers.
(F) Machine mechanics, computer machine technicians or table game device technicians.
(G) Security personnel.
(H) Surveillance personnel.
(I) Personnel with SLOTS Link security administrator access and responsibilities.
(J) Hosts or other individuals authorized to extend complimentary services, including employees performing functions similar to those performed by a gaming junket representative.
(K) Promotional play supervisors, credit supervisors, pit supervisors, cashier supervisors, shift supervisors, table game managers and assistant managers and other supervisors and managers, except for those specifically identified in this part as key employees.
(L) Boxpersons.
(M) Floorpersons.
(N) Personnel authorized to issue promotional play.
(O) Personnel authorized to issue credit.
(P) Directors of the following departments:
(I) Food and beverage.
(II) Facilities.
(III) Construction.
(ii) Employees of a licensed supplier, manufacturer, manufacturer designee or gaming related gaming service provider whose duties:
(A) Are directly involved with the repair, service or distribution of slot machines, table game devices or associated equipment sold or provided to a licensed facility within this Commonwealth.
(B) Require the employee's presence on the gaming floor or in a restricted area of a licensed facility.
(iii) Employees of a gaming service provider whose duties require:
(A) The employee's presence on the gaming floor or in a restricted area of a licensed facility.
(B) The employee to access the slot machines, table game devices or associated equipment in a manner that does not affect the play of the game.
(iv) Gaming junket representatives.
(v) Other employees or individuals who the Board determines, after a review of the work being performed, require permits for the protection of the integrity of gaming.
* * * * * Nongaming employee—An employee of a slot machine licensee, manufacturer, manufacturer designee, supplier or gaming service provider who is not included within the definition of ''principal,'' ''key employee'' or ''gaming employee,'' and:
(i) Whose job duties require the employee to be:
(A) On the gaming floor but do not require the employee to touch or have contact with slot machines, table game devices or associated equipment other than exterior contact that does not affect the play of the game.
(B) In a restricted area and the employee:
(I) Is under the constant supervision of an employee of the slot machine licensee who is licensed or permitted and has appropriate access clearance to be in the restricted area.
(II) Is not required to touch or have contact with slot machines, table game devices or associated equipment other than exterior contact that does not affect the play of the game.
(ii) Who the Board determines, after a review of the work being performed, requires registration for the protection of the integrity of gaming.
* * * * *
Subpart B. LICENSING, PERMITTING, CERTIFICATION AND REGISTRATION
CHAPTER 437a. GAMING SERVICE PROVIDER CERTIFICATION AND REGISTRATION § 437a.1. General gaming service provider requirements.
* * * * * (d) The following persons are exempt from the gaming service provider registration and the gaming service provider certification requirements of this chapter:
* * * * * (15) Professional sports teams of Major League Baseball, the National Hockey League, the National Football League and the National Basketball Association.
(16) 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.
* * * * * § 437a.9. Permission to conduct business prior to certification or registration.
(a) Notwithstanding § 437a.1 (relating to general gaming service provider requirements), the Bureau of Licensing may authorize an applicant for a gaming service provider certification or registration to conduct business with a slot machine applicant or licensee prior to the certification or registration of the gaming service provider applicant if the following criteria are met:
(1) A completed Gaming Service Provider Registration Form—Unsponsored has been filed by the gaming service provider, a completed Gaming Service Provider Registration Form—Sponsored has been filed by the slot machine applicant or licensee or a completed Gaming Service Provider 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 gaming service provider registration applications; and gaming service provider certification applications).
(2) The slot machine applicant or licensee certifies that it has performed due diligence on the gaming service provider.
(3) The applicant for gaming service provider 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 is informed that the suitability of the applicant may be at issue or the applicant fails to cooperate in the application or investigatory 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 registration 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.
Subpart C. SLOT MACHINE LICENSING
CHAPTER 441a. SLOT MACHINE LICENSES § 441a.12. Maintaining agreements; filing of agreements.
(a) Maintaining agreements. Each approved slot machine licensee shall maintain the following:
(1) A copy of every executed agreement with licensed manufacturers, manufacturer designees, suppliers, tenant businesses or franchises located within the licensed facility, and persons required to file a notification or be registered or certified with the Board in accordance with § 437a.1(a), (b) or (h) (relating to general gaming service provider requirements) or Chapter 613a (relating to gaming related gaming service providers). Agreements relating to slot machines, table games, table game devices and associated equipment must be in writing.
(2) Records associated with an oral agreement with licensed manufacturers, manufacturer designees, suppliers, tenant businesses or franchises located within the licensed facility and persons required to file a notification or other request for authorization with the Board in accordance with § 437a.1(a), (b), (g) or (h) or Chapter 613a.
(3) A copy of all executed land and real estate agreements relating to racing or gaming operations.
(4) A copy of all amendments to agreements listed in paragraphs (1)—(3).
(b) Filing agreements. Each approved slot machine licensee shall file with the Board:
(1) Agreements with manufacturers, suppliers, manufacturer designees or gaming related gaming service providers relating to slot machines, table games, table game devices and associated equipment.
(2) Corporate overhead assessment agreements, shared service agreements, centralized service agreements or an agreement under which an affiliate, intermediary, subsidiary or holding company of an approved slot machine licensee provides goods or services to the approved slot machine licensee.
(3) Agreements that provide for the management of all or part of the gaming operations of a licensed facility.
(4) Agreements under which a person's right to receive payment is based or contingent upon a licensee's earnings, profits or receipts from the slot machines, table games or associated equipment.
(5) Amendments to agreements described in paragraphs (1)—(4).
(c) Content of filings. In addition to the agreements in subsection (b)(1)—(4), the Board may require an approved slot machine licensee to submit a copy of a written agreement or documents reflecting or relating to any oral agreement. Documentation of an oral agreement submitted to the Board must include the following:
(1) A description of the goods or services to be provided and the person that will provide the goods or services to the approved slot machine licensee.
(2) The name and business address of the parties to the agreement.
(3) The duration of the agreement or the expected date or dates of performance.
(4) The financial terms of the agreement.
§ 441a.13. Board approval of agreements.
(a) An approved slot machine licensee shall receive Board approval prior to executing, relying upon or taking an action under the following:
(1) Corporate overhead assessment agreements, shared service agreements, centralized service agreements or an agreement under which an affiliate, intermediary, subsidiary or holding company of an approved slot machine licensee provides goods or services to the approved slot machine licensee.
(2) Agreements that provide for the management of all or part of the gaming operations of a licensed facility.
(3) Agreements under which a person's right to receive payment is based or contingent upon a licensee's earnings, profits or receipts from the slot machines, table games or associated equipment.
(4) Amendments to agreements described in paragraphs (1)—(3).
(b) If the Board finds that an agreement is not in the public interest or is inimical to the interest of gaming in this Commonwealth, the Board may deny approval, require the termination of the agreement, the divestiture of any person associated with the agreement, or may pursue any remedy or combination of remedies provided for in the act or this part. If the agreement or association is not promptly terminated in accordance with the Board's order, the Board may pursue any remedy or combination of remedies provided for in the act or this part.
(c) An agreement maintained or filed under § 441a.12 (relating to maintaining agreements; filing of agreements) or this section must include a provision for its termination without liability on the part of the slot machine licensee, or any party to the agreement or any related agreement, if the Board orders the termination of the agreement in accordance with subsection (b).
(d) Each agreement maintained or filed under § 441a.12 or this section must include a provision requiring that the person who has contracted with the slot machine licensee comply with the act and this part, including obtaining required licenses, permits, certifications and registrations.
§ 441a.14. Master purchasing and disbursement report.
(a) Each approved slot machine licensee shall generate a monthly Master Purchasing and Disbursement Report for expenditures. The report shall be submitted to the Bureau of Licensing no later than the 22nd calendar day of the following month and include the following information:
(1) A register listing alphabetically by payee expenditures paid by the approved slot machine licensee, including transfers of funds or credits to payees, and the following information next to the name of each payee:
(i) The description code as set forth by the Bureau of Licensing.
(ii) The amount of the individual disbursement or credit.
(iii) The date of the individual disbursement or credit.
(iv) The subtotal of disbursements or credits by payee.
(2) A register listing alphabetically by payee expenditures paid by any affiliate, intermediary, subsidiary, holding company, management company or agent of the approved slot machine licensee for goods or services that benefit the approved slot machine licensee, including transfers of funds or credits to payees, and the following information next to the name of each payee:
(i) The description code as set forth by the Bureau of Licensing.
(ii) The amount of the individual disbursement or credit.
(iii) The date of the individual disbursement or credit.
(iv) The subtotal of disbursements or credits by payee.
(b) The reports shall be transmitted to the Bureau of Licensing by means of electronic data transmission in a format prescribed by the Board.
§ 441a.16. Slot machine license term and renewal.
(a) The slot machine license will be valid for 3 years from the date on which the initial license is issued or the renewal is approved by the Board.
(b) A Category 1, Category 2 or Category 3 Slot Machine Renewal Application Form shall be submitted to the Board at least 60 days prior to the expiration of a slot machine license.
(c) A slot machine license for which a completed renewal application has been received by the Board will continue in effect until the Board sends written notification to the holder of the slot machine license that the Board has approved or denied the slot machine license renewal application.
§ 441a.20. (Reserved).
[Pa.B. Doc. No. 13-1328. Filed for public inspection July 19, 2013, 9:00 a.m.]
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