Proposed Regulation Clarifies Flawed Florida Amusement Machine Law

In part, the law states that machines awarding prizes cannot accept bills or smart cards, nor can they award gift cards or prizes deemed greater than 75¢ in value. Critics of the law, even those who wanted to see sweepstakes cafés shuttered, rightly claimed the lawmakers cast too wide a net. In seeking to end the proliferation of the shady operations, they inadvertently ensnared some of America's most popular and widely respected FECs.

Florida's Legislature is now moving to undo the unforeseen consequences of the 2013 law. The new legislation, SB 268, creates clearly defined regulations for redemption prize games. While some see the latest legislative effort as a remedy for the less-than-clear public policy that was initially instituted, others might view the proposed fix as a heavy regulatory hand. Although narrowly defining the equipment and exempting it from regulations aimed at sweepstakes cafés, the new regulations also limit prize value, define specific location types suitable for the equipment, and allowable operational features built into the games. For instance, under the proposed regulations, operators cannot offer equipment that keeps a permanent record of bonus or free plays.

DEFINITIONS BY LAW

The proposal states: "Amusement game or machine is defined as a game or machine operated only for the bona fide entertainment of the general public which a person activates by inserting or using currency or a coin, card, coupon, slug, token or similar device, and, by the application of skill, with no material element of chance inherent in the game or machine, the person playing or operating the game or machine controls the outcome of the game."

While the newly proposed law expands both the types of locations in which amusement equipment can be placed and prize values, it also sets strict parameters. For instance, equipment can offer free or bonus play, though the number of additional plays is limited to 15 and the patron cannot exchange bonus play for merchandise. The law also prohibits creating a permanent record of bonus plays.

The new law breaks amusement machines into two distinct categories.

Type 1 amusement machines that issue coupons or points to winning players to be redeemed onsite for merchandise.

Type 2 amusement machines that allow a player to manipulate a "claw" or similar device within a closed space (as in a skill crane game) to receive merchandise directly from the amusement machine.

Under the proposed law, operators can offer a maximum redemption value of coupons or points a player receives for a single play of a skill-based game from 75¢ to $5.25, with a maximum value of 100 times that amount, or $525, for an item of merchandise obtained onsite using accumulated coupons or points. The maximum wholesale value of merchandise that may be dispensed directly to a player through the machine is limited to 10 times that amount, or $52.50.

Interestingly, the Florida Legislature has incorporated a formula for prize values to increase over time to keep up with inflation.

"Beginning Sept. 30, 2017, and annually thereafter, the Department of Revenue shall calculate the maximum value as adjusted by the rate of inflation for the 12 months before Sept. 1, rounded to the nearest 5¢," the law's formula reads. "In calculating the adjusted maximum value, the department shall multiply the prior maximum value by one plus the percentage change in the Consumer Price Index for all urban consumers, U.S. city average, all items, not seasonally adjusted or a successor index as calculated by the U.S. Department of Labor. Each adjusted maximum value shall take effect on the following Jan. 1, with the initial adjusted maximum value to take effect on Jan. 1, 2018. Beginning Oct. 15, 2017, and annually thereafter, the department shall publish the maximum value, as adjusted, in a brochure accessible from its website relating to sales and use tax on amusement machines."

In terms of locations, Type 1 equipment can only operate in a timeshare facility, public lodging establishment or licensed public foodservice establishment, arcade amusement center, bowling center or truck stop. Type 2 machines can be placed in a timeshare facility, arcade amusement center, bowling center, a retail premise, public lodging establishment, licensed public foodservice establishment, truck stop or veterans' service organization.

GAMBLING? NOT A CHANCE

The bill also includes the current law provisions banning casino-style games that depict or use symbols of casino games, including slot machines, blackjack, poker, bingo, lotto, roulette, dice or "games in which the player does not control the outcome of the game through skill." Also banned is the use of a computer-based random number generator or other non-discernible factor known or predictable by the player. The games themselves cannot be designed or adapted with a control device to allow manipulation of the game by the operator, to prevent a player from winning or to predetermine which player will win.

Penalties for breaking the rules are serious. A conviction on a first offense is a second-degree misdemeanor that may include jail time not more than 60 days and up to $500 fine. A second offense earns the perpetrator a first-degree misdemeanor that carries jail time of not more than one year and up to $1,000 fine. And a third conviction is a third-degree felony that includes jail time of not more than five years and up to $5,000 fine.

The bill has passed the Regulated Industries and Finance and Tax committees without a dissenting vote. It is expected to soon pass its last hurdle, the Appropriations Committee, before heading for a signature by Gov. Scott. If signed, as expected, it is scheduled to take effect July 1, 2015.

SOURCE:

https://www.flsenate.gov/Session/Bill/2015/0268/BillText/c2/HTML