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Changes coming to your small games of chance

July 30, 2012

OLIVER TOWNSHIP — If you have an organization that relies on your small games of chance license to raise funds, then be prepared for some major changes that occurred as the result of Act 2 of 2012 — changes that were revealed in a presentation last Wednesday by Pennsylvania Liquor Control Enforcement at the Oliver Township Firehall.

"The information being provided in this presentation is based upon our interpretation of the statute and like many new laws, is subject to interpretation and further clarification by the courts going forward," said Sgt. James A. Jones Jr., Punxsutawney-based Pennsylvania State Bureau of Liquor Control Enforcement.

Jones said Act 2 of 2012 was signed into law by Gov. Tom Corbett on Feb. 2, and it made sweeping changes to the Local Option Small Games of Chance Act.

Jones said the license holders may still play the same games that have been legal since 1998.

"If you hear something that is new to you, that does not mean it is new to the act," he said. "Ninety percent of the questions we (LCE) receive are: 'Now that we can't do this and now we have to do that.' My answer is that you've had to do that for the last 24 years, or you haven't been allowed to do that for the last 24 years."

He said when the LCE first began doing these seminars, there were people who were in attendance who would contact their state representatives or senators and ask them why the legislature made these changes, which have been enforced for 24 years.

"The changes in the act are in regard to the penalties," Jones said, adding that gambling is not defined specifically, and the LCE has to examine court cases in order to define what is legal and what is not.

In Act 2, there were no new games added, and nothing that was permitted previously was banned, he said.

"As far as record keeping and reports required, there are no new record keeping requirements in the act," Jones said, adding that all of the records that had to be kept before still must be maintained.

He said there are more records to keep throughout the year, so one can complete the report at the end of the year.

Jones asked those in attendance what activities constitute “gambling?”
Gambling is not specifically defined by statute in Pennsylvania, he said.

Jones said the Pennsylvania Crimes Code lists various gambling offenses, but nowhere does it define gambling.

He said Pennsylvania courts have determined that gambling consists of three basic elements: Consideration, chance, and reward.

"All three elements must be present to establish that an activity constitutes gambling, Jones said, adding that consideration is the first element.

"If I have to pay anything to get into the game or contest, it constitutes consideration," he said. "You have to have all three elements present for gambling to occur."

He said people who are less than honest will try to hide one or more element of gambling.

"When Texas Hold 'Em was really big, I had some bars in my district which covered nine counties, where some bars would try to be sneaky and offer a buffet," he said.

"If you purchased the buffet then you were permitted to participate in the Texas Hold ‘Em Tournament which constitutes consideration," Jones said, adding that if money is changing hands, that is consideration.
Jones said the second part of the gambling test is event outcome based wholly or predominantly on chance.

He said there's the dominant factor test where an individual has little to no effect over the outcome.

Some examples include the roll of dice or turn of card, Jones said, adding that the dominant factor test is if it's more than a 50-percent chance, it is a game of chance.

"That tells us that a game can have a significant component of skill and still be a game of chance," he said. "You can have 49.9 percent skill and still be a game of chance because the dominant factor is now changed."

He said that in a game of chance, the individual has little or no effect on the outcome of the game unless one is participating in the race or sporting event.

Jones said to be considered a skill, a person would have to be able to master the game, such as darts or billiards.

"Playing poker may involve some skill or knowledge; however, the cards are still dealt randomly," Jones said, adding that currently, the only forms of gambling authorized by statute in Pennsylvania are: Activities conducted pursuant to the Race Horse industry Reform Act, Pennsylvania Lottery, Bingo conducted pursuant to the Bingo Law, gambling activities conducted pursuant to the Local Option Small Games of Chance Act and gambling activities conducted pursuant to the Pennsylvania Race Horse Development and Gaming Act (slots).

He said Pa. Superior Court Decision Commonwealth vs. Betres (1975) determined unlawful gambling is any gambling that has not been authorized by the Legislature.

Jones said common unlawful gambling activities include, Texas Hold ‘Em tournaments, "Night at the Races", 50/50 Drawings, casino nights, pools — football, basketball and NASCAR.“

Other unlawful gambling activities include vertical wheel or chuck-a-luck wheels, video gambling devices and video poker or slots, Jones said, adding that none of these activities are authorized by the small games of chance license.

Jones outlined the changes from Act 2 of 2012:

• Club — An organization that is licensed to sell liquor under section 404 of the liquor code (Hotels, Restaurants & Clubs), and qualifies as an exempt organization under section 501(c) or 527 of the IRS code.

• Club Licensee — A club that holds a license to conduct small games of chance.

• Regular License — Issued to eligible organizations which own their own premise or lease a specific location to conduct normal business. Permits holders to operate SGOC during entire licensing year.

• Limited Occasion License – issued to eligible organizations which do not own their own premises or which do not lease a specific location to conduct their normal business – no more than three occasions covering a total of seven days a year and no more than two raffles during a licensed year, where prizes may not exceed the established limits for regular monthly raffles.

APPLICATION
• Specifies address where games of chance are to be conducted; includes an affidavit relating to who will operate games and where they will be operated; specifies operating day and week.

• Lists responsible persons and lists auxiliary groups.

• Auxiliary groups are not eligible to obtain a license or limited occasion license.

They are eligible to conduct S.G.O.C using the license issued to the eligible organization, provided that the auxiliary group is listed on the license and the application.

• Effective March 3, each application for a license must include the results of a criminal history check from the Pennsylvania State Police for the executive officer and secretary of the eligible organization making the application. The results shall be no more than 60 days old.

• Effective Feb. 1, 2013, each application for a club license must include the most recent report filed with the department.

• PSP Background Check — The applicant may apply through E-Patch, Pennsylvania Access To Criminal History, https://epatch.state.pa.us.
Results may take up to two or three weeks.

Results may be delayed if an individual with the same or similar name has a criminal history.

• Each application must also be accompanied by: If incorporated, a copy of the applicant’s articles of incorporation. If not incorporated, a copy of bylaws or other legal documents that define the organization’s structure and purposes.

• Documentation indicating the organization has been fulfilling its purpose for one year prior to applying for a license is required.
• A copy of the applicant’s Internal Revenue Service tax exemption approval letter or official documentation indicating the applicant is a nonprofit charitable organization.

• Details and copies of all written lease or rental arrangements between the applicant and the owner of premises upon which the games of chance will be conducted, if such premises are leased or rented. If premises are owned, provide a copy of the deed.

NEW APPLICATION
• Changes must be reported to the issuing authority within 15 days.
• Information on file with the issuing authority must be accurate.

PERMITTED GAMES
• The Act is very specific as to the games of chance that are permitted. They are: Punchboards; pull-tabs; raffles (including lotteries); daily drawings; weekly drawings.

• Only licensed eligible organizations or auxiliary group managers, officers, directors, bar personnel or bona fide members of the licensed eligible organization may conduct games of chance.

• A person may not be compensated for conducting games of chance.

Example: Seller of a winning ticket wins a prize or a prize is provided to the top ticket seller.

• No person under the age of 18 may operate or participate in S.G.O.C.

• A person visibly intoxicated may not purchase or sell a punchboard or pull-tab chance.

• An officer or employee of a club licensee who operates a game of chance shall not participate in the game. This does not apply to a raffle.

• What is meant by the phrase, “operates a game of chance?” As the wording, “the game of chance" and not “games of chance” is used in the subsection, it does not mean a blanket prohibition for officers and employees of club licensees. The prohibition would apply only to those particular games in which they participated in the operation.

• No person who has been convicted of a Felony within the last five years or of a violation of the S.G.O.C. Act or Bingo Act within the past 10 years may: Manage, set-up, supervise, or participate in the operation of S.G.O.C.

• The proceeds from the operation of small games of chance may be used for only three purposes: Purchase of small games of chance; public interest purposes and certain operating expenses of certain eligible organizations.

Jones said for more information, check the LCE website at www.ice.state.pa.us.

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