HB3418 99TH GENERAL ASSEMBLY

LRB099 10040 MLM 30263 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3418

Introduced , by Rep. Arthur Turner

SYNOPSIS AS INTRODUCED:

230 ILCS 40/15
230 ILCS 40/45
230 ILCS 40/50

Amends the Video Gaming Act. Provides that central communication system vendors may develop and provide information regarding gaming devices or individual gaming performance data to all manufacturers related to their respective video gaming terminals. Provides that publicly held corporations that have a registration statement filed or pending with the federal Securities and Exchange Commission seeking and possessing a license under the Act are not required to disclose the identity of every person, association, trust, corporation, or limited liability company having a greater than 1% direct or indirect pecuniary interest in the video gaming terminal operation for which license is sought. Provides that licenses issued to licensed establishments, licensed veterans establishment, licensed truck stop establishments, licensed technicians, and licensed terminal handlers shall be renewed annually. Provides that, upon expiration of an initial license, for licenses issued to manufacturers, distributors, suppliers, and terminal operators, licenses are to be issued annually for 3 years, and then shall be valid for up to 4 years in the Board's discretion. Provides that licenses for manufacturers, distributors, suppliers, terminal operators, licensed establishments, licensed fraternal establishments, licensed veterans establishments, and licensed truck stop establishments are not assignable or transferrable without prior approval of the Board or as provided by Board rule. Effective immediately.

A BILL FOR

AN ACT concerning gaming.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Video Gaming Act is amended by changing Sections 15, 45, and 50 as follows:

(230 ILCS 40/15)

Sec. 15. Minimum requirements for licensing and registration. Every video gaming terminal offered for play shall first be tested and approved pursuant to the rules of the Board, and each video gaming terminal offered in this State for play shall conform to an approved model. For the examination of video gaming machines and associated equipment as required by this Section, the Board may utilize the services of one or more independent outside testing laboratories that have been accredited by a national accreditation body and that, in the judgment of the Board, are qualified to perform such examinations. Every video gaming terminal offered in this State for play must meet minimum standards set by an independent outside testing laboratory approved by the Board. Each approved model shall, at a minimum, meet the following criteria:

(1) It must conform to all requirements of federal law and regulations, including FCC Class A Emissions Standards.

(2) It must theoretically pay out a mathematically demonstrable percentage during the expected lifetime of the machine of all amounts played, which must not be less than 80%. The Board shall establish a maximum payout percentage for approved models by rule. Video gaming terminals that may be affected by skill must meet this standard when using a method of play that will provide the greatest return to the player over a period of continuous play.

(3) It must use a random selection process to determine the outcome of each play of a game. The random selection process must meet 99% confidence limits using a standard chi-squared test for (randomness) goodness of fit.

(4) It must display an accurate representation of the game outcome.

(5) It must not automatically alter pay tables or any function of the video gaming terminal based on internal computation of hold percentage or have any means of manipulation that affects the random selection process or probabilities of winning a game.

(6) It must not be adversely affected by static discharge or other electromagnetic interference.

(7) It must be capable of detecting and displaying the following conditions during idle states or on demand: power reset; door open; and door just closed.

(8) It must have the capacity to display complete play history (outcome, intermediate play steps, credits available, bets placed, credits paid, and credits cashed out) for the most recent game played and 10 games prior thereto.

(9) The theoretical payback percentage of a video gaming terminal must not be capable of being changed without making a hardware or software change in the video gaming terminal, either on site or via the central communications system.

(10) Video gaming terminals must be designed so that replacement of parts or modules required for normal maintenance does not necessitate replacement of the electromechanical meters.

(11) It must have nonresettable meters housed in a locked area of the terminal that keep a permanent record of all cash inserted into the machine, all winnings made by the terminal printer, credits played in for video gaming terminals, and credits won by video gaming players. The video gaming terminal must provide the means for on-demand display of stored information as determined by the Board.

(12) Electronically stored meter information required by this Section must be preserved for a minimum of 180 days after a power loss to the service.

(13) It must have one or more mechanisms that accept cash in the form of bills. The mechanisms shall be designed to prevent obtaining credits without paying by stringing, slamming, drilling, or other means. If such attempts at physical tampering are made, the video gaming terminal shall suspend itself from operating until reset.

(14) It shall have accounting software that keeps an electronic record which includes, but is not limited to, the following: total cash inserted into the video gaming terminal; the value of winning tickets claimed by players; the total credits played; the total credits awarded by a video gaming terminal; and pay back percentage credited to players of each video game.

(15) It shall be linked by a central communications system to provide auditing program information as approved by the Board. The central communications system shall use a standard industry protocol, as defined by the Gaming Standards Association, and shall have the functionality to enable the Board or its designee to activate or deactivate individual gaming devices from the central communications system. In no event may the communications system approved by the Board limit participation to only one manufacturer of video gaming terminals by either the cost in implementing the necessary program modifications to communicate or the inability to communicate with the central communications system.

(16) The Board, in its discretion, may require video gaming terminals to display Amber Alert messages if the Board makes a finding that it would be economically and technically feasible and pose no risk to the integrity and security of the central communications system and video gaming terminals.

The Board may adopt rules to establish additional criteria to preserve the integrity and security of video gaming in this State. The central communications system vendor may be licensed as a video gaming terminal manufacturer or a video gaming terminal distributor, or both, but in no event shall the central communications system vendor be licensed as a video gaming terminal operator.

The Board shall not permit the central communication system vendor to develop or use development of information regarding or the use by any licensee of gaming device or individual game performance data for its or its affiliates' exclusive use or benefit. The central communication system vendor may develop and provide information regarding gaming devices or individual gaming performance data to all manufacturers related to their respective video gaming terminals. Nothing in this Act shall inhibit or prohibit the Board from the use of gaming device or individual game performance data in its regulatory duties. The Board shall adopt rules to ensure that all licensees are treated and all licensees act in a non-discriminatory manner and develop processes and penalties to enforce those rules.

(Source: P.A. 98-31, eff. 6-24-13; 98-377, eff. 1-1-14; 98-582, eff. 8-27-13; 98-756, eff. 7-16-14.)

(230 ILCS 40/45)

Sec. 45. Issuance of license.

(a) The burden is upon each applicant to demonstrate his suitability for licensure. Each video gaming terminal manufacturer, distributor, supplier, operator, handler, licensed establishment, licensed truck stop establishment, licensed fraternal establishment, and licensed veterans establishment shall be licensed by the Board. The Board may issue or deny a license under this Act to any person pursuant to the same criteria set forth in Section 9 of the Riverboat Gambling Act.

(a-5) The Board shall not grant a license to a person who has facilitated, enabled, or participated in the use of coin-operated devices for gambling purposes or who is under the significant influence or control of such a person. For the purposes of this Act, "facilitated, enabled, or participated in the use of coin-operated amusement devices for gambling purposes" means that the person has been convicted of any violation of Article 28 of the Criminal Code of 1961 or the Criminal Code of 2012. If there is pending legal action against a person for any such violation, then the Board shall delay the licensure of that person until the legal action is resolved.

(b) Each person seeking and possessing a license as a video gaming terminal manufacturer, distributor, supplier, operator, handler, licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment shall submit to a background investigation conducted by the Board with the assistance of the State Police or other law enforcement. To the extent that the corporate structure of the applicant and applicable securities laws allow allows, the background investigation shall include any or all of the following as the Board deems appropriate or as provided by rule for each category of licensure: (i) each beneficiary of a trust, (ii) each partner of a partnership, (iii) each member of a limited liability company, (iv) each director and officer of a publicly or non-publicly held corporation, (v) each stockholder of a non-publicly held corporation, (vi) each stockholder of 5% or more of a publicly held corporation, or (vii) each stockholder of 5% or more in a parent or subsidiary corporation.

(c) Each person seeking and possessing a license as a video gaming terminal manufacturer, distributor, supplier, operator, handler, licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment shall, to the extent that the corporate structure of the applicant and applicable securities laws allow, disclose the identity of every person, association, trust, corporation, or limited liability company having a greater than 1% direct or indirect pecuniary interest in the video gaming terminal operation for which the license is sought as the Board deems appropriate or as provided for by rule for each category of licensure; however, a publicly held corporation that has a registration statement filed or pending with the federal Securities and Exchange Commission, or its equivalent, is not required to provide information under this Section. If the disclosed entity is a trust, the application shall disclose the names and addresses of the beneficiaries; if a corporation, the names and addresses of all stockholders and directors; if a limited liability company, the names and addresses of all members; or if a partnership, the names and addresses of all partners, both general and limited.

(d) No person may be licensed as a video gaming terminal manufacturer, distributor, supplier, operator, handler, licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment if that person has been found by the Board to:

(1) have a background, including a criminal record, reputation, habits, social or business associations, or prior activities that pose a threat to the public interests of the State or to the security and integrity of video gaming;

(2) create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of video gaming; or

(3) present questionable business practices and financial arrangements incidental to the conduct of video gaming activities.

(e) Any applicant for any license under this Act has the burden of proving his or her qualifications to the satisfaction of the Board. The Board may adopt rules to establish additional qualifications and requirements to preserve the integrity and security of video gaming in this State.

(f) A non-refundable application fee shall be paid at the time an application for a license is filed with the Board in the following amounts:

(1) Manufacturer..........................$5,000

(2) Distributor...........................$5,000

(3) Terminal operator.....................$5,000

(4) Supplier..............................$2,500

(5) Technician..............................$100

(6) Terminal Handler..............................$50

(g) The Board shall establish an annual fee for each license not to exceed the following:

(1) Manufacturer.........................$10,000

(2) Distributor..........................$10,000

(3) Terminal operator.....................$5,000

(4) Supplier..............................$2,000

(5) Technician..............................$100

(6) Licensed establishment, licensed truck stop

establishment, licensed fraternal establishment,

or licensed veterans establishment..............$100

(7) Video gaming terminal...................$100

(8) Terminal Handler..............................$50

(h) A terminal operator and a licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment shall equally split the fees specified in item (7) of subsection (g).

(Source: P.A. 97-1150, eff. 1-25-13; 98-31, eff. 6-24-13; 98-587, eff. 8-27-13; 98-756, eff. 7-16-14.)

(230 ILCS 40/50)

Sec. 50. Distribution of license fees; expiration of licenses; transfer of licenses.

(a) All fees collected under Section 45 shall be deposited into the State Gaming Fund.

(b) Fees collected under Section 45 shall be used as follows:

(1) Twenty-five percent shall be paid, subject to appropriation by the General Assembly, to the Department of Human Services for administration of programs for the treatment of compulsive gambling.

(2) Seventy-five percent shall be used for the administration of this Act.

(c) All initial licenses issued by the Board under this Act shall be valid for one year, are renewable annually unless sooner cancelled or terminated. No license issued under this Act is transferable or assignable.

(d) Upon expiration of the initial license, licenses issued to licensed establishments, licensed fraternal establishment, licensed veterans establishment, licensed truck stop establishments, licensed technicians, and licensed terminal handlers by the Board shall be: (1) valid for one year, unless sooner cancelled or terminated, and (2) renewed annually upon a determination by the Board that the licensee continues to meet all of the requirements of this Act and the Board's rules.

(e) Upon expiration of the initial license, and for 3 years thereafter, licenses issued to manufacturers, distributors, suppliers, and terminal operators shall be: (1) valid for one year, unless sooner cancelled or terminated, and (2) renewed annually upon a determination by the Board that the licensee continues to meet all of the requirements of this Act and the Board's rules; thereafter, such licenses shall be (1) valid for up to 4 years in the Board's discretion, and (2) renewed upon a determination by the Board that the licensee continues to meet all of the requirements of this Act and the Board's rules.

(f) Nothing in this Section shall prohibit the Board from investigating any licensee to determine that the licensee continues to meet all of the requirements of this Act and the Board's rules.

(g) Licenses for manufacturers, distributors, suppliers, terminal operators, licensed establishments, licensed fraternal establishments, licensed veterans establishments, and licensed truck stop establishments are not assignable or transferrable without prior approval by the Board or as provided by Board rule.

(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09.)

Section 99. Effective date. This Act takes effect upon becoming law.