Bill Text: PA SB863 | 2009-2010 | Regular Session | Introduced

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Bill Title: Providing for gaming integrity; and imposing penalties.

Spectrum: Slight Partisan Bill (Democrat 8-4)

Status: (Introduced - Dead) 2009-05-11 - Referred to COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT [SB863 Detail]

Download: Pennsylvania-2009-SB863-Introduced.html

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PRINTER'S NO. 1028
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 863 Session of2009
INTRODUCED BY COSTA, RAFFERTY, GREENLEAF, TARTAGLIONE, FONTANA, PIPPY AND FARNESE, MAY 11, 2009
REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT, MAY 11, 2009
AN ACT
Providing for gaming integrity; and imposing penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Gaming
Integrity Act.
Section 2. Legislative intent.
The General Assembly finds and declares as follows:
(1) With the enactment of 4 Pa.C.S. Pt. II (relating to
gaming), the General Assembly legalized slot machine gaming
in the Commonwealth of Pennsylvania to inure to the benefit
of the Commonwealth's taxpayers.
(2) The enactment of legalized gaming was intended to
enhance the Commonwealth's horse racing industry while
providing a significant source of new revenue to support
property tax relief, wage tax reduction, economic development
opportunities and other similar initiatives.
(3) 4 Pa.C.S. Pt. II was designed to protect the public
from the social ills historically related to the gaming
industry and to ensure that the Commonwealth's gaming
industry operates at the highest levels of integrity and is
beyond reproach. As such, the conduct of legalized gaming was
to be subject to strict regulation and oversight with the
protection of the public interest to be of paramount concern.
(4) Recognizing the dangers historically associated with
gaming and the issues other jurisdictions faced with respect
to public corruption, or the appearance of public corruption,
when legalizing gaming, the General Assembly declared it to
be the public policy of the Commonwealth and in the best
interests of the Commonwealth's citizens to avoid corruption,
or the appearance of corruption, by prohibiting certain
individuals and entities associated with the gaming industry
from making political contributions.
(5) Recently, in DePaul v. Commonwealth, ____ Pa. ____,
____A.2d ____ (No. 194 EM 2007, decided May 1, 2009), the
Pennsylvania Supreme Court declared that the total ban on
campaign contributions contained in 4 Pa.C.S. Pt. II
unconstitutional under Article I, section 7 of the
Pennsylvania Constitution. In so doing, the court held that
the provisions of 4 Pa.C.S. Pt. II did not meet a "strict
scrutiny" analysis under Article I, section 7 of the
Pennsylvania Constitution as the provisions were not
"narrowly tailored to further a compelling government
interest" because the stated intent in 4 Pa.C.S. Pt. II was
to address only "large" campaign contributions.
(6) With the passage of this act, it is the intention of
the General Assembly to address DePaul v. Commonwealth and
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enact a complete ban on political contributions by
individuals and entities subject to this act and 4 Pa.C.S.
Pt. II. In carrying out this intent, the General Assembly
finds and declares as follows:
(i) The General Assembly has a compelling interest
in protecting the integrity of both the electoral process
and the legislative process by preventing corruption and
the appearance of corruption which may arise through
permitting campaign contributions by the gaming industry.
(ii) Historical evidence from other states that have
legalized gaming shows that the potential for corruption
associated with the gaming industry is real.
(iii) Completely banning political contributions by
those individuals and entities subject to this act and 4
Pa.C.S. Pt. II is necessary to prevent corruption, or the
appearance of corruption, that may arise when politics
and gaming are intermingled.
(iv) Decoupling politics and gaming through a total
ban of campaign contributions is the only manner in which
to guarantee that the Commonwealth's gaming industry, and
those who regulate it, are beyond reproach.
(v) This act is narrowly tailored to further the
Commonwealth's compelling interest. The ban contained in
this act is not applicable to all individuals associated
with gaming, rather it is specifically targeted to those
who have substantial interests in, or responsibilities
with, licensed gaming entities.
(vi) This act is narrowly tailored to further the
compelling interest because it leaves numerous avenues
through which individuals can participate in the
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political process. This act does not prohibit individuals
from engaging in any type of "pure speech" that may take
the form of a political contribution. Individuals can
still express their political opinions to any who will
listen, can still announce their support for specific
candidates or political parties, can still express their
political opinions by voting and can still join political
parties or groups and volunteer their services to those
parties or groups.
(vii) The campaign contribution prohibition presents
only a very marginal restriction of an individual's right
to free speech and association and involves little direct
restraint on an individual's right to engage in political
communication or association.
(viii) Although other less restrictive means, such
as limiting the amount of campaign contributions or
limiting the scope of the ban, may exist to further the
Commonwealth's goal of preventing corruption, or the
appearance of corruption, the General Assembly deems
those alternatives inadequate. Campaign contribution
limits do not further the General Assembly's stated
interest. Allowing small contributions would permit the
individuals subject to the provisions under this act or 4
Pa.C.S. Pt. II to circumvent the legislative intent by
financing a large number of small contributions. In this
sense, the ban enacted in this act is analogous to the
ban on corporate contributions or contributions by labor
unions. Acting in concert, these individuals could make
numerous small contributions and, as a group, inject
exorbitant sums of money into the political process,
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thereby raising the appearance of undue influence and
corruption. Additionally, limiting the scope of the ban
to those public officials or candidates with a connection
to legalized gaming also fail to further the General
Assembly's stated interest. Predicting what office
holders at what levels exert influence in areas related
to gaming, whether it be through their elected positions,
their individual involvement with political parties or
their personal relationships with legislators in general,
is impossible. Political pressure is often subtle and
comes in many forms. Consequently, deciding which public
officials are influential and which ones are not is
impracticable and not a valid alternative to a total
contribution ban.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicant."
(1) An applicant for the following, as defined in 4
Pa.C.S. § 1103 (relating to definitions):
(i) Slot machine license.
(ii) Manufacturer license.
(iii) Supplier license.
(iv) Principal license.
(v) Key employee license.
(vi) Registration.
(2) An applicant for a horse racing or harness racing
license issued under the act of December 17, 1981 (P.L.435,
No.135), known as the Race Horse Industry Reform Act.
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(3) The term includes affiliates, intermediaries,
subsidiaries or holding companies of an applicant under
paragraphs (1) and (2).
"Key employee." As defined in 4 Pa.C.S. § 1103 (relating to
definitions).
"Licensed racing entity." As defined in 4 Pa.C.S. § 1103
(relating to definitions).
"Licensee."
(1) The holder of the following, as defined in 4 Pa.C.S.
§ 1103 (relating to definitions):
(i) Slot machine license.
(ii) Manufacturer license.
(iii) Supplier license.
(iv) Registration.
(2) The term includes affiliates, intermediaries,
subsidiaries or holding companies of holders of licenses or
registrations under paragraph (1).
"Political committee." Any committee, club, association or
other group of persons which receives contributions or makes
expenditures. The term includes a political committee as defined
in section 1621(h) of the act of June 3, 1937 (P.L.1333,
No.320), known as the Pennsylvania Election Code.
"Political contribution." Any monetary or in-kind
contribution. The term includes:
(1) A payment, gift, subscription, assessment, contract,
payment for services, dues, loan, forbearance, advance or
deposit of money or any valuable thing made to a candidate or
political committee for the purpose of influencing any
election in this Commonwealth or for paying debts incurred by
or for a candidate or committee before or after any election.
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(2) The purchase of tickets for events, including
dinners, luncheons, rallies and other fundraising events.
(3) The granting of discounts or rebates not available
to the general public.
(4) The granting of discounts or rebates by television
and radio stations and newspapers not extended on an equal
basis to all candidates for the same office.
(5) Payments provided for the benefit of any candidate,
including payments for the services of a person serving as an
agent of a candidate or committee by a person other than the
candidate or committee or person whose expenditures the
candidate or committee must report.
(6) A receipt or use of anything of value received by a
political committee from another political committee and also
includes any return on investments by a political committee.
"Principal." As defined in 4 Pa.C.S. § 1103 (relating to
definitions).
"Registrant." Any person registered by the Pennsylvania
Gaming Control Board under 4 Pa.C.S. Pt. II (relating to
gaming).
Section 4. Political contributions.
(a) Political contribution restriction.--The following
persons shall be prohibited from making a political contribution
to a candidate for nomination or election to any public office
in this Commonwealth, or to any political party committee or
other political committee in this Commonwealth or to any group,
committee or association organized in support of a candidate,
political party committee or other political committee in this
Commonwealth:
(1) An applicant.
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(2) A licensee, licensed racing entity or registrant.
(3) A licensed principal or licensed key employee of a
licensee, licensed racing entity or registrant.
(4) An affiliate, intermediary, subsidiary or holding
company of a licensee, licensed racing entity or registrant.
(5) A licensed principal or licensed key employee of an
affiliate, intermediary, subsidiary or holding company of a
licensee, licensed racing entity or registrant.
(6) A person who holds a similar gaming license in
another jurisdiction and the affiliates, intermediaries,
subsidiaries, holding companies, principals or key employees
of those entities.
(b) Political contributions to certain associations and
organizations barred.--The persons prohibited from making
political contributions under subsection (a) shall not make a
political contribution to any association or organization,
including a nonprofit organization, if the political
contribution has been solicited by an elected official,
executive-level public employee or candidate for nomination or
election to a public office in this Commonwealth or the
individual knows or has reason to know that the association or
organization will donate the contribution or a portion thereof
to an elected official, a candidate for nomination or election
to public office in this Commonwealth or to a political
committee.
(c) Internet website.--
(1) The board shall establish an Internet website that
includes a list of all applicants and licensees and the
affiliates, intermediaries, subsidiaries, holding companies,
principals and key employees thereof, all persons holding a
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similar gaming license in another jurisdiction and the
affiliates, intermediaries, subsidiaries, holding companies,
principals and key employees thereof and any other entity in
which the applicant or licensee has any debt or equity
security or other ownership or profits interest. An applicant
or licensee shall notify the board within seven days of the
discovery of any change in or addition to the information.
The list shall be published semiannually in the Pennsylvania
Bulletin.
(2) An individual who acts in good faith and in reliance
on the information on the Internet website shall not be
subject to any penalties or liability imposed for a violation
of this section.
(3) The board shall request the information required
under paragraph (1) from persons licensed in another
jurisdiction who do not hold a license in this Commonwealth
and from regulatory agencies in the other jurisdiction. If a
licensee in another jurisdiction refuses to provide the
information required under paragraph (1), the person and its
officers, directors or persons with a controlling interest
shall be ineligible to receive any license under this act.
(d) Certifications.--
(1) Upon submission of an application and prior to the
award of a license or registration by the board, the chief
executive officer, or other appropriate individual, of each
applicant shall certify under oath to the board and the
Department of State that the applicant has developed and
implemented internal safeguards and policies intended to
prevent a violation of this provision and that the applicant
has conducted a good faith investigation that has not
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revealed any violation of this provision since the date the
application was filed. If the applicant is an individual, the
applicant shall submit an affidavit to the board and the
Department of State that the applicant has not violated the
provisions of this section since the date the application was
filed.
(2) No later than February 1 of each year, the chief
executive officer, or other appropriate individual, of each
licensee shall certify under oath to the board and the
Department of State that the licensee has developed and
implemented internal safeguards and policies intended to
prevent a violation of this provision and that the licensee
has conducted a good faith investigation that has not
revealed any violation of this subsection during the prior
calendar year.
(e) Civil penalties.--The following civil penalties shall
apply to a violation of this section:
(1) For a violation committed by a person prohibited
from making a contribution under subsection (a)(1), the board
shall impose a fine equal to three times the amount of the
contribution made or $100,000, whichever is greater. A
violation of this section by an applicant shall constitute
grounds for denial of the application.
(2) For a violation of this section committed by a
person prohibited from making a contribution under subsection
(a)(2) or (4), the following shall apply:
(i) For a slot machine licensee, the board shall
impose a fine of not less than an average single day's
gross terminal revenue of the slot machine licensee
derived from the operation of slot machines in this
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Commonwealth. For a second violation of this section
within five years of the first violation, the board shall
impose a fine of not less than an average of five days'
gross terminal revenue of the slot machine licensee
derived from the operation of slot machines in this
Commonwealth. For a third violation of this section
within five years of the second violation, the board
shall immediately revoke the license held by the slot
machine licensee. A fine levied under this subparagraph
may not be less than $100,000.
(ii) For a manufacturer or supplier licensee, the
board shall impose a fine of not less than one day's
average of the gross profit from sales made by the
manufacturer or supplier in Pennsylvania during the
preceding 12-month period or portion thereof in the event
the manufacturer or supplier has not operated in
Pennsylvania for 12 months. A second violation of this
section within five years of the first violation shall be
punishable by a one-month suspension of the license held
by the manufacturer or supplier and a fine of not less
than two times one day's average of the gross profit from
sales made by the manufacturer or supplier in
Pennsylvania during the preceding 12-month period or
portion thereof in the event the manufacturer or supplier
has not operated in Pennsylvania for 12 months. For a
third violation of this section within five years of the
second violation, the board shall immediately revoke the
license. A fine levied under this subparagraph may not be
less than $100,000.
(iii) For a licensed racing entity or registrant,
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the board shall impose a fine equal to three times the
amount of the contribution made or $100,000, whichever is
greater. For a second violation of this section within
five years of the first violation, the board or the
commission shall impose a one-month suspension of the
registration or horse or harness racing license held by
the licensed racing entity. For a third violation of this
section within five years of the second violation, the
board or the commission shall immediately revoke the
registration or the horse or harness license held by the
licensed racing entity.
(3) For a violation committed by a person prohibited
from making a contribution under subsection (a)(3) or (5),
the board shall impose a fine equal to three times the amount
of the contribution made. The board shall also impose a fine
under paragraph (2) against the licensee, licensed racing
entity or registrant with which the person is associated. For
a second violation of this section, the board shall impose
the fines authorized under this subparagraph and shall
suspend the principal or key employee's license for a period
of 30 days. For a third violation of this section, the board
shall impose the fines authorized under this subparagraph and
shall revoke the principal or key employee's license.
(4) For a violation committed by a person prohibited
from making a contribution under subsection (a)(6), the board
shall impose a fine equal to three times the amount of the
contribution made. A person fined under this paragraph shall
be prohibited from applying for a license, permit or
registration under this part for a period of six months from
the date the board imposes the fine. For a second violation
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of this section, the board shall impose the fine authorized
under this paragraph and shall prohibit the person from
applying for a license, permit or registration under this
part for a period of one year from the date the board imposes
the fine. For a third violation of this section, the board
shall impose the fines authorized under this paragraph and
shall prohibit the person from applying for a license, permit
or registration under this part for a period of five years
from the date the board imposes the fine.
(5) Any candidate for nomination or election to any
public office in this Commonwealth, any political party
committee or other political committee in this Commonwealth,
or any group, committee or association organized in support
of a candidate, political party committee or other political
committee in this Commonwealth that accepts a contribution
prohibited under this section commits a violation of this
section. The Department of State shall have jurisdiction over
violations of this section committed by those persons or
entities identified in this paragraph. In addition to any
other penalty authorized by law, the Department of State
shall require the return of the contribution and shall impose
a fine equal to three times the amount of the contribution
accepted. An individual who acts in good faith and in
reliance on the information on the Internet website under
subsection (c)(2) shall not be subject to any penalties or
liability imposed for a violation of this section.
(f) Criminal penalties.--In addition to any fine or sanction
that may be imposed by the board, any person who makes a
contribution in violation of this act commits a misdemeanor of
the third degree.
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Section 20. Effective date.
This act shall take effect in 60 days.
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