PA Bar Owner’s Guide to Small Games of Chance · PA Bar Owner’s Guide to Small Games of Chance...

PA Bar Owner’s Guide to Small Games of Chance

FEBRUARY 2014

Providing prospective Pennsylvania Bar & Tavern Owners with everything they need to know to get into the Small Games of Chance business

PA BAR OWNER’S GUIDE TO SMALL GAMES OF CHANCE

v. 1.1 © 2014 Texter Mountain Products

INTRODUCTION ___________________________________________________________________ 3

PART I: ACT 90 OF 2013 __________________________________________________________ 5

The Law ______________________________________________________________________________________ 5

Who Can Apply? _____________________________________________________________________________ 6

Personal Qualifications for Approval ______________________________________________________ 6

Background Checks _________________________________________________________________________ 7

Cost Of License And Renewal _______________________________________________________________ 7

Revenue Splits _______________________________________________________________________________ 8

Reports, Recordkeeping, Rules and Taxes _________________________________________________ 8

Separate Bank Accounts for Funds _________________________________________________________ 9

Transfer or Sale of Business ________________________________________________________________ 9

Host Municipal Jurisdiction And Approval ______________________________________________ 10

Dealing With The LCB and Their Inspectors ____________________________________________ 10

PART II: IMPLEMENTING A SGOC BUSINESS _________________________________ 12

Investment And Start-up Costs For Equipment _________________________________________ 12

Equipment For Your Business ____________________________________________________________ 15

Your Software ______________________________________________________________________________ 19

Choice of Games ___________________________________________________________________________ 20

Licensed Sales Distributors _______________________________________________________________ 26

Managing Employees Involved in Your Gaming Business ______________________________ 27

Rules and Guidelines for Players _________________________________________________________ 29

RECOMMENDATION & CONCLUSION _________________________________________ 30



INTRODUCTION

Congratulations and thank you for purchasing my report. My experience in all phases of the small

games of chance industry is extensive. From a player, to managing a large VFW club that had

gaming, to selling the very products you will be buying if you choose to become a licensee of tavern

gaming.

When PA House Bill 1098 was passed last November by the PA State legislature, I made the decision

to look into what this would mean for my business and to the tavern owners. After about a week, I

realized the tavern owners would have to make a decision on investing a substantial amount of

money and time without having a place to go to find out if it was even right for them. Shortly

thereafter I started listing all the things I thought would be important to them. In the end, I

compiled a great deal more information than I ever thought would be necessary for the tavern

owners to know about and six weeks ago I decided to start putting it into a formal report. Today, I

probably know more about what is involved in the overall small games of chance industry than any

other person in PA.

In this report, I have laid out as much information as I could research, speaking many times directly

with all the regulatory agencies involved and incorporated the benefit of my personal experience to

try to assist you in making an informed decision. You have just purchased most of that information

and it cost you 1/200th of what a license will cost you. I trust you will find it very beneficial.

With the opening of applications for licenses, it was important that this information be made

available to you as soon as possible. I have requested information from the PA. Liquor Control

Board (LCB), the PA Gaming Control Board (PGCB), the Department of Revenue (DOR) and the

Bureau of Investigations and Enforcement (BIE) to make the report as complete as possible, but

some facts were not yet available from them, or any other source. In those cases, I will be emailing

that information and any addition pertinent facts directly to you as soon as they become available.



I am presenting this report in two parts.

The first deals with the Bill passed by the PA legislature and is designed to inform you of the laws

and regulations you must follow. It is important information that you will need to know to get into

the gaming business….and how to stay in it. The LCB, PGCB, DOR and the BIE expanded this Bill to

include their requirements which I try to clarify for you also. It doesn’t make for exciting reading,

but if you read the entire Bill itself, you would find it much worse and still have many questions left

unanswered. If you attended one of the many seminars put on to explain the provisions of the law

you might find some of this material repetitive, but it is important you fully understand what they

are telling you, so take the time to read and grasp it fully.

The second part covers the many aspects of the gaming business itself. Based on my experience,

which covers all facets of the SGOC business, I will give you my best advice on the estimated cost to

get into tavern gaming, the equipment needed, the games themselves, risk management, and

several other important items. This section will also provide you with valuable information you will

need should you decide to enter the gaming business and some of the problems you might

encounter.

Sit back and enjoy your reading.



PART I: ACT 90 OF 2013

THE LAW

House Bill 1098 (now Act 90 of 2013) contains many pages of legal speak, much of which does not

pertain to your interest, nor does it explain many of the things that will be required by the four

State agencies involved.

Although tavern raffles (only one per month allowed for a charitable cause) are permitted under

this Bill, in my estimation, it is such a small part of your potential income for the reporting and

banking headache it will cause you, you would do it only if the charitable organization you donate

the proceeds to is of important personal interest to you. In that same light, I will not be addressing

tavern “daily drawings” which are sold for $1.00 or less, one chance per drawing per individual and

must be drawn each day or the money rolled into the next day’s drawing. I’m sure this drawing was

designed to be similar to the daily and weekly books used by non-profit clubs that do build up to

substantial amounts of money if no winners are drawn for several weeks and sometimes months. I

cannot get into how their funds are split because most clubs have their own rules, but I can tell you,

what you will be able to offer does not parallel what the club’s drawings are, or what you would be

able to offer your customers. Neither the raffles nor the daily drawings are reported by your sales

distributor, meaning it is your responsibility to handle all of that, plus making the tax payments to

the State. You will learn what that involves as you read this report.

Certain portions of the Bill are important enough to copy verbatim and I have done so when

necessary so you do not misunderstand the information. Those paragraphs or sentences will be

denoted by quotation (“) marks.

This Bill became law on January 27, 2014. Applications for licenses will be accepted shortly

thereafter. At present, there are no limits placed on the number of licenses that will be issued.

Since all references in the Bill encompass the word “Tavern” when referring to your business,

regardless of what type of establishment you operate, I will do the same. So let’s get started!



WHO CAN APPLY?

As to those eligible to apply, it includes any “for profit” bar, tavern, inn, cafe, pub or restaurant

normally holding an “R” type liquor license. A microbrewery or privately owned golf course that

has a valid license to sell liquor or beer under the Liquor Code is also eligible. In addition, it must be

located in a municipality that permits SGOC in taverns.

If your business is one of the following, it does NOT qualify for a SGOC license:

1. A grocery store, including a restaurant with an interior connection to a grocery store (most hold an

“R” license type);

2. A restaurant or store where the sale of liquid fuels or oil is conducted;

3. A hotel or restaurant located in a casino;

4. A business on the grounds/facility where a professional sports team or racing league conducts

games or races;

5. A tavern whose liquor license is in safekeeping;

6. A tavern whose license has been objected to for renewal, has been issued and is under suspension,

or the license has been revoked or has been decreed a nuisance;

7. Any person involved in the business has been convicted of a felony offense, or a misdemeanor

gambling offense, in any jurisdiction, within the past 15 years;

8. Any establishment holding any license types: E, C, CC, O, LK and AL.

PERSONAL QUALIFICATIONS FOR APPROVAL

Based on the information contained in your application and the PLCB’s investigation report to the

Board, there are certain subjective things they will try to evaluate. These would include such items

as financial stability (gleaned from your credit report, etc.), integrity and responsibility. They will

consider your business experience in determining if you can effectively operate tavern gaming,

that’s in addition to your character, honesty and integrity to operate tavern games in a responsible

and lawful manner. The forms you are required to complete are extensive, but not overwhelming.

What the various agencies stressed time and time again, is that the applications be completed

accurately, completely and honestly. Most importantly, FILL IN EVERY BLANK (with “Not

Applicable”), even if it does not apply to you. It should also be pointed out that everything I am

discussing in this report could apply not only to owners, but individuals having a financial interest



in the tavern. There is an Entity Application and Disclosure Information Form used for reporting

those individuals and entities. It is important you get printouts of all of these forms to make sure

they do/do not apply to your circumstances.

BACKROUND CHECKS

The gaming laws contain many checks and balances to prevent organized crime from entering the

business. The fact that you have been issued a liquor license means you have already met many of

the requirements outlined in their laws, but does not lessen the amount of proof they require to

meet their gaming law screenings. Some of the things they will require you to complete in the

background application include:

Securing an FBI Criminal History Summary and a fingerprint card to submit with your

application;

Submit your most recent tax return for the tavern. Provide additional financial tax (IRS

Form 4506-T) information from the IRS and PA DOR as needed;

Any regulatory history before the Board or other Commonwealth agencies in the last five

years; one such agency would be your records regarding unemployment and workers

compensation from the PA Department of Labor and Industry.

They may even ask for a personal interview if they are not satisfied with the information gathered

in their normal background checks. It is important that you answer all questions truthfully and

honestly because you could be subjected to criminal penalties and jeopardize your current liquor

license if you fail to do so.

COST OF LICENSE AND RENEWAL

The Bill has fixed the application fee for a license at $1,000.00. You are also required to pay a

$1,000.00 fee for the background check. Neither of these fees is refundable if the Board denies your

application. If the Board approves your application, the cost of your first license will be $2,000.00

more. The license is good for one year and can be renewed for $1,000.00 per year thereafter.



As an aside, if the background check requires more extensive investigation than normal, you will be

charged an extra amount deemed necessary to cover this expense. The LCB has up to six months

from the time they receive the background report to approve or disapprove your application,

REVENUE SPLITS

The net profit from the sale of games of chance is split (called a “tax”) as follows:

State of Pennsylvania – 60%

Host municipality – 5%

Tavern owner – 35%

The net profit is determined by subtracting both the winning payouts paid to the players and the

cost of the game from the Sales Distributor, from the gross ticket sales of the game.

REPORTS, RECORDKEEPING, RULES AND TAXES

1. When pull tab games are purchased from a licensed distributor the tavern will pay the tax (65% of

the game profit) directly to them upon delivery of the games in addition to the cost of the game. The

sales distributor will be responsible for remitting those taxes and filing the information with the

State.

2. Pull tab games are subject to a sales tax of 6% on the cost of the game. You would need to add an

additional 1% for Allegheny County and 2% for sales in Philadelphia (all of which are deductible as

a cost prior to the 65% tax split).

3. It is important that top prizes for pull tab games be less than $600.00. Federal law requires that you

report winnings greater than that amount on a W-2G form and provide it to the IRS and the DOR,

making the winner subject to their taxes. Most standard pull tab games do not exceed this amount.

In any event there is a top prize limit of $2,000.00 for ANY game of chance you offer.

4. There is a $35,000.00 limit on all game winnings in any seven-day period. Should you reach this

limit it will be necessary for you to suspend all gaming for a day or two to get under this amount for

the last seven days.

5. For all pull tab games the BIE requires you maintain the following records:



a. Name and serial number of games.

b. Date placed into and removed from play.

c. Total number of plays in each game.

d. Cost per play, cost of prizes paid and cash value of all prizes in games.

e. If a prize is awarded in excess of $600: The form and serial number of the game, the

name of the game, date of win, the amount of cash or the cash value and description

of merchandise and the full name and address of the winner.

There are five formal reports that are required from all licensees each year.

These would include four quarterly and one annual report. The reports are due on the 20th of the

month following the close of each calendar quarter; April 20, July 20, October 20 and January 20,

with the annual report submitted with the January quarterly report. If you choose to participate in

drawings and/or raffles, you are required to pay the 65% to the State when filing your next

quarterly report. A spreadsheet to assist with record-keeping and filing will be made available

within the electronic filing system for download.

SEPARATE BANK ACCOUNTS FOR FUNDS

Money from all games of chance cannot be co-mingled with any other bank account your business

may have. It will be necessary for you to set up a separate bank account exclusively for gaming

purposes and deposit funds into it (more on the amount later). Payments out of this account will be

made to the licensed Sales Distributor who sold you the game, which include all taxes (splits) due

to the State (60%) and your host municipality (5%) on the total profits the game should/will earn.

The remaining 35% belongs to you and can be withdrawn at your discretion.

TRANSFER OR SALE OF BUSINESS

Transfer of a tavern license is prohibited under this Bill. A license may not be sold, transferred or

assigned to any other person. “A licensee may not pledge or otherwise grant a security interest in or

lien on the license. The purchaser or transferee of the assets or premises of the licensee must

independently qualify for a license, pay the license fee and undergo and pay fees and costs for a

background investigation.” If you are contemplating sale of your business in the near future (to

someone you believe can qualify for a tavern gaming license), you should weigh whether the



additional revenue realized from your tavern gaming will help your sales effort, against the expense

involved in setting up your gaming program for the time you remain owner.

HOST MUNICIPAL JURISDICTION AND APPROVAL

A host municipality is “A municipality with one or more taverns licensed to conduct tavern gaming”

It will be necessary for the host municipality to adopt a referendum to allow small games of chance

for taverns.

The 5% tax designated to go to them is remitted to the State and then distributed to them within 60

days of the end of each year. Since most municipalities are in need of revenue, and dependent on

the State for many grants, I cannot see where gaming licenses would be denied to taverns if the

State requests their approval, but it is possible.

I have asked the Department of Finance if the application and background fee would be returned

should a municipality reject tavern gaming. To date, they have not responded, I will advise you by

email as soon as I get the answer.

DEALING WITH THE LCB AND THEIR INSPECTORS

As you can surmise thus far, the State of Pennsylvania will take gambling laws very serious.

Violation of gaming laws, like liquor laws, can have harsh consequences. Their Bureau of Liquor

Control Enforcement is required to visit 5% of all gaming licensees each year. They normally will

not conduct a complete audit of your books, but may spot check them to make sure you are in

compliance with reports and tracking that have been mandated. In addition, they will be looking for

any violations of the following:

1. “It is unlawful for an individual under 21 years of age to play or participate in a tavern game.”

2. “It is unlawful for an owner, officer or employee of a licensee to sell, operate or otherwise

participate in the conduct of tavern games if the employee has been convicted in any

jurisdiction of a felony or a misdemeanor gambling offense unless 15 years have elapsed from

the date of conviction.”



3. “It shall be unlawful for an owner or officer of a licensee or for an employee of the licensee who

operates the tavern game to participate in the game.”

4. “It is unlawful for a licensee to permit an employee under 18 years of age to operate tavern

games.”

It has been my experience that most unscheduled visits by Inspectors are the result of formal

complaints by disgruntled customers. Some reason for these complaints will be covered in the

“employee” section.

Violations of the gaming laws reported by the Bureau of Liquor Control Enforcement may involve

civil penalties and could be subject to the following fines by the LCB:

Up to $2,000.00 for an initial violation. (a 3rd degree misdemeanor)

Up to $3,000.00 for a second violation. (a 2nd degree misdemeanor)

Up to $5,000.00 for a third violation. (a 2nd degree misdemeanor)

Like your liquor license, serious or repeated violations of the gaming laws could result in loss of

your gaming AND most importantly your liquor license.

In the next section, I will discuss the details of what this law means for your business.



PART II: IMPLEMENTING A SGOC BUSINESS

INVESTMENT AND START-UP COSTS FOR EQUIPMENT

Unlike non-profit clubs, you are required to pay the tax on all games of chance to the sales

distributor at the time you buy the games and get delivery from them. Below I give an approximate

example of one of the standard games you will be purchasing and you will see that the tax (65%)

would be $650.00 per game. It should be pointed out that there are games with smaller or slightly

higher profit margins and counts (number of tickets) less than the 4,000 I give in my example,

hence, your tax and startup costs would be less. Most non-profit clubs have 4-8 pull tab games

displayed for their players at all times, not counting their punch boards.

Although every tavern is different, I have come up with three options of what could be invested to

enter the gaming business. Keep in mind, I am presenting these examples only as a guide. Should

you be the owner of a large establishment it does not mean you should jump into the gaming

business with both feet. Your option to start smaller and build the SGOC revenue as play demands

may be a wise and conservative approach. Conversely, if you fall into the category of a “small

tavern” it does not mean you won’t have several patrons that are “high rollers” and spend lots of

money on these games and could turn over your inventory rapidly. In which case, upgrading and

expanding your gaming operation would be an option.

Selling $4,000.00 tickets (as in the below example) may seem like a lot of money for your customers

to spend to exhaust a box of tickets, but keep in mind you are giving them back $3,000.00 of it in

payouts. People who play these games are notorious for not quitting when they are ahead, and

certainly hate quitting when they are losing. And 90% of them will put back (reinvest) any small

($1.00-$5.00) winning tickets, which makes up a fair percentage of the total payouts.

For ease of understanding, I will use an example that is almost identical to what you would be

selling; a box of gaming tickets that contain 4,000 tickets that sell for $1.00 each. It pays out on

average $3,000.00 (75%) in winnings to the players. Your gross profit on each box sold would then

be $1,000.00 (less the cost of the tickets before the split or taxes). 65% of which would go to the

State and local municipality, and 35% retained as your net profit. Winnings, of course are paid out



as the game is sold and not all at once to the player. In most instances, you will be able to fund most

of those payouts from the cash flow of the ticket sales. However, sufficient cash needs to be readily

available should players hit several large winning tickets early in the games.

I would estimate your start-up costs at a minimum for the smaller taverns would be about

$7,700.00. This would include your total first year licensing fees of $4,000.00, purchase of four

lockable, plastic game containers (called jars) and the purchase of the games of chance (estimated

at $675.00 per game for the 65% tax and YOUR net cost of the game itself). This would allow you

four games to be displayed at once to provide choices for the players. You would then adjust your

backup inventory as needed.

For the medium sized taverns you should be planning on an investment of about $11,400.00. This

investment would include your $4,000.00 license fees, eight plastic jars, and an initial purchase of

eight games of chance, adjusting your inventory as needed. Read below to select the pull tab

options you could use in the jars.

Here is my recommendation for large taverns with 100 or more patrons a day and sports bars. The

reason I have singled out sports bars in this category stems from the fact that patrons that frequent

these establishments are normally avid gamblers. Providing them a convenient place to play games

of chance, should prove very profitable to these bars. I estimate the start-up cost would be

$21,100.00. I based this amount on the following: License fees $4,000.00, an automatic ticket

machine for $7,000.00, 8 plastic jars and $8,100.00 of inventory for 12 boxes of tickets at $675.00

per box. I feel it is extremely important to provide your customers a large range of games, ticket

prices and prizes. You will have 8 bins to fill in the machine and 8 jars to fill. I recommend you fill

the ticket machine(s) as follows:

Ticket Machine Amounts and Prizes

2 rows of .50 cent tickets from the same game (maximum of $100-$200 top prize)

4 rows of $1.00 tickets with tickets from 2 different games (maximum of $100-$250 top prize).

1 rows of $2.00 tickets from the same game (maximum of $500 top prize).

1 row of $5.00 tickets from the same game (maximum of $500 top prize).



Each row will hold 800-1000 tickets. The opened boxes of excess tickets would be stored securely

in the locked cabinet underneath the machine. If you are concerned the jar tickets will interfere

with your normal business, ticket machines are designed to automate everything but the payouts

and reloading. Although I recommend selling tickets from jars behind the bar, it would be optional

depending on your labor and business requirements. Should you decide not to put in jar tickets you

may want to consider putting in a second ticket machine (perhaps in another area), in which case

you need to add about $3,050.00 to the above startup costs.

One of the biggest concerns non-profit clubs have that sell SGOC is the amount of paperwork

involved in keeping up with the reports and tracking required by the LCB. It will be no different for

Tavern Gaming. For the medium and large taverns I believe it is essential, if you do not already have

one, that a point-of-sale cash register be considered. If you already own these systems, don’t

despair over what I am going to tell you. (I cover this in the software portion of this report). What I

am recommending, however, is that you NOT purchase one in anticipation of getting your gaming

license. Delay this decision as long as possible. Here’s why; the ideal cash register would not only

cover your tavern business, but be interfaced directly to web-based software capable of

maintaining, completing and even transmitting your reports through your computer directly to the

LCB and DOF when due. The information would be recorded automatically as you sell each ticket

from each game and make payouts to winners from the register. There is just-released, web-based

software capable of tracking this but the final step, the register itself, is not yet available to interface

with this software. Technology these days moves at warp speed, and with this large market opening

up, the need for a register capable of providing all the features you need and interfaced to this

software is crucial and should be only months away. Record keeping would then involve only a few

minutes a week to complete instead of hours. Americans are notorious for finding a need and filling

it. This should be no exception.

Plastic Jars Amounts and Prizes

With the recommended plastic jars you have several options and almost all games of chance

authorized by the LCB come into play. Even the 4000 count box of tickets I described above for

machines. Bags of jar tickets and POGs (both described below) are commonly used to fill the jars.

You would normally not have $2.00 nor $5.00 tickets in these jars, but it is an option based on your

customer's play. You would also have the option of going down as low as a .25 cent tickets with a

$100-$150 top prize and a ticket count as low as 400-500 if you wanted to turn games over quickly.



A review of the games I’ve describe below will provide you with the options best suited for your

particular establishment and setup.

EQUIPMENT FOR YOUR BUSINESS

Jars

Let’s start with the simplest product; the plastic, lockable containers (jars) that hold games usually

located behind the bar (a picture is shown below). There are cheaper, open, smaller jars available,

but I do not recommend them unless you are a small mom and pop tavern and security is never a

problem. All licensed distributors sell both types.

Figure 1: Recommended Jars



The games sold from jars must be collected for, counted out and winners paid by your bartender.

Prices will vary, but plan on spending about $250.00 each for them. These are large enough to hold

an entire (4000 count) bag of jar tickets or POGS and have a lock and a drawer. They are important

for a couple reasons: First, people are inherently lazy (or to put it another way, are in your place to

relax). It is much easier to just sit on a stool at the bar and have the bartender bring them the games

they are playing, instead of walking over to a ticket machine and putting money in to get them.

Secondly, the player can see how many tickets are left should they decide to “clean the jar” or buy

all the remaining tickets. This will happen when a player has already invested a fair amount of

money in the game and has not hit winners. They feel the winning tickets are in there, and they just

have to spend more to find them. These containers obviously involve more work for your

bartenders. Customers generally buy tickets in quantities of $10.00 or $20.00 at a time. It will take

them only a few minutes to open them….and they are ready for more. It is important that the

players understand, and be advised that their gaming comes second to serving drinks, food, etc.,

which is your primary business. Most will have no problem accepting this …if you tell them and if

they don’t have to wait too long. If you purchase these jars in the quantities I've recommended, you

should be able to negotiate with the sales distributor to get a "quantity" discount. If handled right,

you could even pay for this report several times over.

Ticket Machines

The next product is the automatic dispensing ticket machine. There are several to choose from but I

have a favorite, primarily because of feedback I have gotten from my customers. It’s reliable, parts

are readily available and almost maintenance free. Plus it looks good. It is the Nevada Gold Ticket

Machine manufactured by Arrow International out of Cleveland, Ohio (you will see a picture

below). Since it is the most popular machine sold in PA, it should be sold by all sales distributors in

your area. The machine is offered in two sizes; an eight column and a four column. Each column

holds up to 800-1,000 tickets (The Company just recently introduced a 1,000 column machine,

which I have not seen yet, nor sold). It is high speed, meaning it will dispense 20 tickets in about

three seconds. The two best parts for a tavern owner is it does not take much of your bartender’s

time to service the players. And it’s mistake-proof and secure. The bartender’s only job will be to

pay the player for the winning tickets they tender and refill the tickets in the machine when needed.

Players that hit $1.00-$5.00 winning tickets seldom cash them in until they have accumulated

$10.00-$20.00 worth of them or are done playing. The machines are great and I have seen groups

that anted up $10.00 each to try to hit a $300-$500 winner…. only to ante up another, and another.



Some players will not set foot in a casino, but will put a lot of money into these games. The eight

column, 800-1000 capacity per bin machines sell for about $7,000.00 and a four column for about

$4,700.00 including stand (but without the accounting system). I have never sold a four column

machine but it is not to say I wouldn’t recommend buying one for the small to medium sized tavern.

The eight column machine price includes two other items I feel you need. It includes a sturdy

stand/storage cabinet to store unsold tickets in securely and a hand-held, accounting /printing

system that you plug into the machine that gives you a printout of tickets sold, by column, dollar

volume of each column, and basically all totals needed to enter into your computer, software or

register for tracking your sales and profit. Profit margins are not great for these machines for the

sales distributor, so you will not have much room to negotiate the price. But you could ask for a

short term (90-120 days) payment schedule that would allow you to pay for all or part of it from

your cash flow from gaming.

You should also have some leeway negotiating the equipment maintenance agreement (EMA). I

would ask for a free year on all parts, labor, travel and maintenance when you buy the machine. I

would also tell the distributor you are getting a couple quotes (and get them) for the machine and

EMA and want their best price. Be sure to ask them about their response time when you do require

service. The EMA prices range from free (except for parts) if you buy all your tickets for the

machine from one distributor, up to $250.00, plus parts, per year, which includes several calls

before you are charged about $90.00+ per service call. There is simple maintenance that you should

perform yourself, like cleaning the feeder systems, which many times will keep the machines

operating efficiently. And purchase your replacement tickets from your normal sales distributor.

Using cheap tickets from drive-by distributors could cause you jamming problems that will drive

you nuts.



Figure 2: Recommended Eight-Column Ticket Machine

ATMs

The fact that your customer has run out of ready cash, and this is strictly a cash business, does not

mean they are broke. If you do not already have an ATM machine in your establishment, you may

want to consider installing one. Players really dislike having to leave to go get more money to play

and only the most dedicated gambler will do so. Casinos have them handy for a reason. The

machine will benefit your gaming volume and depending on the program you sign up for, can be an

additional profit center for you. There are a large variety of programs and prices available which

even include used machines, so I will leave it up to you to find your best deal.

Scales

Depending on the gaming volume, number of employees handling the games, and if you want all

gaming play accounted for at the end of each employee’s shift, you could consider a counting scale.

There are scales available that allow you to subtract the tare weight (weight of the container) and

tell you exactly how many tickets remain in each container. A few clubs I service have this system in



place and experience many fewer mistakes as compared to those that don’t. You may not want to

start off with this product, but if you find losses are a problem, it would certainly be an option.

Registers/POS

If you are a medium or large size tavern, you probably already have an electronic, touch screen cash

register, in which case you will have no problem expanding your system to accommodate the

additional keys needed to track each game sold. If you still have a non-electronic register, be sure

that you have the capacity to ring up the sale and payout of each game on a separate key on your

register. You have to know that your sales and payouts match the expected revenue and this is the

only way you will be able to track that information for jar sales or machine payouts. I have found

that numbering each container or game (1, 2, 3, etc.) and then correspond that number on your

register prevents a lot errors by the employees.

YOUR SOFTWARE

You will find that your monthly investment in software is as important as any of the machines or

games I have recommended thus far. As I have stated above, the tracking, reporting and accounting

to meet the requirements of the State agencies is very time consuming and tedious. The solution is

a software rental program. It will cost you $99.00 per month (an in-house software system to do

this can sell for $3,000.00 and more). This software was being developed for the private clubs that

expressed a strong need to track their expanded reporting and tracking requirements this year.

When Act 30 of 2013 was passed, it became apparent to this Company that the need to expand the

software capability to include tavern owners was also needed. They are currently working with all

the State agencies to meet those requirements. The technology itself is 21st century. First, since it is

web-based software, and unlike in-house software, all records are held securely in computers on

the web. And is a state-of-the-art technology (an official partner with Microsoft) that tracks and

generates all required reports necessary, in electronic form, to meet the high standard required. It

allows the sales distributor (of your choice) to automatically and electronically download all the

information you will need such as the game, serial number, count, payout, profit, etc. when it is

delivered to your door. From that point on, you just input into the software via your computer what

you have sold and paid out for each game and the software will do the rest. The fact that it is stored

on the web eliminates any possible loss of data should your computer crash. In addition, the

distributor can download your delivery prior to arriving which lets you know in advanced the total

charges for your inventory orders and have a check waiting for the delivery guy/gal. The current



software rental agreement is a simple month-to-month contract and the software can be installed

remotely. The smallest tavern may not consider it too much of a problem to do all the tracking and

reporting of a few games manually, but for the rest, I highly recommend you contact

GameTrackerUSA (www.GameTrackerUSA.com), a Pennsylvania based company, and have this

software installed before bringing in tavern gaming. This will probably be the software technology

that will be integrated into the registers when they are introduced.

CHOICE OF GAMES

There are a multitude of manufacturers producing games of chance tickets. Games will have

different looks, a whole range of payouts, a wide assortment of ticket counts and a variety of

different options. When you boil it all down however, here are the games you will display over 95%

of the time:

Five window tickets used in both machines and jars,

Three part “jar tickets” sold only from jars,

POGS sold only from jars, and

Signer Boards sold in conjunction with all of these games.

There are things that are common to most of these games that you should know. The first is that

profit margins range between 20-25% gross for these products, although sales distributors are

allowed to sell you games with as high as 35% profits. Second, you can order ticket counts from as

low as 100 and up to 4,000 per game. Third, the cost of the ticket sold to the player can range

from .25 cents to .50 cents to $1.00, $2.00 or as high as $5.00 per ticket for some games. You will be

given the option to pick the price of the ticket you want to sell, the ticket count and the top prize

money the game will pay in most cases. The reason the top prize is important is because if you are

selling tickets primarily to your every-day customers, a game containing one or two large prizes

(say $350-$500) it would not be played by them should they learn the big payouts are already gone.

And they do find out. Winners like to tell others how lucky they are. If you have lots of top prizes of

$100.00 on that board, along with lots of $50’s and $25’s, everybody would continue to play the

game. This would be especially true of the smaller taverns. On the other side of the equation,

players that are willing to spend a lot of money on a game want to win something big. If you have a



large clientele, or high rollers, you would want, and need, some large instant payouts in your games

to attract their interest.

Signer Boards

There is a game that might give you the best of both worlds, regardless of your size. It’s called a

signer board. Any of the common games I mentioned above can be ordered with seals, that when

opened can contain almost any large amount of money as a prize. Of course there would be instant

cash won while the game is played. This involves the players signing their name next to a matching

number if that number is opened during regular play. Once the game is sold out, the seals are

opened and whoever signed to match that number is the winner. What makes this game good for

your business is signer boards are allowed to have a “last sale” seal. This guarantees that the entire

board will be sold in most instances.

Typically what you will have happen is games will become “dead”. By that I mean top prize tickets

could have already been won or all signers are taken, in which case no one (especially your regular

customers) will play them. Your only recourse is to pull the game and eat the cost of the unopened

tickets. It does not benefit you to have un-played games taking up space when replacing it with a

new game will start generating revenue for you again (this does not necessarily mean that the

unopened tickets are a complete loss, whatever winning ticket left in the jar and not paid out

belong to you). A last sale seal gives players the incentive to clean the board as it gets down to the

end. The dollar amount for the last sale seal is printed on the board. Where this type of board can

also be profitable is using the seal for merchandise prizes.

If you have a sales distributor that can supply you with games that provide such things as

computers, flat screen TVs, home generators, snow blowers, just to name a few, as top prizes, you

may find a great deal of interest by your customers (just be sure that the distributor tells you the

top prize offered is under $600). This, in my estimation, is a lot better than daily or monthly

drawings, and without all the reporting headaches. Some players, however, especially those that do

not frequent your business often, or are just passing through, will not play signer boards for

obvious reasons. They want you to “show them the money” now, so do not invest in all signer

boards. Signer boards do not lend themselves well to tickets dispensed from a ticket machine, but it

is an option.



Tip Boards are basically a signer board with a low ticket count, usually 200 chances or less and

normally sell for $1.00 per ticket. They can, in most instances, be designed or ordered by your

distributor to accommodate your needs. Cash payouts from the winning seal are not large (usually

$50 or less) or merchandise, such as a tools, appliances, kitchenware, etc. provided by the

distributor. These boards would be sold quickly and could provide small, but extra income for you.

Figure 3: Tip Board



Five Window Tickets

Five window tickets are 2”X4” tickets primarily used for automatic machines, though they can be

stacked in a jar and sold that way. Windows is a term used just to describe the number of panels on

the back of the ticket the player must open to find winning tickets. A box of 4,000 count tickets

sells for about $70-$80 per box, $2.00 and $5.00 tickets are slightly higher. These are prices in my

area and may be a little higher in the larger cities for any of these games.

Figure 4: 5-Window Ticket Display Board



Jar Tickets

Jar tickets usually contain three parts when opened. As mentioned above, they are sold only from

jars because they cannot be automated. Normally they are purchased in bags of 4,000 count and

cost you approximately $80-$90 per bag. If you order them as a signer board, you will want to

order this size bag to be able to offer large seals prizes and decent instant prizes, although smaller

count bags are available if you want faster turnover of the (non-signer) games.

Figure 5: Loose Jar Tickets and Display Card



POGS

I didn’t name them and have no idea why they are called that. But, like the window and jar tickets

they are sold in quantities of 4,000 per bag or less. These are a one-play ticket, meaning the player

opens it, looks at it and then throws it away or cashes it in. Some players really like them because

they can play them quickly, others, like me, prefer to lose our money slower. It is important that if

you have jar tickets, these should be included in your lineup. The cost per bag of 4,000 is about

$60-$65 per bag. They sell well on signer boards also.

Figure 6: POGs and Display Card

Impermissible Games

Punch boards, nor any other game not expressly authorized by PA State Law, are not permitted to

be sold under tavern gaming laws. Video Poker, slot machines, football squares, etc., are all out. Do

not consider them. They are not worth losing your gaming or liquor license.



LICENSED SALES DISTRIBUTORS

Most areas in the State are serviced by 2 or 3 sales distributors. Philadelphia and Pittsburgh would

have many times that number, some coming from across the State lines. They are licensed by the

State to provide supplies and equipment to organizations and businesses with SGOC licenses. Like a

tavern, their license is their business, and they will not intentionally violate any laws that would

jeopardize it. It is pretty safe to assume they are ethical. In business I’m a firm believer in

competition. You will inevitably give most of your gaming business to the distributor that provides

you the best products, price and service, but it is always good to keep them sharp by buying a few

things from their competition… and let them know you are doing it, especially if the competitor can

occasionally provide a product that is cheaper, better or a new idea.

Under the new tavern gaming law the distributors are being turned into IRS agents when it comes

to collecting all the taxes on your games of chance. The reporting, tracking, banking and accounting

required will be a nightmare for them. I would not be surprised to see price increases for their

products because of this added burden. I can also see the smaller distributors choosing not to even

sell to taverns because of the paperwork involved. Most distributors make deliveries once a week.

The good ones will arrange for additional, special deliveries in the event you need their services.

One bit of advice I do want to give you. Be careful not tie yourself into a distributor that offers to sell

you a register or software that only THEY can input data automatically; primarily the delivery of

your inventory. Take my word for it, they are effectively locking out ALL other competition and that

is NOT in your best interest. The key word here is “automatically”. You want to be able to do

business with any distributor you choose and allow them to input your inventory automatically

upon delivery or remotely from their store. The alternative would be if a distributor does not share

their code (and they won't) to access your register or software, you would then have to manually

key in all serial numbers, game, payouts, etc. if you buy anything from their competitor. You

normally will not have, nor will take the time to do this and just pay whatever the distributor

charges you for your supplies.



MANAGING EMPLOYEES INVOLVED IN YOUR GAMING BUSINESS

I have to assume that if you hired them, they are honest and trustworthy. If they are not, your

problem will be compounded with the introduction of SGOC into your tavern. Depending on what

games you install, a lot of cash (and again, it is strictly a cash business) could be exchanged. Not

ringing up a few $20.00 sales that are collected, from the players, giving extra or free tickets to their

friends, pocketing tickets they open later, etc. the list is pretty long and should be of concern to you.

All those cameras in a casino are not just to watch for cheating players, they are to watch the

dealers too. I’m not recommending you install cameras, but I am recommending you closely

monitor the games to be aware of any shortages that might be occurring… and if so, find out why.

The reason I recommend you buy locking jars is because they should not be left open if unattended

or even if your business is closed. For example, a cook who came in early every morning would grab

a hand-full of tickets from an open container before anyone arrived. Later that evening she would

show up at the club and play the game. You cannot believe how lucky she was. She was eventually

caught, but probably stole several thousands of dollars before that happened. Cleaning and

maintenance people could have access to these games too. It has been my experience, however, that

shortages showing up in games is largely the result of employees ringing up the game under the

wrong key on the register and that would be the first thing you should examine. A shortage in one

game will show up as an overpayment in the other when you reconcile the totals. That is a training

problem easily solved.

Non-profit clubs have a distinct advantage not accorded your business; they are able to screen their

members to keep out the undesirables. You on the other hand have no idea who is coming through

your door. Con artists can walk in as easily as anyone else. One scam involves winning tickets.

Although there are many manufactures of the games of chance, most games are purchased from the

2-3 largest by the sales distributors. The chance of the exact game you are selling is also being sold

to other businesses or clubs is almost 100%. Taking an un-cancelled winning ticket from another

business or club by an employee and bringing it into your tavern, playing that game, and then

cashing in their “lucky” ticket is another scam I have seen. There is only one way to prevent this loss

and that is to have your employees check the serial number of all winning tickets of $25.00 or more

before paying the winner. That serial number will never be the same as your game. Those numbers

should be made easily available for your employee on your register screen or kept alongside it.



Train your employees to always, always, always collect the money for the ticket sales and ring them

up before counting out the tickets for the player. This serves two purposes; they will not forget to

get the money for the game in the first place and secondly, it makes it tougher for an employee to

pocket any ticket sales. If they are counting out tickets to a customer and that sale is not on the

register if you check it, you might have a problem. Normally a bartender will collects after the

drinks, food, etc. has been served; this product has to be different.

The final point I wish to suggest involves what is called “inside information”. Even though it is

against the law for you or your employees to play games of chance that they are directly involved in

selling, this does not restrict them from playing games in your tavern they did not personally sell.

What I have been told about this is if you have eight games of chance on display, and your employee

sells six of those during their shift, they are then allowed to sit on the other side of the bar and play

the other two. In my opinion, this should be changed to “no one involved in selling games of chance

should be permitted to gamble in any games”. There are a couple things that really will make your

customers that play these games mad. First, if an employee sits on the customer’s side of the bar

and starts playing tickets and hits a big winner, the customer has every right to assume the

employee knew what jar to play to do that. And second, it is not hard to figure out and track

(especially if their other bartender buddies tell them) what jars are “hot”, meaning what jars have

few tickets and large winners still in them. When I managed a club, one of the first things I

implemented was to restrict anyone who was involved in ANY part of the gaming end of the

business, even if it was just taking money out of the ticket machines, from playing any game except

merchandise boards. I strongly recommend you do the same. As for inside information: you and

your bartenders will know what games are hot. It stands to reason if they sell $800 in tickets out of

a 1000 count jar and the player didn’t hit any big winners, whoever buys the remaining tickets is

sure to win. This information, if shared with a few select people, could do irreparable harm to both

your tavern and gaming business. I have heard from people that after putting hundreds of dollars in

a game and returned to play it again (early) the next night when the club first opened, only to find

someone had cleaned that very jar. This not only cost them that customer, but perhaps friends they

told about it. Again, I strongly recommend that ANYONE involved with selling games tell NOBODY

which games to play. You will regret it if you don’t institute this rule on day one. Showing a player

how many total tickets are left in a jar, however, is acceptable.



RULES AND GUIDELINES FOR PLAYERS

As mentioned earlier, it is important that you let players know that your regular business comes

before handling games of chance for them. They will understand this. There are other things you

will need to decide though. One will be allowing a player(s) to put a “hold” on a particular game

while they are playing it. This simply means that while they are playing it no other player may buy

tickets from that game or column. I personally recommend holding the game for the player if they

ask. The reason is, if a player has put a lot of money in a game already and has not won, they do not

want anyone jumping in the middle and perhaps taking out what would have been their winning

ticket. I have had it happen to me and believe me I did not like it at all. Some patrons will watch for

a player to lose a lot of money on a game and when they are done, start playing it themselves. This

has to be accepted even if you don't like the idea. For ticket machines, the player merely “caps” the

column they are playing with a small plastic cup that serves the same purpose. Just be sure the cup

is removed when they are done playing. If a player leaves your tavern to get more money (no ATM

in house) and will return shortly, they should be allowed to hold the game they were playing also.

Whether you choose to leave all games open all the time is your choice, but you need to establish

this rule from the start so your customers know.

You will need to post a sign that says “No winning tickets are to be removed from the premises or

they will become void and not paid”. People will stick a winning ticket in their pocket, coming back

two weeks later after you have already closed out the game and want their money. Do you see the

problem here with your records? I would just point to the sign and say “Sorry!” And to go with your

liquor sales signage: "No one under 21 years of age is allowed to play this game."

When a sales distributor delivers a game they will normally give you a 9” X 12” poster with it. This

poster should be hung on a wall near the game itself or put on the front of the jar. It is very good

advertising that shows all the money that can be won by the player. Speaking of advertising, the

rule regarding your ability to advertise the fact that your establishment now offers small games of

chance has not been provided in writing. I will send you an email when I know for sure what those

rules are.



RECOMMENDATION & CONCLUSION I guess the big question now is: Would I recommend tavern owners get into the gaming business? I

don’t want to sound like a politician, so I’m going to give you my best answer. Yes! But you may have

your own reservations.

For the smaller taverns it would make sense if you have extra money in the bank drawing little or

no interest, to put that money to work in your business. You certainly should do better than leaving

it there. Your $7,700.00 investment that I recommend may take a year or so to recover, but after

that this business should start generating a clear profit. You may also find that people might stay

longer in your tavern or new customers may come in to play the games. The games are fun to play

and people love to gamble.

For the medium, large and sports bars it could be a good investment to expand your business. Let’s

face it, if you operate an efficient tavern and provide good service, products and prices there is not

much more you can do to increase revenue, except raise prices. In which case, your competitors

benefits if they don't do the same. You may feel, however, that taking on this additional business

venture is not worth the effort or expense. I can't make that decision for you. But there are benefits

to providing this product. If you are controlling your expenses and hiring good people, you will

certainly add revenue to your business. Making about $300.00 for selling a box of tickets may not

seem like a lot of money for you, but if you do that just once a week, you would add over $13,000.00

a year to your bottom line (and that’s after deducting your license renewal and software rental).

The VFW club I managed did 2-4 times (or more) that much most weeks. And every club I knew,

including mine, was in violation of the law for exceeding the $5,000.00 payout limit to winners

many, many weeks. A lot of them were caught (I was lucky) doing it and had to suspend gaming for

a month or two as a penalty plus pay a fine. That limit has now been raised to $25,000.00 a week

for them and is $35,000.00 for you. The point I am making is that even the smaller clubs were

selling the equivalent of over a box of tickets a week that caused them to exceed that $5,000.00

limit. I don't want to paint too rosy a picture on this recommendation, but I am confident it will not

lose you money if you run it in the manner I have recommended in this report. Even in the depths

of our latest recession and up to today the casinos are setting record sales and earnings from their

gambling operations. Does this tell you something? As I said, people love to gamble! If you are

financially able to invest money in your business, I can’t think of a much better product to invest in,

if even for passive income you aren’t getting now.



In the mid 1980’s a very good friend of mine and his wife owned a successful supper club in the

Reading area. Unfortunately, he was diagnosed with cancer. He asked if I would run his business for

a week while he underwent surgery and until his wife could leave him alone at home. He didn’t

have anyone else he could turn to and trust to handle the $3,000-$4,000 they took in each night. I

took time off my regular job to run his business. That had to be the worst week I can remember.

Long hours on my feet, helping make drinks, complaints about seating, restocking the bar, people

being too loud next to them…..it never stopped. And he used do this SIX days a week. The bottom

line is, I gained a very healthy respect for what you do and how hard you work to earn a living in

the bar and restaurant business.

Hopefully I’ve provided you the information to either save you money or help you make money. Not

only do you employ a lot of people in our State, but I know you’re hard-working people and I hope

what you’ve read greatly benefits you.

Please feel free to contact me directly at the below email address if you have questions about

anything I’ve covered in this report. Your feedback regarding this report is very important to me

and if you have an opinion about the report or what I can do to improve it, please take a minute to

give me your input at my email address below. Just a few words (good or bad) would be very much

appreciated. Thank you again for your order and you will be hearing from me on other items of

interest to you as they become available. The very best of luck to you.

Ron Savitski

Wernersville, PA

My Personal E-mail Address: [email protected]

mailto:[email protected]



LEGAL NOTICE

No part of this report may be reproduced or transmitted in any form whatsoever. The use of

electronic or mechanical recording, including photocopying, or by any informational storage or

retrieval without express written, dated and signed permission from the author is prohibited. You

only have the personal use rights to this report.

The information presented herein solely represents the view of the author as of the date of

publication. Although the author is currently employed by a small game of chance sales distributor,

no part of this report contains a conflict of interest that would offer a biased representation of the

facts. The author expressly does NOT represent the interest of all sales distributors, gaming

manufacturers, any Commonwealth of Pennsylvania agency (including but not limited to, the

Pennsylvania Department of Revenue, the Pennsylvania Liquor Control Board, the Pennsylvania

Gaming Control Board, the Pennsylvania Liquor Enforcement Agency) nor any other entity.

Because of the rate at which conditions change, the author reserves the right to alter and update his

opinion and versions of this report, based upon new conditions.

The report is for informational purpose only. While every attempt has been made to verify the

information provided in this report, neither the author, nor his affiliates assume any legal or

financial responsibility for errors, inaccuracies or omissions.

Any slights of people and organizations are unintentional. If advice concerning legal or related

matters is a concern, the services of a fully qualified legal professional should be sought. This report

is not intended for use as legal or accounting advice.

You should be aware of any laws which govern business transactions or other business practices in

the Commonwealth of Pennsylvania. Reference to any person or business whether living or dead is

purely coincidental.

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