§ 441a.5. License fee payment bond or letter of credit requirements.
(a) An application for a slot machine license shall at all times throughout the period in which the application is on file with the Board include original payment bonds or original irrevocable letters of credit, or some combination thereof, that include draw instructions guaranteeing the applicant’s payment of the slot machine license fee required by sections 1209(a) and 1305(d) of the act (relating to slot machine license fee; and Category 3 slot machine license) if the license is approved and issued.
(1) Payment bonds or irrevocable letters of credit shall be submitted to the Bureau of Licensing for review before an application may be accepted for filing. The review of the payment bond or irrevocable letter of credit will include an assessment of both the proposed terms and the surety or financial institution that will issue the payment bond or irrevocable letter of credit. An application will be deemed incomplete if at any time during the period the application is on file with the Board payment bonds or letters of credit in the amounts required in paragraph (2) are not in full force and effect.
(2) Payment bonds or irrevocable letters of credit must aggregate to the following amounts:
(i) $50,000,000 for each application for a Category 1 or Category 2 license.
(ii) $5,000,000 for each application for a Category 3 license.
(b) Unless otherwise permitted by the Board, a payment bond provided under this section must be issued by a surety company that is both licensed by the Insurance Department and assigned a credit rating within the three highest categories, without regard to numerics or other modifiers, by Moody’s or Standard & Poor’s, or upon the discontinuance of Moody’s or Standard & Poor’s, by another Nationally-recognized rating service. Proof that the surety is licensed by the Insurance Department and has been assigned the required credit rating must accompany any payment bond submitted under this section.
(c) Unless otherwise required by the Board, a letter of credit must be issued by a bank, trust company, National banking association or corporation which is both subject to regulation by the Federal Reserve System under the Bank Holding Company Act of 1956 (12 U.S.C.A. § § 1841—1852) and assigned a credit rating within the three highest rating categories, without regard to numerics or other modifiers, by Moody’s or Standard & Poor’s, or upon the discontinuance of Moody’s or Standard & Poor’s, by another Nationally-recognized rating service. Proof that the bank, trust company, National banking association or corporation is subject to regulation by the Federal Reserve System under the Bank Holding Company Act of 1956 and that the issuer has been assigned the required credit rating must accompany any letter of credit submitted under this section.
(d) The payment bond or irrevocable letter of credit provided under this section must state that it is payable to the ‘‘Commonwealth of Pennsylvania’’ as the obligee.
(e) The payment bond or irrevocable letter of credit provided under this section must provide that if the slot machine license has been approved by the Board and the license fee has not been paid in full within 5 business days following the deadline for payment set by the Board or Board staff, the Commonwealth will have the right to request immediate payment under the payment bond or irrevocable letter of credit for payment of the slot machine license fee.
(f) The payment bond or irrevocable letter of credit provided under this section must state that it will expire upon the earlier to occur of the following:
(1) A specified expiry date or any automatically extended expiry date.
(2) Receipt by the issuer of the Board’s signed statement that:
(i) The application has been denied.
(ii) The slot machine license has been issued and 10 business days have elapsed following the issuance of the license.
(iii) The license fee has been paid.
(iv) The applicant has been permitted by the Board to withdraw its application under § 423a.5 (relating to application withdrawal and surrender).
(g) An expiry date applicable to a payment bond or letter of credit provided under this section must be at least 12 months from the date of issuance of the payment bond or letter or credit. Any provision automatically renewing or extending a payment bond or letter of credit must do so at intervals of at least 3 months. Notice provisions to the Board in a payment bond or letter of credit applicable to an election by an issuer not to renew or extend a then current expiry date must provide that the Board will receive at least 60 days written notice, by registered mail or overnight courier service, of an election not to renew or extend.
(h) This section does not preclude a slot machine license applicant from substituting or replacing a payment bond or letter of credit during the period the application is on file with the Board provided the replacement payment bond or letter of credit is reviewed by the Bureau of Licensing.
Authority The provisions of this § 441a.5 amended under 4 Pa.C.S. § § 1202(b)(9)—(23), 1205, 1206(f) and (g), 1207(1) and (2), 1208(1)(iii), 1209(b), 1212, 1213, 13A11, 13A12—13A14, 13A15 and 1802 and Chapter 13.
Source The provisions of this § 441a.5 amended June 12, 2015, effective June 13, 2015, 45 Pa.B. 2829. Immediately preceding text appears at serial apges (345165) to (345166) and (353445).
Cross References This section cited in 58 Pa. Code § 441a.7 (relating to licensing hearings for slot machine licenses).
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