Various Proposals In Development To Address Small Games Conflict

Shippensburg News Chronicle

State Rep. Rob Kauffman is on board with amendments in the works to change Pennsylvania’s 2012 Act 2 that regulates the use and operation of small games of chance by clubs and organizations like veterans organizations, private clubs and volunteer fire companies.

Kauffman says he is a co-sponsor of legislation being prepared by state Reps. Peter Daley (D-49) and Michele Brooks (R-17). Additionally, Kauffman says he is seeking support for his own bill that will focus more narrowly on what he has determined to be the major concerns of his constituency.

Kauffman spokesman Jordan Conner said last week that Kauffman’s proposed house bill addresses how profits from small game of chance are used.

Present law requires clubs to distribute 70 percent of gambling proceeds to “public good” organizations and allows the clubs to keep 30 percent of the proceeds — none of which can be used for items like food, alcohol or wages.

Kauffman’s proposed amendment shifts the distribution schedule, giving 60 per cent to the clubs and preserving 40 percent for the public interest groups. The clubs could then use the 60 percent for food purchases, but still not use it for wages or alcohol purchases.

Additionally, the prospective Kauffman bill raises the daily individual prize limit to $5,000 from its current $1,000 limit, and hikes the aggregate weekly payout maximum to $35,000 from $25,000.

“Those are the big issues we’ve heard from constituents,” Conner says.

There is much to be done to ensure action by both the state House and Senate, according to Kauffman.

He says, “I am currently looking for cosponsors for my legislation and talking with my colleagues about their concerns and potential for their support. I continue to meet with local veterans and service clubs, and non-profits on my proposed legislation and how it will impact their operations. Support needs to continue to build around the Commonwealth. Even if this legislation passes the House, it will need strong support in the Senate and with the Governor.”

Kauffman says he will sponsor the more sweeping provisions being penned by Daley and Brooks, while touting his own bill.

The Brooks/Daley measure provides a different remedy for sharing gambling revenue.

It calls for clubs to keep all proceeds up to the $40,000 mark for their own use; after that, further profits are shared, with 70 percent going to charitable (or public interest) groups.

The proposed bill also expands the array of acceptable games of chance, changes licensing provisions somewhat and establishes different reporting requirements.

According to the Brooks and Daley pages on the legislative website, the provisions include:

• Clarify the definition of public interest purpose to make it clear that an entity operating solely in the public interest has the ability to retain the money for their own charitable purposes;

• Add new games such as Chinese auction (selective raffle), quarter auction, Night at the Races, Texas Hold ’em (defining it in a manner that the game can only have an entrance fee to play and there is no award of money for the play of the game) and vertical wheel (chuck a luck, big wheel);

• Permit Department of Revenue to approve new small games of chance per regulation with statutory guidelines;

• Clarify when proceeds need to be expended for public interest by changing it from the same calendar year to 12 months from when the proceeds were received;

• Include that annual report form will be available in paper format and can be filed by mail;

• Clarify that an organization may hold their small games at another organization’s licensed premise and each organization can operate games at the same time (For example, if a VFW wants to operate their games, they can still rent out their banquet room to another organization holding a fundraiser simultaneously);

• Change secretary to treasurer for those who need background checks;

• Eliminate the need for a limited occasion license (see below for new licenses);

• Clarify the license process and requirements based on the amount of proceeds an organization receives from small games of chance. There will be two licenses — an organization making less than $40,000 a year in proceeds from games of chance will pay $25 for their license. This license will allow them to operate all the current small games of chance, and also exempt them from annual reporting, background checks and separate bank accounts for their proceeds. An organization making more than $40,000 a year in proceeds from games of chance will pay the current license fee of $100 for a license. The license will allow them to operate all the current small games of chance, but will be required to report annually, submit to background checks and keep separate bank accounts for their proceeds.

• Clarify that Liquor Control Enforcement (LCE) does not have enforcement powers over small games of chance violations with organizations that solely have a special occasion permit under the Liquor Code. LCE would retain enforcement power over any Liquor Code violations of these organizations;

• Change the following regulation record keeping requirements: Increasing from $100 to $600, the requirement that an organization must record the name and address of a winner. This will align with the $600 federal requirement for the organization and winner to report to the IRS.

• Eliminating the requirement that an organization must obtain receipts for all donated items.

Daley spokesman Jerry Livingston says Daley continues to consider a complete repeal and rewrite of Act 2, but is a strong advocate for the measure he and Brooks are preparing.

“We started talking with Rep. Brooks and this is a good bill,” Livingston says. “It looks at the good, the bad and the ugly (in Act 2). It looks at the money and the reporting. It’s possible that this may be a better route than repeal. With this, we can help out the very small clubs that have been thrown for a loop, but keep the concept from the 1980s that small games profits must benefit the public.”

Kauffman says he also supports an initiative by state Rep. Ron Miller (R-93) that would exempt organizations without a liquor license that have small games of chance proceeds less than $10,000 in a calendar year from reporting requirements, having a separate bank account and submitting background checks for licensure.

Read more: