Want to Bet? Expansion of Small Games of Chance

November 22, 2013
Aaron K. Zeamer

The Pennsylvania Legislature this week passed a bill that, for the first time in Pennsylvania, allows bars, restaurants and other similar establishments to conduct small games of chance, daily drawings and raffles. The bill will now go to the Governor for final approval. It is expected that the Governor will sign the bill into law.

The Bill allows hotels, restaurants, golf courses, brew pubs and microbreweries holding a valid liquor license to obtain a separate license allowing them to conduct "tavern games." Tavern games consist of pull tabs, daily drawings and raffles. The distinctions between the types of games are important because there are different rules that apply to how the proceeds of those games can be used and what taxes may be owed. In order to obtain a license to conduct these games, an applicant must provide information to the Pennsylvania Liquor Control Board relating to the applicant’s business, finances and personal background, in addition to paying an application fee of over $2,000.00. There is also an annual renewal fee of $1,000.00 each year for the gaming license. Potential applicants should also make sure that their municipalities in which permit such gambling or gaming.

The good news for bars and restaurants is that they are now able to compete with some of the private clubs and organizations which have historically been permitted to offer small games of chance to their members. However, there are very specific requirements and regulations regarding the use of the proceeds from these gaming activities. Specifically, for bars and restaurants, 60% of the revenue obtained from these games must be paid to the State, and 35% can be retained by the establishment. An additional 5% tax is paid to the local municipality where the gaming occurs. There are also further restrictions on raffles which require at least half the proceeds to be donated to charity and significant penalties to any establishment that fails to adhere to these revenue allocations and taxes.

This change in the gaming regulations for bars and restaurants is another significant step forward by the Commonwealth of Pennsylvania to modernize it laws and regulations pertaining to sales of alcohol and activities conducted by those selling alcohol. These advances, however, don’t come free.  Owners and operators need to be aware of the restrictions and requirements placed upon them if they choose to conduct these games in their establishment.

Aaron Zeamer is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Business Law and Liquor License matters.