UPDATE
Pennsylvania Gaming
NOVEMBER 2004
The Gaming Act and Diversity: Legislative Affirmative Action
The Pennsylvania Race Horse Development and Gaming
promote diversity in the “ownership, participation and
Act (“Gaming Act”) has been the subject of much
operation of licensed facilities and any business
discussion and controversy. The focus of many
enterprises offering goods or services” to those licensed
discussions is on the gambling aspect and what that means
facilities, including slot-machine licensees.
to the local communities both in terms of social and
economic impact. Another goal of the Gaming Act is one
that little is heard about: diversity.
The Gaming Control Board’s role is more than just as a
passive monitoring body. The Gaming Control Board has
unspecified investigative powers to “ascertain whether
In the course of meeting that statutory goal, the Gaming
effective and meaningful action has been taken or will be
Act imposes on applicants and licensees extensive and, in
taken to enhance” diversity. However, the legislation does
some cases, novel requirements that can create peril for
not further define or limit the Gaming Control Board’s
the gaming entity that does not learn what is required of it
investigative powers.
and meet the new standards. Failure to meet these
requirements could potentially be a major obstacle to an
applicant or licensee’s effort to be a part of the gaming
LICENSEES AND APPLICANTS –
REQUIREMENTS FOR DIVERSITY
industry in Pennsylvania, and an incorrect approach to
Before applying for a gaming license in Pennsylvania, an
fulfilling those requirements could subject the applicant or
applicant should have a diversity plan in place that would
the licensee to very real legal problems.
satisfy the requirements of the Gaming Act. An applicant
In each initial or renewal application, an applicant must
include an “affirmative action” plan for its operations and
its plan to assure the diversity efforts of any contractor
should also be prepared to address its historical
compliance with federal, state and local employment and
labor laws.
with whom it contracts directly or indirectly. In addition,
When considering a license application or a renewal
the Gaming Act gives the Gaming Control Board
application for a slot license, in addition to numerous
essentially unfettered authority to investigate each licensee
eligibility requirements, the Gaming Control Board also
to determine the licensee’s compliance with the diversity
must consider an applicant’s “good faith plan to recruit,
initiative.
train and upgrade diversity in all employment
Any potential applicant for a gaming license in
Pennsylvania should proceed with caution during the
application process and in its subsequent gaming efforts in
Pennsylvania.
classifications in the facility.” Although similar to the
requirements for a federal contractor, the affirmative
action plan that the Gaming Act contemplates appears to
go beyond the requirements in federal regulations.
Unlike a formal affirmative action plan required by federal
regulations, an applicant’s “affirmative action plan” under
THE GAMING CONTROL BOARD –
REQUIREMENTS FOR DIVERSITY
the Gaming Act must look not only at the internal
Established as an independent administrative board, the
structure of the applicant or licensee’s company, but also
Gaming Control Board is charged with promoting and
must speak to the diversity efforts of all vendors of
ensuring diversity. The Gaming Control Board must
services or goods to the applicant regardless of whether
Kirkpatrick & Lockhart LLP
the applicant contracts directly or indirectly with the
point in the infancy of the program how broadly the
vendor. That requirement, of course, imposes on the
Gaming Control Board will interpret its powers. Each
applicant or licensee a significant duty to inquire into, and
licensee should be prepared to develop a plan to address a
to document, the diversity efforts of all of its vendors.
potential audit or other investigation of its contracting and
That is no small task.
employment policies. These ambiguities are not likely to
An applicant must also include a historical review of its
record of compliance with all applicable employment and
labor laws and employee relations. The Gaming Act
be resolved absent regulations clarifying the procedure
that applicants must follow and the substantive
requirements of an affirmative action plan.
requires that the Gaming Control Board examine the
JACQUELINE JACKSON-DEGARCIA
record of the applicant and its developer regarding
717.231.5877
jjacksondegarcia@kl.com
compliance with all federal, state and local employment
and labor laws and its record of dealing with employment
DAVID R. FINE
matters at any other facility that it operates. The Gaming
717.231.5820
dfine@kl.com
Act provides no further guidance regarding how the
Gaming Control Board will evaluate this information.
Once approved, a licensee must give more than lip service
to its diversity plan. An applicant for renewal must
provide updated information. It is likely that the Gaming
Control Board will review the updated information to
determine the progress that each licensee has made in
maintaining diversity or meeting plan goals. In addition,
a licensee may be subjected to an investigation to review
its compliance with its plan.
WHAT STEPS SHOULD AN
APPLICANT/LICENSEE TAKE?
Any applicant or licensee must have a plan in place. An
applicant must take pains to ensure that its plan is
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national and international markets that includes representation
of over half of the FORTUNE 100. Currently approximately
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reasonable, rational and achievable, as it is not clear what
FOR MORE INFORMATION, please consult one of the
penalties will result if there is a failure to meet that plan.
lawyers listed below:
Further, when drafting a plan, a licensee must be careful
Harrisburg
to develop a plan that complies not only with state
David R. Overstreet
diversity requirements but also with the mandates of
C. Grainger Bowman 717.231.5817 gbowman@kl.com
federal employment laws such as Title VII.
717.231.4517 doverstreet@kl.com
Pittsburgh
The legislative policy of diversity should be approached
Sandy B. Ferguson
cautiously because there is no clarity about what the
The attorneys resident in all offices,
unless otherwise indicated, are not certified
by the Texas Board of Legal Specialization.
Gaming Control Board might be looking for in a diversity
plan and what steps the Gaming Control Board might take
412.355.6494 sferguson@kl.com
to investigate all involved in gaming activity to determine
compliance with the diversity plans.
®
Any entity looking to get into the gaming industry in
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Pennsylvania should understand that because these
Challenge us. ®
investigative powers are not defined, it is not clear at this
www.kl.com
BOSTON
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DALLAS
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HARRISBURG
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LOS ANGELES
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MIAMI
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NEWARK
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NEW YORK
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PITTSBURGH
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SAN FRANCISCO
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WASHINGTON
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This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein
should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
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© 2004 KIRKPATRICK & LOCKHART
KIRKPATRICK & LOCKHART LLP PENNSYLVANIA GAMING UPDATE