PENNSYLVANIA GAMING CONTROL BOARD [58 PA. CODE CH. 431] Temporary Regulations; Supplier Licenses [36 Pa.B. 3948]
[Saturday, July 22, 2006]The Pennsylvania Gaming Control Board (Board), under 4 Pa.C.S. § 1203(a) (relating to temporary regulations), adopts temporary regulations to facilitate implementation of 4 Pa.C.S. Part II (relating to gaming), enacted by the act of July 5, 2004 (P. L. 572, No. 71) (Act 71). The Board's temporary regulations will be added to Part VII (relating to Gaming Control Board). Chapter 431, entitled supplier licenses, is added to Subpart B, entitled Licensing, Registering, Certifying and Permitting.
Purpose and Background
Under 4 Pa.C.S. § 1203(a), the Board is authorized to promulgate temporary regulations to facilitate the prompt implementation of Act 71. The regulations are necessary to enhance the credibility of the licensed operation of slot machines and associated equipment within this Commonwealth and to carry out the policy and purposes of the Board. To promulgate the temporary regulations in accordance with customary rulemaking procedure, the Board published draft regulations at 35 Pa.B. 2569 (April 23, 2005). A 30-day public comment period was provided.
Under 4 Pa.C.S. § 1203, the temporary regulations adopted by the Board expire no later than 3 years following the effective date of Act 71 or upon promulgation of regulations as generally provided by the law. These temporary regulations shall not be subject to sections 201--205 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201--1208), known as the Commonwealth Documents Law (CDL), or to the Regulatory Review Act (71 P. S. §§ 745.1--745.15).
Financial Impact
Act 71 and the regulations will provide for the implementation and management of gaming within this Commonwealth and the collection of fees and taxes from entities and individuals authorized by the Board to be employed by, provide gaming related services to or operate gaming facilities. The appropriations from the Commonwealth for the implementation of Act 71 and costs of administering 4 Pa.C.S. Part II will be reimbursed by the licensed entities as specified within Act 71. Individuals and entities that wish to obtain licenses as gaming entities shall pay to the Gaming Fund significant licensing fees to obtain the authority to do business within this Commonwealth. Part of these fees shall reimburse the Board and the Pennsylvania State Police for licensing processes and background investigations. The licensing, registration, certification and permitting of individuals and other classes of applicants will be reimbursed by the applicants through fees established by the Board. It is anticipated that all expenses of the Board and all associated activities shall be reimbursed by the applicants and gaming entities as previously specified. The Board shall have no financial impact on the State budget.
Statutory Authority
The Board is authorized under 4 Pa.C.S. § 1203(a) to adopt and publish temporary regulations to implement the policies and purposes of Act 71.
Regulatory Review
Under 4 Pa.C.S. § 1203(b), the Board's authority to adopt temporary regulations expires 2 years from the effective date of Act 71.
Findings
The Board finds that:
(1) Under 4 Pa.C.S. § 1203(a), the temporary regulations are exempt from the requirements of the Regulatory Review Act and sections 201--205 of the CDL.
(2) A 30-day public comment period was held prior to the adoption of the temporary regulations.
(3) The adoption of the temporary regulations provided by this order is necessary and appropriate for the administration of the authorizing statute.
Order
The Board, acting under the authorizing statute, orders that:
(a) The Board, acting under the authority of Act 71, adopts as its final-form temporary regulations, the draft regulations as adopted by resolution at the June 28, 2006, public meeting. The temporary regulations pertain to supplier licenses.
(b) The temporary regulations of the Board, 58 Pa. Code, are amended by adding §§ 431.1--431.4 to read as set forth in Annex A.
(c) The temporary regulations are effective June 28, 2006.
(d) The temporary regulations shall be posted in their entirety on the Board's website and published in the Pennsylvania Bulletin.
(e) The temporary regulations shall be subject to amendment as deemed necessary by the Board in accordance with the purpose of Act 71 and to further the intent of Act 71.
(f) The Chairperson of the Board shall certify this order and deposit the regulations with the Legislative Reference Bureau as required by law.
THOMAS A. DECKER,
ChairpersonFiscal Note: 125-43. No fiscal impact; (8) recommends adoption.
Annex A TITLE 58. RECREATION PART VII. GAMING CONTROL BOARD Subpart B. LICENSING, REGISTERING, CERTIFYING AND PERMITTING CHAPTER 431. SUPPLIER LICENSES Sec.
431.1. Supplier license requirements. 431.2. Supplier licensing standards and application. 431.3. Supplier requirements and prohibitions. 431.4. Supplier log books. § 431.1. Supplier license requirements.
(a) In determining whether an applicant will be licensed as a supplier under this section, the Board will consider whether the applicant satisfies the criteria in this section and whether the applicant is seeking to sell, lease, offer or otherwise provide, distribute or service slot machines or associated equipment at a licensed gaming facility which meet one or more of the following criteria:
(1) Are specifically designed for use in the operation of a slot machine.
(2) Are needed to conduct an authorized game.
(3) Have the capacity to affect the outcome of the play of a game.
(4) Have the capacity to affect the calculation, storage, collection or control of gross terminal revenue.
(b) An applicant for or holder of a supplier license shall have a continuing duty to promptly:
(1) Notify the Board of a material change in the information, materials and documents submitted in the license application or renewal application submitted by the applicant or licensee or a change in circumstances that may render the applicant or licensee ineligible, unqualified or unsuitable to hold the license under the licensing standards and requirements of the act.
(2) Provide information requested in writing by the Board relating to 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.
(c) In accordance with section 1317 of the act (relating to supplier and manufacturer licenses application), neither an applicant for or the holder of a manufacturer license or slot machine license nor any of the applicant's or holder's affiliates, intermediaries, subsidiaries or holding companies, is eligible to apply for or hold a supplier license.
(d) Computerized casino management systems, player tracking systems, including slot machine interface boards, card readers and displays, wide-area progressive systems and slot monitoring systems, including gaming voucher systems, bonusing systems and electronic transfer promotional credit systems are not required to be provided through a licensed supplier. Manufacturers or suppliers providing these systems to slot machine licensees may only employ individuals with occupation permits issued under § 435.4 (relating to occupation permits) to service and repair such excluded systems.
§ 431.2. Supplier licensing standards and application.
(a) The standards and requirements for qualification for a supplier license are set forth in this section and in section 1317 of the act (relating to supplier and manufacturer licenses application). An applicant shall submit:
(1) A nonrefundable application processing fee.
(2) An original and three copies of the Supplier Application and Disclosure Information Form for the applicant and each of the applicant's affiliated entities.
(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 each natural person who is a key employee qualifier as specified by the Supplier Application and Disclosure Information Form or as determined by the Board, which must consist of the following:
(i) An original and three copies of the Multi Jurisdictional Personal History Disclosure Information Form and Pennsylvania Supplement with a nonrefundable deposit to be set by the Board and provided in a fee schedule for each key employee and key employee qualifier.
(ii) The applicant may be subject to additional fees based on the actual expenses incurred by the Board in conducting the background investigation.
(5) If applicable, copies of all filings required by the United States Securities and Exchange Commission 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. §§ 78a 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) Properly executed forms for consents to inspections, searches and seizures; waivers of liability for disclosures of information; and consents to examination of accounts and records in forms as prescribed by the Board.
(7) An affirmation that neither it 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 key employee qualifier 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 any managerial control or receive income during the time period the holder is subject to these provisions.
(v) Through tuition account plans organized and operated under section 529 of the Internal Revenue Code (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.
(8) A statement as to whether the supplier is a certified minority- or women-owned and controlled and the supplier's enterprise certification number, if any, as required by § 481.3 (relating to diversity participation).
(9) Other information or documentation as may be requested in writing by the Board.
(b) Each application for a supplier license must include the production of copies of financial books, records, information, documentation and assurances to satisfy the Board of the following:
(1) The financial fitness, good character, honesty, integrity and responsibility of the applicant.
(2) That all key employee qualifiers individually qualify under the standards of section 1317 of the act.
(3) The integrity of all financial backers.
(4) The suitability of the applicant and all key employee qualifiers of the applicant based on the satisfactory results of:
(i) A background investigation of all owners, officers, members of the board of directors and key employees or their equivalent in other jurisdictions.
(ii) A current tax clearance and lien 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.
(c) 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).
§ 431.3. Supplier requirements and prohibitions.
(a) Supplier licensees shall be the sole and exclusive authorized sources of slot machines or associated equipment, as provided in section 1317 of the act (relating to supplier and manufacturer licenses application), that are sold, leased, offered, installed or otherwise provided for use or play, distributed, serviced or repaired at licensed facilities.
(b) Nothing in this section prohibits a licensed gaming entity from servicing or repairing 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.
(c) Nothing in this section prohibits a licensed gaming entity from performing routine maintenance directly related to the availability of slot machines for play, customer service or a clean and gracious playing environment. The routine maintenance must include 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.
(d) Nothing in this section prohibits a licensed manufacturer from installing, servicing or repairing slot machines or associated equipment at a designated licensed facility pursuant to a written agreement between the manufacturer licensee and the supplier licensee that provided the slot machines or associated equipment for use or play at the designated licensed facility.
(e) Every supplier licensee shall be subject to the following requirements:
(1) Within 1 year of the Board's issuance of the supplier license, a supplier shall establish and maintain a principal place of business in this Commonwealth.
(2) Under section 1306 of the act (relating to order of initial license issuance), the Board will license a sufficient number of suppliers to adequately meet the installation, service and repair needs of the licensed facilities.
(3) Nothing in this part requires that a manufacturer and a supplier enter into either an exclusive or nonexclusive contractual agreement.
(4) A supplier may only employ permitted technicians that have been trained and issued a certification according to procedures or policies established by licensed manufacturers whose equipment that supplier will service, install or repair.
(5) A supplier shall maintain at all times equipment and a physical facility in this Commonwealth approved by the Board adequate to house necessary inventory of replacement parts and supplies for slot machine operation and support, equipment necessary for transporting and delivering inventory, and equipment for the servicing, repairing and installing of all slot machines and associated equipment.
(6) At the time of licensure, a supplier shall have assets or available lines of credit to support the sale, financing, servicing and repair of all slot machines to be placed in service 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.
(7) A supplier shall submit to the Board for review any agreements with a licensed manufacturer or with a licensed gaming entity 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 any licensed manufacturer or licensed gaming entity.
(8) Nothing in this chapter shall be construed as creating a franchise for the purposes of any franchise statutes, rules or regulations.
§ 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 in the log book the following:
(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) If applicable, the individual's Board license number.
(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. 06-1314. Filed for public inspection July 21, 2006, 9:00 a.m.]
