Gaming law

Complying With Small Games of Chance Act Is No Small Task

, Special to the Legal, The Legal Intelligencer

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games of chance

Like it or not, gambling and alcohol go hand in hand. Only now Pennsylvanians will not have to travel to a casino to get their fill of both.

Within a few months, two of the Keystone state's greatest revenue sources—gambling and alcohol—are set to become even closer bedfellows thanks to Act 90 of 2013, or the Local Option Small Games of Chance Act.

After it narrowly passed through the state House of Representatives 102-96 and breezed through the Senate 34-15, Gov. Tom Corbett signed Act 90 into law Nov. 27, 2013, to allow bars and restaurants to offer pull-tab games, 50/50 raffles and other small games of chance. The legislation went into effect Jan. 27, when applications for the new gaming licenses became available to the public. However, since the Pennsylvania Liquor Control Board has up to six months to act on license applications, patrons might have to wait until the summer to start gambling in their favorite bars.

Act 90 is notable because it represents Pennsylvania's biggest gambling expansion since the legalization of casino table games in 2009. Additionally, this legislation takes games traditionally reserved for veterans' posts, fire halls and other fraternal organizations and spreads them to thousands of bars, taverns and restaurants.

The games now available to tavern gaming license holders under Act 90 include pull-tab and tip-board games with a maximum prize of $2,000, daily drawings much like the nightly lottery and raffles with at least 50 percent of the proceeds going to charity. Noticeably absent from this list are the ever-popular video poker machines.

Those eligible to apply for a tavern gaming license must hold an active restaurant liquor license, hotel liquor license, brewery pub license or a privately owned public golf course liquor license. Licenses are not available for grocery stores, casinos or caterers. Yet holders of liquor licenses that are in safe keeping or have been declared nuisances under Section 611 of the Liquor Code cannot obtain a tavern gaming license.

Most remarkable, though, is the enormous burden this legislation places on bar owners in terms of the application, taxation and record-keeping processes without accounting for ways to ensure proper financial compliance and the prevention of problem gambling.

The first likely obstacle for many bar owners is the cost and time necessary to apply for a tavern gaming license. Applicants must pay a nonrefundable $2,000 filing fee to the PLCB, which includes $1,000 to the Pennsylvania Gaming Control Board for an FBI background investigation. If the application is approved, applicants must then pay an additional $2,000 fee to the state's general fund to obtain the actual license. The state tacks on another $1,000 annual renewal fee per license. Unlike a liquor license, a tavern gaming license is nontransferable and no security interest may be placed on it.

In addition to the primary tavern application, every individual who owns 10 percent or more of the establishment, or serves as a manager or officer of the bar, must fill out an individual application form and disclose full financial, tax and criminal history. The PGCB will also review all unemployment compensation, workers' compensation and liquor license regulatory histories for each establishment.

Therefore, it is imperative before any bar applies for a tavern gaming license that it does its own homework on all of its owners and managers to make sure everything is in line before the FBI and the PGCB start investigating. An otherwise eligible application could be denied because of a minority owner's checkered financial or criminal past.

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