HB2641 101ST GENERAL ASSEMBLY

LRB101 07269 SMS 52308 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2641

Introduced , by Rep. Jaime M. Andrade, Jr.

SYNOPSIS AS INTRODUCED:

New Act
720 ILCS 5/28-1	from Ch. 38, par. 28-1

Creates the Gaming and Amusement Licensing, Cybersecurity, and Data Collection and Remittance Act. Authorizes fringe gambling to be conducted in locations authorized to conduct video gaming under the Video Gaming Act. Provides restrictions on fringe gambling and fringe gambling machines, including prohibiting a person under the age of 21 from using a fringe gambling machine. Provides minimum requirements for the licensing of fringe gambling machines. Includes provisions for issuing licenses under the Act. Limits locations authorized to conduct fringe gambling to 5 fringe gambling machines on their premises. Makes conforming changes in the Criminal Code of 2012.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning gaming.

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

Section 1. Short title. This Act may be cited as the Gaming and Amusement Licensing, Cybersecurity, and Data Collection and Remittance Act.

Section 5. Definitions. As used in this Act:

"Department" means the Department of Revenue.

"Distributor" means an individual, partnership, corporation, or limited liability company licensed under this Act to buy, sell, lease, or distribute fringe gambling machines or major components or parts of fringe gambling machines to or from operators.

"Electronic voucher" means a voucher printed by a fringe gambling machine that is redeemable in the licensed establishment for which it was issued.

"Fringe gambling" means any gambling or lottery device that is:

(1) given, conducted, or offered for use or sale by a business in exchange for anything of value, including, but not limited to, cash, coin, cryptocurrency, vouchers, gift cards, or prizes, or provides an opportunity to participate in a contest, game, gaming scheme, or sweepstakes with a potential monetary return or outcome based on an element of chance, regardless of whether anything of value was required to play; or

(2) given away incident to the purchase of other goods or services.

"Fringe gambling" does not include a promotional activity that is clearly ancillary to the primary activity of a business or video gaming, as defined by the Video Gaming Act.

"Fringe gambling machine" means a mechanically or electronically operated machine or device that is intended to be used by a sweepstakes entrant or by a player for the playing of a game by insertion of a coin or token or any other way where the outcome of the game is determined by the action of the machine, whether manipulated by the player or not; that uses energy; and that displays the results of a game entry or game outcome to a participant on a screen or other mechanism at a licensed establishment, licensed fraternal establishment, licensed veterans establishment, or licensed truck stop establishment. An electronically operated machine or device may:

(1) be server-based;

(2) use a simulated game terminal as a representation of the prizes associated with the results of the sweepstakes entries;

(3) use software such that the simulated game influences or determines the winning or value of the prize;

(4) select prizes from a predetermined finite pool of entries;

(5) offer a monetary prize or electronic voucher of any amount, including cash, coin, or cryptocurrency;

(6) use a mechanism that reveals the content of a predetermined sweepstakes entry;

(7) predetermine the prize results and stores those results for delivery at the time the sweepstakes entry results are revealed;

(8) use software to create a game result;

(9) require direct payment into the electronic machine or device or remote activation of the electronic machine or device;

(10) require purchase of a related product having legitimate value;

(11) reveal the prize incrementally, even though it may not influence if a prize is awarded or the value of any prize awarded;

(12) determine and associate the prize with an entry or entries at the time the sweepstakes is entered; or

(13) be a slot machine or other form of electrical, mechanical, or computer game.

"Licensed establishment", "licensed fraternal establishment", "licensed veterans establishment", and "licensed truck stop establishment" have the same meanings as those terms are given in the Video Gaming Act.

"Licensed handler" means a person, including, but not limited to, an employee or independent contractor working for a manufacturer, distributor, supplier, technician, or operator, who is licensed under this Act to possess or control a fringe gambling machine or to have access to the inner workings of a fringe gambling machine. "Licensed handler" does not include an individual, partnership, corporation, or limited liability company that is a manufacturer, distributor, supplier, technician, or operator.

"Licensed technician" means an individual who is licensed under this Act to repair, service, and maintain fringe gambling machines.

"Manufacturer" means an individual, partnership, corporation, or limited liability company that is licensed under this Act and that manufactures or assembles fringe gambling machines.

"Operator" means an individual, partnership, corporation, or limited liability company that is licensed under this Act and that owns, services, and maintains fringe gambling machines for placement in licensed establishments, licensed truck stop establishments, licensed fraternal establishments, or licensed veterans establishments.

"Prize" means any gift, award, gratuity, good, service, credit, or anything else of value that may be transferred to a person, whether possession of the prize is actually transferred or placed on an account or other record as evidence of the intent to transfer the prize.

"Supplier" means an individual, partnership, corporation, or limited liability company that is licensed under this Act to supply major components or parts to fringe gambling machines to licensed operators.

"Sweepstakes" means any game, advertising scheme or plan, or other promotion that, with or without payment of any consideration, a person may enter to win or become eligible to receive any prize, the determination of which is based upon chance.

Section 10. Fringe gambling by minors prohibited. No licensee shall cause or permit any person under the age of 21 years to use or play a fringe gambling machine. Any licensee who knowingly permits a person under the age of 21 years to use or play a fringe gambling machine is guilty of a business offense and shall be fined an amount not to exceed $5,000.

Section 15. Minimum requirements for licensing and registration of fringe gambling machines. Every machine engaged in fringe gambling offered for play in this State must, at a minimum, meet the following criteria:

(1) It must conform to all requirements of federal law and regulations, including Federal Communications Commission 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%. Fringe gambling machines 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 previous games.

(9) The theoretical payback percentage of a fringe gambling machine must not be capable of being changed without making a hardware or software change in the fringe gambling machine, either on site or through the central communications system.

(10) It 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 machine printer, credits played in for fringe gambling machines (if required), and credits won by video gaming players. The fringe gambling machine must provide the means for on-demand display of stored information as determined by the Department.

(12) Electronically stored meter information 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 fringe gambling machine shall suspend itself from operating until reset.

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

(15) It shall be linked by a central communications system to provide auditing program information. 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 State of Illinois or its designee to activate or deactivate individual gaming devices from the central communications system. The central communications system may not limit participation to only one manufacturer of a fringe gambling machine by either the cost in implementing the necessary program modifications to communicate or the inability to communicate with the central communications system.

The Department may adopt rules to establish additional criteria to preserve the integrity and security of fringe gambling in this State. The central communications system vendor may be licensed as a fringe gambling machine manufacturer under this Act or a video gaming terminal distributor under the Video Gaming Act, or both, but the central communications system vendor may not be licensed as a video gaming terminal operator under the Video Gaming Act.

The Department shall not permit the development of information or the use by any licensee of gaming device or individual game performance data. Nothing in this Act shall inhibit or prohibit the Department from the use of gaming device or individual game performance data in its regulatory duties.

Section 20. Issuance of license.

(a) The burden is upon each applicant to demonstrate his or her suitability for licensure. Each fringe gambling machine manufacturer, distributor, supplier, operator, and handler shall be licensed by the State. The Department 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.

(b) The Department 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 Department shall delay the licensure of that person until the legal action is resolved.

(c) Each person seeking and possessing a license as a fringe gambling machine manufacturer, distributor, supplier, operator, or handler shall submit to a background investigation conducted by the Department with the assistance of the State Police or other law enforcement. To the extent that the corporate structure of the applicant allows, the background investigation shall include any or all of the following as the Department 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.

(d) Each person seeking and possessing a license as a fringe gambling machine manufacturer, distributor, supplier, operator, or handler shall 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 fringe gambling machine operation for which the license is sought. 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.

(e) No person may be licensed as a fringe gambling machine manufacturer, distributor, supplier, operator, or handler if that person has been found by the Department to:

(1) have a background, including a criminal record of any felony or any misdemeanor involving dishonesty or fraud, 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 fringe gambling;

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

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

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

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

(1) Manufacturer...............................$3,000

(2) Distributor................................$3,000

(3) Operator...................................$3,000

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

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

(6) Handler......................................$100

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

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

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

(3) Operator...................................$5,000

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

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

(6) Fringe gambling machine......................$100

(7) Handler......................................$100

(i) An operator and a licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment shall equally split the fees specified in item (6) of subsection (h).

Section 25. Restrictions on fringe gambling machines. A licensed establishment, licensed truck stop establishment, licensed veterans establishment, or licensed fraternal establishment may operate up to 5 fringe gambling machines on its premises at any time.

Section 90. The Criminal Code of 2012 is amended by changing Section 28-1 as follows:

(720 ILCS 5/28-1) (from Ch. 38, par. 28-1)

Sec. 28-1. Gambling.

(a) A person commits gambling when he or she:

(1) knowingly plays a game of chance or skill for money or other thing of value, unless excepted in subsection (b) of this Section;

(2) knowingly makes a wager upon the result of any game, contest, or any political nomination, appointment or election;

(3) knowingly operates, keeps, owns, uses, purchases, exhibits, rents, sells, bargains for the sale or lease of, manufactures or distributes any gambling device;

(4) contracts to have or give himself or herself or another the option to buy or sell, or contracts to buy or sell, at a future time, any grain or other commodity whatsoever, or any stock or security of any company, where it is at the time of making such contract intended by both parties thereto that the contract to buy or sell, or the option, whenever exercised, or the contract resulting therefrom, shall be settled, not by the receipt or delivery of such property, but by the payment only of differences in prices thereof; however, the issuance, purchase, sale, exercise, endorsement or guarantee, by or through a person registered with the Secretary of State pursuant to Section 8 of the Illinois Securities Law of 1953, or by or through a person exempt from such registration under said Section 8, of a put, call, or other option to buy or sell securities which have been registered with the Secretary of State or which are exempt from such registration under Section 3 of the Illinois Securities Law of 1953 is not gambling within the meaning of this paragraph (4);

(5) knowingly owns or possesses any book, instrument or apparatus by means of which bets or wagers have been, or are, recorded or registered, or knowingly possesses any money which he has received in the course of a bet or wager;

(6) knowingly sells pools upon the result of any game or contest of skill or chance, political nomination, appointment or election;

(7) knowingly sets up or promotes any lottery or sells, offers to sell or transfers any ticket or share for any lottery;

(8) knowingly sets up or promotes any policy game or sells, offers to sell or knowingly possesses or transfers any policy ticket, slip, record, document or other similar device;

(9) knowingly drafts, prints or publishes any lottery ticket or share, or any policy ticket, slip, record, document or similar device, except for such activity related to lotteries, bingo games and raffles authorized by and conducted in accordance with the laws of Illinois or any other state or foreign government;

(10) knowingly advertises any lottery or policy game, except for such activity related to lotteries, bingo games and raffles authorized by and conducted in accordance with the laws of Illinois or any other state;

(11) knowingly transmits information as to wagers, betting odds, or changes in betting odds by telephone, telegraph, radio, semaphore or similar means; or knowingly installs or maintains equipment for the transmission or receipt of such information; except that nothing in this subdivision (11) prohibits transmission or receipt of such information for use in news reporting of sporting events or contests; or

(12) knowingly establishes, maintains, or operates an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet or to make a wager upon the result of any game, contest, political nomination, appointment, or election by means of the Internet. This item (12) does not apply to activities referenced in items (6) and (6.1) of subsection (b) of this Section.

(b) Participants in any of the following activities shall not be convicted of gambling:

(1) Agreements to compensate for loss caused by the happening of chance including without limitation contracts of indemnity or guaranty and life or health or accident insurance.

(2) Offers of prizes, award or compensation to the actual contestants in any bona fide contest for the determination of skill, speed, strength or endurance or to the owners of animals or vehicles entered in such contest.

(3) Pari-mutuel betting as authorized by the law of this State.

(4) Manufacture of gambling devices, including the acquisition of essential parts therefor and the assembly thereof, for transportation in interstate or foreign commerce to any place outside this State when such transportation is not prohibited by any applicable Federal law; or the manufacture, distribution, or possession of video gaming terminals, as defined in the Video Gaming Act, by manufacturers, distributors, and terminal operators licensed to do so under the Video Gaming Act.

(5) The game commonly known as "bingo", when conducted in accordance with the Bingo License and Tax Act.

(6) Lotteries when conducted by the State of Illinois in accordance with the Illinois Lottery Law. This exemption includes any activity conducted by the Department of Revenue to sell lottery tickets pursuant to the provisions of the Illinois Lottery Law and its rules.

(6.1) The purchase of lottery tickets through the Internet for a lottery conducted by the State of Illinois under the program established in Section 7.12 of the Illinois Lottery Law.

(7) Possession of an antique slot machine that is neither used nor intended to be used in the operation or promotion of any unlawful gambling activity or enterprise. For the purpose of this subparagraph (b)(7), an antique slot machine is one manufactured 25 years ago or earlier.

(8) Raffles and poker runs when conducted in accordance with the Raffles and Poker Runs Act.

(9) Charitable games when conducted in accordance with the Charitable Games Act.

(10) Pull tabs and jar games when conducted under the Illinois Pull Tabs and Jar Games Act.

(11) Gambling games conducted on riverboats when authorized by the Riverboat Gambling Act.

(12) Video gaming terminal games at a licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment when conducted in accordance with the Video Gaming Act.

(13) Games of skill or chance where money or other things of value can be won but no payment or purchase is required to participate.

(14) Savings promotion raffles authorized under Section 5g of the Illinois Banking Act, Section 7008 of the Savings Bank Act, Section 42.7 of the Illinois Credit Union Act, Section 5136B of the National Bank Act (12 U.S.C. 25a), or Section 4 of the Home Owners' Loan Act (12 U.S.C. 1463).

(15) Fringe gambling on a fringe gambling machine at a licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment when conducted in accordance with the Gaming and Amusement Cybersecurity and Data Collection and Remittance Act.

(c) Sentence.

Gambling is a Class A misdemeanor. A second or subsequent conviction under subsections (a)(3) through (a)(12), is a Class 4 felony.

(d) Circumstantial evidence.

In prosecutions under this Section circumstantial evidence shall have the same validity and weight as in any criminal prosecution.

(Source: P.A. 98-644, eff. 6-10-14; 99-149, eff. 1-1-16.)