HB4601 INTR

H. B. 4601

(By Delegates Farris, Sorah, Houvouras
and Mezzatesta)
[Introduced February 24, 1994; referred to the
Committee on the Judiciary then Finance.]

A BILL to amend chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article twenty-four, relating to authorizing the state lottery commission to license and regulate excursion boat gambling; defining certain terms; describing the scope of authorization; legalizing wagering on a gambling game when conducted on an excursion gambling boat; describing the powers and authority of the commission; providing for the licensing of boats and gambling operations; establishing requirements for licensees; setting forth the terms and conditions of licenses and providing for revocation; requiring licensees to be bonded; prohibiting wagering by minors; imposing an admission tax; imposing a wagering tax; requiring audits of licensees' operations; requiring the commission to report annually to the governor; defining the misdemeanor offense of unlawful operation of a gambling excursion and establishing the penalty therefor; defining the felony offense of felonious wagering and establishing the penalty therefor; and providing for the forfeiture of property for certain unlawful acts.

Be it enacted by the Legislature of West Virginia:

That chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article twenty-four, to read as follows:

ARTICLE 24. EXCURSION BOAT GAMBLING.

§ 29-24-1. Definitions.

As used in this article unless the context otherwise requires:

(1) "Applicant" means any person applying for an occupational license, applying for a license for an excursion gambling boat, or applying for a license to conduct gambling games on an excursion gambling boat.
(2) "Commission" means the state lottery commission created under section four, article twenty-two of this chapter.
(3) "Holder of occupational license" means a person licensed by the commission to perform an occupation which the commission has identified as requiring a license to engage in excursion boat gambling in West Virginia.
(4) "Licensee" means any person licensed under section seven of this article.
(5) "Gambling game" means twenty-one, slot machine, video game of chance, roulette wheel, klondike table, punchboard, faro layout, keno layout, numbers ticket, push card, jar ticket or pull tab which is authorized by the commission as a wagering device under this article.
(6) "Excursion gambling boat" means a self-propelled excursion boat on which lawful gambling is authorized and licensed as provided in this article.
(7) "Gambling excursion" means the time during which gambling games may be operated on an excursion gambling boat whether docked or during a cruise.
(8) "Excursion season" includes the months of April through October.
(9) "Off season" includes the months of November through March.
(10) "Dock" means the location where an excursion gambling boat moors for the purpose of embarking passengers for and disembarking passengers from a gambling excursion.
(11) "Gross receipts" means the total sum wagered under this article.
(12) "Adjusted gross receipts" means the gross receipts less winnings paid to wagerers.
(13) "Cheat" means to alter the selection of criteria which determine the result of a gambling game or the amount or frequency of payment in a gambling game.

§ 29-24-2. Scope of provisions.

This article does not apply to the pari-mutuel system of wagering used or intended to be used in connection with the horse race or dog race meetings as authorized under article twenty-three, chapter nineteen of this code, lottery or lotto games authorized under article twenty-two of this chapter, or bingo or games of skill or chance authorized under article twenty, chapter forty-seven of this code.

§ 29-24-3. Excursion boat gambling authorized.

The system of wagering on a gambling game as provided by this article is legal, when conducted on an excursion gambling boat at authorized locations by a licensee as provided in this article.

§ 29-24-4. Powers and authority.

The commission has full jurisdiction over and shall supervise all gambling operations governed by this article. The commission has the following powers:

(1) To propose legislative rules pursuant to chapter twenty-nine-a of this code to implement this article;
(2) To investigate applicants and determine the eligibility of applicants for a license and to select among competing applicants for a license the applicant which best serves the interests of the citizens of West Virginia;
(3) To license owners of gambling game operations, to license operators of excursion gambling boats, to identify occupations within the excursion gambling boat operations which require licensing, and to adopt standards for licensing the occupations including establishing fees for the occupational licenses and licenses for owners of gambling game operations. The fees shall be paid to the commission and deposited in a special account of the general fund of the state. All revenue received by the commission from license fees and admission taxes shall be deposited in the special account in the general fund of the state;
(4) To adopt standards under which all excursion gambling boat operations shall be held and standards for the facilities within which the gambling operations are held. The commission may authorize the operation of gambling games on an excursion boat which is also licensed to sell or serve alcoholic beverages, wine, or beer;
(5) To regulate the wagering structure for gambling excursions;
(6) To enter the office, excursion gambling boat, facilities, or other places of business of a licensee to determine compliance with this article;
(7) To investigate alleged violations of this article or the commission rules, orders, or final decisions and to take appropriate disciplinary action against a licensee or a holder of an occupational license for a violation, or institute appropriate legal action for enforcement, or both;
(8) To authorize a licensee, an employee of a licensee or holder of an occupational license to expel a person violating a provision of this article or the commission rules, orders, or final orders, or other person considered to be undesirable from the excursion gambling boat facilities;
(9) To require the removal of a licensee, an employee of a licensee or a holder of an occupational license for a violation of this article or a commission rule or engaging in a fraudulent practice;
(10) To require a licensee to file an annual balance sheet and profit and loss statement pertaining to the licensee's gambling activities in this state, together with a list of the stockholders or other persons having any beneficial interest in the gambling activities of each licensee;
(11) To issue subpoenas for the attendance of witnesses and subpoenas duces tecum for the production of books, records and other pertinent documents, and to administer oaths and affirmations to the witnesses, when, in the judgment of the commission, it is necessary to enforce this article or the commission rules;
(12) To keep accurate and complete records of its proceedings and to certify the records as may be appropriate;
(13) To revoke or suspend licenses;
(14) To take any other action as may be reasonable or appropriate to enforce this article and the commission rules;
(15) To require all licensees of gambling game operations to utilize a cashless wagering system whereby all players' money is converted to tokens, electronic cards, or chips which can only be used for wagering on the excursion gambling boat; and
(16) To determine the payouts from the gambling games authorized under this article. In making the determination of payouts, the commission shall consider factors that provide gambling and entertainment opportunities which are beneficial to the gambling licensees and the general public.

§ 29-24-5. Licenses for boat and game owners; applications.

(a) A qualified person may apply to the commission for a license to operate an excursion gambling boat or to own a gambling game operation on an excursion gambling boat as provided in this article. The application shall be filed with the director of the commission at least sixty days before the first day of the next riverboat gambling excursion season as determined by the commission, shall identify the excursion boat upon which gambling games will be authorized, shall specify the exact location where the boat will be docked, and shall be in a form and contain information as the commission prescribes.

(b) The annual license fee to operate an excursion gambling boat shall be based on the passenger-carrying capacity including crew, for which the excursion gambling boat is registered. The annual fee shall be five dollars per person capacity.

§ 29-24-6. Requirements of applicant; penalty; consent to search.

(a) A person may not be issued a license to own a gambling game operation on an excursion gambling boat, or a license to operate an excursion gambling boat under this article or an occupational license unless the person has completed and signed an application on the form prescribed and published by the commission. The application shall include the full name, social security number, residence, date of birth and other personal identifying information of the applicant that the commission considers necessary. The application shall also indicate whether the applicant has any of the following:

(1) A record of conviction of a felony;
(2) An addiction to alcohol or a controlled substance; or
(3) A history of mental illness or repeated acts of violence.
(b) An applicant shall submit pictures, fingerprints, and descriptions of physical characteristics to the commission in the manner prescribed on the application forms.
(c) The commission shall charge the applicant a fee set by the department of public safety, criminal identification bureau, to defray the costs associated with the search and classification of fingerprints required in subsection (b) of this section. This fee is in addition to any other license fee charged by the commission.
(d) Before a license is granted, the superintendent of the division of public safety shall conduct a thorough background investigation of the applicant for a license to operate a gambling game operation on an excursion gambling boat. The applicant shall provide information on a form as required by the superintendent.
(e) A person who knowingly makes a false statement on the application is guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than one hundred nor more than five hundred dollars or confined in the county or regional jail not less than six months or both fined and confined.
(f) The licensee or a holder of an occupational license shall consent to members of the division of public safety or commission employees designated by the director of the commission to the search without a warrant of the licensee or holder's person, personal property and effects, and premises which are located on the excursion gambling boat or adjacent facilities under control of the licensee to inspect or investigate for criminal violations of this article or violations of rules adopted by the commission.

§ 29-24-7. Licenses; terms and conditions; revocation.

(a) If the commission is satisfied that this article and its rules adopted under this article applicable to licensees have been or will be complied with, it shall issue a license for a period of not more than three years. The commission may decide which gambling games it will permit. The commission shall decide the number, location, and type of excursion gambling boats licensed under this article. The commission shall license not more than a total of twelve excursion gambling boats. Not more than eight excursion gambling boats may be licensed for operation on the Ohio and Kanawha rivers and not more than four excursion gambling boats may be licensed for operation on lakes and reservoirs within the state and on rivers other than the Ohio River and the Kanawha River. The license shall set forth the name of the licensee, the type of license granted, the place where the excursion gambling boats will operate and dock, and the time and number of days during the excursion season and the off season when gambling may be conducted by the licensee. The commission shall not allow a licensee to conduct gambling games on an excursion gambling boat while docked during the off season if the licensee does not operate gambling excursions for a minimum number of days during the excursion season.

(b) A license may only be granted to an applicant upon the express condition that:
(1) The applicant shall not, by a lease, contract, understanding, or arrangement of any kind, grant, assign, or turn over to a person the operation of an excursion gambling boat licensed under this section or of the system of wagering described in section nine of this article. This section does not prohibit a management contract approved by the commission; and
(2) The applicant shall not in any manner permit a person other than the licensee to have a share, percentage, or proportion of the money received for admissions to the excursion gambling boat.
(c) A license shall not be granted if there is substantial evidence that the applicant for a license:
(1) Has been suspended from operating a game of chance or gambling operation in another jurisdiction by a board or commission of that jurisdiction;
(2) Has not demonstrated financial responsibility sufficient to meet adequately the requirements of the enterprise proposed;
(3) Is not the true owner of the enterprise proposed;
(4) Is not the sole owner, and other persons have ownership in the enterprise which fact has not been disclosed;
(5) Is a corporation and ten percent of the stock of the corporation is subject to a contract or option to purchase at any time during the period for which the license is issued unless the contract or option was disclosed to the commission and the commission approved the sale or transfer during the period of the license;
(6) Has knowingly made a false statement of a material fact to the commission; or
(7) Has failed to meet any monetary obligation in connection with an excursion gambling boat.
(d) Character references may be required of persons licensed, but the character references shall not be obtained from persons in the same or similar occupations or professions in other states.
(e) A license shall not be granted to a licensee for gambling on more than two excursion gambling boats at the same time.
(f) A licensee may not loan to any person money or any other thing of value for the purpose of permitting that person to wager on any game of chance.
(g) A licensee may not dock an excursion gambling boat within the jurisdiction of a city which enacts an ordinance prohibiting excursion boat gambling or within an area outside the limits of a city if the county enacts an ordinance prohibiting excursion boat gambling.
(h) An excursion gambling boat operated on inland waters of this state is subject to an inspection of its sanitary facilities to protect the environment and water quality before a license is issued under this article.
(i) Upon a violation of any of the conditions listed in this section, the commission shall immediately revoke the license.

§ 29-24-8. Bond of licensee.

A licensee licensed under section seven shall post a bond to the state of West Virginia before the license is issued in a sum as the commission shall fix, with sureties to be approved by the commission. The bond shall be used to guarantee that the licensee faithfully makes the payments, keeps its books and records and makes reports, and conducts its games of chance in conformity with this article and the rules adopted by the commission. The bond may not be canceled by a surety on less than thirty days notice in writing to the commission. If a bond is canceled and the licensee fails to file a new bond with the commission in the required amount on or before the effective date of cancellation, the licensee's license shall be revoked. The total and aggregate liability of the surety on the bond is limited to the amount specified in the bond.

§ 29-24-9. Wagering; minors prohibited.

(a) Except as permitted in this section, the licensee shall permit no form of wagering on gambling games.

(b) The licensee may receive wagers only from a person present on a licensed excursion gambling boat.
(c) The licensee shall exchange the money of each wagerer for tokens, chips, or other forms of credit to be wagered on the gambling games. The licensee shall exchange the gambling tokens, chips, or other forms of wagering credit for money at the request of the wagerer.
(d) Wagering may not be conducted with money or other negotiable currency.
(e) A person under the age of eighteen years is not permitted on an excursion gambling boat and shall not be allowed in the area of the excursion boat where gambling is being conducted.
(f) A licensee may not conduct gambling games while the excursion gambling boat is docked unless it is temporarily docked for embarking or disembarking passengers, crew or supplies during the course of an excursion cruise, for mechanical problems, adverse weather or other conditions adversely affecting safe navigation, during the duration of the problem or condition, or as authorized by the commission during off season.

§ 29-24-10. Admission tax; tax fees.

(a) An owner of a gambling game operation on an excursion gambling boat licensed under section seven shall pay the tax imposed by section eleven.

(b) An excursion boat licensee shall pay to the commission an admission tax for each person embarking on an excursion gambling boat with a ticket of admission. The admission tax shall be set by the commission.
(1) If tickets are issued which are good for more than one excursion, the admission tax shall be paid for each person using the ticket on each excursion that the ticket is used.
(2) If free passes or complimentary admission tickets are issued, the licensee shall pay the same tax upon these passes or complimentary tickets as if they were sold at the regular and usual admission rate.
(3) However, the excursion boat licensee may issue tax-free passes to actual and necessary officials and employees of the licensee or other persons actually working on the excursion gambling boat.
(4) The issuance of tax-free passes is subject to the rules of the commission, and a list of all persons to whom the tax-free passes are issued shall be filed with the commission.
(c) In addition to the admission tax charged under subsection (b), a city may adopt, by ordinance, an admission tax not exceeding fifty cents for each person embarking on an excursion gambling boat docked within the city or a county may adopt, by ordinance, an admission tax not exceeding fifty cents for each person embarking on an excursion gambling boat docked outside the boundaries of a city.
(1) The admission tax revenue received by a city shall be used for one or more of the following purposes:
(A) Law enforcement programs;
(B) Acquisition of, and necessary improvements to, natural areas, green spaces, parks, recreational facilities and historical heritage projects; or
(C) Cultural programs.
(2) The admission tax revenue received by a county shall be used for one or more of the following purposes:
(A) Law enforcement programs;
(B) Credited to the emergency services and volunteer fire commissions; or
(C)Libraries.
(d)In determining the license fees and state admission taxes to be charged as provided under section four and this section, the commission shall use the amount appropriated to the commission as the basis for determining the amount of revenue to be raised from the license fees and admission taxes.
(e) No other license tax, permit tax, occupation tax, or excursion fee, may be levied, assessed, or collected from a licensee by the state or by a political subdivision, except as provided in this article.
(f) No other excise tax may be levied, assessed, or collected from the licensee relating to gambling excursions or admission charges by the state or by a political subdivision, except as provided in this article.

§ 29-24-11. Wagering tax; rate; credit.

(a) A tax is imposed on the adjusted gross receipts received annually from gambling games authorized under this article at the rate of five percent on the first one million dollars of adjusted gross receipts and at the rate of ten percent on any amount of adjusted gross receipts over one million dollars. The taxes imposed by this section shall be paid by the licensee to the treasurer of state within ten days after the close of the day when the wagers were made and shall be credited to a special fund in the state treasury which shall be designated and known as the "riverboat lottery fund."

(b) The tax revenue deposited in the riverboat lottery fund shall be used, subject to appropriation by the Legislature, as follows:
(1) Fifty percent to the benefit fund of the state teachers retirement system.
(2) Twenty-five percent to the death, disability and retirement fund for the benefit of members of the department of public safety and any dependent of a retired or deceased member thereof; and
(3) Twenty-five percent to the ports or ports visited by such boats.

§ 29-24-12. Licensees; roads; reports; supervision.

(a) A licensee shall keep its books and records so as to clearly show the following:

(1) The total number of admissions to gambling excursions conducted by it on each day, including the number of admissions upon free passes or complimentary tickets.
(2) The amount received daily from admission fees.
(3) The total amount of money wagered during each excursion day and the adjusted gross receipts for the day.
(b) The licensee shall furnish to the commission reports and information as the commission may require with respect to its activities. The commission may designate a representative to board a licensed excursion gambling boat, who shall have full access to all places within the enclosure of the boat and who shall supervise and check the admissions. The compensation of the representative shall be fixed by the commission but shall be paid by the licensee.
(c) The books and records kept by a licensee as provided by this section are public records and examination, publication and dissemination of the books and records are governed by the provisions of article one, chapter twenty-nine-b of this code.

§ 29-24-13. Audit of licensee operations.

Within ninety days after the end of each month, the licensee shall transmit to the commission an audit of the financial transactions and conditions of the licensee's operations conducted under this article. Additionally, within ninety days after the end of the licensee's fiscal year, the licensee shall transmit to the commission an audit of the financial transactions and condition of the licensee's total operations. All audits shall be conducted by certified public accountants registered in the state of West Virginia.

§ 29-24-14. Annual report of commission.

The commission shall make an annual report to the governor for the period ending the thirty-first day of December of each year. Included in the report shall be an account of the commission's actions, its financial position and results of operation under this article, the practical results attained under this article, and any recommendations for legislation which the commission considers advisable.

§ 29-24-15. Prohibited activities; penalty.

(a) A person is guilty of unlawful operation of a gambling excursion when:

(1) Such person operates a gambling excursion where wagering is used or is to be used without a license issued by the commission.
(2) Such person operates a gambling excursion where wagering is permitted other than in the manner specified by section nine of this article.
(3) Such person acts, or employs another person to act, as a shill or decoy to encourage participation in a gambling game.
(4) Such person knowingly permits a person under the age of eighteen years to make a wager.
(5) Such person exchanges tokens, chips or other forms of credit to be used on gambling games for anything of value. The provisions of this subdivision shall not apply to wagers on gambling games or exchanges for money as provided in subsection (d), section nine of this article.
(b) A person is guilty of felonious wagering when:
(1) Such person offers, promises or gives anything of value or benefit to a person who is connected with an excursion gambling boat operator, pursuant to an agreement or arrangement or with the intent that the promise or thing of value or benefit will influence the actions of the person to whom the offer, promise or gift was made in order to affect or attempt to affect the outcome of a gambling game, or to influence official action of a member of the commission. For the purposes of this subdivision and subdivision (2) of this subsection, the term "person who is connected with an excursion gambling boat operator" includes, but is not limited to, an officer or employee of a licensee or holder of an occupational license.
(2) Such person solicits or knowingly accepts or receives a promise of anything of value or benefit while the person is connected with an excursion gambling boat, pursuant to an understanding or arrangement or with the intent that the promise or thing of value or benefit will influence the actions of the person to affect or attempt to affect the outcome of a gambling game, or to influence official action of a member of the commission.
(3) Such person uses or possesses with the intent to use a device to assist:
(A) In projecting the outcome of the game;
(B) In keeping track of the cards played;
(C) In analyzing the probability of the occurrence of an event relating to the gambling game; or
(D) In analyzing the strategy for playing or betting to be used in the game, except as permitted by the commission.
(4) Such person cheats at a gambling game.
(5) Such person manufactures, sells or distributes any cards, chips, dice, game or device which is intended to be used to violate any provision of this article.
(6) Such person instructs a person in cheating or in the use of a device for that purpose with the knowledge or intent that the information or use conveyed may be employed to violate any provision of the article.
(7) Such person alters or misrepresents the outcome of a gambling game on which wagers have been made after the outcome is made sure but before it is revealed to the players.
(8) Such person places a bet after acquiring knowledge, not available to all players, of the outcome of the gambling game which is subject of the bet or to aid a person in acquiring the knowledge for the purpose of placing a bet contingent on that outcome.
(9) Such person claims, collects or takes, or attempts to claim, collect or take, money or anything of value in or from the gambling games, with intent to defraud, without having made a wager contingent on winning a gambling game, or claims, collects, or takes an amount of money or thing of value of greater value than the amount won.
(10) Such person knowingly entices or induces a person to go to any place where a gambling game is being conducted or operated in violation of the provisions of this article with the intent that the other person plays or participates in that gambling game.
(11) Such person uses counterfeit chips or tokens in a gambling game.
(12) Such person knowingly uses, other than chips, tokens, coin, or other methods or credit approved by the commission, legal tender of the United States of America, or to use coin not of the denomination as the coin intended to be used in the gambling games.
(13) Such person, not a gambling licensee or employee of a gambling licensee acting in furtherance of the employee's employment, has in his or her possession any device intended to be used to violate a provision of this article.
(14) Such person, not a gambling licensee or employee of a gambling licensee acting in furtherance of the employee's employment, has in his or her possession any key or device designed for the purpose of opening, entering, or affecting the operation of a gambling game, drop box, or an electronic or mechanical device connected with the gambling game or for removing coins, tokens, chips or other contents of a gambling game.
(c) Any person who violates the provisions of subsection (a) of this section is guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than one hundred dollars nor more than one thousand dollars and confined in the county or regional jail not more than six months.
(d) Any person who violates the provisions of subsection (b) of this section is guilty of a felony, and, upon conviction thereof, shall be fined not less than one thousand dollars nor more than ten thousand dollars and imprisoned in the penitentiary not less than one year nor more than five years.

§ 29-24-16. Forfeiture of property.

(a) Anything of value, including all traceable proceeds including, but not limited to, real and personal property, moneys, negotiable instruments, securities, and conveyances, is subject to forfeiture to the state of West Virginia if the item was used for any of the following:

(1) In exchange for a bribe intended to affect the outcome of a gambling game.
(2) In exchange for or to facilitate a violation of this article.
(b) All moneys, coin and currency found in close proximity of wagers, or of records of wagers are presumed forfeited. The burden of proof is upon the claimant of the property to rebut this presumption.
(c) Subsections (a) and (b) do not apply if the act or omission which would give rise to the forfeiture was committed or omitted without the owner's knowledge or consent.

NOTE: The purpose of this bill is to authorize the state lottery commission to license and regulate riverboat gambling in this state.

Article 24 is new, therefore, strike-throughs and underscoring have been omitted.