Small Games of Chance

Last year Governor Corbett signed into law an update to the Local Option Small Games of Chance Act which took effect in late January.  The revised law allows liquor licensees with hotel (H), restaurant (R), and privately owned public golf course (C) licenses to obtain a tavern gaming license so they can offer small games of chance to their patrons.  Under this legislation, an eatery (E), limited wineries (LK), and limited distilleries (AL) licenses are expressly excluded.  Until this year, these types of games could only be offered by veterans’ posts, fire halls and other fraternal organizations.   The Commonwealth expects that the 60 percent State tax levied on the games and the additional five percent municipal tax will generate more than $150 million annually.

Under the new law, taverns may apply for a one year renewable gaming license.  The gaming licenses may only exist in municipalities where small games of chance are permitted.  These gaming licenses are limited to pull-tab games; punchboards; raffles (including special permit raffles); daily drawings; weekly drawings; fifty-fifty (50/50) drawings (including major league sports drawings); race night games; and pools, excluding sports. 

The games are subject to prize limits.  The maximum price for any single chance is $2,000.00 and no more than $35,000.00 in prizes may be awarded by a tavern in a seven-day period.  Gaming licensees must keep a separate bank account to hold only the net revenue generated by the games.  Records of income and expenses must be maintained for a minimum of two years. 

While the Pennsylvania Liquor Control Board (“LCB”) issues the tavern gaming license, the license application process actually involves two state agencies, the LCB and the Gaming Control Board.  Each agency charges separate fees and each conducts independent investigations of the application.  It should be noted that unlike a liquor license, a gaming license cannot be sold or transferred and it may not be pledged as collateral for a bank loan.  The Pennsylvania State Police Bureau of Liquor Control Enforcement is responsible for monitoring and investigating taverns and for issuing citations for violations.   The LCB has the authority to fine, suspend, revoke or refuse a license that is the subject of a violation.  The Local Option Small Games of Chance Act does not authorize sports pools which remain prohibited by federal law. 

Let us know if you have any questions concerning obtaining a gaming license.

– J. Ken Butera


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