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PA Bulletin, Doc. No. 09-41




[ 58 PA. CODE CH. 401a ]

Licensed Facility

[39 Pa.B. 235]
[Saturday, January 10, 2009]

   The Pennsylvania Gaming Control Board (Board), under the general authority in 4 Pa.C.S. § 1202(a) and (b) (relating to general and specific powers) amends § 401a.3 (relating to definitions) to read as set forth in Annex A.

Purpose of the Final-Form Rulemaking

   This amendment provides additional clarification as to how the Board interprets the term ''licensed facility.''

Explanation of the Amendment to Chapter 401a

   Currently, the Board's regulations use the definition of ''licensed facility'' that is contained in 4 Pa.C.S. § 1103 (relating to definitions).

   However, a number of questions have arisen as to how the term should be interpreted. For example, 4 Pa.C.S. § 1305(b) (relating to Category 3 slot machine license) requires that no Category 3 license shall be located within 15 linear miles of another licensed facility. Questions have been raised as to whether the 15 linear miles should be measured from the property line of the applicant or the building that houses the gaming floor.

   To provide greater clarity to applicants for and holders of slot machine licenses, the Board is expanding the definition of ''licensed facility'' to clarify that it includes the gaming floor, all restricted areas servicing the slot operations, amenities, such as food, beverage and retail outlets and other areas serving the gaming floor which are located on or directly accessible from the gaming floor or restricted areas. The term does not include areas that are exclusively devoted to pari-mutuel activities, hotel activities or other amenities not related to the slot machine gaming operations.

Comment and Response Summary

   Notice of proposed rulemaking was published at 38 Pa.B. 2053 (May 3, 2008).

   The Board received comments from Senators Robert Tomlinson and Mike Folmer, Representatives Mauree Gingrich, Ronald Marisco and Rosemarie Swanger, the Lebanon County Commissioners, East Hanover Township (Lebanon County), the Bushkill Group, Inc., the Lebanon Valley Chamber of Commerce, the Ono Fire Company (East Hanover Township, Lebanon County) and Sands Casino Resort Bethlehem during the public comment period. By letter dated July 2, 2008, the Independent Regulatory Review Commission (IRRC) also submitted comments. All of these comments were reviewed by the Board and are discussed in detail as follows.

   Most of the commentators, except the Bushkill Group, Inc. and Sands Casino Resort Bethlehem, commented that this expanded definition would make East Hanover Township in Lebanon County and Lebanon County ineligible to receive any local share gaming funds. For that reason, they recommended that the Board not revise the definition of licensed facility.

   Their arguments were based on the fact that approximately 22 acres of the land owned by Penn National Turf Club (Penn National) is located in Lebanon County and their presumption that Penn National is the slot machine licensee. Actually, the holder of the slot machine license is Mountainview Thoroughbred Racing Association (Mountainview), not Penn National. When this amendment was proposed, Mountainview leased approximately 220 acres from Penn National and all of that acreage is in Dauphin County. So regardless of how the term ''licensed facility'' was defined, East Hanover Township (Lebanon County) and Lebanon County would not have been eligible to receive any local share funds. In August of 2008, Penn National and Mountainview amended the lease so that it now includes the acreage in Lebanon County.

   The Board concurs with commentators that there will be economic impacts on East Hanover Township (Lebanon County) and Lebanon County. However, the Board does not believe that changing the definition of ''licensed facility'' to include all areas owned or leased by a slot machine licensee is consistent with the language of the Pennsylvania Race Horse Development and Gaming Act (act) or the intent of the General Assembly.

   While Lebanon County is not entitled to any local share funds under the act, the act does permit counties that receive funds to enter into intergovernmental cooperative agreements with other jurisdictions for sharing these funds. Therefore, the Board encourages Lebanon County to enter into discussions with Dauphin County to explore the possibility of entering into an agreement.

   IRRC and some of the other commentators questioned the Board's authority to ''change'' the statutory definition of licensed facility.

   The Board has not changed the statutory language in the definition. That language continues to mirror the language of the act. The Board has, however, expanded the definition by adding additional language which articulates how the Board interprets the language in the act. This has been done under the Board's general authority to regulate gaming in this Commonwealth.

   IRRC suggested that the Board consider further amendments to this definition to clarify whether the phrase ''physical land-based location'' refers to the entire property or just identified structures on the property where the licensed facility is located.

   The Board believes the proposed definition, with the revisions discussed, is clear that it only applies to certain areas within a structure or structures. Because a number of the licensed facilities are in buildings which also house activities unrelated to gaming (such as pari-mutuel or retail activities) expanding the definition to include the entire building which houses the gaming related activities would be inconsistent with the act.

   IRRC questioned if amending the definition of licensed facility would somehow interfere with the Department of Revenue's (Revenue) powers under 4 Pa.C.S. § 1403 (relating to establishment of State gaming and net slot machince revenue distributions).

   Section 1403 of the act vests Revenue with the sole authority to make distributions from the State Gaming Fund; it does not give Department of Revenue (Revenue) the authority to define what constitutes a ''licensed facility.'' Instead, section 1202 of the act gives the Board the authority to regulate all aspects of gaming.

   IRRC also asked the Board to explain how the proposed definition is consistent with legislative intent and whether it represents a policy issue that warrants legislative review.

   In the act, the term ''licensed facility'' is used over 200 times in a variety of contexts. Reading these provisions as a whole, the Board believes that the intent of the General Assembly when it first passed the act was that the licensed facility consists of more than just the gaming floor but less than the entire parcel of land on which the licensed facility is located.

   Additionally, during the deliberations on Senate Bill 862, which amended the act, the phrase ''and associated areas'' in the definition of ''licensed facility'' and a definition of ''associated areas,'' which had been added in an earlier version of the bill, were both deleted by the House. During the floor debate in the Senate, both Senators Brightbill and Fumo expressed reservations that this amendment by the House could reduce the scope of what was included as part of a ''licensed facility.''

   Given the various provisions that use the term ''licensed facility'' and the most recent amendments to the act passed by the General Assembly, the Board believes that its interpretation of what constitutes a licensed facility is consistent with the intention of the General Assembly. Additionally, because this definition was amended in the final version of Senate Bill 862, the Board believes that this is an issue that the General Assembly has already reviewed.

   IRRC and a commentator also suggested that the Board consider limiting the scope of the proposed definition solely for the purposes of measuring linear distance between facilities.

   While the one example used in the proposed preamble addressed the 15 mile issue, this definition is also intended to give slot machine licensees guidance for other issues as well. Additionally, since there is no basis for such a distinction in the act, the Board believes it lacks a statutory basis to do multiple definitions. Even if the Board had the authority, multiple definitions would be confusing to licensees.

   Sands Casino Resort Bethlehem supports the expansion of the definition of licensed facility and offered revisions which it believes would further clarify this definition. IRRC suggested that the Board consider the changes offered by Sands Casino Resort Bethlehem.

   The Board has reviewed the suggestions offered by Sands Casino Resort Bethlehem and has included some of the suggested language in the final-form definition.

   The Bushkill Group, Inc. supports the adoption of the regulation as proposed because it clarifies the definition of licensed facility.

   The Board appreciates the support expressed by this commentator.

Affected Parties

   Holders of and applicants for a slot machine license will be affected by this rulemaking.

   There are currently 11 slot machine licensees and 4 applicants for slot machine licenses.

Fiscal Impact


   There will be no new costs to the Board or other Commonwealth agencies as a result of this amendment.

Political Subdivisions

   Under 4 Pa.C.S. § 1403, the distribution of funds from the local share assessment is based upon the location of the licensed facility. For slot machine licensees that have licensed facilities in more than one county or municipality this proposed rulemaking could have a fiscal impact on those political subdivisions. However, as discussed previously, none of the currently licensed facilities are located in multiple political subdivisions.

Private Sector

   To the extent that this rulemaking clarifies the definition of the term ''licensed facility,'' there may be some small potential savings to applicants or potential applicants for a slot machine license.

General Public

   This final-form rulemaking will have no fiscal impact on the general public.

Paperwork requirements

   This final-form rulemaking creates no new paperwork requirements.

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 April 21, 2008, the Board submitted a copy of the proposed rulemaking, published at 38 Pa.B. 2053, 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 (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 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)), the final-form rulemaking was deemed approved by the Committees on November 5, 2008. Under section 5.1(e) of the Regulatory Review Act, IRRC met on November 6, 2008, and approved the final-form rulemaking.


   The Board finds that:

   (1)  Public notice of intention to adopt this amendment 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).


   The Board, acting under 4 Pa.C.S. Part II, orders that:

   (a)  The regulations of the Board, 58 Pa. Code Chapter 401a, are amended by amending § 401a.3 to read as set forth in Annex A, with ellipses referring to the existing text of the regulation.

   (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.


   (Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 38 Pa.B. 6429 (November 22, 2008).)

   Fiscal Note: Fiscal Note 125-85 remains valid for the final adoption of the subject regulation.

Annex A





§ 401a.3. Definitions.

   The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:

*      *      *      *      *

   Licensed facility--

   (i)  The physical land-based location at which a licensed gaming entity is authorized to place and operate slot machines including the gaming floor, all restricted areas servicing slot operations, and food, beverage and retail outlets and other areas serving the gaming floor which are located either on or directly accessible from and adjacent to the gaming floor or the restricted areas servicing slot operations.

   (ii)  The term does not encompass areas or amenities exclusive to pari-mutuel activities, hotel activities including hotel rooms, catering or room service operations serving a hotel, convention, meeting and mutipurose facilities, retail facilities, food and beverage outlets and other amenities and activities not located on or adjacent to the gaming floor, or related to slot machine gaming operations.

*      *      *      *      *

[Pa.B. Doc. No. 09-41. Filed for public inspection January 9, 2009, 9:00 a.m.]

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