2012 -- S 3001 SUBSTITUTE A

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LC02714/SUB A/4

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO REVENUE PROTECTION

     Introduced By: Senators Goodwin, Bates, and Felag

     Date Introduced: May 24, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Purpose. The general assembly hereby finds that:

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     (a) The Twin River facility located in the Town of Lincoln (“Twin River”) is an

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important source of revenue for the state of Rhode Island, having been licensed by the Rhode

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Island Department of Business Regulation to conduct pari-mutuel wagering, and at which the

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Division (as defined herein) operates games of the Rhode Island Lottery.

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     (b) The Newport Grand facility located in the City of Newport (“Newport Grand”) is an

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important source of revenue for the state of Rhode Island, having been licensed by the Rhode

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Island Department of Business Regulation to conduct pari-mutuel wagering, and at which the

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Division (as defined herein) operates games of the Rhode Island Lottery.

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     (c) In a study commissioned by the Rhode Island Department of Revenue, Christiansen

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Capital Advisors, LLC anticipated that competition from gaming facilities recently authorized in

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Massachusetts could have a 25-40% negative impact on state revenues generated from state-

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operated gaming in Rhode Island, amounting to losses to the state of one hundred million dollars

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($100,000,000) or more in annual revenue.

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     (d) Revenues generated from state-operated gaming in Rhode Island constitute the third

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largest source of revenue to the state, behind only revenue generated from income taxes and sales

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and use taxes.

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     (e) Accordingly, competition from gaming facilities in Massachusetts present an

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imminent threat to revenues generated by the state, and thus an imminent threat to the public

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welfare.

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     (f) It is therefore imperative that action be taken to ameliorate the anticipated adverse

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effects on state revenues from competition from gaming facilities recently authorized in

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Massachusetts.

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     (g) It is also imperative that action be taken to preserve and protect the state’s ability to

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maximize revenues at Twin River and Newport Grand in an increasingly competitive gaming

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market by expanding critical revenue-driving promotional programs through legislative

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authorization and necessary amendments to contracts, previously authorized by the General

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Assembly, to position the promotional programs for long-term success.

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     (h) It is also in the best interest of the state to preserve public confidence in the integrity

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of Rhode Island gaming by authorizing the Division to promulgate regulations to direct and

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control state-operated Table Gaming (as defined herein).

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     (i) It is the intent of the general assembly that this act address, independently: (1) Section

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8 of Chapter 151, Article 25 of the Public Laws of 2011 authorizing a referendum question to be

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submitted to statewide and Town of Lincoln voters at the next general election asking such voters

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to approve Casino Gaming (as defined therein) at Twin River; and (2) Section 1 of Chapters 24

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and 25 of the Public Laws of 2012 authorizing a referendum question to be submitted to statewide

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and City of Newport voters at the next general election asking such voters to approve Casino

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Gaming at Newport Grand; it being the intent of the General Assembly that the voters’ actions on

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the referendum questions as to Twin River be independent of the voters’ actions on the

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referendum questions as to Newport Grand.

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     (j) It is also the intent of the general assembly that this act satisfies the general assembly’s

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obligations pursuant to subdivision 42-61.2-2.1(b)(4) of the Rhode Island General Laws.

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     (k) It is also the intent of the general assembly that this act, being necessary to address an

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imminent threat to the public welfare, as aforesaid, shall be liberally construed so as to effectuate

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its purposes, including without limitation, the state’s attempt to minimize certain commercial

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risks faced by UTGR (as defined herein) and Newport Grand, LLC (as defined herein) by

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entering into agreements with the Division.

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     SECTION 2. Definitions. (a) For the purposes of this act, the following terms shall have

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the following meanings:

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     (1) "Division" means the division of lotteries within the department of revenue and/ or

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any successor as party to the UTGR Master Contract, the Newport Grand Master Contract and the

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GTECH Master Contract.

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     (2) "GTECH Master Contract" means that certain Master Contract made as of May 12,

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2003 pursuant to Chapters 32 and 33 of the Public Laws of 2003, as amended from time to time.

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     (3) "Initial Promotional Points Program" means that promotional points program

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authorized in Section 4(a)(ii) of Part A as to Twin River and Part B as to Newport Grand of

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Chapter 16 of the Public Laws of 2010, as amended by Section 8 of Chapter 151, Article 25 of

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the Public Laws of 2011.

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     (4) "Newport Grand, LLC" means that limited liability company defined in Chapter 16 of

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the Public Laws of 2010, Part B, Section 2(l).

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     (5) "Newport Grand Master Contract" means that certain Master Video Lottery Terminal

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Contract made as of November 23, 2005 by and between the Division and Newport Grand Jai

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Alai, LLC, as amended from time to time.

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     (6) "Prior Marketing Year" means the prior state fiscal year.

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     (7) "Promotional Points" means the promotional points issued pursuant to any free play

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or other promotional program operated by the Division at a licensed video lottery terminal facility

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(including, without limitation, the promotional points programs at Twin River and Newport

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Grand authorized pursuant to Chapter 16 of the Public Laws of 2010, Part A as to Twin River and

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Part B as to Newport Grand, Section 4(a)(ii), Chapter 151, Article 25 of the Public Laws of 2011,

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Section 8(a)(i), and Section 8 hereof as to Twin River and Section 9 hereof as to Newport Grand),

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which are downloaded to a video lottery terminal by a player.

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     (8) "Supplementary Promotional Points Program" means that promotional points program

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authorized in Section 8 hereof as to Twin River and Section 9 hereof as to Newport Grand.

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     (9) “UTGR” means that corporation defined in Chapter 16 of the Public Laws of 2010,

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Part A, Section 2(n).

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     (10) "UTGR Master Contract" means that certain Master Video Lottery Terminal

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Contract made as of July 18, 2005 by and between the Division, the Department of

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Transportation and UTGR, as amended from time to time.

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     SECTION 3. Except as otherwise amended by this act, the terms, conditions, provisions

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and definitions of Chapters 32 and 33 of the Public Laws of 2003, Chapters 322 and 323 of the

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Public Laws of 2005, Chapter 16 of the Public Laws of 2010, Chapter 151, Article 25 of the

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Public Laws of 2011 and Chapters 24 and 25 of the Public Laws of 2012 are hereby incorporated

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by reference and shall remain in full force and effect.

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     SECTION 4. Sections 42-61.2-1 and 42-61.2-7 of the General Laws in Chapter 42-61.2

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entitled "Video Lottery Terminal" is hereby amended to read as follows:

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     42-61.2-1. Definitions. [Effective June 30, 2009.] -- For the purpose of this chapter, the

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following words shall mean:

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      (1) "Central communication system" means a system approved by the lottery division,

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linking all video lottery machines at a licensee location to provide auditing program information

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and any other information determined by the lottery. In addition, the central communications

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system must provide all computer hardware and related software necessary for the establishment

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and implementation of a comprehensive system as required by the division. The central

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communications licensee may provide a maximum of fifty percent (50%) of the video lottery

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terminals.

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      (2) "Licensed video lottery retailer" means a pari-mutuel licensee specifically licensed

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by the director subject to the approval of the division to become a licensed video lottery retailer.

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      (3) "Net terminal income" means currency placed into a video lottery terminal less

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credits redeemed for cash by players.

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      (4) "Pari-mutuel licensee" means an entity licensed and authorized to conduct:

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      (i) Dog racing, pursuant to chapter 3.1 of title 41; and/or

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      (ii) Jai-alai games, pursuant to chapter 7 of title 41.

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      (5) "Technology provider" means any individual, partnership, corporation, or association

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that designs, manufactures, installs, operates maintains, distributes or supplies video lottery

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machines or associated equipment for the sale or use in this state.

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      (6) "Video lottery games" means lottery games played on video lottery terminals

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controlled by the lottery division.

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      (7) "Video lottery terminal" means any electronic computerized video game machine

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that, upon the insertion of cash, is available to play a video game authorized by the lottery

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division, and which uses a video display and microprocessors in which, by chance, the player

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may receive free games or credits that can be redeemed for cash. The term does not include a

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machine that directly dispenses coins, cash, or tokens.

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      (8) "Casino gaming" means any and all table and casino-style games played with cards,

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dice or equipment, for money, credit, or any representative of value; including, but not limited to

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roulette, blackjack, big six, craps, poker, baccarat, paigow, any banking or percentage game, or

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any other game of device included within the definition of Class III gaming as that term is

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defined in Section 2703(8) of Title 25 of the United States Code and which is approved by the

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state through the division of state lottery.

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     (9) "Net Table Game Revenue" means win from Table Games minus counterfeit

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currency.

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     (10) "Rake" means a set fee or percentage of cash and chips representing cash wagered in

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the playing of a nonbanking Table Game assessed by a Table Game Retailer for providing the

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services of a dealer, gaming table or location, to allow the play of any nonbanking Table Game.

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     (11) “Table Game” or “Table Gaming” means that type of Casino Gaming in which table

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games are played for cash or chips representing cash, using cards, dice or equipment and

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conducted by one or more live persons.

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     (12) "Table Game Retailer" means a retailer authorized to conduct Table Gaming

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pursuant to section 42-61.2-2.1 and 42-61.2-2.2 of the Rhode Island General Laws.

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     42-61.2-7. Division of revenue. [Effective June 30, 2011.] -- (a) Notwithstanding the

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provisions of section 42-61-15, the allocation of net terminal income derived from video lottery

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games is as follows:

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      (1) For deposit in the general fund and to the state lottery division fund for

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administrative purposes: Net terminal income not otherwise disbursed in accordance with

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subdivisions (a)(2) -- (a)(6) herein;

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      (i) Except for the fiscal year ending June 30, 2008, nineteen one hundredths of one

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percent (0.19%) up to a maximum of twenty million dollars ($20,000,000) shall be equally

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allocated to the distressed communities as defined in section 45-13-12 provided that no eligible

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community shall receive more than twenty-five percent (25%) of that community's currently

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enacted municipal budget as its share under this specific subsection. Distributions made under

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this specific subsection are supplemental to all other distributions made under any portion of

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general laws section 45-13-12. For the fiscal year ending June 30, 2008 distributions by

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community shall be identical to the distributions made in the fiscal year ending June 30, 2007 and

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shall be made from general appropriations. For the fiscal year ending June 30, 2009, the total

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state distribution shall be the same total amount distributed in the fiscal year ending June 30,

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2008 and shall be made from general appropriations. For the fiscal year ending June 30, 2010, the

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total state distribution shall be the same total amount distributed in the fiscal year ending June 30,

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2009 and shall be made from general appropriations, provided however that $784,458 of the total

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appropriation shall be distributed equally to each qualifying distressed community. For each of

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the fiscal years ending June 30, 2011 and June 30, 2012, seven hundred eighty-four thousand four

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hundred fifty-eight dollars ($784,458) of the total appropriation shall be distributed equally to

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each qualifying distressed community.

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      (ii) Five one hundredths of one percent (0.05%) up to a maximum of five million dollars

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($5,000,000) shall be appropriated to property tax relief to fully fund the provisions of section 44-

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33-2.1. The maximum credit defined in subdivision 44-33-9(2) shall increase to the maximum

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amount to the nearest five dollar ($5.00) increment within the allocation until a maximum credit

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of five hundred dollars ($500) is obtained. In no event shall the exemption in any fiscal year be

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less than the prior fiscal year.

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      (iii) One and twenty-two one hundredths of one percent (1.22%) to fund section 44-34.1-

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1, entitled "Motor Vehicle and Trailer Excise Tax Elimination Act of 1998", to the maximum

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amount to the nearest two hundred fifty dollar ($250) increment within the allocation. In no event

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shall the exemption in any fiscal year be less than the prior fiscal year.

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      (iv) Except for the fiscal year ending June 30, 2008, ten one hundredths of one percent

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(0.10%) to a maximum of ten million dollars ($10,000,000) for supplemental distribution to

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communities not included in paragraph (a)(1)(i) above distributed proportionately on the basis of

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general revenue sharing distributed for that fiscal year. For the fiscal year ending June 30, 2008

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distributions by community shall be identical to the distributions made in the fiscal year ending

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June 30, 2007 and shall be made from general appropriations. For the fiscal year ending June 30,

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2009, no funding shall be disbursed. For the fiscal year ending June 30, 2010 and thereafter,

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funding shall be determined by appropriation.

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      (2) To the licensed video lottery retailer:

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      (a) (i) Prior to the effective date of the NGJA Master Contract, Newport Jai Ali twenty-

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six percent (26%) minus three hundred eighty four thousand nine hundred ninety-six dollars

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($384,996);

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      (ii) On and after the effective date of the NGJA Master Contract, to the licensed video

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lottery retailer who is a party to the NGJA Master Contract, all sums due and payable under said

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Master Contract minus three hundred eighty four thousand nine hundred ninety-six dollars

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($384,996).

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     (iii) Effective July 1, 2013, provided that the referendum measure authorized by Section

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1 of Chapters 24 and 25 of the Public Laws of 2012 is approved statewide and in the City of

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Newport and provided further that Newport Grand commences and continues to offer table

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games, the rate of net terminal income payable to Newport Grand, LLC under the Newport Grand

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Master Contract shall increase by one and one half percentage (1.5%) points.

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      (b) (i) Prior to the effective date of the UTGR Master Contract, to the present licensed

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video lottery retailer at Lincoln Park which is not a party to the UTGR Master Contract, twenty-

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eight and eighty-five one hundredths percent (28.85%) minus seven hundred sixty-seven

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thousand six hundred eighty-seven dollars ($767,687);

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      (ii) On and after the effective date of the UTGR Master Contract, to the licensed video

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lottery retailer who is a party to the UTGR Master Contract, all sums due and payable under said

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Master Contract minus seven hundred sixty-seven thousand six hundred eighty-seven dollars

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($767,687).

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      (3) (i) To the technology providers who are not a party to the GTECH Master Contract

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as set forth and referenced in Public Law 2003, Chapter 32, seven percent (7%) of the net

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terminal income of the provider's terminals; in addition thereto, technology providers who

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provide premium or licensed proprietary content or those games that have unique characteristics

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such as 3D graphics, unique math/game play features or merchandising elements to video lottery

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terminals may receive incremental compensation, either in the form of a daily fee or as an

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increased percentage, if all of the following criteria are met:

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      (A) A licensed video lottery retailer has requested the placement of premium or licensed

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proprietary content at its licensed video lottery facility;

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      (B) The division of lottery has determined in its sole discretion that the request is likely

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to increase net terminal income or is otherwise important to preserve or enhance the

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competiveness of the licensed video lottery retailer;

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      (C) After approval of the request by the division of lottery, the total number of premium

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or licensed propriety content video lottery terminals does not exceed ten percent (10%) of the

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total number of video lottery terminals authorized at the respective licensed video lottery retailer;

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and

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      (D) All incremental costs are shared between the division and the respective licensed

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video lottery retailer based upon their proportionate allocation of net terminal income. The

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division of lottery is hereby authorized to amend agreements with the licensed video lottery

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retailers, or the technology providers, as applicable, to effect the intent herein.

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      (ii) To contractors who are a party to the Master Contract as set forth and referenced in

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Public Law 2003, Chapter 32, all sums due and payable under said Master Contract;

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      (iii) Notwithstanding paragraphs (i) and (ii) above, there shall be subtracted

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proportionately from the payments to technology providers the sum of six hundred twenty-eight

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thousand seven hundred thirty-seven dollars ($628,737);

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     (4) (A) To the city of Newport one and one hundredth percent (1.01%) of net terminal

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income of authorized machines at Newport Grand, except that:

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     (i) Effective November 9, 2009 until June 30, 2012 2013, the allocation shall be one and

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two tenths percent (1.2%) of net terminal income of authorized machines at Newport Grand for

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each week the facility operates video lottery games on a twenty-four (24) hour basis for all

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eligible hours authorized, and

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     (ii) Effective July 1, 2013, provided that the referendum measure authorized by Section 1

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of Chapters 24 and 25 of the Public Laws of 2012 is approved statewide and in the City of

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Newport, the allocation shall be one and forty-five hundredths percent (1.45%) of net terminal

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income of authorized video lottery terminals at Newport Grand; and

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     (B) To the town of Lincoln one and twenty-six hundredths percent (1.26%) of net

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terminal income of authorized machines at Lincoln Park Twin River except that,

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     (i) Effective November 9, 2009 until June 30, 2012 2013, the allocation shall be one and

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forty-five hundredths percent (1.45%) of net terminal income of authorized machines at Lincoln

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Park Twin River for each week the facility operates video lottery games are offered on a twenty-

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four (24) hour basis for all eligible hours authorized, and

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     (ii) Effective July 1, 2013, provided that the referendum measure authorized by Article

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25, Chapter 151, Section 4 of the Public Laws of 2011 is approved statewide and in the Town of

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Lincoln, the allocation shall be one and forty-five hundredths percent (1.45%) of net terminal

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income of authorized video lottery terminals at Twin River; and

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     (5) To the Narragansett Indian Tribe, seventeen hundredths of one percent (0.17%) of net

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terminal income of authorized machines at Lincoln Park up to a maximum of ten million dollars

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($10,000,000) per year, which shall be paid to the Narragansett Indian Tribe for the account of a

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Tribal Development Fund to be used for the purpose of encouraging and promoting: home

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ownership and improvement, elderly housing, adult vocational training; health and social

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services; childcare; natural resource protection; and economic development consistent with state

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law. Provided, however, such distribution shall terminate upon the opening of any gaming facility

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in which the Narragansett Indians are entitled to any payments or other incentives; and provided

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further, any monies distributed hereunder shall not be used for, or spent on previously contracted

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debts; and

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     (6) Unclaimed prizes and credits shall remit to the general fund of the state; and

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     (7) Payments into the state's general fund specified in subdivisions (a)(1) and (a)(6) shall

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be made on an estimated monthly basis. Payment shall be made on the tenth day following the

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close of the month except for the last month when payment shall be on the last business day.

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     (b) Notwithstanding the above, the amounts payable by the Division to UTGR related to

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the Marketing Program shall be paid on a frequency agreed by the Division, but no less

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frequently than annually.

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     (c) Notwithstanding anything in this chapter 61.2 of this title 42 to the contrary, the

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Director is authorized to fund the Marketing Program as described above in regard to the First

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Amendment to the UTGR Master Contract.

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     (d) Notwithstanding the above, the amounts payable by the Division to Newport Grand

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related to the Marketing Program shall be paid on a frequency agreed by the Division, but no less

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frequently than annually.

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     (e) Notwithstanding anything in this chapter 61.2 of this title 42 to the contrary, the

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Director is authorized to fund the Marketing Program as described above in regard to the First

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Amendment to the Newport Grand Master Contract.

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     (f) Notwithstanding the provisions of § 42-61-15, the allocation of Net Table Game

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Revenue derived from Table Games at Twin River is as follows:

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     (1) For deposit into the state lottery fund for administrative purposes and then the balance

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remaining into the general fund:

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     (i) Sixteen percent (16%) of Net Table Game Revenue, except as provided in subsection

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(f)(1)(ii);

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     (ii) An additional two percent (2%) of Net Table Game Revenue generated at Twin River

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shall be allocated starting from the commencement of Table Game activities by such Table Game

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Retailer, and ending, with respect to such Table Game Retailer, on the first date that such Table

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Game Retailer’s net terminal income for a full State fiscal year is less than such Table Game

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Retailer’s net terminal income for the prior State fiscal year, at which point this additional

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allocation to the State shall no longer apply to such Table Game Retailer.

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     (2) To UTGR, Net Table Game Revenue not otherwise disbursed pursuant to above

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subsection (f)(1); provided, however, on the first date that such Table Game Retailer’s net

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terminal income for a full State fiscal year is less than such Table Game Retailer’s net terminal

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income for the prior State fiscal year, as set forth in subsection (f)(1)(ii) above, one percent (1%)

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of this Net Table Game Revenue shall be allocated to the town of Lincoln for four (4) consecutive

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State fiscal years.

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     (g) Notwithstanding the provisions of § 42-61-15, the allocation of Net Table Game

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Revenue derived from Table Games at Newport Grand is as follows:

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     (1) For deposit into the state lottery fund for administrative purposes and then the balance

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remaining into the general fund: eighteen percent (18%) of Net Table Game Revenue.

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     (2) To Newport Grand LLC, Net Table Game Revenue not otherwise disbursed pursuant

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to above subsection (g)(1) provided, however, on the first date that such Table Game Retailer’s

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net terminal income for a full State fiscal year is less than such Table Game Retailer’s net

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terminal income for the prior State fiscal year, one percent (1%) of this Net Table Game Revenue

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shall be allocated to the city of Newport for four (4) consecutive State fiscal years.

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     SECTION 5. Chapter 42-61.2 of the General Laws entitled "Video Lottery Terminal" is

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hereby amended by adding thereto the following section:

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     42-61.2-3.1. Table game regulation. – (a) In addition to the powers and duties of the

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Division director under Sections 42-61-4, 42-61.2-3 and 42-61.2-4, and pursuant to § 42-61.2-2.1

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and § 42-61.2-2.2, the Division director shall promulgate reasonable rules and regulations relating

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to state-operated Table Gaming and set policy for these Table Games. These rules and regulations

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shall include, but not be limited to:

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     (1) Establishing standards and procedures for Table Gaming and associated equipment.

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(2) Establishing standards, rules and regulations to govern the conduct of Table Games and the

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system of wagering associated with Table Games, including without limitation:

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     (i) The object of the Table Game and method of play, including what constitutes win, loss

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or tie bets;

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     (ii) Physical characteristics of the Table Games and Table Game equipment;

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     (iii) Wager and payout odds for each type of available wager;

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     (iv) The applicable inspection procedures for any of the following, as required by a Table

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Game:

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     (A) Cards;

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     (B) Dice;

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     (C) Wheels and balls; and

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     (D) Other devices, equipment and accessories related to table games.

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      (v) Procedures for the collection of bets and payouts, including requirements for internal

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revenue service purposes;

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     (vi) Procedures for handling suspected cheating or Table Gaming irregularities; and

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     (vii) Procedures for handling any defective or malfunctioning Table Game equipment.

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     (3) Establishing the method for calculating Net Table Game Revenue and standards for

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the daily counting and recording of cash received in the conduct of Table Games, and ensuring

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that internal controls are followed, including the maintenance of financial books and records and

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the conduct of annual audits at the expense of the table game retailer.

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     (4) Establishing the number and type of Table Games authorized at a Table Game

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Retailer’s facility, and all rules related thereto.

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     (5) Establishing any Table Game rule changes, Table Game minimum and maximum

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wager changes, and changes to the type of Table Game being offered at a particular gaming table,

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including any notice by the Table Game Retailer to the public.

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     (6) Requiring the Table Game Retailer to:

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     (i) Provide written information at each Table Game about game rules, payoffs or winning

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wagers and other information as the Division may require.

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     (ii) Provide specifications approved by the Division to integrate and update the Table

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Game Retailer’s surveillance system to cover all areas where Table Games are conducted and

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other areas as required by the lottery division. The specifications shall include provisions

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providing the Division and other persons authorized by the Division with onsite access to the

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system.

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      (iii) Designate one or more locations within the Table Game Retailer’s facility to

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conduct Table Games.

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     (iv) Ensure that visibility in a Table Game Retailer’s facility is not obstructed in any way

11-6

that could interfere with the ability of the Division, the Table Game Retailer or other persons

11-7

authorized under this section or by the Division to oversee the surveillance of the conduct of

11-8

Table Games.

11-9

     (v) Ensure that the count room for Table Gaming has appropriate security for the

11-10

counting and storage of cash.

11-11

     (vi) Furnish each Table Game with a sign acceptable to the division indicating the

11-12

permissible minimum and maximum wagers at the Table Game.

11-13

     (vii) Adopt policies or procedures to prohibit any Table Game equipment from being

11-14

possessed, maintained or exhibited by any person on the premises of a Table Game Retailer’s

11-15

facility except in the areas of such facility where the conduct of Table Games is authorized or in a

11-16

restricted area designated to be used for the inspection, service, repair or storage of Table Game

11-17

equipment by the Table Game Retailer or in an area used for employee training and instruction by

11-18

the Table Game Retailer.

11-19

     (viii) Ensure that drop boxes are brought into or removed from an area where Table

11-20

Games are conducted or locked or unlocked in accordance with procedures established by the

11-21

Division.

11-22

     (ix) Designate secure locations for the inspection, service, repair or storage of Table

11-23

Game equipment and for employee training and instruction to be approved by the Division.

11-24

     (7) Establishing the size and uniform color by denomination of Table Game chips used in

11-25

the conduct of Table Games, including tournaments, and a policy for the use of promotional or

11-26

commemorative chips used in the conduct of certain Table Games. All types of Table Game chips

11-27

shall be approved by the Division prior to being used for play at a Table Game.

11-28

     (8) Establishing the procedure to be used by a Table Game Retailer to determine and

11-29

extract a Rake for the purposes of generating Net Table Game Revenue from nonbanking games.

11-30

     (9) Establishing minimum standards relating to the acceptance of tips or gratuities by

11-31

dealers at a Table Game, which shall include:

11-32

     (i) The requirement that tips or gratuities accepted by dealers at banking Table Games be

11-33

placed in a common pool for complete distribution pro rata among all dealers based on the daily

11-34

collection of such tips or gratuities; provided however, the Division may establish an alternative

12-1

distribution method for tips or gratuities at a banking Table Game upon submission by the Table

12-2

Game Retailer of a proposal acceptable to the division to modify the existing distribution method

12-3

for tips or gratuities.

12-4

     (ii) The requirement that tips or gratuities accepted by dealers at nonbanking Table

12-5

Games are not required to be pooled and may be retained by the dealers; provided however, the

12-6

Division may establish an alternative distribution method for tips or gratuities at a nonbanking

12-7

Table Game upon submission by the Table Game Retailer of a proposal acceptable to the division

12-8

to modify the existing distribution method for tips or gratuities.

12-9

     (10) Establishing the minimal proficiency requirements for Table Game personnel,

12-10

including without limitation Table Game dealers. The foregoing requirements of this subsection

12-11

(10) shall not affect any rules or regulations of the Rhode Island Department of Business

12-12

Regulation requiring licensing of personnel of state-operated gaming facilities.

12-13

     (11) Establishing the practices and procedures governing the conduct of Table Game

12-14

tournaments.

12-15

     (12) Establishing appropriate eligibility requirements and standards for traditional Table

12-16

Game equipment suppliers.

12-17

     (13) Any other matters necessary for conducting Tables Games.

12-18

     (b) The Division shall promulgate the Table Game regulations authorized by this section

12-19

on or before March 31, 2013.

12-20

     (c) A Table Game Retailer shall reimburse and pay to the Division (or to such other

12-21

entities as the Division may identify) all reasonable costs and expenses associated with the

12-22

Division's review of the business or operations of the Table Game Retailer, including, but not

12-23

limited to, such items as ongoing auditing, legal, investigation services, compulsive and problem

12-24

gambling programs, and other related matters.

12-25

     (d) The Table Game Retailer shall provide secure, segregated facilities as required by the

12-26

Division on the premises for the exclusive use of the Lottery staff and the State Police. Such

12-27

space shall be located proximate to the gaming floor and shall include surveillance equipment,

12-28

monitors with full camera control capability, as well as other office equipment that may be

12-29

deemed necessary by the Division. The location and size of the space shall be subject to the

12-30

approval of the Division.

12-31

     SECTION 6. Sections 42-61.2-5, 42-61.2-8 and 42-61.2-12 of the General Laws in

12-32

Chapter 42-61.2 entitled "Video Lottery Terminal" are hereby amended to read as follows.

12-33

     42-61.2-5. Exclusion of minors. -- No person under the age of eighteen (18) years may

12-34

play a video lottery game or a Table Game authorized by this chapter, nor shall any licensed

13-1

video lottery or Table Game retailer knowingly permit a minor to play a video lottery machine or

13-2

Table Game or knowingly pay a minor with respect to a video lottery credit slip or Table Game

13-3

chip. Violation of this section shall be punishable by a fine of five hundred dollars ($500).

13-4

     42-61.2-8. Penalty for manipulation or tampering. -- Any person who, with intent to

13-5

manipulate the outcome, payoff, and/or operation of a video lottery terminal or Table Game,

13-6

manipulates the outcome, prize, or operation of a video lottery terminal or Table Game by

13-7

physical or electronic means shall be guilty of a felony punishable by imprisonment for not more

13-8

than ten (10) years or by a fine of not less than ten thousand ($10,000) dollars or both.

13-9

     42-61.2-12. Video lottery terminal prize -- Set-off for child support debts Prize --

13-10

Set-off for child support debts. -- Notwithstanding the provisions of section 42-61-7 relating to

13-11

assignment of prizes, the following set off provisions shall apply to the payment of any prize

13-12

requiring the issuance of Internal Revenue Service Form W-2G by a video lottery retailer

13-13

(whether or not a Table Game Retailer) to a patron:

13-14

      (1) With respect to a person entitled to receive the prize who has an unpaid child support

13-15

order(s) arrearage(s) in excess of five hundred dollars ($500), as provided by the department of

13-16

human services pursuant to subsection 42-61-7.1(3), the division of state lottery:

13-17

      (i) Shall establish rules and regulations pursuant to section 42-61.2-3 and section 42-

13-18

61.2-3.1) providing for the establishment and operation of a system whereby the division of state

13-19

lottery shall have the ability to communicate such information to video lottery retailers so as to

13-20

identify a person entitled to receive a prize requiring the issuance of Internal Revenue Service

13-21

Form W-2G who has an unpaid child support order(s) arrearage(s).

13-22

      (ii) Upon receipt of information indicating an unpaid child support arrearage the video

13-23

lottery retailer shall set off against the amount due to that person an amount up to the balance of

13-24

the child support arrearage(s). The video lottery retailer shall then make payment as prescribed by

13-25

the division of lottery to the Rhode Island family court in the case of child support arrearage(s)

13-26

which shall deposit the amount set off into the registry of the family court for a period of forty-

13-27

five (45) days, or if any application for review has been filed pursuant to subsection 27-57-1(d),

13-28

until final disposition of the application until further order of the court.

13-29

      (iii) The video lottery retailer shall pay to this person the remaining balance of the prize

13-30

amount, if any, after reduction of the amount set off above for child support.

13-31

      (2) The division of lottery, the lottery director and the video lottery retailer shall be

13-32

discharged of all further liability upon payment of a prize pursuant to this section. Except in the

13-33

case of gross negligence, the division of lottery, the lottery director and the video lottery retailer

13-34

shall not be liable to any party or person for failure to make such a set-off.

14-1

      (3) The department of human services shall periodically within each year furnish the

14-2

director with a list or compilation of names of individuals, together with any other identifying

14-3

information and in a form that the director shall require, who as of the date of the list or

14-4

compilation, have an unpaid child support order arrearage in excess of five hundred dollars

14-5

($500) as shown on the Rhode Island family court decrees department of human services child

14-6

support enforcement computer system ("CSE system"). For the purposes of this section, the terms

14-7

used in this section shall be given the meaning and definitions specified in section 15-16-2.

14-8

      (4) Any party aggrieved by any action taken under this section may within thirty (30)

14-9

days of the withholding of the payment by the lottery director seek judicial review in the family

14-10

court, which may, in its discretion, issue a temporary order prohibiting the disbursement of funds

14-11

under this section, pending final adjudication.

14-12

      (5) Notwithstanding any other general or special law to the contrary, this section shall

14-13

apply to all existing gambling facilities within the state as of the time of enactment and also to

14-14

any gambling facility within this state which is established after the date of enactment.

14-15

     SECTION 7. Chapter 42-61.2 of the General Laws entitled "Video Lottery Terminal" is

14-16

hereby amended by adding thereto the following sections:

14-17

     42-61.2-13. Table game enforcement. – (a) Whoever violates sections 42-61.2-2.1 or

14-18

42-61.2-3.1, or any rule or regulation, policy or procedure, duly promulgated thereunder, or any

14-19

administrative order issued pursuant to sections 42-61.2-2.1 or 42-61.2-3.1, shall be punishable as

14-20

follows:

14-21

     (1) In the Division director's discretion, the Division director may impose an

14-22

administrative penalty of not more than one thousand dollars ($1,000) for each violation. Each

14-23

day of continued violation shall be considered as a separate violation if the violator has

14-24

knowledge of the facts constituting the violation and knows or should know that such facts

14-25

constitute or may constitute a violation. Lack of knowledge regarding such facts or violation shall

14-26

not be a defense to a continued violation with respect to the first day of its occurrence. Written

14-27

notice detailing the nature of the violation, the penalty amount, and effective date of the penalty

14-28

will be provided by the Division director. Penalties shall take effect upon notification. A written

14-29

request for a hearing must be submitted in writing to the Division director within thirty (30) days

14-30

of notification of violation.

14-31

     (2)(a) In the Division director's discretion, the Division director may endeavor to obtain

14-32

compliance with requirements of this chapter by written administrative order. Such order shall be

14-33

provided to the responsible party, shall specify the complaint, and propose a time for correction

14-34

of the violation.

15-1

     (b) The Division director shall enforce this chapter. Such enforcement shall include, but

15-2

not be limited to, referral of suspected criminal activity to the Rhode Island state police for

15-3

investigation.

15-4

     (c) Any interest, costs or expense collected under this section shall be appropriated to the

15-5

Division for administrative purposes.

15-6

     (d) Any penalty imposed by the Division pursuant to this Section 42-61.2-13 shall be

15-7

appealable to Superior Court.

15-8

     42-61.2-14. Compulsive and problem gambling program. – The Division and the State

15-9

acknowledge that the vast majority of gaming patrons can enjoy gambling games responsibly, but

15-10

that there are certain societal costs associated with gaming by some individuals who have

15-11

problems handling the product or services provided. The Division and the State further

15-12

understand that it is their duty to act responsibly toward those who cannot participate

15-13

conscientiously in gaming. Pursuant to the foregoing, Twin River and Newport Grand, in

15-14

cooperation with the State, shall offer compulsive and problem gambling programs that include,

15-15

but are not limited to (a) problem gambling awareness programs for employees; (b) player self-

15-16

exclusion program; and (c) promotion of a problem gambling hotline. Twin River and Newport

15-17

Grand shall modify their existing compulsive and problem-gambling programs to include Table

15-18

Games to the extent such games are authorized at such facilities. Twin River and Newport Grand

15-19

shall reimburse and pay to the Division no less than one hundred thousand dollars ($100,000) in

15-20

aggregate annually for compulsive and problem gambling programs established by the Division.

15-21

The contribution from each facility shall be determined by the Division.

15-22

     42-61.2-15. Table game hours of operation. – To the extent Table Games are

15-23

authorized at Twin River, such Table Games may be offered at Twin River for all or a portion of

15-24

the days and times that VLTs are offered. To the extent Table Games are authorized at Newport

15-25

Grand, such Table Games may be offered at Newport Grand for all or a portion of the days and

15-26

times that VLTs are offered.

15-27

     SECTION 8. Authorized Procurement of Third Amendment to the UTGR Master

15-28

Contract.

15-29

     (a) Notwithstanding any provision of the general or Public Laws to the contrary, within

15-30

ninety (90) days of the enactment of this Act, the Division is hereby expressly authorized and

15-31

directed to enter into with UTGR a Third Amendment to the UTGR Master Contract to effectuate

15-32

the terms and conditions of this Act relative to video lottery terminals, including, without

15-33

limitation, the following:

16-34

     (1) There is hereby authorized a Supplementary Promotional Points Program at Twin

16-35

River (in addition to the Initial Promotional Points Program), pursuant to the terms and conditions

16-36

established from time to time by the Division during the term of the UTGR Contract. The

16-37

approved amount of the Supplementary Promotional Points Program shall not exceed six percent

16-38

(6%) of Twin River net terminal income of the Prior Marketing Year. For avoidance of doubt, the

16-39

aggregate approved amount of the Initial and Supplementary Promotional Points Programs, in

16-40

total, shall therefore not exceed ten percent (10%) of the amount of net terminal income of Twin

16-41

River of the Prior Marketing Year, plus an additional seventy hundred and fifty thousand dollars

16-42

($750,000) allocated pursuant to the terms of Chapter 151, Article 25 of the Public Laws of 2011,

16-43

Section 8(a)(i).

16-44

     (2) The requirements of this Section 8 related to the Supplementary Promotional Points

16-45

Program shall take effect on and after July 1, 2012.

16-46

     SECTION 9. Authorized Procurement of Third Amendment to the Newport Grand

16-47

Master Contract.

16-48

     (a) Notwithstanding any provision of the general or Public Laws to the contrary, within

16-49

ninety (90) days of the enactment of this Act, the Division is hereby expressly authorized and

16-50

directed to enter into with Newport Grand, LLC a Third Amendment to the Newport Grand

16-51

Master contract to effectuate the terms and conditions of this Act relative to video lottery

16-52

terminals, including, without limitation, the following:

16-53

     (1) There is hereby authorized a Supplementary Promotional Points Program at Newport

16-54

Grand (in addition to the Initial Promotional Points Program), pursuant to the terms and

16-55

conditions established from time to time by the Division during the term of the Newport Grand

16-56

Master Contract. The approved amount of the Supplementary Promotional Points Program shall

16-57

not exceed six percent (6%) of Newport Grand net terminal income of the Prior Marketing Year.

16-58

For avoidance of doubt, the aggregate approved amount of the Initial and Supplementary

16-59

Promotional Points Programs, in total, shall therefore not exceed ten percent (10%) of the amount

16-60

of net terminal income of Newport Grand of the Prior Marketing Year, plus an additional seventy

16-61

hundred and fifty thousand dollars ($750,000) allocated pursuant to the terms of Chapter 151,

16-62

Article 25 of the Public Laws of 2011, Section 8(a)(i).

16-63

     (2) The requirements of this Section 9 related to the Supplementary Promotional Points

16-64

Program shall take effect on and after July 1, 2012.

16-65

     SECTION 10. This act shall take effect upon passage, except for section 7. With respect

16-66

to Twin River, Section 7 shall take effect only if Casino Gaming at Twin River is approved

16-67

statewide and by the Town of Lincoln pursuant to Article 25, Chapter 151, Section 4 of the Public

16-68

Laws of 2011. With respect to Newport Grand, Section 7 shall take effect only if Casino Gaming

17-1

at Newport Grand is approved statewide and by the City of Newport pursuant to Section 1 of

17-2

Chapters 24 and 25 of the Public Laws of 2012. Voter approval or non-approval with respect to

17-3

one facility shall be independent of voter approval or non-approval with respect to the other

17-4

     facility.

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LC02714/SUB A/4

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO REVENUE PROTECTION

***

18-1

     This act would make several amendments regarding gaming in Rhode Island, and

18-2

specifically table. The act would provide for the regulation of table gaming. The act also would

18-3

revise the allocation of revenue in the event table gaming is approved at Newport Grand and/or

18-4

Twin River by appropriate vote.

18-5

     This act would take effect upon passage, except for section 7. With respect to Twin

18-6

River, Section 7 shall take effect only if Casino Gaming at Twin River is approved statewide and

18-7

by the Town of Lincoln pursuant to Article 25, Chapter 151, Section 4 of the Public Laws of

18-8

2011. With respect to Newport Grand, Section 7 shall take effect only if Casino Gaming at

18-9

Newport Grand is approved statewide and by the City of Newport pursuant to Section 1 of

18-10

Chapters 24 and 25 of the Public Laws of 2012. Voter approval or non-approval with respect to

18-11

one facility shall be independent of voter approval or non-approval with respect to the other

18-12

facility.

=======

LC02714/SUB A/4

=======