2001 SESSION

01-0240

08/10

HOUSE BILL 644-FN-A-LOCAL

COMMITTEE: Ways and Means

ANALYSIS

This bill:

I. Requires the sweepstakes commission to hold at least one sealed bid auction for permits to operate slot machines.

II. Requires operators of slot machines to be licensed by the sweepstakes commission.

III. Requires that no slot machines may be operated in a town or city until the town or city has voted affirmatively to allow such operation.

IV. Provides the sweepstakes commission with certain rulemaking authority.

V. Provides that moneys received from a sealed bid auction and a tax applied to permit transfers shall be deposited in the general fund.

VI. Provides that a scaled percentage of revenues from the operation of slot machines shall be deposited in the education trust fund, with 2 percent of revenues paid to the town or city housing the slot machines and the remainder retained by the operator licensee.

VII. Repeals the interest and dividends tax on July 1, 2002.

VIII. Repeals the legacies and succession tax on July 1, 2002.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

01-0240

08/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand One

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Chapter; Slot Machines. Amend RSA by inserting after chapter 287-F the following new chapter:

CHAPTER 287-G

SLOT MACHINES

287-G:1 Definitions.

I. "Commission" means the state sweepstakes commission.

II. "Gross revenues" means the total of all sums actually received by a licensee from a slot machine, less only the total of all sums paid out as winnings to slot machine players.

III. "Licensee" means any person who holds a license to operate slot machines pursuant to this chapter.

IV. "Person" means any corporation, association, operation, firm, partnership, trust or other form of business association, as well as a natural person.

V. "Slot machine" means any mechanical or electrical machine which, upon insertion of a coin, token, or similar object, or upon payment of any consideration, is available to play or operate, the play or operation of which, whether by reason of skill or the element of chance, or both, may deliver or entitle the person playing the machine to receive cash, premiums, merchandise, tokens, or anything of value, whether the payoff is made automatically from the machine or in any other manner. Slot machines shall not include redemption slot machines as defined in RSA 647:2, II(f).

287-G:2 Administration. The sweepstakes commission shall be responsible for the administration of this chapter.

287-G:3 Enforcement.

I. The commission shall request the attorney general to proceed in any action or prosecution to enforce the provisions of this chapter.

II. At any time within 5 years after any amount of fees, interest penalties, or tax required to be collected under this chapter becomes due and payable, the commission through the attorney general may bring a civil action in the courts of this state or any other state or of the United States to collect in the name of the state of New Hampshire the amount delinquent together with penalties and interest. An action may be brought, whether or not the person owing the amount is a licensee under this chapter. If the action is brought in this state:

(a) A writ of attachment may be issued and no bond or affidavit prior to its issuance shall be required.

(b) The records of the commission shall be prima facie evidence of the determination of the tax or the amount of the delinquency.

287-G:4 Violation; Penalty; Fine.

I. Any person who violates any provision of this chapter 3 times within a calendar year shall have any license issued under this chapter revoked and any slot machines seized by appropriate state and local enforcement authorities, and such person shall be ineligible for relicensing for a period of 5 years.

II. The state and municipalities shall be held harmless of any loss or liability that results from enforcement of this chapter.

287-G:5 License; Fee. No slot machine shall be maintained or operated for public use in this state unless the owner or such machine has received a license for such purpose from the commission.

287-G:6 Local Approval Required.

I. No slot machine may be lawfully operated under the provisions of this chapter unless the municipality in which it is to be operated has first approved the conduct of lawful slot machines, as provided in paragraph II.

II. A town or city may adopt the provisions of RSA 287-G, for allowing the conduct of lawful slot machines in the municipality, in the following manner:

(a) In a town, other than a town that has adopted a charter pursuant to RSA 49-D, the question shall be placed on the warrant of a special or annual town meeting, by the governing body or by petition pursuant to RSA 39:3, and shall be voted upon by official ballot if that town has adopted the official ballot for the election of officers. A public hearing shall be held at least 15 but not more than 60 days prior to the vote.

(b) In a city or a town that has adopted a charter pursuant to RSA 49-D, the legislative body may consider and act upon the question in accordance with its normal procedures for passage of resolutions, ordinances, and other legislation. In the alternative, the legislative body of any such municipality may vote to place the question on the official ballot for any regular municipal election.

287-G:7 Number of Slot Machines; Limit.

I. No more than 1,000 slot machines operated under the provisions of this chapter shall be housed in any one town or city of the state.

II. No person shall hold permits for the operation of more than 600 slot machines operated in this state.

287-G:8 Sealed Bid Auction. Within 6 months of any municipality approving the conduct of lawful slot machines pursuant to RSA 287-G:6, II, and at other times thereafter deemed appropriate by the commission, the commission shall hold a sealed bid auction for permits to operate blocks of 200 slot machines.

287-G:9 Transferability of Permits; Tax.

I. Permits for slot machines under this chapter shall be transferable, subject to the tax as provided in this section.

II.(a) A tax is imposed upon the sale, granting, and transfer of slot machine permits including transfers by operation of law.

(b) The tax shall be applied at a rate of 5 percent of the price or consideration for such sale, grant, or transfer. The tax imposed shall be computed to the nearest whole dollar.

III. The tax imposed by this section shall apply to both the purchaser, grantee, assignee, or transferee and the seller, grantor, assignor, or transferor. Each shall be liable for half the total tax imposed.

287-G:10 Revenues From Auction and Transfer Tax. Revenues received by the sweepstakes commission from a sealed bid auction conducted pursuant to RSA 287-G:8 and the transfer tax imposed by RSA 287-G:9 shall be forwarded to the state treasurer and deposited in the general fund.

287-G:11 Minors Prohibited; Penalty. No person under the age of 21 shall be allowed to play a slot machine authorized by this chapter. Any licensee who allows a minor to play such a slot machine shall be guilty of a misdemeanor.

287-G:12 Distribution of Gross Revenues.

I. Gross revenues generated by a licensee shall be distributed and paid as follows:

(a)(1) Forty-four and eight-tenths percent of the first $200 of the daily average gross revenues generated by a slot machine for each calendar month shall be paid to the state from which the state shall pay for its costs of regulation and administration, and the balance shall be deposited with the state treasurer for deposit in the education trust fund established by RSA 198:39.

(2) Fifty-four and eight-tenths percent of the average daily gross revenues greater than $200 and less than or equal to $250 generated by a slot machine for each calendar month shall be paid to the state from which the state shall pay for its costs of regulation and administration, and the balance shall be deposited with the state treasurer for deposit in the education trust fund established by RSA 198:39.

(3) Sixty-four and eight-tenths percent of the average daily gross revenues greater than $250 generated by a slot machine for each calendar month shall be paid to the state from which the state shall pay for its costs of regulation and administration, and the balance shall be deposited with the state treasurer for deposit in the education trust fund established by RSA 198:39.

(4) The purpose of this subparagraph is to increase the amount of net machine income payable to the state on a graduated scale for the portion of the average daily gross revenues in excess of $200 and $250 respectively. The average gross revenues shall be determined for each calendar month and the licensee and the state shall reconcile payments within 10 days after the last day of a calendar month.

(b) Two percent of the average daily gross revenues shall be paid to the town or city in which a licensee operates slot machines.

(c) The balance of the average daily gross revenues shall be retained by the licensee.

II. Subject to reconciliation at the end of each calendar month, all distributions to the state, the town or city, and the licensee shall be made by the licensee within 5 business days after the end of each week in which gross revenues are generated. Notwithstanding RSA 287-G:4, the licensee shall pay a fine equal to the greater of $50 for each day in which such payments are overdue in whole or in part, or interest on the unpaid amount with interest calculated at the annual rate of 10 percent for each day for which the payment due is late. The late payment penalty shall be paid by the licensee to the sweepstakes commission.

287-G:13 Machine Pay Off. All slot machines in operation pursuant to this chapter shall provide a pay off to players of at least 87 percent on an average annual basis.

287-G:14 Rulemaking. The sweepstakes commission shall adopt rules, pursuant to RSA 541-A, relative to:

I. Application procedures and fees for the licensing of authorized slot machine operators.

II. Who may bid at a sealed bid auction.

III. Procedures of a sealed bid auction.

IV. Any other matter necessary to implement the provisions of this chapter.

287-G:15 Declaration of Limited Exemption from Operation of Provisions of 15 U.S.C. section 1171-1172. Pursuant to section 2 of an act of Congress of the United States entitled "An act to prohibit transportation of gambling devices in interstate and foreign commerce," approved January 2, 1951, being Chapter 1194, 64 Stat. 1134, and also designated as 15 U.S.C. sections 1171-1172, the state of New Hampshire, acting by and through the duly elected and qualified members of its legislature, does hereby, in accordance with and in compliance with the provisions of that section 2 of that act of Congress, declare and proclaim that section 2 of that act of Congress shall not apply to any gambling device in this state where the transportation of such a device is specifically authorized by and done in compliance with the provisions of this chapter and any rules adopted pursuant to it, and that any such gambling device transported in compliance with state law and rules shall be exempt from the provisions of that act of Congress.

287-G:16 Legal Shipment of Gaming Devices into New Hampshire. All shipments into this state of gaming devices, the registering, recording and labeling of which has been duly had by the manufacturer or dealer in accordance with sections 3 and 4 of an act of Congress of the United States entitled "An act to prohibit transportation of gambling devices in interstate and foreign commerce, approved January 2, 1951, being chapter 1194, 64 Stat. 1134, and also designated as 15 U.S.C. sections 1171-1172, shall be deemed legal shipments into this state.

2 Repeal. The following are repealed:

I. RSA 77, relative to the interest and dividends tax.

II. RSA 86, relative to the legacies and succession tax.

III. RSA 87:12, relative to applications of RSA 86 to RSA 87.

IV. RSA 195-H:8, relative to the college tuition savings plan and the interest and dividends tax.

V. RSA 195-H:10, relative to the college tuition savings plan and the interest and dividends tax.

VI. RSA 261:52-a, relative to driver's license applications and the interest and dividends tax.

VII. RSA 391:3, relative to common trusts and the interest and dividends tax.

3 Reference Deleted. Amend RSA 87:1, I to read as follows:

I. [In addition to the taxes imposed by RSA 86] An estate tax is hereby imposed upon the transfer of the estate of every decedent leaving an estate which is subject to an estate tax under the provisions of the United States Internal Revenue Code of 1986, as amended, and who has property within this state.

4 Department of Revenue Administration; Reference to Interest and Dividends Tax Deleted. Amend RSA 21-J:13-a to read as follows:

21-J:13-a Exemption From Rulemaking Requirement. The commissioner shall be exempt from adopting, as rules pursuant to RSA 541-A, the requirements on the department's tax filing forms for the business profits tax[,] and business enterprise tax[, and interest and dividends tax].

5 Property Tax; Investigation of Application and Decision by Town Officials; Reference to Interest and Dividends Tax Deleted. Amend RSA 72:34, II(a)-(c) to read as follows:

(a) Federal income tax form; and

(b) [State interest and dividends tax form; and

(c)] Property tax inventory form filed in any other town.

6 Department of Revenue Administration; Reference to Interest and Dividends Tax Deleted. Amend RSA 21-J:31 to read as follows:

21-J:31 Penalty for Failure to File. Any taxpayer who fails to file a return when due, unless an extension has been granted by the department, shall pay a penalty equal to 5 percent of the amount of the tax due or $10, whichever is greater, for each month or part of a month during which the return remains unfiled. The total amount of any penalty shall not, however, exceed 25 percent of the amount of the tax due or $50, whichever is greater. This penalty shall not be applied in any case in which a return is filed within the extended filing period as provided in [RSA 77:18-b,] RSA 77-A:9, RSA 77-E:8, RSA 83-C:6, or RSA 84-A:7, or the failure to file was due to reasonable cause and not willful neglect of the taxpayer. The amount of the penalty is determined by applying the percentages specified to the net amount of any tax due after crediting any timely payments made through estimating or other means.

7 Department of Revenue Administration; Reference to Interest and Dividends Tax Deleted. Amend RSA 21-J:31 to read as follows:

21-J:31 Penalty for Failure to File. Any taxpayer who fails to file a return when due, unless an extension has been granted by the department, shall pay a penalty equal to 5 percent of the amount of the tax due or $10, whichever is greater, for each month or part of a month during which the return remains unfiled. The total amount of any penalty shall not, however, exceed 25 percent of the amount of the tax due or $50, whichever is greater. This penalty shall not be applied in any case in which a return is filed within the extended filing period as provided in [RSA 77:18-b,] RSA 77-A:9, RSA 77-E:8, RSA 83-C:6, RSA 83-E:5 or RSA 84-A:7, or the failure to file was due to reasonable cause and not willful neglect of the taxpayer. The amount of the penalty is determined by applying the percentages specified to the net amount of any tax due after crediting any timely payments made through estimating or other means.

8 Department of Revenue Administration; Reference to Interest and Dividends Tax Deleted. Amend RSA 21-J:33-a, I to read as follows:

I. If there is a substantial understatement of tax imposed under RSA 77, RSA 77-A, RSA 77-E, RSA 78-A, RSA 78-C, RSA 82-A or RSA 83-C, for any taxable period, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement.

9 Department of Revenue Administration; Reference to Interest and Dividends Tax Deleted. Amend RSA 21-J:33-a, I to read as follows:

I. If there is a substantial understatement of tax imposed under [RSA 77,] RSA 77-A, RSA 77-E, RSA 78-A, RSA 78-C, RSA 82-A or RSA 83-C, or RSA 83-E, for any taxable period, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement.

10 Issuance of Rate Reduction Bonds; Reference to Interest and Dividends Tax Deleted. Amend RSA 369-B:5, VI to read as follows:

VI. The exercise of the powers granted by this chapter shall be in all respects for the benefit of the people of this state, for the increase of their commerce, welfare, and prosperity, and as the exercise of such powers shall constitute the performance of an essential public function, neither any electric utility, any affiliate of any electric utility, any financing entity, nor any collection or other agent of any of the foregoing shall be required to pay any taxes or assessments upon or in respect of any revenues or property received, acquired, transferred, or used by any electric utility, any affiliate of any electric utility, any financing entity, or any collection or other agent of any of the foregoing under the provisions of this chapter or upon or in respect of the income therefrom[, and any rate reduction bonds shall be treated as notes or bonds of a political subdivision of the state for purposes of RSA 77].

11 Contingency. Sections 7 and 9 of this act shall only take effect upon certification pursuant to 1997, 347:6, I by the public utilities commission that the statewide electric utility industry restructuring plan issued by order of the public utilities has begun implementation. If the public utilities commission so certifies then sections 7 and 9 shall take effect July 1, 2002 at 12:01 a.m. or on the date of the certification, whichever is later.

9 Effective Date.

I. Sections 2-6, 8, and 10 of this act shall take effect July 1, 2002.

II. Sections 7 and 9 of this act shall take effect as provided in section 11.

III. The remainder of this act shall take effect July 1, 2001.

LBAO

01-0240

2/8/01

HB 644-FN-A-LOCAL - FISCAL NOTE

FISCAL IMPACT: