741 Temporary regulations; general licensing requirements; licensing of manufacturers and suppliers

PENNSYLVANIA GAMING CONTROL BOARD

[58 PA. CODE CHS. 421, 423, 427 AND 431]

Temporary Regulations; General Licensing Requirements; Licensing of Manufacturers and Suppliers

[37 Pa.B. 1970]
[Saturday, April 28, 2007]

   Under the Pennsylvania Gaming Control Board's (Board) Resolutions No. 2005-3-REG and 2006-9-REG, the Board has the authority to amend the temporary regulations adopted on June 16, 2005, and June 28, 2006, as it deems necessary in accordance with the purpose of 4 Pa.C.S. Part II (relating to gaming) (Act 71) and to further the intent of Act 71. To respond to changes in the Board's licensing programs for manufacturers and suppliers and as a result of the passage of the act of November 1, 2006 (P. L. 1243, No. 135), the Board has decided to make changes to the temporary regulations, dated June 16, 2005, and June 28, 2006, as deposited with the Legislative Reference Bureau (Bureau) and published at 35 Pa.B. 4045 (July 16, 2005) and 36 Pa.B. 3948 (July 22, 2006).

   Therefore, the Board has deposited with the Bureau amendments to Chapters 421, 423, 427 and 431. The amendments are effective as of March 15, 2007.

   The temporary regulations of the Board in Chapters 421, 423, 427 and 431 are amended by amending §§ 421.1, 421.3--421.5, 423.1, 423.3--423.6, 427.1--427.3 and 431.1--431.4; by deleting §§ 421.2 and 423.3; and by adding §§ 421.4a, 423.1a, 423.5a, 427.2a, 427.4 and 431.2a to read as set forth in Annex A.

   Order

   The Board, acting under the authorizing statute, orders that:

   (a)  The Board, acting under the authority of the Act 71, adopts the amendments to the temporary regulations adopted by resolution at the March 15, 2007, public meeting. The amendments to the temporary regulations pertain to general licensing requirements and licensing of manufacturers and suppliers.

   (b)  The temporary regulations of the Board, 58 Pa. Code Chapters 421, 423, 427 and 431, are amended by amending §§ 421.1, 421.3--421.5, 423.1, 423.3--423.6, 427.1--427.3 and 431.1--431.4; by deleting §§ 421.2 and 423.3; and by adding §§ 421.4a, 423.1a, 423.5a, 427.2a, 427.4 and 431.2a to read as set forth in Annex A.

   (c)  The amendments are effective March 15, 2007.

   (d)  The amendments to the temporary regulations shall be posted in their entirety on the Board's website and published in the Pennsylvania Bulletin.

   (e)  The Chairperson of the Board shall certify this order and deposit the amendments to the temporary regulations with the Bureau as required by law.

THOMAS A. DECKER,   
Chairperson

   Fiscal Note: 125-62. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 58. RECREATION

PART VII. GAMING CONTROL BOARD

Subpart B. LICENSING, REGISTERING, CERTIFYING AND PERMITTING

CHAPTER 421. GENERAL PROVISIONS

§ 421.1. General requirements.

   (a)  A license permit, certification or registration issuance, renewal or other approval issued by the Board is a revocable privilege. No person holding a license, permit, certification or registration, renewal, or other approval is deemed to have any property rights.

   (b)  By filing an application with the Board, an applicant consents to an investigation of the applicant's general suitability, financial suitability, character, integrity and ability to engage in, or be associated with, gaming activity in this Commonwealth to the extent deemed appropriate by the Board. The investigation may include a background investigation of the applicant, employees of the applicant, all persons having a controlling interest in the applicant, and other persons as determined by the Board.

   (c)  By filing an application for a license, permit, certification or registration issuance, renewal or other approval from the Board, an applicant agrees to:

   (1)  Abide by the provisions of the act and this part.

   (2)  Waive liability as to the Board, its members, its employees, the Pennsylvania State Police, the Commonwealth and its instrumentalities for damages resulting from disclosure or publication in any manner, other than a willfully unlawful disclosure or publication of material or information acquired during an investigation of the applicant.

   (3)  Consent to execute all releases requested by the Board.

   (d)  An applicant for or holder of a license, permit, certification or registration may not give or offer to give, compensation or reward or a percentage or share of the money or property played or received through gaming to a public official or public employee in consideration for or in exchange for obtaining a license, permit, certification or registration issued under this part.

   (e)  An applicant for or holder of a license, permit, certification or registration shall have a duty to inform the Bureau of an action which the applicant for or holder of a license, permit, certification or registration believes would constitute a violation of the act. No person who so informs the Bureau may be discriminated against by an applicant for or holder of a license, permit, certification or registration for supplying the information.

   (f)  An applicant for a license, permit, certification or registration shall have a continuing duty to inform the Board of any changes in the information supplied to the Board in or in conjunction with the original or renewal application or a change in circumstances that may render the applicant for a license, permit, certification or registration ineligible, unqualified or unsuitable to hold a license, permit, certification or registration under the standards and requirements of the act and of this part.

   (g)  An applicant for a license, permit, certification or registration shall have a continuing duty to 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.

   (h)  An application submitted to the Board constitutes the seeking of a privilege. An applicant shall at all times have the burden of proof. It shall be the applicant's affirmative responsibility to establish the facts supporting its suitability under the act and this subpart by clear and convincing evidence, including why a license, permit, certification or registration should be issued or renewed by the Board.

   (i)  A person holding a license, permit, certification or registration issued by the Board who violates a provision of the act or this part may be held jointly or severally liable for the violation.

   (j)  The Board will maintain lists of all applicants for licenses, permits, certifications or registrations under this part as well as a record of all actions taken with respect to each applicant. The lists will be posted on the Board's website (www.pgcb.state.pa.us).

§ 421.2. (Reserved).

§ 421.3. Disqualification criteria.

   (a)  An application for issuance or renewal of a license, permit, certification or registration may be denied, or a license, permit, certification or registration may be suspended or revoked if:

   (1)  The applicant has failed to prove to the satisfaction of the Board that the applicant or any of the persons required to be qualified, are in fact qualified in accordance with the act and with this part.

   (2)  The applicant for or holder of a license, permit, certification or registration has violated the act or this part.

   (3)  The applicant for or holder of a license, permit, certification or registration is disqualified under the criteria in the act.

   (4)  The applicant for or holder of a license, permit, certification or registration has materially departed from a representation made in the application for licensure or renewal.

   (5)  The applicant for or holder of a license, permit, certification or registration has failed to comply with applicable Federal or state laws or regulations.

   (b)  A denial of an application or nonrenewal, suspension or revocation of a license, permit, certification or registration may be made for a sufficient cause consistent with the act and the public interest.

§ 421.4. Investigations; supplementary information.

   (a)  The Board may make an inquiry or investigation concerning an applicant for or holder of a license, permit, certification or registration or any affiliate, intermediary, subsidiary or holding company of the applicant for or holder of a license, permit, certification or registration as it may deem appropriate either at the time of the initial application or at any time thereafter.

   (b)  It shall be the continuing duty of applicants and a holder of a license, permit, certification or registration to provide full cooperation to the Board in the conduct of an inquiry or investigation and to provide supplementary information requested by the Board.

§ 421.4a. Presuitability determination.

   (a)  Upon request from an eligible applicant for or holder of a license and upon receipt of an application and the appropriate fees, the Board will make an inquiry or investigation of a potential purchaser of an applicant for or holder of a license, certification or registration as if the purchaser were an eligible applicant. The eligible applicant for or holder of a license may petition the Board, on behalf of the purchaser, for a Statement of Investigation under § 493.4 (relating to petitions generally).

   (b)  The applicant for or holder of a license making the request shall reimburse the costs associated with the inquiry or investigation upon request of the Board.

   (c)  This inquiry or investigation does not replace the application process required under the act and this part which is a requirement for licensure, certification or registration.

§ 421.5. Monopolization of economic opportunities and control.

   (a)  In accordance with section 1102(5) of the act (relating to legislative intent), a slot machine license, management company license or other certification or registration may not be issued to or held by a person if the Board determines that the issuance or holding will result in the monopolization of economic opportunities and control of the licensed gaming facilities in this Commonwealth by that person.

   (b)  For purposes of this section, monopolization of economic opportunities of and control of the licensed gaming facilities means that a person:

   (1)  Would have actual or potential domination of the gaming market in this Commonwealth contrary to the legislative intent.

   (2)  Could substantially impede or suppress competition among licensees.

   (3)  Could adversely impact the economic stability of the gaming industry in this Commonwealth.

   (c)  In determining whether the issuance or holding of a license by a person will result in monopolization of economic opportunities and control of the licensed gaming facilities in this Commonwealth, the Board will consider the following criteria:

   (1)  The percentage share of the market presently controlled by the person in each of the following categories:

   (i)  Total number of slot machine licenses available under section 1307 of the act (relating to number of slot machine licenses).

   (ii)  Total gaming floor square footage.

   (iii)  Number of slot machines.

   (iv)  Gross terminal revenue.

   (v)  Net terminal revenue.

   (vi)  Total amount of money, vouchers and electronic money transfers through the use of a cashless wagering system made to slot machines.

   (vii)  Number of persons employed by the licensee.

   (2)  The estimated increase in the market share in the categories in paragraph (1) if the person is issued or permitted to hold the license.

   (3)  The relative position of other persons who hold licenses, as evidenced by the market share of each person in the categories in paragraph (2).

   (4)  The current and projected financial condition of the industry.

   (5)  The current market conditions, including level of competition, consumer demand, market concentration, any consolidation trends in the industry and other relevant characteristics of the market.

   (6)  Whether the gaming facilities held or to be held by the person have separate organizational structures or other independent obligations.

   (7)  The potential impact of licensure on the projected future growth and development of the gaming industry in this Commonwealth and the growth and development of the host communities.

   (8)  The barriers to entry into the gaming industry, including the licensure requirements of the act, and whether the issuance or holding of a license by the person will operate as a barrier to new companies and individuals desiring to enter the market.

   (9)  Whether the issuance or holding of the license by the person will adversely impact consumer interests, or whether the issuance or holding is likely to result in enhancing the quality and customer appeal of products and services offered by slot machine licensees to maintain or increase their respective market shares.

   (10)  Whether a restriction on the issuance or holding of an additional license by the person is necessary to encourage and preserve competition and to prevent monopolization of economic opportunities and control of the licensed gaming facilities.

   (11)  Other evidence deemed relevant by the Board.

CHAPTER 423. APPLICATIONS

§ 423.1. General requirements.

   (a)  For the purposes of this section, a reference to an applicant includes the applicant's affiliates, intermediaries, subsidiaries and holding companies.

   (b)  An application shall be submitted on forms supplied or approved by the Board, contain the information and documents required by the Board and include the applicable fees.

   (c)  The applicant shall file with the application the supplemental forms required by the Board. The forms require full disclosure of details relative to the applicant's suitability to conduct business in this Commonwealth under the act.

   (d)  Upon request of the Board, the applicant shall further supplement information provided in the application. The applicant shall provide the requested documents, records, supporting data and other information within the time period specified in the request, or if no time is specified, within 30 days of the date of the request. If the applicant fails to provide the requested information within the required time period as set forth in the request, the Board may deny the application.

   (e)  Information provided to the Board must be true and complete. If there is any change in the information provided to the Board, the applicant shall promptly file a written amendment in a form prescribed by the Board.

   (f)  The application and amendments thereto and other specific documents designated by the Board must be sworn to or affirmed by the applicant before a notary public.

   (g)  The Board will deny the application of an applicant that refuses to submit to a background investigation or provide requested information as required under the act.

   (h)  An applicant that submits a document to the Board which is in a language other than English shall also submit an English translation of the non-English language document. The translation must include the signature, printed name, address and telephone number of the translator and a verification by the translator of the truth and accuracy of the translation. At its discretion, the Board may accept an English summary of a document in lieu of a complete translation of the document.

   (i)  An application that has been accepted for filing and the related materials submitted to the Board become the property of the Board and will not be returned to the applicant.

§ 423.1a. Preliminary submission review.

   (a)  Upon receipt of an application submission, the Board will review the submission to insure that it contains the following as applicable:

   (1)  Application fee.

   (2)  Application forms and additional information and accompanying documentation required by the act or this part governing the specific type of application.

   (3)  Completed authorization forms for release of information from Federal and State agencies required for the specific type of application.

   (4)  For slot machine license applications only, a bond or letter of credit as required by section 1313(c) of the act (relating to applicant's ability to pay license fee).

   (b)  If an application submission fails to include one or more of the items in subsection (a), the applicant will be notified that the application has not been accepted for filing and the applicant will be given an opportunity to cure the insufficiency.

   (c)  If the applicant fails to cure the insufficiency within the time period set by the Board, the submission and related materials will be returned to the applicant.

§ 423.2. Application processing.

   (a)  Upon a determination that the prerequisites for filing have been met, the Board will:

   (1)  Accept the application for filing.

   (2)  Notify the applicant or the applicant's attorney, if any, in writing of the fact that the application has been accepted for filing and the date of the acceptance for filing. The Board will also notify the applicant that the acceptance for filing of the application will not constitute evidence that any requirement of the act has been satisfied.

   (3)  Obtain and evaluate information as may be necessary to determine the qualifications of the applicant and any matter relating to the application.

   (4)  Request the Bureau to promptly conduct an investigation and provide the information necessary to determine the qualifications of the applicant and matters relating to the application.

   (5)  Request the Pennsylvania State Police to provide a criminal history background investigation report, determine employee eligibility consistent with § 435.1 (relating to general provisions), conduct fingerprinting, photograph applicants and perform duties as directed by the Board.

   (6)  Request the Department to promptly conduct a tax clearance review.

   (7)  Request the Department of Labor and Industry to perform an Unemployment Compensation Tax clearance review and a Workers Compensation Tax clearance review.

   (8)  Request any agencies, entities or persons to conduct investigations or evaluations or to provide information to the Board, as deemed necessary by the Board.

   (b)  The Board will keep and maintain a list of the applicants under this part together with a record of the actions taken with respect to applicants.

   (c)  An application submitted under this part and the information obtained by the Board relating to the application shall be part of the evidentiary record of the licensing proceeding. The Board's decision to issue or deny a license shall be based solely on the evidentiary record before the Board.

§ 423.3. (Reserved).

§ 423.4. Deficient applications.

   (a)   If an application is found to be deficient, the Board will notify the applicant of the deficiencies in the application and permit the applicant to cure the deficiencies within a time period prescribed by the Board.

   (b)  Refusal to provide information as required in subsection (a) may result in the immediate denial of the application.

§ 423.5. Application withdrawal.

   (a)  A request for withdrawal of an application for a license, permit, certification or registration may be made by petition to the Board filed at any time prior to issuance by the Board of its determination with respect to the application.

   (b)  The petition must set forth the reasons for the withdrawal.

   (c)  An applicant may petition for the withdrawal of its application or an application submitted by one of its affiliates, intermediaries, subsidiaries or holding companies or persons or entities required to be qualified under section 1311 of the act (relating to slot machine license application business entity requirements).

   (d)   When rendering a decision on a petition for withdrawal, the Board may set the conditions of withdrawal and may deny or grant the request with or without prejudice.

   (1)  If a petition for withdrawal is granted with prejudice, the person or entity whose application has been withdrawn will not be eligible to apply for a license, permit, certification or registration with the Board until after expiration of 5 years from the date of the withdrawal.

   (2)  If a petition for withdrawal is granted without prejudice the Board will determine when the person or entity whose application has been withdrawn may be eligible to apply for a license, permit, certification or registration.

   (e)  The Board may convert an incomplete application to a petition for withdrawal.

   (f)  Unless the Board otherwise directs, fees or other payments relating to an application will not become refundable by reason of the withdrawal. The fees and costs owed to the Board related to the application shall be paid prior to granting a petition to withdraw.

§ 423.5a. License, permit, registration and certification issuance and Statement of Conditions.

   (a)  Issuance criteria.

   (1)  In addition to the criteria contained in the act, the Board will not issue or renew a license, permit, certification or registration unless the Board finds that the following criteria have been established by the applicant:

   (i)  The applicant has paid the applicable fees.

   (ii)  The applicant has fulfilled each condition set by the Board or contained in the act, including the execution of a Statement of Conditions.

   (iii)  The applicant is found suitable consistent with the laws of the Commonwealth and is otherwise qualified to be issued a license, certification, permit, registration or other authorization.

   (b)  Statement of Conditions.

   (1)  For this subsection, the term ''executive officer'' means the individual holding the highest ranking management position within the entity and who is authorized to contract on behalf of the entity.

   (2)  If the Board approves an entity's application for a license, certification or registration, or for the renewal of a license, certification or registration, the Board may require the executive officer of the entity whose application has been approved, or other competent individual designated by the entity in accordance with paragraph (3), to execute a Statement of Conditions in the manner and form required by the Board. Execution of the Statement of Conditions shall constitute the acceptance of each provision contained in the Statement of Conditions by both the entity and the executive officer. The executive officer shall ensure that the entity fully complies with each provision contained in the Statement of Conditions.

   (3)  Prior to the issuance of a license, certification or registration to an entity, the entity shall determine whether the entity will designate its executive officer or another competent individual with a direct reporting relationship to its executive officer to execute the Statement of Conditions on behalf of both the entity and its executive officer. If the entity elects to designate another competent individual with a direct reporting relationship to its executive officer to execute the Statement of Conditions on behalf of the entity and its executive officer, the entity shall adopt a resolution identifying the individual so designated, authorizing that individual to execute the Statement of Conditions on behalf of both the entity and its executive officer, and evidencing the executive officer's concurrence in that individual's designation. A copy of the resolution, certified as true and correct, shall be provided to the Board and attached to the Statement of Conditions.

   (4)  If the Board approves an individual's application for a license, permit, certification or registration, or for the renewal of a license, permit, certification or registration, the Board may require the individual whose application has been approved to execute a Statement of Conditions in the manner and form required by the Board. The execution of the Statement of Conditions shall constitute the acceptance of each provision contained in the Statement of Conditions by the individual. The individual shall fully comply with each provision contained in the Statement of Conditions.

   (5)  Failure to fully comply with any provision contained in an executed Statement of Conditions shall constitute a violation of the Statement of Conditions and may result in the imposition of Board-imposed administrative sanctions, up to and including revocation, against the individual to whom the license, permit, certification or registration was issued, and, in the case of an entity, against the entity and its executive officer or other designee under paragraph (3).

§ 423.6. Restriction on application after denial or revocation.

   (a)  A person whose application has been denied or whose license, permit, certification or registration has been revoked, may not apply for a license, permit, certification or registration for 5 years from the date that the application was denied or the license, permit, certification or registration was revoked.

   (b)  The 5-year restriction in subsection (a) will not apply as follows:

   (1)  To applicants for a slot machine license if the denial was for reasons other than unsuitability.

   (2)  If the denial or revocation was based on pending charges for a disqualifying offense under section 1213 or section 1518 of the act (relating to license or permit prohibition; and prohibited acts and penalties), 18 Pa.C.S. (relating to crimes and offenses) or the criminal laws of another jurisdiction, and the pending charges do not result in conviction of the disqualifying offense.

   (c)  Two years from the date that the application was denied or the license, permit, certification or registration was revoked, a person may file a petition for permission to apply for a license, permit, certification or registration before the expiration of the 5-year period.

   (d)  A petition filed under subsection (c) shall be filed in accordance with § 493.4 (relating to petitions generally).

   (e)  Petitions filed under subsection (c) must contain:

   (1)  An explanation of how the conditions that were the basis for denial or revocation have been corrected or no longer exist.

   (2)  Supporting materials that demonstrate that the person meets the requirements for a license, permit, certification or registration.

   (3)  If the denial or revocation was the result of a conviction, evidence of rehabilitation, such as:

   (i)  The nature and seriousness of the offense or conduct.

   (ii)  The circumstances under which the offense or conduct occurred.

   (iii)  The date of the offense or conduct.

   (iv)  The age of the applicant when the offense or conduct was committed.

   (v)  Whether the offense or conduct was an isolated or repeated incident.

   (vi)  Social conditions which may have contributed to the offense or conduct.

   (vii)  Evidence of rehabilitation, including good conduct in prison or in the community, counseling or psychiatric treatment received, acquisition of additional academic or vocational schooling, successful participation in correctional work-release programs, or the recommendation of persons who have or have had the applicant under their supervision.

   (viii)  Evidence that obligations for restitution, fines and penalties have been met.

   (f)  If a petition filed under subsection (c) is denied, a person may not file another petition under subsection (c) for 1 year from the date of the denial of the petition.

CHAPTER 427. MANUFACTURER LICENSES

§ 427.1. Manufacturer general requirements.

   (a)  A manufacturer seeking to manufacture slot machines and associated equipment for use in this Commonwealth shall apply to the Board for a manufacturer license.

   (b)  In accordance with section 1317.1 of the act (relating to manufacturer licenses), an applicant for or the holder of a manufacturer license or any of the applicant's or holder's affiliates, intermediaries, subsidiaries or holding companies, may not apply for or hold a slot machine license or supplier license.

   (c)  A licensed manufacturer or a licensed manufacturer designee may supply or repair any slot machine or associated equipment manufactured by the licensee.

   (d)  A licensed manufacturer may contract with a slot machine licensee or licensed supplier to supply or repair slot machines or associated equipment manufactured by the manufacturer licensee.

   (e)   Limitations may not be placed on the number of manufacturer licenses issued or when an application for a manufacturer license may be filed.

§ 427.2. Manufacturer license applications and standards.

   (a)  An applicant for a manufacturer license shall submit:

   (1)  An original and three copies of the Manufacturer Application and Disclosure Information Form unless otherwise directed by the Board.

   (2)  A nonrefundable application fee.

   (3)  A diversity plan as set forth in section 1325(b) of the act (relating to license or permit issuance) and Chapter 481 (relating to general provisions), which shall be signed by the chief executive officer of the applicant.

   (4)  An application from every key employee and principal as specified by the Manufacturer Application and Disclosure Information Form or as determined by the Board.

   (5)  If applicable, copies of filings required by the SEC during the 2 immediately preceding fiscal years, including annual reports filed with the SEC, under sections 13 or 15(d) of the SEC of 1934 (15 U.S.C.A. §§ 78m and 78o(d)), quarterly reports filed with the SEC, under sections 13 or 15(d) of the Securities Exchange Act of 1934, current reports filed with the SEC, under sections 13 or 15(d) of the Securities Exchange Act of 1934, and proxy statements issued by the applicant.

   (6)  An affirmation that neither the applicant nor any of its affiliates, intermediaries, subsidiaries or holding companies, holds any direct or indirect ownership interest in an applicant for or holder of a slot machine applicant or license or supplier license, or employs, directly or indirectly, a person who satisfies the definition of a principal or key employee of a slot machine applicant or licensee or supplier applicant or licensee. In applying this provision to an applicant for a manufacturer license, the Board will not include interests that are held by individuals in any of the following manners:

   (i)  In mutual funds when the value of the interest owned does not exceed 1% of the total fair market value of the applicant or licensee and provided that the mutual fund is not a nondiversified fund invested primarily in entities operating in, or connected with, the gaming industry.

   (ii)  Through defined benefit pension plans.

   (iii)  Through deferred compensation plans organized and operated under section 457 of the Internal Revenue Code of 1986 (26 U.S.C.A. § 457).

   (iv)  In blind trusts over which the holder may not exercise a managerial control or receive income during the time period the holder is subject to these provisions.

   (v)  Through tuition account plans organized and operated under section 529 of the Internal Revenue Code of 1986 (26 U.S.C.A. § 529).

   (vi)  Through plans described in section 401(k) of the Internal Revenue Code of 1986 (26 U.S.C.A. § 401(k)).

   (vii)  An interest held by a spouse if an action seeking a divorce and dissolution of marital status has been initiated in any jurisdiction by either party to the marriage.

   (7)  A sworn or affirmed statement that the applicant has developed and implemented internal safeguards and policies to prevent a violation of section 1513 of the act (relating to political influence) and a copy the safeguards and policies.

   (b)   In addition to the materials required under subsection (a), an applicant for a manufacturer license shall:

   (1)  Promptly provide information requested by the Board relating to the manufacturer's 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 421 and 423 (relating to general provisions; and applications).

   (3)  Demonstrate that the applicant has the ability to manufacture, build, rebuild, repair, fabricate, assemble, produce, program, design or otherwise make modifications to slot machines or associated equipment which meet one or more of the following criteria:

   (i)  Are specifically designed for use in the operation of a slot machine.

   (ii)  Are needed to conduct an authorized game.

   (iii)  Have the capacity to affect the outcome of the play of a game.

   (iv)  Have the capacity to affect the calculation, storage, collection or control of gross terminal revenue.

   (c)  An applicant for a manufacturer license will be required to reimburse the Board for additional costs, based on the actual expenses incurred by the Board, in conducting the background investigation.

   (d)  In determining whether an applicant is suitable to be licensed as a manufacturer under this section, the Board will consider the following:

   (1)  The financial fitness, good character, honesty, integrity and responsibility of the applicant.

   (2)  If the principals of the applicant individually qualify under the standards of section 1317.1 of the act (relating to manufacturer license).

   (3)  The integrity of financial backers.

   (4)  The suitability of the applicant and principals and key employees of the applicant based on the satisfactory results of:

   (i)  The background investigation of the principals and key employees.

   (ii)  A current tax clearance review performed by the Department.

   (iii)  A current Unemployment Compensation Tax clearance review and a Workers Compensation Tax clearance review performed by the Department of Labor and Industry.

§ 427.2a. Manufacturer license term and renewal.

   (a)  A manufacturer license or renewal will be valid for 1 year from the date on which the license or renewal is approved by the Board.

   (b)  A renewal application and renewal fee shall be filed at least 6 months prior to the expiration of the current license.

   (c)  A manufacturer license for which a completed renewal application and fee has been received by the Board will continue in effect for an additional 6-month period or until acted upon by the Board, whichever occurs first.

§ 427.3. Alternative manufacturer licensing standards.

   (a)  If an applicant for a manufacturer license holds a similar license in another jurisdiction in the United States, the applicant may submit a written request with its application required under § 427.2(a) (relating to manufacturer license applications and standards) for the Board to adopt an abbreviated licensing process under section 1319 of the act (relating to alternative manufacturer licensing standards) to review a manufacturer license application.

   (b)  The Board may use the abbreviated process if:

   (1)  The Board determines, after investigation, that the licensing standards in the jurisdiction in which the applicant is licensed are similarly comprehensive, thorough and provide equal, if not greater, safeguards as provided in the act and that granting the request is in the public interest.

   (2)   The applicant has provided a copy of its most recent application or renewal for the similar license in the other jurisdiction and a copy of the license or the order issued by the other jurisdiction granting the license.

   (3)  The applicant has no administrative or enforcement actions pending in another jurisdiction or the applicant has adequately disclosed and explained the action to the satisfaction of the Board.

   (4)  There are no pending or ongoing investigations of possible material violations by the applicant in another jurisdiction or the applicant has adequately disclosed and explained the investigation to the satisfaction of the Board.

   (c)  This section may not be construed to waive fees associated with obtaining a license through the application process in this Commonwealth.

§ 427.4. Responsibilities of a manufacturer.

   (a)  A holder of a manufacturer license shall have a continuing duty to:

   (1)  Provide any information requested by the Board relating to the manufacturer's licensing or regulation; cooperate with the Board in investigations, hearings, and enforcement and disciplinary actions; and comply with all 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 manufacturer license ineligible, unqualified or unsuitable to hold a license under the standards and requirements of the act and of this part.

   (3)  Provide a copy of SEC filings listed in § 427.2(a)(5) (relating to manufacturer license applications and standards) that are filed after the date of issuance of its license. The copy shall be submitted no later than 30 days after the date of filing with the SEC.

   (b)  An employee of a licensed manufacturer whose duties of employment or incidental activities related to employment require the employee to be on the gaming floor or in a restricted area shall be required to obtain an occupation permit under § 435.4 (relating to occupation permit).

   (c)  A slot machine licensee may service or repair slot machines or associated equipment at its licensed facility pursuant to a written agreement between the slot machine licensee and the manufacturer licensee that provided the slot machines or associated equipment at the licensed facility.

   (d)  A slot machine licensee may perform routine maintenance directly related to the availability of slot machines for play, customer service or a clean and gracious playing environment. The routine maintenance includes installation or replacement of the following: batteries, hardware, including hinges, screws, bolts and custom handles, light bulbs, locks on slot machines and slot cash storage boxes, including the rekeying of the locks, printers, exclusive of printer software and paper stock. Routine maintenance also includes external cleaning and the clearing of paper, bill and coin jams which do not require removal or dismantling of the mechanisms.

CHAPTER 431. SUPPLIER LICENSES

§ 431.1. Supplier general requirements.

   (a)   A supplier seeking to sell, lease, offer or otherwise provide, distribute or service slot machines or associated equipment to a slot machine licensee within this Commonwealth shall apply to the Board for a supplier license.

   (b)   In accordance with sections 1317 and 1317.1 of the act (relating to supplier licenses; and manufacturer licenses), an applicant for or the holder of a supplier license or any of the applicant's or holder's affiliates, intermediaries, subsidiaries or holding companies, may not apply for or hold a slot machine license or a manufacturer license.

   (c)   Limitations may not be placed on the number of supplier licenses issued or when an application for a supplier license may be filed.

§ 431.2. Supplier license applications and standards.

   (a)  An applicant for a supplier license shall submit:

   (1)  An original and three copies of the Supplier Application and Disclosure Information Form for the applicant and each of the applicant's affiliated entities unless otherwise directed by the Board.

   (2)  A nonrefundable application fee.

   (3)  A diversity plan as set forth in section 1325(b) of the act (relating to license or permit issuance) and Chapter 481 (relating to general provisions).

   (4)  An application from every key employee and each natural person who is a principal as specified by the Supplier Application and Disclosure Information Form or as determined by the Board.

   (5)  If applicable, copies of filings required by the SEC during the 2 immediately preceding fiscal years, including all annual reports filed under section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.A. §§ 78m and 78o(d)), quarterly reports filed under section 13 or section 15(d) of the Securities Exchange Act of 1934, current reports filed under section 13 or section 15(d) of the Securities Exchange Act of 1934 and proxy statements issued by the applicant.

   (6)  An affirmation that neither the applicant nor any of its affiliates, subsidiaries, intermediaries and holding companies holds any direct or indirect ownership interest in any applicant for or holder of a manufacturer license or slot machine licensee, or employs, directly or indirectly, any person who satisfies the definition of a principal or key employee of a manufacturer or slot machine applicant or licensee. In applying this provision to an applicant for a supplier license, the Board will not include interests that are held by individuals in any of the following manners:

   (i)  In mutual funds when the value of the interest owned does not exceed 1% of the total fair market value of the manufacturer or slot machine applicant or licensee and provided that the mutual fund is not a nondiversified fund invested primarily in entities operating in, or connected with, the gaming industry.

   (ii)  Through defined benefit pension plans.

   (iii)  Through deferred compensation plans organized and operated under section 457 of the Internal Revenue Code of 1986 (26 U.S.C.A. § 457).

   (iv)  In blind trusts over which the holder may not exercise managerial control or receive income during the time period the holder is subject to these provisions.

   (v)  Through tuition account plans organized and operated under section 529 of the Internal Revenue Code (26 U.S.C.A. § 529).

   (vi)  Through plans described in section 401(k) of the Internal Revenue Code (26 U.S.C.A. § 401(k)).

   (vii)  An interest held by a spouse if an action seeking a divorce and dissolution of marital status has been initiated in any jurisdiction by either party to the marriage.

   (7)  A sworn or affirmed statement that the applicant has developed and implemented internal safeguards and policies to prevent a violation of section 1513 of the act (relating to political influence) and a copy the safeguards and policies.

   (b)   In addition to the materials required under subsection (a), an applicant for a supplier license shall:

   (1)  Promptly provide information requested by the Board relating to the supplier's 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 421 and 423 (relating to general provisions; and applications).

   (3)  Demonstrate that the applicant has or will establish a principal place of business in this Commonwealth.

   (c)  An applicant for a supplier license shall be required to reimburse the Board for additional costs, based on the actual expenses incurred by the Board, in conducting the background investigation.

   (d)  In determining whether an applicant is suitable to be licensed as a supplier under this section, the Board will consider the following:

   (1)  The financial fitness, good character, honesty, integrity and responsibility of the applicant.

   (2)  If the principals of the applicant individually qualify under the standards of section 1317 of the act (relating to supplier licenses).

   (3)  The integrity of financial backers.

   (4)  The suitability of the applicant and the principals and key employees of the applicant based on the satisfactory results of:

   (i)  A background investigation of the principals and key employees.

   (ii)  A current tax clearance review performed by the Department.

   (iii)  A current Unemployment Compensation Tax clearance review and a Workers Compensation Tax clearance review performed by the Department of Labor and Industry.

§ 431.2a. Supplier license term and renewal.

   (a)  A supplier license or renewal will be valid for 1 year from the date on which the license or renewal is approved by the Board.

   (b)  A renewal application and renewal fee shall be filed at least 2 months prior to the expiration of the current license.

   (c)  A supplier license for which a completed renewal application and fee has been received by the Board will continue in effect for an additional 6-month period or until acted upon by the Board, whichever occurs first.

§ 431.3. Responsibilities of a supplier.

   (a)  Within 1 year of the Board's issuance of a supplier license, the supplier shall establish and maintain a principal place of business in this Commonwealth.

   (b)  At the time of licensure, a supplier shall have assets or available lines of credit to support the sale, financing, servicing or repair of all slot machines to be placed in service or repaired by the supplier. The assets and available lines of credit shall be from a source independent of slot machine manufacturers and licensed gaming entities. Notwithstanding the forgoing, a licensed manufacturer may extend financing or payment terms to a licensed supplier, at prevailing market rates and terms, for the acquisition or leasing of slot machines, to be secured by the slot machines sold, leased or transferred.

   (c)  A supplier shall submit to the Board for review any agreements with a licensed manufacturer or with a slot machine licensee and detailed business plans. The Board's review may include, but not be limited to, financing arrangements, inventory requirements, warehouse requirements, warehouse space, technical competency, compensative agreements and other terms or conditions to ensure the financial independence of the licensed supplier from licensed manufacturer or licensed gaming entity.

   (d)  A holder of a supplier license shall have a continuing duty to:

   (1)  Provide information requested by the Board relating to licensing or regulation; cooperate with the Board in investigations, hearings and enforcement and disciplinary actions; and comply with the 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 supplier license ineligible, unqualified or unsuitable to hold a license under the standards and requirements of the act and of this part.

   (3)  Provide a copy of SEC filings listed in § 427.2(a)(5) (relating to manufacturer license applications and standards) that are filed after the date of issuance of its license. The copy shall be submitted no later than 30 days after the date of filing with the SEC.

   (e)  An employee of a licensed supplier whose duties of employment or incidental activities related to employment allow the employee access to slot machines or associated equipment or require the employee to be on the gaming floor or in a restricted area shall be required to obtain an occupation permit under § 435.4 (relating to occupation permit).

   (f)  A slot machine licensee may service or repair slot machines or associated equipment at its licensed facility pursuant to a written agreement between the licensed gaming entity and the supplier licensee that provided the slot machines or associated equipment for use or play at the licensed facility.

   (g)   A slot machine licensee may perform routine maintenance directly related to the availability of slot machines for play, customer service or a clean and gracious playing environment. The routine maintenance includes installation or replacement of the following: batteries, hardware, including hinges, screws, bolts and custom handles, light bulbs, locks on slot machines and slot cash storage boxes, including the rekeying of the locks, printers, exclusive of printer software and paper stock. Routine maintenance also includes external cleaning and the clearing of paper, bill and coin jams which do not require removal or dismantling of the mechanisms.

   (h)   A licensed manufacturer or a manufacturer's designee may supply, install, service or repair slot machines or associated equipment manufactured by the licensed manufacturer.

§ 431.4. Supplier log books.

   (a)  A supplier licensee shall maintain a log book to register all individuals who enter the licensee's principal place of business and each physical facility utilized by the licensee to house inventory, replacement parts, supplies, transportation or delivery equipment.

   (b)  The supplier licensee shall record or cause to be recorded the following in the log book:

   (1)  The date, entrance time and departure time of each individual.

   (2)  The name of each individual entering the place of business or physical facility and who they represent.

   (3)  The signature of each individual.

   (4)  The purpose for the visit.

   (5)  The individual's Board license, permit, certification or registration number, if applicable.

   (c)  Licensed, permitted or registered employees of a supplier are not required to register in the log book.

   (d)  Each log book required by this section shall be maintained at the entrance of the location to which it pertains and shall be made readily accessible for examination and inspection upon the demand of any agent, employee or representative of the Board, the Department of Revenue or the Pennsylvania State Police.

[Pa.B. Doc. No. 07-741. Filed for public inspection April 27, 2007, 9:00 a.m.]