At the end of 2016, a group of Pennsylvania operators/vendors got together with a group of Illinois terminal operators and formed the PA Video Gaming Association (PAVGA). The sole purpose of the PAVGA is to legalize operator based video gaming terminals (VGTs) in liquor licensed establishments, thus supporting small business, the local economy and providing meaningful revenue to the Commonwealth of PA, as well as local municipalities and counties.
[Note: Legislation (HB 271) supported by the PAVGA closely parallels the provisions of the Illinois legislation that legalized video gaming terminals in 2012. In 2016, VGTs in Illinois generated over One Billion Dollars in total revenue (without the participation of the City of Chicago).]
Once fully implemented in Pennsylvania, VGTs are expected to generate over 1.1 Billion Dollars in total revenue, which is projected to provide over 400 million dollars to the Commonwealth. The proposed legislation would allow up to 40,000 VGTs, while getting rid of the estimated 15,000 to 35,000 illegal (“gray area”) games in Pennsylvania. It is estimated that 7500 liquor-licensed establishments will take advantage of this new and substantial revenue stream.
PA HB 271 Video Gaming Terminal Legislation
On June 7, 2017 the PA House of Representatives passed HB 271, an omnibus gambling bill. This historic legislation legalized video gaming terminals (VGTs) in liquor-licensed establishments, bowling centers and truck stops. It also legalized fantasy sports, online gaming, and sports betting in casinos (subject to a change in Federal law).
Below are a listing of the key provisions of HB 271 that apply to liquor-licensed establishments [These key provisions will change if and when legislation is passed]:
- The Pennsylvania Gaming Board must license each terminal operator, manufacturer and establishment. The applications are stringent requiring a significant amount of personal, financial and business information
- Manufacturers, terminal operators, suppliers and establishment licensee may only possess one type of license
- A person that has been convicted of a felony in any jurisdiction is prohibited from receiving a license
- A person convicted of and gambling offense in any jurisdiction is prohibited from receiving a license unless 15 years have elapsed from the date of conviction for the offense
- A liquor establishment whose liquor or retail dispenser license is not in good standing with the Pennsylvania Liquor Control Board
Video Gaming Limitations
- For an establishment licensee that is a truck stop establishment, no more than 10 video gaming terminals
- For an establishment licensee that is a non-primary location, no more than 10 video gaming terminals
- For an establishment licensee that is not a truck stop establishment or non-primary location, no more than five video gaming terminals
- With the exception of tickets, video gaming machines may not dispense any coin, cash, token, or anything else of value
- Terminal placement agreements shall be valid for a minimum of 60-month term but shall not exceed a 120-month term
- No video gaming terminal may be placed in an area that is easily accessible to a minor
- The entrance to the video gaming area shall be secure and easily seen and observed by the employees or management of the licensed Establishment
- Unless approved by the board, no establishment licensee may advertise gaming to the general public
- Unless approved by the board, no establishment licensee may provide an incentive
Additional Requirements and Allowances
- All video gaming terminals must be linked to a central computer system under the control of the department and accessible by the board
- Video gaming terminals and redemption terminals that include hardware and software must be approved by the board
- Rules of play must be clearly displayed on the video gaming terminal face or screen as promulgated by the board
- The cost of credit shall be 1ȼ, 5ȼ, 10ȼ, 25ȼ, and the maximum wager shall not exceed $5.00
- The maximum cash award for any individual game may not exceed $1,000
- Each video gaming terminal shall pay out a minimum of 85% of the amount wagered
- Persons under the age of 21 shall not be permitted to play video gaming terminals
Distribution of Funds (VGT Taxes and Assessments
- 37.5% to the Commonwealth
- 4% local share assessment (2% to municipality and 2% to county in which the liquor licensee is operating
- 26% to the establishment licensee
- 31% to the terminal operator
- 1.5% to the department of revenue to cover regulatory assessment costs or expenses
Application and Renewal Fees
- All manufacturer or supplier license applicants must pay a nonrefundable application fee of $50,000 as well as a $10,000 annual fee
- All terminal operator license applicants must pay a nonrefundable application fee of $25,000 as well as an annual fee of $5,000
- All key employee or principal license applicants must pay a nonrefundable application fee of $500 as well as an annual fee of $500
- Establishment licensee must pay a nonrefundable application fee of $100 and annual license fee of $250 per each video gaming terminal in operation at the premises of the establishment licensee
H. Lazar & Son, Inc. will be fully involved in the new Video Gaming Terminal (VGT) marketplace.
A number of both “out of state” and a few “in-state” VGT companies (some with “out of state” ownership) have been sending out marketing materials as well as soliciting bars and clubs in southwestern PA. These companies have been touting a litany of benefits, some of which are either irrelevant or untrue. For example:
- We have an inventory of games in a warehouse that are awaiting the passage of the bill.
FACT: PA will require proprietary jurisdictional software that has not yet been developed.
- We will have games with exclusive software.
FACT: It is highly unlikely that any licensed VGT vendor will have exclusive software. This did happen in Illinois, but was a very short-term aberration.
- We were the first company in Illinois to install VGTs.
FACT: The Illinois Gaming Board randomly selected a handful of locations to test system implementation. No terminal operator was given any advantage over another.
- We have unlimited funds to invest in VGTs.
FACT: Most licensed VGT operators will have more than adequate funding.
- Sign an agreement now and you will be among the first locations to have VGTs.
FACT: All agreements signed prior to legalization will be void and the signing date will have no impact on who gets their games first.
Above are a limited number of examples of irrelevant or untrue statements being promoted by unscrupulous VGT companies. In some cases, these companies have hired sales people of questionable character, employees unfamiliar with the amusement/VGT business or merely migrant opportunists.
Additionally, some of the principals of these companies have been in business and flipped the business shortly after receiving a gaming license. Other companies with “out of state” ownership are currently negotiating the sale of their businesses. And in fact, some of these “out of state” companies were threatened with fines and/or license revocation by the Illinois Gaming Commission.
So, what will H. Lazar & Son, Inc. be doing? We will continue to provide our accounts with professional and personal service, as we have for 85 years. And why else should H. Lazar & Son, Inc. be your Terminal Operator? The reasons number exactly eight and they are Dave, Jeff, Roman, Rocky, Kathy, Anthony, Will and Dale.
H. Lazar & Son, Inc. will continue its tradition of investment in quality equipment and software, supported by professional, prompt and personal service as it expands into the Video Gaming Terminal (VGT) business.
Dear Valued Customer, Business Associate and Future Customer,
As you probably know, the PA House of Representatives passed House Bill 271 (“HB 271”), a sweeping gambling expansion bill that would expand gambling to bars, restaurants, clubs and airports, as well as legalize and regulate online gambling and fantasy sports contests. HB 271 allows for up to 40,000 Video Gaming Terminals (VGTs) in liquor establishments (bars and clubs), bowling centers and truck stops.
Our industry could not have achieved this first step without the extraordinary efforts of our new organization, the PA Video Gaming Association (PAVGA). I am honored to be a founding board member of this organization. Unlike prior legalization efforts, PAVGA has the staffing and funds to shepherd a robust effort for legalization.
H. Lazar & Son, Inc. will be fully involved in the new VGT marketplace.
So, what will H. Lazar & Son, Inc. be doing? We will continue to provide you with professional and personal service, as we have for 85 years. And why else should we be your Terminal Operator? The reasons number exactly eight and they are Dave, Jeff, Roman, Rocky, Kathy, Anthony, Will and Dale.
The bill is now in the PA Senate for a vote before going to the governor. At the present time, funding for the state budget is in a gridlock with the House Republicans insisting that VGTs be part of any final agreement, while the House Republicans are adamantly against VGTs. It is the proverbial legislative “roller coaster ride”.
More specifically, our battle in the PA Senate has opposition coming primarily from powerful casino interests; Las Vegas casino magnate, Sheldon Adelson; and an army of big time Harrisburg lobbyists. This is a classic war between Wall Street casinos and Main Street bars.
We need your help!! Please call your PA Senator. In fact, ask your staff, customers, relatives and friends to also call their Senator at both his/her Harrisburg office and District Office and urge your Senator to support the legalization of VGTs in bars and clubs. Below are sample messages….
For business owners or employees, say something like …
My name is _____________ and I own a bar (or work at a bar) located in your district. I urge Senator ______ to support legislation that legalizes VGTs. This legislation will support small businesses in PA, as well as provide needed revenue for local and state government. Thank you.
For supporters of VGTs and Main Street, small businesses say something like …
My name is _____________ and I live in your district. I urge Senator _____ to support legislation that legalizes VGTs. This legislation will support small businesses in PA, as well as provide needed revenue for local and state government. Thank you.
If you do not know the name of your Senator, please click here or call Kathy in my office at 412-683-7310 and she will give you their name and number.
The only way we (Main Street) will be able to defeat Wall Street is by Senators hearing our voices. Please call now. The Senate vote could take place as early as today or as late as the end of summer.
If legislation is passed in both houses and signed by Governor Wolf, H. Lazar & Son, Inc. will be fully involved and knowledgeable. We will continue our tradition of investment in quality equipment and software, supported by professional, prompt and personal service.
We value our long-term friendships and business relationships and look forward to expanding them in the future.
Please make the phone call…..
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