H. B. 4035


(By Delegate Wright)

[Introduced January 14, 2002; referred to the

Committee on the Judiciary then Finance.]





A BILL to amend chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article twenty-five, relating to the regulation, control and taxation of parlay cards and parlay games; use of revenue proceeds; and providing for criminal penalties.

Be it enacted by the Legislature of West Virginia:
That chapter forty-seven 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-five, to read as follows:
ARTICLE 25. PARLAY CARD AND PARLAY GAMES.
§47-25-1. Short title.

This article shall be known as and may be cited as the "Parlay Card and Parlay Games Act."
 §47-25-2. Definitions.
For purposes of this article, unless specified otherwise:
(a) "Commissioner" means the tax commissioner of the state of West Virginia, or his delegate.
(b) "Retail value" means the actual consideration paid to the wholesaler by the retailer for any parlay cards or games.
(c) "Person" means any individual, association, society, incorporated or unincorporated organization, firm, partnership or other nongovernmental entity or institution.
(d) "Retailer" means every person engaged in the business of making retail sales of parlay cards.
(e) "Parlay cards" or "parlay games" means: (1) A card or other device designed for listing single or multiple athletic teams and athletic events or games with participating teams and dates of the events or games, together with odds on the participating team and events and the promise to pay money or other valuable consideration for successfully picking the winning team of the listed event with the odds stated on the parlay card for a given date; (2) a paper card with sporting or athletic events and teams listed for specific performance dates and the odds for the favored teams, which, on payment of a nominal sum, entitles the player to a designated prize if the player picks the winning team or teams based upon the odds on the favorite team or teams; or (3) any other similar parlay card or game which may be defined by the state tax commissioner by legislative rule.
(f) "Sale" means the transfer of the ownership of tangible personal property for a consideration.
(g) "Verification" means a unique manufacture identifiable serial number which is required to be printed on each parlay card or game or any other form of identification as may be prescribed by the tax commissioner upon a showing of undue hardship by the taxpayer: Provided, That any other form of identification shall be prescribed by rule in accordance with the provisions of article three, chapter twenty-nine-a of this code.
(h) "Wholesaler" or "distributor" means any person or entity engaged in the wholesale distribution of parlay cards or parlay games or similar cards or devices, as defined by the commissioner, and licensed under the provisions of this article. It also includes anyone who is engaged in the manufacturing, packaging, preparing or repackaging of parlay cards or parlay games for distribution in this state: Provided, That license taxes or other fees provided for in this section may not be charged to any newspaper or other printing or duplicating operation not regularly engaged in the business of manufacturing, packaging, preparing or repackaging parlay cards or parlay games where the gross sales of the printing or duplicating operation from this activity does not exceed seven thousand five hundred dollars per calendar year and who is donating the items or services to a nonprofit entity without compensation may not be considered a "wholesaler" or "distributor" under this article.
 §47-25-3. Fees.
Wholesalers or distributors of parlay cards and parlay games to retailers must be licensed and a license fee in the amount of five hundred dollars must be paid to the commissioner by each wholesaler or distributor for an annual license. Wholesalers and distributors must also pay a fee of twenty cents on each dollar of retail value of each parlay card or parlay game sold to a retailer. The fees imposed by this article must be deposited in a special revenue account hereby established and designated as the "Parlay Card and Parlay Game Fund" and used exclusively as follows: Ten percent of the revenue shall be dedicated to funding for veterans; ten percent of the revenue shall be dedicated to funding for senior citizens; ten percent of the revenue shall be dedicated to the state's "rainy day fund"; ten percent of the revenue shall be dedicated to funding for prescription medications; twenty percent of the revenue shall be dedicated to funding for retired state employees; ten percent of the revenue shall be dedicated to funding for the computer incentive fund; twenty percent of the revenue shall be dedicated to the department of highways for roads and bridges; and ten percent of the revenue shall be dedicated to funding the "promise scholarship" fund.
§47-25-4. No fee on parlay cards or parlay games by municipalities or other governmental subdivisions.

Municipalities or governmental subdivisions may not levy any excise or other tax or fee requiring parlay card or parlay games to be stamped, or require licenses for sale of these items, other than licenses which may be imposed as a result of licenses provided for in article twelve, chapter eleven of this code.
§47-25-5. Surety bonds required; release of surety; new bond.

The commissioner may require wholesalers and distributors to file continuous surety bond in an amount to be fixed by the commissioner except that the amount may not be less than one thousand dollars. Upon completion of the filing of a surety bond an annual notice of renewal, only, shall be required thereafter. The surety must be authorized to engage in business within this state. The bond shall be conditioned upon faithfully complying with the provisions of this article including the filing of the returns and payment of all fees prescribed by this article.
Any surety on a bond furnished hereunder shall be released and discharged from all liability accruing on the bond after the expiration of sixty days from the date the surety has lodged, by certified mail, with the tax commissioner a written request to be discharged. This does not relieve, release or discharge the surety from liability already accrued or which shall accrue before the expiration of the sixty-day period. Whenever any surety seeks release as provided in this section, the wholesaler or distributor must supply the commissioner with another bond.
§47-25-6. Requirement of wholesalers and distributors to be licensed to do business in state; resident agent requirement.

(a) Any wholesaler or distributor supplying parlay cards or parlay games to retailers in this state must be registered to do business in this state pursuant to the provisions of article twelve, chapter eleven of this code.
(b) Nonresidents otherwise complying with the provisions of this article may be licensed as wholesalers or distributors of parlay cards or parlay games upon designating to the tax commissioner a resident agent upon whom notices, orders or other communications issued pursuant to this article may be served and upon whom process may be served.
§47-25-7. How fee paid; reports required; due date; records to be kept; inspection of records and stocks; examination of witnesses, summons, etc.

The retail value fee imposed by section three of this article must be paid by each licensed wholesaler or distributor to the commissioner on or before the twentieth day of April, July, October and January for the preceding three calendar months. The measure of the fee on the retail value of parlay cards or parlay games shall be determined by multiplying the total amount of the retail value of all parlay cards and parlay games sold by a wholesaler or distributor to retailers during the three-month period by twenty percent. The fee is in addition to any tax imposed pursuant to the provisions of article fifteen, chapter eleven of this code. All fees due and owing to the commissioner by reason of this article, if paid after the due dates required by this section, shall be subject to the provisions of article ten, chapter eleven of this code. Each wholesaler or distributor shall provide with each quarterly payment of fees a return covering the business transacted in the previous three calendar months and providing such other information as the commissioner considers necessary for the ascertainment or assessment of the fee imposed by this article. The return must be signed under penalty of perjury on forms the tax commissioner may prescribe and the wholesaler or distributor must at the time of filing remit all fees owed or due.
The returns prescribed by this section are required, although a fee might not be due or no business transacted for the period covered by the return.
Each person required to file a return under this article must make and keep records prescribed by the commissioner that are necessary to substantiate the returns required by this article, including, but not limited to, invoices, serial numbers or other verification, inventories, receipts, disbursements and sales, for a period of time not less than three years.
Unless otherwise permitted, in writing, by authority of the commissioner, each delivery ticket or invoice for each purchase or sale of parlay cards or parlay games must be recorded upon a serially numbered invoice showing the name and address of the seller and the purchaser, the point of delivery, the date, quantity, serial number and price of the product sold and the fee must be set out separately, and any other reasonable information as the commissioner may require. These invoicing requirements also apply to cash sales and a person making those sales must maintain records as may be reasonably necessary to substantiate his or her return.
In addition to the commissioner's powers set forth in section five, article ten, chapter eleven of this code, the commissioner may inspect or examine the stock of parlay cards and parlay games kept in and upon the premises of any person where parlay cards and parlay games are placed, stored or sold, and he or she may inspect or examine the records, books, papers and any equipment or records of manufacturers, wholesalers and distributors or any other person for the purpose of determining the quantity of parlay cards and parlay games acquired or disbursed to verify the truth and accuracy of any statement or return and to ascertain whether the fee imposed by this article has been properly paid.
In addition to the commissioner's powers set forth in section five, article ten, chapter eleven of this code, and as a further means of obtaining the records, books and papers of a manufacturer, wholesaler, distributor or any other person and ascertaining the amount of fees and returns due under this article, the commissioner may examine witnesses under oath; and if the witness fails or refuses at the request of the commissioner to grant access to the books, records or papers, the commissioner shall certify the facts and names to the circuit court of the county having jurisdiction of the party and the court shall thereupon issue summons to the party to appear before the commissioner, at a place designated within the jurisdiction of the court, on a day fixed, to be continued as the occasion may require for good cause shown and give evidence and lay open for inspection any books and papers required for the purpose of ascertaining the amount of fee and returns due, if any.
§47-25-8. Penalty for failure to file return when no fee due; other offenses; penalties; seizures of illegal cards and games; disposition.

(a) Penalty for failure to file required return where no fee due. -- If there is any failure to make or file a return when no fee is due, as required by this article, on the date prescribed therefor, unless it be shown that failure was due to reasonable cause and not due to willful neglect, there shall be collected a penalty of twenty-five dollars for each month of the failure or fraction thereof.
(b) It is a misdemeanor, punishable pursuant to the terms of this article, if any person:
(1) Makes any false entry upon an invoice required to be made under the provisions of this article or with intent to evade the fee imposed by this article presents any false entry for the inspection of the commissioner;
(2) Prevents or hinders the commissioner from making a full inspection of any place where parlay cards or parlay games subject to the fee imposed by this state are sold or stored or prevents or hinders the full inspection of invoices, books, records or papers required to be kept under the provisions of this article;
(3) Sells any parlay cards or parlay games in this state on which the applicable fee or tax has not been paid;
(4) Being a retailer in this state, fails to produce on demand by the commissioner invoices and verification of all parlay cards and parlay games purchased or received by him or her within three years before the demand, unless upon satisfactory proof it is shown that the nonproduction is due to providential or other causes beyond his or her control; or
(5) Being a retailer in this state, purchases or acquires parlay cards and parlay games from any person other than a wholesaler or distributor licensed under this article.
(c) Any person convicted of violating the provisions of subsection (b) of this section shall be fined not less than one thousand dollars nor more than ten thousand dollars , or confined in the county jail or regional jail for not more than one year, or both fined and imprisoned.
(d) Any person who falsely or fraudulently makes, forges, alters or counterfeits any invoice or serial number prescribed by the provisions of this article, or its related rules, for the purpose of evading the fee hereby imposed, is guilty of a felony and, upon conviction thereof, shall be fined not less than five thousand dollars nor more than ten thousand dollars or imprisoned in a state correctional facility for not less than one year nor more than five years, or both fined and imprisoned.
(e) Whenever the commissioner, or any of his or her deputies or employees authorized by him or her, or any peace officer of this state discovers any parlay cards or parlay games subject to the fee as provided by this article and upon which the fee has not been paid as required by this article, the parlay cards and parlay games are considered to be contraband, and the commissioner, or the deputy or employee or any peace officer of this state, may seize and take possession of the parlay cards or parlay games, without a warrant, and the parlay cards and games shall be forfeited to the state, and the commissioner shall retain the forfeited parlay cards and parlay games until they are no longer needed as evidence in any prosecution of the person from whom the parlay cards and parlay games were seized. The commissioner may within a reasonable time thereafter destroy the parlay cards and parlay games: Provided, That seizure and destruction does not relieve any person from fine or imprisonment as provided herein for violation of any provisions of this article. The destruction may be made in any county the commissioner deems most convenient and economical.
All revenue from the license fee must be deposited in the special revenue account established under the authority of section two-a, article nine, chapter eleven of this code and used to support the investigatory activities provided for in that section.
(f) Magistrates have concurrent jurisdiction with any other courts having jurisdiction for the trial of all misdemeanors arising under this article.
§47-25-9. Transportation of parlay cards and parlay games; forfeitures and sales of parlay cards, parlay games and equipment; criminal sanctions.

Any person who knowingly transports parlay cards or parlay games upon the public highways, waterways, airways, roads or streets of this state must have in his or her actual possession invoices or delivery tickets for the parlay cards or parlay games which must show the true name and the complete and exact address of the manufacturer, the true name and complete and exact address of the wholesaler or distributor who is the purchaser, the quantity and description of the parlay cards and parlay games transported and the true name and complete and exact address of the person who has or will assume payment of the West Virginia state fee, or the tax, if any, of the state or foreign country at the point of ultimate destination. In the absence of invoices, delivery tickets or bills of lading, as the case may be, the parlay cards or parlay games so transported, the vehicle or vessel in which the parlay cards or parlay games are being transported and any paraphernalia or devices used in connection with them, are declared to be contraband goods and may be seized by the commissioner, his or her agents or employees or by any peace officer of the state without a warrant.
Any person who transports parlay cards or parlay games in violation of this section is guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than three hundred dollars nor more than five thousand dollars, or imprisoned in the county or regional jail not more than one year, or both fined and imprisoned.
Parlay cards and parlay games seized under this section must be immediately destroyed in the manner provided in this section and destruction does not relieve the owner of the destroyed parlay cards and parlay games of any action by the commissioner for violations of this or any other sections of this article.
The commissioner shall immediately, after any seizure made pursuant to this section, institute a proceeding for the confiscation in the circuit court of the county in which the seizure is made. The court may proceed in a summary manner and may direct confiscation by the commissioner: Provided, That any person claiming to be the holder of a security interest in any vehicle or vessel, the disposition of which is provided for in this article, may present his petition so alleging and be heard, and if it appears to the court that the property was unlawfully used by a person other than the claimant, and if the claimant acquired his security interest in good faith and without knowledge that the vehicle or vessel was going to be so used, the court shall waive forfeiture in favor of the claimant and order the vehicle or vessel returned to the claimant.
§47-25-10. Administration; rule making; required verification.

(a) The commissioner shall propose for promulgation, rules to administer the provisions of this article in accordance with the provisions of chapter twenty-nine-a of this code: Provided, That the initial promulgation of rules to administer the provisions of this article shall be by emergency rule. Additionally, the commissioner shall promulgate a rule which requires that every parlay card or parlay game shall each bear verification, as defined by section two of this article, printed by a manufacturer on each parlay card or parlay game unless, upon application by the taxpayer showing undue hardship, the tax commissioner consents to waive this requirement in favor of some other form of verification.
(b) The commissioner shall deny an application for a license if he or she finds that the issuance thereof would be in violation of the provisions of this article.
(c) The commissioner may suspend, revoke or refuse to renew any license issued hereunder for a material failure to maintain the records or file the reports required by this article or administrative rule if the commissioner finds that the failure will substantially impair the commissioner's ability to administer the provisions of this article with regard to the licensee.
(d) The burden of proof in any administrative or court proceeding is on the applicant to show cause why a parlay card or parlay games wholesaler's or distributor's license should be issued or renewed and on the licensee to show cause why its license should not be revoked or suspended.
§47-25-11. General procedure and administration.

Each and every provision of the "West Virginia Tax Procedure and Administration Act" set forth in article ten, chapter eleven of this code shall apply to the fees imposed by this article with like effect as if the act were applicable only to the fees imposed by this article and were set forth in extenso in this article.
NOTE: The purpose of this bill is to regulate, control and tax the use of parlay cards. The proceeds from this activity is to be used as follows: 10% of the revenue shall be dedicated to funding for veterans; 10% shall be dedicated to funding for senior citizens; 10% shall be dedicated to the state's "rainy day fund"; 10% shall be dedicated to funding for prescription medications; 20% of the revenue shall be dedicated to funding for retired state employees; 10% shall be dedicated to funding for the computer incentive fund; 20% shall be dedicated to the department of highways for roads and bridges; and 10% of the revenue shall be dedicated to funding the "promise scholarship" fund.

This article is new; therefore, strike-throughs and underscoring have been omitted.