AB774: Bill Text

LRB-4979/1

RAC&JS:skg:jlb

1995 - 1996 LEGISLATURE

1995 Assembly BILL 774

January 9, 1996 - Introduced by Representatives Handrick, Seratti, Porter, Linton, Musser, Ourada, Skindrud, Gunderson, Vander Loop, Lorge, Dobyns, Kreuser, Hasenohrl, F. Lasee, Plombon and Zukowski, cosponsored by Senators Andrea, A. Lasee, Breske and Shibilski. Referred to Joint survey committee on Tax Exemptions.

AB774,1,12 An Act to amend 20.197 (1) (j), 25.75 (2), chapter 77 (title), 561.06 (1), 561.06 (2) to (4), chapter 564 (title), 945.01 (3) (a), 945.01 (4) (am) and 945.01 (5) (am); to repeal and recreate 561.02 (1), 561.12, 564.02 (2) (a), 564.02 (2) (b) (intro.), 564.02 (2) (d), 564.02 (2) (e), 564.02 (2) (f), 564.02 (2) (g), 564.02 (2m) (intro.), 564.02 (3) (c) and 564.02 (4); to create 20.566 (9), 77.51 (4) (b) 7., 77.51 (15) (b) 6., subchapter X of chapter 77 [precedes 77.994], 564.02 (1) (ag), 564.03, 564.04, 945.01 (1) (dm) and 945.01 (3) (b) 1m. of the statutes; and to affect 1995 Wisconsin Act 27, section 9123 (6ps) (a), (b), (c) 2. and (e) 2. ; relating to: the regulation and licensing of crane games and certain video amusement devices by the department of revenue, creating a sales tax exemption, imposing a tax, granting rule-making authority, making an appropriation and providing a penalty.

Analysis by the Legislative Reference Bureau

Under current law, the gaming commission regulates pari-mutuel wagering, bingo, raffle and crane games and the state lottery. This bill requires the department of revenue (DOR), on behalf of all towns, cities and villages, to license and regulate certain video amusement devices that award or are capable of awarding to players free replays or redeemable credits. These devices may not change the ratio of plays to free replays or credits and are required to have a percentage of credits awarded to credits played of not less than 83%.

All towns, cities and villages are required under the bill to permit DOR to license and regulate these video amusement devices in their jurisdictions unless a town, city or village does either of the following: permits an election to be held on the first Tuesday in April to determine whether such video amusement devices shall be prohibited in the town, city or village and a majority of the electors in the town, city or village votes to prohibit the play or possession of video amusement devices or the town, city or village enacts an ordinance before July 1, 1996, or the day after publication, whichever is later, that prohibits the play or possession of any video amusement device. If a town, city or village does not enact such an ordinance before July 1, 1996, or the day after publication, whichever is later, or hold such an election, a town, city or village may not prohibit the play or the possession of any video amusement device licensed by DOR.

Under the bill, no person may market, lease, service, repair, warehouse, transport or set up for the purpose of play any amusement device or collect the proceeds from an amusement device unless the person has been a resident of this state during the year immediately prior to applying for registration, the person registers with DOR and a license with an identification number issued by DOR is affixed to the amusement device. In addition, no manufacturer of video amusement devices may do business in this state related to such devices unless the person is issued a manufacturer's license by DOR. Finally, no distributor may sell, repair, distribute, warehouse, transport, display or market any video amusement device unless the person is issued a distributor's license by DOR.

The bill provides that DOR may not permit the play of these video amusement devices at any location other than in a town, city or village on a premises issued a Class "B" or "Class B" alcohol beverage license. Under the bill, no more than 5 video amusement devices may be kept at any one premises issued a Class "B" or "Class B" license and the play of these amusement devices is prohibited during hours in which the premises is closed. The owner of a premises issued a Class "B" or "Class B" license, who permits the play of video amusement devices at his or her premises, is required to enter into a contract with the owner of the amusement devices and this contract must be kept on the premises at all times, available for inspection by persons authorized by DOR. In addition, the bill prohibits the advertising of video amusement devices and the offering of any special inducement for playing such a device.

Under the bill, DOR, on behalf of towns, cities and villages, must charge an annual license fee of $1,000 for each amusement device that is set up for the purpose of play. The person charged this fee is required to pay the fee directly to the town, city or village in which the amusement device will be set up for the purpose of play. In addition, DOR is required to charge an additional annual license fee of $500 for each amusement device to defray the costs incurred by DOR in regulating video amusement devices, but the bill provides that no person may be charged more than a total of $10,000 in any one year. DOR is also required to charge a manufacturer or distributor of amusement devices an annual license fee of $10,000 and each manufacturer and distributor is also required to pay DOR a nonrefundable fee set by DOR to cover all costs of processing the person's application for a license. The bill creates an amusement device tax at the rate of 5% of the value of the net proceeds of amusement devices, which is to be deposited in the lottery fund. Finally, under the bill, an exemption from the sales tax is allowed for the value of the net proceeds of each video amusement device.

Under current law, it is unlawful to make a bet, set up for the purpose of play any gambling machine, permit the operation of a gambling place or conduct an illegal lottery. This bill provides that playing an amusement device licensed by DOR is not a bet; that an amusement device licensed by DOR or that is possessed by a person licensed by DOR is not a gambling machine; that a lottery does not include the playing of an amusement device licensed by DOR; and, that the premises on which an amusement device licensed by DOR is located is not a gambling place.

Finally, under current law the gaming commission regulates and licenses the playing of crane games. The bill requires DOR to regulate and license crane games.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB774, s. 1 Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

AB774, s. 2 Section 2. 20.197 (1) (j) of the statutes, as affected by 1995 Wisconsin Act 27, section 545m, is amended to read:

AB774,3,8 20.197 (1) (j) (title) General program operations; charitable and crane games. The amounts in the schedule for general program operations under chs. ch. 563 and 564. All moneys received by the gaming board under ch. 563, except s. 563.80, and under s. 564.02 (2) shall be credited to this appropriation account.

AB774, s. 3 Section 3. 20.566 (9) of the statutes is created to read:

AB774,4,5 20.566 (9) Amusement devices and crane games. (j) General program operations. The amounts in the schedule for general program operations under ch. 564. All moneys received by the department under ch. 564 shall be credited to this appropriation account.

AB774, s. 4 Section 4. 25.75 (2) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB774,4,10 25.75 (2) Creation. There is created a separate nonlapsible trust fund known as the lottery fund, to consist of gross lottery revenues received by the department of revenue and all revenues collected under subch. X of ch. 77.

AB774, s. 5 Section 5. Chapter 77 (title) of the statutes, as affected by 1995 Wisconsin Act 56, is amended to read:

AB774,4,23 CHAPTER 77 TAXATION OF FOREST CROPLANDS; REAL ESTATE TRANSFER FEES; SALES AND USE TAXES; COUNTY and special district SALES AND USE TAXES; MANAGED FOREST LAND; TEMPORARY RECYCLING SURCHARGE; LOCAL FOOD AND BEVERAGE TAX; LOCAL RENTAL CAR TAX; amusement Device Tax

AB774, s. 6 Section 6. 77.51 (4) (b) 7. of the statutes is created to read:

AB774,5,2 77.51 (4) (b) 7. The value of the net proceeds of an amusement device, as defined in s. 564.03 (1) (a).

AB774, s. 7 Section 7. 77.51 (15) (b) 6. of the statutes is created to read:

AB774,5,5 77.51 (15) (b) 6. The value of the net proceeds of an amusement device, as defined in s. 564.03 (1) (a).

AB774, s. 8 Section 8. Subchapter X of chapter 77 [precedes 77.994] of the statutes is created to read:

AB774,5,8 Chapter 77

AB774,5,10 Subchapter X Amusement device tax

AB774,5,14 77.994 Imposition. There is imposed a tax at the rate of 5% of the value of the net proceeds of an amusement device, as defined in s. 564.03 (1) (a). The tax under this section is imposed on all persons who set up an amusement device for play, as provided under s. 564.03.

AB774,5,17 77.9942 Administration. (1) The department of revenue shall administer the tax under this subchapter and may take any action, conduct any proceeding and impose interest and penalties.

AB774,5,20 (2) Sections 77.52 (3) and (18), 77.58 (1) to (5) and (7), 77.59, 77.60, 77.61 (2), (5), (8), (9) and (12) to (14) and 77.62 as they apply to the taxes under subch. V apply to the tax under this subchapter.

AB774,5,24 (3) Persons who are subject to the tax under this subchapter shall register with the department of revenue. Any person who is required to register; including any person who is authorized to act on behalf of a corporation, partnership or other person who is required to register; and who fails to do so is guilty of a misdemeanor.

AB774,6,2 (4) The department of revenue shall deposit all revenue collected under this subchapter in the lottery fund.

AB774, s. 9 Section 9. 561.02 (1) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed and recreated to read:

AB774,6,8 561.02 (1) The board shall coordinate and regulate all activities relating to, and promulgate all rules relating to, racing and pari-mutuel wagering conducted under ch. 562 and bingo and raffles conducted under ch. 563, and shall perform its duties and functions under ch. 569 regarding Indian gaming.

AB774, s. 10 Section 10. 561.06 (1) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB774,6,12 561.06 (1) Subject to s. 565.25 (1m), provide all of the security services for the gaming operations under chs. 562 to, 563, 565 and 569.

AB774, s. 11 Section 11. 561.06 (2) to (4) of the statutes are amended to read:

AB774,6,15 561.06 (2) Monitor the regulatory compliance of gaming operations under chs. 562 to, 563, 565 and 569.

AB774,6,16 (3) Audit the gaming operations under chs. 562 to, 563, 565 and 569.

AB774,6,17 (4) Investigate suspected violations of chs. 562 to, 563, 565 and 569.

AB774, s. 12 Section 12. 561.12 of the statutes is repealed and recreated to read:

AB774,6,20 561.12 Charitable gaming. The board shall establish a separate subunit in the board to do all of the following:

AB774,6,22 (1) Advise the board on policy making and rule making relating to the conduct of bingo and raffles under ch. 563.