2003-2004 Bill 5109: Licensure and Regulation on Bingo - South Carolina Legislature Online

1 South Carolina General Assembly 2 115th Session, 2003-2004 3 4 H. 5109 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Rep. Scott 10 Document Path: l:\council\bills\gjk\21127sd04.doc 11 Companion/Similar bill(s): 5151 12 13 Introduced in the House on April 14, 2004 14 Currently residing in the House Committee on Judiciary 15 16 Summary: Licensure and regulation on bingo 17 18 19 HISTORY OF LEGISLATIVE ACTIONS 20 21 Date Body Action Description with journal page number 22 4/14/2004 House Introduced and read first time HJ-9 23 4/14/2004 House Referred to Committee on Judiciary HJ-11 24 25 26 VERSIONS OF THIS BILL 27 28 4/14/2004 29 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 12-21-3920, AS AMENDED, CODE OF 12 LAWS OF SOUTH CAROLINA, 1976, RELATING TO BINGO 13 DEFINITIONS, SO AS TO REVISE THE DEFINITION OF A 14 “PROMOTER”; TO AMEND SECTION 12-21-3940, 15 RELATING TO LICENSES TO CONDUCT BINGO, SO AS TO 16 REVISE THE TIME THE DEPARTMENT OF REVENUE HAS 17 TO APPROVE OR REJECT LICENSE APPLICATIONS; TO 18 AMEND SECTION 12-21-3950, AS AMENDED, RELATING 19 TO A PROMOTER’S LICENSE, SO AS TO FURTHER 20 PROVIDE FOR THE CONTENTS OF AN APPLICATION FOR 21 A PROMOTER’S LICENSE; TO AMEND SECTION 22 12-21-3970, RELATING TO A PROMOTER’S LICENSE 23 REQUIRED FOR EACH LICENSEE, SO AS TO PROVIDE 24 THAT BEFORE A LICENSED NONPROFIT ORGANIZATION 25 ALLOWS AN INDIVIDUAL OR ENTITY TO MANAGE, 26 OPERATE, OR CONDUCT ITS BINGO GAME, THE 27 ORGANIZATION SHALL ENSURE THAT THE INDIVIDUAL 28 OR ENTITY FIRST OBTAINS A PROMOTER’S LICENSE 29 FROM THE DEPARTMENT; TO AMEND SECTION 30 12-21-3990, RELATING TO THE MANNER OF PLAYING 31 BINGO, SO AS TO PROVIDE THAT A NUMBER IS NOT 32 VALID FOR A GAME UNTIL IT IS CALLED, AND TO 33 PROVIDE THAT WHEN THE CALLER ANNOUNCES A 34 GAME IS CLOSED, ALL PLAY FOR THAT GAME IS 35 CONCLUDED; TO AMEND SECTION 12-21-4000, AS 36 AMENDED, RELATING TO PROCEDURES APPLICABLE TO 37 CONDUCT OF BINGO, SO AS TO FURTHER PROVIDE FOR 38 THESE PROCEDURES; TO AMEND SECTION 12-21-4020, AS 39 AMENDED, RELATING TO CLASSES OF BINGO LICENSES 40 AND TAXES, SO AS TO PROVIDE THAT CLASS C BINGO 41 GAMES MAY, BUT ARE NOT REQUIRED TO, HAVE A 42 PROMOTER, AND TO REVISE THE MANNER IN WHICH

1 [5109] 1 1 CLASS C BINGO GAMES MAY BE CONDUCTED AND 2 CERTAIN REQUIREMENTS RELATING TO CLASS C 3 LICENSES; TO AMEND SECTION 12-21-4050, RELATING TO 4 ALLOWING ONLY ONE ORGANIZATION TO OPERATE 5 BINGO PER BUILDING, SO AS TO PROVIDE THAT THIS 6 SECTION DOES NOT PROHIBIT THE LAWFUL OPERATION 7 OF ADDITIONAL LICENSED BUSINESSES RELATED TO 8 THE PLAY OF BINGO; TO AMEND SECTION 12-21-4080, AS 9 AMENDED, RELATING TO THE REQUIREMENTS FOR A 10 PROMOTER TO TURN OVER PROCEEDS AND THE 11 MEMBER TO DEPOSIT PROCEEDS, SO AS TO PROVIDE 12 THAT DEPOSITS MADE BY ELECTRONIC FUNDS 13 TRANSFER MUST BE MADE WITHIN THREE BUSINESS 14 DAYS; TO AMEND SECTION 12-21-4140, RELATING TO 15 BINGO PENALTIES, SO AS TO REVISE PENALTIES FOR 16 CERTAIN VIOLATIONS; TO AMEND SECTION 12-21-4190, 17 RELATING TO BINGO CARD CHARGES AND 18 DISTRIBUTION OF REVENUES, SO AS TO REVISE 19 CHARGES WHICH MAY BE MADE BY THE DEPARTMENT 20 OF REVENUE FOR CERTAIN LICENSES; TO AMEND 21 SECTION 12-21-4210, AS AMENDED, RELATING TO THE 22 SALE OR TRANSFER OF BINGO CARDS, SO AS TO 23 PROVIDE THAT CARDS HELD BY A CLASS C LICENSEE 24 THAT CONVERTS TO A CLASS B LICENSE SHALL BE 25 AUDITED AND A TRANSFER TAX PAID; TO AMEND 26 SECTION 12-21-4240, RELATING TO LICENSES TO 27 MANUFACTURE, DISTRIBUTE OR USE BINGO CARDS, SO 28 AS TO FURTHER PROVIDE FOR THE REQUIREMENTS 29 PERTAINING TO LICENSED MANUFACTURERS AND 30 DISTRIBUTORS, AND FOR PROCEDURES PERTAINING TO 31 THESE LICENSES. 32 33 Be it enacted by the General Assembly of the State of South 34 Carolina: 35 36 SECTION 1. Section 12-21-3920(4) of the 1976 Code, as last 37 amended by Act 334 of 2002, is further amended to read: 38 39 “(4) ‘Promoter’ means an individual, corporation, partnership, 40 limited liability company, subsidiary, or organization, or any 41 related entity which manages, operates, solicits players, or 42 conducts in any manner the nonprofit organization’s game. The 43 person hired under written contract is considered the promoter and

1 [5109] 2 1 must be licensed as a professional solicitor by the Secretary of 2 State who is hired by a nonprofit organization to manage, operate, 3 or conduct the licensee’s bingo game. The person hired under 4 written contract is considered the promoter.” 5 6 SECTION 2. Section 12-21-3940(B) of the 1976 Code is 7 amended to read: 8 9 “(B) Upon application for a license, the department has thirty 10 forty - five days to approve or reject the application based on the 11 requirements of this article.” 12 13 SECTION 3. Section 12-21-3950(A) of the 1976 Code is 14 amended by adding appropriately numbered items to read: 15 16 “(5) the names, addresses, and telephone numbers of all partners 17 if the promoter is a partnership; 18 (6) the names, addresses, and telephone numbers of all 19 stockholders of ten percent or more in the corporation if the 20 promoter is a corporation; 21 (7) the names and addresses of all subsidiaries if the promoter 22 is a corporation owning at least ten percent of a subsidiary; and 23 (8) the names, addresses, and telephone numbers of all 24 individuals or entities owning ten percent or more of the company 25 or entity if the promoter is a limited liability company or any other 26 type of entity or organization.” 27 28 SECTION 4. Section 12-21-3970 of the 1976 Code is amended 29 to read: 30 31 “Section 12-21-3970. For each licensed nonprofit organization 32 the promoter manages, operates, or conducts bingo, the promoter 33 must purchase a promoter’s license as provided in Section 34 12-21-3950 before operating or conducting bingo. Before a 35 licensed nonprofit organization allows an individual or entity to 36 manage, operate, or conduct its bingo game, the organization shall 37 ensure that the individual or entity first obtains a promoter’s 38 license from the department. No promoter is permitted more than 39 five licenses. This license must be prominently displayed at the 40 location where bingo is conducted.” 41 42 SECTION 5. Section 12-21-3990 of the 1976 Code, as last 43 amended by Act 172 of 2004, is further amended to read:

1 [5109] 3 1 2 “Section 12-21-3990. (A) The game of bingo must be played in 3 the following manner: 4 (1) Bingo is played by more than one player and a caller who is 5 associated with the house. Each player must pay face value for 6 each card to be played during the course of a game and may 7 purchase the card for a specified number of games. All cards sold 8 for a game must sell for face value and cards may not be given to 9 players as prizes or for free. After the player has purchased a card 10 or cards for a specified number of games, the house cannot require 11 or accept an additional payment or consideration by the player in 12 order to complete the specified number of games. 13 (2) Before each game begins, the caller shall announce to the 14 players the configuration or configurations that will win the game. 15 A configuration consists of a number of grids covered in the 16 manner announced by the caller. Any method of playing the games 17 is allowed if the method is announced before each game’s 18 beginning including, but not limited to, wild card games. In 19 addition, anytime before the conclusion of the game, the prize, 20 specifically stating the dollar amount or value of merchandise 21 awarded to the winner or winners for the game, must be 22 announced. 23 (3) The prize must be awarded to the winner of that game 24 without delay. For multiple winners, the prize must be divided 25 equally among the winners. In the case of a merchandise prize, the 26 cash value of the merchandise may be divided among the winners. 27 Purchase receipts of merchandise awarded as prizes must be made 28 available to players and the department for confirmation of value. 29 (4) The caller shall draw and announce numbers from the cage 30 one at a time. A number is not valid for the game until it is called. 31 If a player has a card with the called number on it, he may use a 32 marker to cover the square which contains the number. After the 33 number is announced, it must be indicated on the master-board by 34 the caller. 35 (5) When a player covers sufficient squares on a card to 36 achieve the winning configuration, he may indicate to the caller. 37 The caller shall require that the player’s card be checked against 38 the master-board in the presence of the other players to determine 39 if the squares were covered accurately. If it is determined by the 40 caller that the player accurately has covered the squares and 41 achieved the preannounced configuration, the player is declared 42 the winner. If it is determined that the player has not covered the

1 [5109] 4 1 squares accurately and achieved the preannounced configuration, 2 play continues in that game. 3 (6) All devices, including the master-board, used to show what 4 numbers have been called during a game must not be changed or 5 turned off until the winners are verified. 6 (7) When the caller announces a game is closed, all play for 7 that game is concluded.” 8 9 SECTION 6. A. Section 12-21-4000(2) of the 1976 Code, as 10 last amended by Act 334 of 2002, is further amended to read: 11 12 “(2) Only one set of seventy-five balls may be on the ball floor 13 and only one master-board is allowed in the room or area during 14 the play of the game.” 15 16 B.Section 12-21-4000(15) of the 1976 Code, as last amended by 17 Act 334 of 2002, is further amended to read: 18 19 “(15) The house may hold promotions of special events during 20 a session offering players prizes other than from the play of bingo 21 not to exceed one hundred dollars in cash or merchandise for each 22 session. This amount is not to may be paid out of the bingo 23 account and is not included in total payouts for a session. There is 24 no additional charge to players to participate in a special 25 promotion. The promotion must not be a form of gambling or a 26 game of chance.” 27 28 SECTION 7. Section 12-21-4020(3) of the 1976 Code, as last 29 amended by Act 334 of 2002, is further amended to read: 30 31 “(3) CLASS C: An organization operating a bingo game and 32 offering prizes of twenty dollars or less a game during a single 33 session shall obtain a Class C bingo license at no cost. However, 34 the organization may offer a prize in cash or merchandise of no 35 more than one hundred fifty dollars for six jackpot games a 36 session. Class C bingo games may, but are not required to, have a 37 promoter. Sole responsibility for the operation of a Class C bingo 38 game without a promoter lies with the nonprofit organization. A 39 holder of a Class C bingo license may conduct bingo games seven 40 days a week for a session of twelve hours between the hours of 41 9:00 a.m. and 2:00 a.m. An organization operating a Class C 42 bingo game may not exceed gross bingo proceeds of two hundred 43 fifty thousand dollars per calendar month for more than three

1 [5109] 5 1 consecutive months. If the gross bingo proceeds for any calendar 2 quarter exceeds that amount, the organization must notify the 3 department within ten days of the end of the quarter, and pay the 4 license fee for a Class B license within one hundred eighty days. 5 The department, in its discretion, may allow certain Class C 6 licenses to use hard bingo cards instead of the paper cards required 7 by this article. 8 To qualify to play on hard cards, a bingo game conducted by a 9 Class C license must meet the following criteria: 10 (a) be operated solely by volunteers; 11 (b) the person managing, conducting, or operating the bingo 12 game must not be paid or otherwise be compensated and must be a 13 designated member of the organization; 14 (c) remuneration, including wages or other compensation, 15 must not be made to any individual or corporation; 16 (d) all equipment used to operate a game of bingo, including 17 chairs, tables, and other equipment, must be owned by the charity; 18 (e) the organization may lease the building directly from the 19 owner of the building or own the building in which the game of 20 bingo is played. The organization may not lease or sublease the 21 building from a person who is not the owner; 22 (f) the only expenses allowed to be paid from the proceeds 23 of the game are utility bills, prizes, purchases of cards, payments 24 for the lease of a building, purchases of equipment required to 25 operate a game of bingo, and the charitable purposes of the 26 organization; 27 (g) one hundred percent of the net proceeds from the 28 operation of the game must be used for charitable purposes.” 29 30 SECTION 8. Section 12-21-4050 of the 1976 Code is amended to 31 read: 32 33 “Section 12-21-4050. Only one nonprofit organization may 34 operate or cause the operation of bingo in a building. This section 35 does not prohibit the lawful operation of additional licensed 36 businesses related to the play of bingo. This section applies to all 37 buildings regardless of ownership, of primary use, or of original 38 use.” 39 40 SECTION 9. Section 12-21-4080(A) of the 1976 Code, as last 41 amended by Act 334 of 2002, is further amended to read: 42

1 [5109] 6 1 “(A) Upon completion of the session, the promoter or the 2 organization member representative shall deposit the gross 3 proceeds from the session less the amount paid out as prizes into 4 the bingo checking account. If the promoter is authorized by the 5 organization to make the session deposit, the promoter shall 6 deliver to the organization representative evidence that the deposit 7 was made in a timely manner. This evidence must be furnished no 8 later than the next business day following the day of the bingo 9 session on which the proceeds were obtained. Deposits made by 10 electronic funds transfer must be made within three business 11 days.” 12 13 SECTION 10. Section 12-21-4140 of the 1976 Code is amended 14 to read: 15 16 “Section 12-21-4140. (A) All new department revenue rulings 17 must be presented to all bingo organizations and promoters in 18 writing before the department’s issuance of a warning or violation. 19 (B) A written warning must be given before the department’s 20 issuance of a first violation. 21 (C) Violations for any section of this article shall allow for an 22 appeal to the department. The action in question shall cease until 23 the appeals process is complete. The fines for violations shall be: 24 (1) five hundred dollars for the first violation; 25 (2) one thousand dollars for the second violation; 26 (3) five thousand dollars for the third violation; and 27 (4) revocation of license for fourth violation. 28 A penalty of up to five thousand dollars and revocation of the 29 license at the discretion of the department may be imposed for a 30 violation of this article. Each violation and each day in violation 31 of a provision of this article constitutes a separate offense.” 32 33 SECTION 11. Section 12-21-4190(A) of the 1976 Code is 34 amended to read: 35 36 “(A) The department shall charge and retain sixteen and one-half 37 cents for each dollar of face value for each bingo card sold for AA, 38 B, D, and E licenses. The department shall charge and retain ten 39 cents for each dollar of face value for each bingo card sold for a 40 Class B license. The department shall charge and retain five cents 41 for each dollar of face value for each bingo card sold to a F license. 42 There shall be no charge for a C license. The department shall

1 [5109] 7 1 charge and retain three cents for each dollar of face value for each 2 bingo card sold to a Class C license.” 3 4 SECTION 12. Section 12-21-4210 of the 1976 Code, as last 5 amended by Act 334 of 2002, is further amended to read: 6 7 “Section 12-21-4210. Bingo cards may not be sold or transferred 8 between licensed organizations, between distributors, or between 9 manufacturers. All unused bingo cards may be returned to the 10 department for refund and destruction. The department shall audit 11 all cards held by a Class C licensee that converts to a Class B 12 license, and the licensee shall pay a tax to the department of ten 13 percent of the face value of the cards held. This tax must be 14 distributed as directed by Section 12 - 21 - 4190(B). The department 15 may not issue additional bingo cards to the licensee until the tax is 16 paid. The department is required to refund only the amount 17 retained by the department previously based on the face value of 18 each card and does not include the manufacturer’s price or 19 transportation charges to the consignee at destination and such 20 additional charges. If an organization operating a bingo game 21 ceases operation within fifteen days from the purchase of the last 22 voucher and the voucher remains outstanding, the department shall 23 accept the returned paper and credit the value of returned paper 24 against the outstanding voucher. The organization then shall pay 25 the balance of the voucher less the value of returned paper.” 26 27 SECTION 13. Section 12-21-4240 of the 1976 Code is amended 28 to read: 29 30 “Section 12-21-4240. (A) Each manufacturer, distributor, 31 organization, or promoter must be licensed to manufacture or 32 distribute, or use bingo cards. The department shall charge an 33 annual license fee of five thousand dollars for each manufacturer 34 and two thousand dollars for each distributor. A license issued by 35 the department under this section is renewable annually unless 36 canceled or terminated. No license issued under this section is 37 transferable or assignable. 38 (B) A licensed manufacturer shall obtain a certificate of 39 authority pursuant to Section 33 - 15 - 102 and shall name a 40 registered agent. A licensed manufacturer shall keep and maintain 41 a complete set of records which shall include details of all 42 activities of the licensee relating to the conduct of the licensed 43 activity as may be required by the department, including quantities

1 [5109] 8 1 and types of all bingo cards sold to each licensed distributor. 2 These records shall be made available for inspection and copying 3 upon request by the department. A licensed manufacturer shall 4 permit agents of the department to enter their premises, or the 5 business premises of another person, including a successor 6 corporation, whether located in this State or another state, for the 7 purposes of inspecting all books, papers, records, memoranda, 8 commodities, or other things bearing on activities licensed under 9 this article. The department may require that licensees furnish 10 copies of these records to the department regardless of whether an 11 on - site inspection has been conducted. 12 (C) A licensed distributor shall have a principal place of 13 business located within this State and shall obtain a certificate of 14 authority pursuant to Section 33 - 15 - 102 and shall name a 15 registered agent. A licensed distributor shall keep and maintain a 16 complete set of records which shall include all details of all 17 activities of the licensee relating to the conduct of the licensed 18 activity as may be required by the department, including the 19 quantities and types of all bingo cards sold to each licensed 20 nonprofit organization. These records must be made available for 21 inspection and copying upon request by the department. A licensed 22 distributor shall permit agents of the department to enter the 23 premises, or the business premises of another person, including a 24 successor corporation, whether located in this State or another 25 state, for the purposes of inspecting all books, papers, records, 26 memoranda, commodities, or other things bearing on activities 27 licensed under this article. The department may require that 28 licensees furnish copies of these records to the department 29 regardless of whether an on - site inspection has been conducted. 30 (D) The department shall require, by regulation, periodic 31 reporting from licensed manufacturers and distributors relative to 32 their bingo activities in this State. 33 (E) No manufacturer or distributor may permit distribution of 34 any bingo cards, printed or nonprinted, unless authorized by the 35 department pursuant to Section 12 - 21 - 4270. The department may 36 revoke a license issued under this article if the holder of the license 37 fails to comply with the provisions of this section. 38 (F) Failure to comply with the provisions of this section shall 39 result in the revocation of the license. 40 (G) No license shall be issued to the holder of a license revoked 41 for noncompliance with the provisions of this article. An 42 individual or entity is deemed to be the holder of a revoked license 43 if he or it has any interest whatsoever, directly or indirectly, in a

1 [5109] 9 1 partnership, association, limited liability corporation, limited 2 liability partnership, or corporation holding a license revoked for 3 noncompliance with the provisions of this article. 4 (H) Records obtained pursuant to this section are considered 5 admissible in a contested case hearing before the Administrative 6 Law Judge Division under the business records exception to the 7 hearsay rule if the records are accompanied by an affidavit of an 8 officer of the business reflecting that the records are kept in the 9 ordinary course of business and that the information provided is 10 accurate and correct and, if the records are properly exchanged 11 pursuant to Rule 26 of the Rules of Procedure for the 12 Administrative Law Judge Division. The manufacturer or 13 distributor shall provide such an affidavit upon request by the 14 department.” 15 16 SECTION 14. This act takes effect upon approval by the 17 Governor. 18 ----XX---- 19

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