Late Wednesday afternoon the Pennsylvania House votes in favor of HB1098 (102 Yeah – 96 Nay), a bill that would allow certain for-profit restaurants to conduct "Tavern Gaming."
The bill amends the Local Option Small Games of Chance Act to include a section entitled "Tavern Gaming." Under the amended Act, a "tavern game" would be defined as a pull-tab game, a daily drawing or a tavern raffle. Tavern games may only be conducted in municipalities that have adopted a referendum allowing small games of chance. Under the Act, a for-profit restaurant licensee approved by the Liquor Control Board could apply for a license to conduct tavern gaming on its licensed premises (grocery stores and premises where the sale of liquid fuels or oil is conducted are excluded from the definition of a restaurant licensee).
Additionally, the bill would allow 50-50 drawings to be conducted by a non-profit affiliate of a major league sports team (NFL, MLB, NHL, or MLS), one of their minor league affiliates or a racing facility.
The bill was previously passed in the Senate on October 23rd. Because of certain amendments in the House version, the bill now goes back to the Senate.
There were to key changes made by the House. The House-amended version revises the revenue distribution breakdown between the Commonwealth and the operator. Under the revised House version, the Commonwealth will receive a Tavern Game Tax of 60% of the net revenue from tavern games (this percentage is unchanged from the previously passed Senate version) and the licensee will retain 35% of the net revenue (previously 40% under the Senate version). The House-version added a 5% Host Municipality Tavern Games Tax which is paid to the Commonwealth and deposited in a "Restricted Receipts Account" to be distributed to the host community of the licensee.
Another important revision under the House version of the bill is a revision relates to club licensees. Club licensees were previously the only version of small games of chance offered in the Commonwealth. Club licensees cannot profit from the games of chance offerings. Previously, club licensees had to distribute 70% of the proceeds for use for a "public interest purpose." Under the House-amended version, only 60% of the proceeds must be distributed for a "public interest purpose" use and 40% may be retained by the club licensee for certain operational expenses including – e.g. real property taxes, mortgage and insurance payments; utility costs; new construction costs; and certain entertainment equipment. It is believed this reduction in required proceeds to public interest purposes was an attempt to satisfy such club groups, specifically veterans groups, as reported publicly here.
The House Committee on Appropriations Fiscal Note on the bill anticipates additional $156 million in revenue for the Commonwealth.
Stay tuned for updates on the bill.
This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.
Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.
