IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Better Bets Ventures, LLC
, :

Petitioner : CASES CONSOLIDATED

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 386 C.D. 2022

: Michael Brozzetti, :

Petitioner :

:
v. : : Pennsyl v ania Gaming Control : Board, :

Respondent : No. 387 C.D. 2022

: Frank Brozzetti, :

Petitioner :

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 388 C.D. 2022

: Lendell Gaming, LLC, :

Petitioner :

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 389 C.D. 20222

Richard Teitelbaum, :

Petitioner :

:
v. : : P ennsylvania Gaming Control : Board, :

Respondent : No. 390 C.D. 2022

: : Argued: September 11, 2023

BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge HONORABLE ELLEN CEISLER , Judge

OPINION BY JUDGE McCULLOUGH FILED: October 12, 2023

In these consolidated appeals, Petitioners Better Bets Ventures, LL C (Better Bets), Michael Brozzetti and Frank Brozzetti, Jr. (together, the Brozzettis)
, Lendell Gaming, LLC (Lendell Gaming), and Richard Teitelbaum (Teitelbaum) (collect ively, Petitioners or Applicants) seek review of the Pennsylvania Gaming
Control Board’s (Board) orders and Corrected Adjudicatio n issued on March 23, 2022, and March 24, 2022, respectively. Therein, the Board denied Petitioners’ several applications (App lications) for both video gaming terminal op erator ( Better Bets and Lendell) and video gaming terminal principal (Teitelbaum and the Brozzettis) licenses
pursuant to the act relating to video gaming terminals, also common ly known as the Video Gaming Act

. 1 The Board denied the A pplications
, in essence
, because of
Petitioners’ involvement in and association with the “skill games ” industry in
Penns y lvania. On appeal, Petitioners argue that the Board committed legal error and
abused i ts discreti on in denying the Applications on that basis. After careful review,

we agree . We accordingly reverse the Board

.

1 4 Pa. C.S. §§ 3101

- 4506.3 I. FACTS AND PROCEDURAL HISTORY The facts material to the issues presented in these appeals are not disputed. The Board made extensive findings of fact in its Corrected Adjudication , a large portion
of which was based on stipulations of fact submitted by the parties

. See Reproduced Record (R.R.) at 80a, 594a. We summarize the Board’s pertinent findings as follows. 2

A. Teitelbaum and Lendell Gaming
Teitelbaum is the sole owner, corporate officer, and decision

- maker of Lendell Gaming, a Pennsylvania limited liability company. Teitelbaum also is the sole owner, corporate officer, and decision

- maker of Lendell Vending, Inc., a Pennsylva nia Corporation formed in 2003 (Lendell Vending). 3 Lendell Vending operates amusement equipment, automated teller machines, and jukeboxes in Pennsylvania and New Jersey. Teitelbaum first became aware of “skill games ” 4 in 2015 when he was approached by Lou Miele, the owner of Miele Manufacturing, Inc. (Miele)
, which manufactures skill games for vending companies. Miele provided to Teitelbaum a copy of the Beaver County Court of Common Pleas decision in In re Pace

- O

- Matic, Inc. Equipment I.D. No. 142613 (Pa. C

. P.
, Beaver C n ty. , No. M.D. 965

- 2013 , filed December 23, 2014) ( Beaver County Case ) , which held that a skill game manufactured

2 Where noted, we have supplemented the Board’s findings of fact with additional necessary facts from the Reproduced Record.

3 Although Teitelbaum is the principal of both Lendell Gaming and Lendell Vending, for the sake of clarity, we note initially that Lendell Vending did no t submit any of the Applications at issue in this appeal. Lendell Vending is not, and has never been, a party to these proceedings.

4 We utilize the term “skill games” to describe the games referenced throughout the Board’s Correcte d Adjudication and the parties ’ briefs as “Pennsylvania Skill” or “skill

- based” games. In utilizing the term “skill games,” we render no findings or conclusions regarding the nature of these games as either predominantly skill

- or chance

- based. We are co gnizant of other litigation pending in this Court in which that very determination is at issue , and nothing herein should be construed a s the Court’s inclination toward one characterization or the other.4

by Miele, branded a s “Pennsylvania Skill, ” was not an illegal gambling device subject
to forfeiture. See R.R. at 963a

- 75a

. Miele also provided Teitelbaum with a copy of testimony given by Major Thomas Butler, the Director of the Pennsylvania State Police Bureau of Liquor Control Enforcement (BLCE)
, before the Pennsylvania House of Representatives regarding skill gam es, their distribution throughout the Commonwealth, and BLCE’s decision not to take action against skill game operators given the current state of Pennsylvania law.

In 2016, Teitelbaum, through Lendell Vending, began purchasing skill games from Miele and offering them to customers. Teitelbaum purchased and
marketed only the brand of “Pennsylvania Skill” games found to be legal in the Beaver County Case

. In August 2018, Lendell Gaming applied for a video gaming terminal operator license, and Teitelbaum applied for a n associated video gaming terminal principal license. In October 2018, d uring the investigation conducted by the Board’s Bureau of Investigations and Enforcement (BIE)
, 5 the Board issued Lende ll Gaming
and Teitelbaum conditional licenses. BIE confirmed with Teitelbaum that he operated skill games and requested a list of the names of Teitelbaum’s skill games and their locations, which Teitelbaum provided.

On June 10, 2019, the Pennsylvania Hou se of Representatives Gaming Oversight Committee conducted a hearing on electronic gambling devices , at which Major Scott T. Miller, then

- director of BLCE, and Drew Svitko, the Executive Director of the Pennsylvania Lottery (Lottery) , testified regarding t he problems they believed skill games posed in Pennsylvania. Major Miller testified that skill games do not have

5 The BIE is established by Section 1517(a) of the Pennsylvania Race Horse Development and Gaming Act (Gaming Act), 4 Pa. C.S. § 1517 (a), and investigates (1) applications for licenses, permits, and registrations , and (2) alleged violations of the Gaming Act. DeNaples v. Pennsylvania Gaming Control Board , 178 A.3d 262, 263 (Pa. Cmwlth. 2018).5

controls in place to prevent underage gambling like those that are in place at casinos.
He further testified that proceeds from skill games t ypically are paid to owners in cash
, and , because they are unregulated, th e games do not have payout requirements like slot
machines at licensed facilities.

Mr. Svitko gave his opinion regarding the negative impact that skill games
have had on the L ottery. Specifically, he testified that (1) skill games cause an annual loss of $138 million that otherwise would be spent on programs and services for senior citizens; (2) s kill gam e s are video gambling machines; (3) skill games often resemble

L ottery machines and are placed near L ottery machines in establishments to give the impression that they are a sanctioned L ottery game; and (4) if skill games remain in competition with the L ottery, such competition could result in hundreds of millions of
dollars in future lost L ottery revenue. Both Major Miller and Mr. Svitko testified that skill games are illegal in Pennsylvania.

On June 12, 2019, BLCE notified Teitelbaum and other liquor licensees that skill games are illegal and that their operation would result in citation s against their liquor licenses. As of July 1, 2019, Lendell Vending had provided 211 “Pennsylvania Skill” games to 125 businesses in Pennsylvania. On Februar y 27, 2020, the Board’s
Office of Enforcement Counsel (OEC) sent Lendell Gaming and Teitelbaum ’s counsel
a Notice of Recommendation of Denial of Initial Application ( Lendell Denial Notice) indicating that OEC would recommend to the Board that th eir license A pplications be denied. In pertinent part, the Lendell D enial N otice advised as follows:

Please be advised that [OEC] is of the opinion that these [skill games] are unlicensed and unregulated video gaming terminals and/or slot machines, skille d slot machines, or hybrid slot machines that have not been approved by the Board for manufacturing or distribution in Pennsylvania . As a result of the unapproved distribution of these unlicensed and unregulated video gaming terminals and/or [s]lot [m]ach ines6

by [ ] Teitelbaum, through Lendell Vending, [OEC] is of the opinion that [ ] Teitelbaum and/or Lendell Gaming have failed to meet the character requirements pursuant to 4 Pa. C.S. § 3502(b) and (f) and/or the overall suitability requirements of a prin cipal applicant and/or terminal operator applicant.

. . . . [OEC] is of the opinion that by providing, and continuing to provide, these unlicensed and unregulated video gaming terminals and/or [s]lot [m]achines , without Board authorization and proper lice nsure, [ ] Teitelbaum has violated the Video Gaming Act , the Gaming Act, and the Board’s regulations.

. . .

. . . . [OEC] is also of the opinion that these violations of the Video Gaming Act, the Gaming Act, and the Board’s regulations, along with the un derlying facts [,] demonstrate that [ ] Teitelbaum does not possess the requisite good character, honesty, and integrity required by the Video Gaming Act, and is therefore not suitable for a [v]ideo [g]aming [t]erminal [p]rincipal [l]icense. [OEC] holds th e position that unregulated, untested, and unapproved video gaming terminals and/or [s]lot [m]achines pose a threat to the public interest and the effective regulation and control of video gaming operations . Therefore, it is in the public interest to deny video gaming terminal applications in such cases. As such, [OEC] is OBJECTING to [ ] Teitelbaum’s [A] pplication for a [v]ideo [g]aming [t]erminal [p]rincipal [l]icense and recommending that the Board DENY [ ] Teitelbaum’s [A] pplication.

. . . . [OEC] is of the opinion that denial of [ ] Teitelbaum’s application for a [v]ideo [g]aming [t]erminal [p]rincipal [l]icense and Lendell Gaming’s application for a [v]ideo [g]aming [t]erminal [o]perator [l]icense is consistent with the requirements of the V ideo Gaming Act and the Board’s regulations and is overall in the public interest. . . .7

(R.R. at 13a

- 18a ) (emphasis in original).

B. Better Bets and the Brozzettis Better Bets is a limited liability company based in Moscow, Pennsylvania.
The Brozzett is each own a 50% interest in Better Bets. The Brozzettis also each own a 33.33% interest in another business, Hugo Amusements, LLC (Hugo) . Their father, Frank Brozzetti, Sr., owns the remainder of Hugo. Since 2015, Hugo has been in the
business of prov iding skill games to Pennsylvania businesses and
, as of July 16, 2020, had provided 155 skill games to 86 business es in the Commonwealth. Included among the skill games provided to business es by Hugo are the “Diamond Choice Skill Game
1” and “Diamond Choi ce Skill Game 2 ” games (Diamond Choice Games)

. On March 23, 2017, the Luzerne County Court of Common Pleas held that the Diamond Choice
Games were illegal gambling devices subject to forfeiture under Section 5513 of the Crimes Code, 18 Pa. C.S. § 5513 ( Luzerne County Case )

. 6 (R.R. at 976a.)

On January 17, 2019, Better Bets submitted A pplications for both a video gaming terminal operator license for itself and a video gaming terminal principal
license on behalf of the Brozzettis. (R.R. at 31a.) In March 2019, t he Board issued
conditional licenses to both Better Bets and the Brozzettis, which conditional licenses
were extended in June 202 0. On August 19, 2020, OEC sent to Better Bets’ and the
Brozzettis’ counsel a Notice of Recommendation of Denial of Initial Application for Video Gaming Terminal Operator License ( Better Bets Denial Notice) (with Lendell Denial Notice, the Denial Notices)

. Id. In t he Better Bets Denial Notice , OEC justified

6 Section 5513 (a) pertinently provides that a person who “intentionally or knowingly makes, assembles, sets up, maintain s, sells, lends, leases, gives away, or offers for sale, loan, lease or gift

. . . any device to be used for gambling purposes, except playing cards,” is guilty of a first

- degree misdemeanor. 18 Pa. C.S. § 5513(a). See also 18 Pa. C.S. § 5513(b) (“Any ga mbling device possess ed or used in violation of the provisions of subsection (a) shall be seized and forfeited to the Commonwealth.”)

.8

the recommended license denials on substantially the same grounds as those set forth in the Lendell Denial Notice. Specifically, OEC concluded that the Brozzettis, through Hugo, marketed “unregulated ” and “unlicensed” skill games to businesses throughout Pennsylvania and, accordingly, failed to meet the character and suitability requirements of the Video Gaming Act. (R.R. at 33a.) OEC further concluded that, b y marketing the skill games through Hugo, the Brozzettis also violated the Video Gaming Act, the Gaming Act, and the Board’s regulations . (R.R. at 36a.) Additionally, OE C relied on
the Luzerne County Cas e to conclude that the Brozzettis, through Hugo, violated the Crimes Code by distributing skill games. Id.

OEC finally advised that it “holds the position that unregulated, untested, and unapproved video gaming termina ls and/or [s]lot [m]achines , as well as illegal gambling devices, pose a threat to the public interest,” and
, therefore
, “it is in the public interest to deny these video gaming terminal applications.” Id. 7

C. Proceedings Before the Board Petitioners requested hearings on their A pplications, which were
scheduled before a hearing officer from the Board’s Office of Hearings and Appeals (OHA). The hearing on the Lendell Gaming and Teitelbaum A pplica tions was held on April 28, 202 1 . Better Be ts and the Brozzettis ultimately waived their right to a hearing and requested that the Board consider their A pplications on stipulated facts. After hearing , oral argument, and consideration of the parties’ briefs, the Board voted unanimously on March 23, 2022, to accept OEC’s denial recommendations for all of the Applications. The Board issued an Adjudication on March 23, 2022, and a

7 OEC concluded that, because the Brozzettis were the sole owners of Better Bets and majority owners of Hugo, th is com mon ownership and control established that “Better Bets has a business association with Hugo.” (R.R. at 37a.)9

Corrected Adjudication on March 24, 2022, in which i t provided the reasoning for its
deci sion

. In its Corrected Adjudicat ion, the Board rejected Petitioners ’ arguments that they had not been adequately advised by OEC that its denial recommendations
would be based on its finding that granting the Applications would be contrary to the public interest. The Board c onclud ed that the Denial Notices contained specific findings that denying the A pplications would be in the public interest. (Corrected Adjudication at 25

- 26

. ) The Board also noted tha t , “[u]ltimately, the issue in these matters is whether [Petitioners ’] ties or former ties to [skill games] support a finding that they lack the good character and integrity required for licensure
, ” and, “regardless of the legality of [Petitioners’] conduc t, should the Board determine that their actions are otherwise contrary to the public interest, this could also support such a finding.” ( Corrected Adjudication at 26.)

On the merits, t he Board first concluded that, because the Brozzettis were
part owners of Hugo, which distributed the Diamond Choice Games found to be illegal gambling devices in the Luzerne County Case , there was “substantial evidence” that Hugo operated illegal gambling devices in violation of the Crimes Code. The Board secondly co ncluded that, regardless of skill games’ legality in the Commonwealth, their “offer for play and operation is contrary to the positions taken by various government agencies.” Id. at 28. The Board relied on Major Miller’s and Mr. Svitko’s testimony

presen ted before the Pennsylvania House of Representatives to conclude as follows

r egarding Petitioners’ suitability for the issuance of video gaming terminal licenses :

(1) Regardless of skill games [’] legality, their offer for play and operation is contrary to the positions taken by various government agencies , namely, BLCE and the Lottery.10

(2) Skill games are not regulated and are not operated in a controlled environment, which makes regulation of underage and illegal gambling more difficult

. (3) Skill games do not have payout requirements. (4) S kill games cause millions of dollars of revenue losses to the Lottery and often are positioned in establishments to look like sanctioned Lottery machines. (5) BLCE considers skill games to be illegal and their operation may justify a citation against the liquor licenses of establishments where they are housed. (6) Skill games do not contain any of the protections that

a re required for licensed gambling operations, including character and suitability requirements, protections against underage gambling, minimum payout requirements, and compulsive and problem gambling protections

. (Corrected Adjudication at 27

- 31.) The Board contrasted these protections with the
fac t that the operation of skill games is unregulated and therefore (1) do es not provide any protections against problem and compulsive gambling ; (2) will not necessarily
self

- regulate to guard against underage and problem gambling; (3) do es not produce
the s ame level of tax revenue as other regulated gambling operations, such as the Lottery ; and (4) negatively impacts public confidence in, and the operation of
, legalized gambling venues, especially casinos that house licensed slot machines

. Id. at 31

- 36.

The Board ultimately concluded that Petitioners d o not possess the character required for the issuance of video gaming terminal licenses , stating:

Overall, the Board believes that gaming is best conducted in an environment that is strictly co ntrolled and regulated. Such an environment requires surveillance and security measures, protections against underage gaming, protections against compulsive and problem gambling, the requiring of approved internal controls to safeguard assets, an overarch ing body of law to regulate the conduct, and a government agency to11

oversee and enforce these protections. [Skill games] in unlicensed locations do not contain any of these protections. The Board, therefore, consider s [skill games] to be a substantial pu blic threat.
Collectively, the record shows that [Petitioners] are, or were, involved in an industry that possesses none of the oversight and public protection [s] required to ensure the integrity of their gaming operations. The Brozzettis’ and Teitelbau m’s continued involvement in this industry casts substantial doubt on whether they possess the good character and integrity required for a video gaming terminal principal license. Additionally, the suitability of the Brozzettis is further tarnished by the ir operation of [the Diamond Choice Games] that were determined to be illegal gambling devices by a Pennsylvania court. Consequently, the Board finds that [ ] Teitelbaum and the Bro z zettis h a ve failed to establish by clear and convincing evidence that the y are suitable for licensure.
Since the principals of Better Bets [ ] and Lendell Gaming are unsuitable for a principal license, the Board must find that these entities are not eligible for video gaming terminal operator license [s]

. Id. at 37. Th e Board accordingly adopted OEC’s recommendations and denied Petitioners’ Applications by orders filed March 23, 2022. 8 Petitioners thereafter filed
separate petitions for review in this Court on April 21, 2022 . We consolidated the several petitions fo r decision by order exited July 7, 2022.
II. ISSUES Petitioners raise five issues on appeal , which we summarize as follows : (1) whether the Board’s findings of fact and conclusions of law are supported by substantial evidence; (2) whether the Board erred a nd abused its discretion in

8 The Board denied the Applications by orders filed March 23, 2022. (R.R. at 1387a

- 88a.) The Board issued an original Adjudication contempora neously with its orders, see R.R. at 1389a

1427a, and subsequently issued the Corrected Adjudication on March 24, 2022.12

concluding that Petitioners do not possess the “good character, honesty, and integrity” required for licensure; (3) whether the Board erred and abused its discretion in concluding that Better Bets and the Brozzettis operated ill egal gambling devices in violation of 18 Pa. C.S. § 5513 ; (4) whether the Board erred and abused its discretion in concluding that granting Petitioners’ A pplications was contrary to the public interest; and (5) whether the Board erred and abused its discre tion in concluding that the Board’s
Denial Notices comported with due process by sufficiently inform ing Petitioners of the
reasons for OEC’s recommendations

.

III. SCOPE AND STANDARD OF REVIEW
Our scope review of a Board order is limited to determining whether the Board’s necessary findings of fact are supported by substantial evidence and whether the Board committed legal error or violated constitutional rights. DeNaples , 178 A.3d

at 267 n.1 (citing, in part , 2 Pa. C.S. § 704). Our review of questions of law is plenary
, and an administrative agency’s interpretation of an otherwise clear statute, including its own enabling statute, is not entitled to deference. Crown Castle NG East LLC v. Pennsylvania Public Utility Commission
, 234 A.3d 665 , 667

- 68, 6 79

- 80 (Pa. 2020).
A n administrative agency ’ s adjudication is not in accordance with the law if it represents a manifest and flagrant abuse of the agency’s discretion or a purely arbitrary
execution of its duties or functions. Slawek v. State Board of Med ical Edu cation &
Licensure , 586 A.2d 362
, 3 65 (Pa. 1991). However, “[i] n the absence of bad faith, fraud, capricious action or abuse of power, reviewing courts will not inquire into the wisdom of the agency ’ s action or into the details or manner of executing agency
action. ” Id.13 IV. DISCUSSION
A. Pertinent Provisions of the Video Gaming Act Section 3301 of the Video Gaming Act defines the Board’s powers to regulate video gaming in Pennsylvania. 9 It provides, in pertinent part, as follows:

(a) General powers.

-- (1) The [B] oard shall have general and sole regulatory authority over the conduct of video gaming or related activities as described in this part. The [B] oard shall ensure the integrity of the acquisition and operation of video gaming terminals, redemption terminals and associated equipment and shall have sole regulatory authority over every aspect of the conduct of video gaming.

. . . . (b) Specific powers.

-- The [B] oard shall have the power and duty:

. . . . (2) At its discretion, to issue, approve, renew, revoke, suspend, condition or deny issuance or renewal of terminal operator licenses.

. . . . (11) To approve an application for or issue or renew a license, certificate, registration, permit or other authorization that may be required by the [B] oard, if the [B] oard is satisfied that the person has demonstrated by clear and convincing evidence that the person is of good character, honesty and integrity whose prior activities, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest or the effective regulation and control of video

9 Section 3501 of the Video Gaming Act provides that “[n]o person may offer or otherwise make available for play in this Commonwealth a video gaming terminal unless the person is licensed under this part and according to regulation s promulgated by the [B]oard under this part. ” 4 Pa. C.S. § 3501.14 gaming terminal operations or create or enhance the danger of unsuitable, unfair or illegal practices, methods and activities in the conduct of video gaming or the carrying on of the business and financial arrangements incidental thereto.

. . . . 4 Pa. C.S. § 3301 (a)(1), (b)(2 ), (11) (emphasis provided)

. 10 Section 3302 (a)(1) of the Video Gaming Act, which establishes the Board’s regulatory authority, provides, in pertinent part, as f

ollows: (a) General rule.

-- The [B] oard shall have the power and duty: (1) To deny, deny the renewal of, revoke, condition or suspend a license or permit provided for in this part if the [B] oard finds in its sole discretion that an applicant, licensee or permittee under this part or its officers, employees or agents have furn ished false or misleading information to the [B] oard or failed to comply with the provisions of this part or the rules and regulations of the [B] oard and that it would be in the public interest to deny, deny the renewal of, revoke, condition or suspend the license or permit.

. . . .

10 Relatedly, Section 3502(b) of the Video Gaming Act , which governs terminal operator licenses, requires that terminal operator license applicants include in their applications “ information, documentation and assurances as may be required to establish by clear and convincing evidence of the applicant’s suitability, including good c haracter, honesty and integrity.” 4 Pa. C.S. § 3502(b). Section 3502(b) goes on to list the sources of such information, including “family, habits, character, reputation, criminal history background, business activities, financial affairs and business, [ and] professional and personal associates . . . .” Id.

Section 3502 (f) of the Video Gaming Act requires that the principals of terminal operator license applicants “obtain a license to meet the character requirements of [ Section 3502]

. . . . ” 4 Pa. C.S. § 3502(f). Section 3504(c) in turn governs principal licenses and similarly provides that “ the [ B ] oard may issue a principal license if the applicant has proven by clear and convincing evidence that the applicant is a person of good character, honesty and integrity and is eligible and suitable to be licensed as a principal.” 4 Pa. C.S. § 3504(c).15

4 Pa. C.S. § 3302 (a) (1) (emphasis provided)

. B. Analysis Because we conclude that they are dispositive, we first address
Petitioners’ secon d, third, and fourth arguments , although in a modified order. In all three, Petitioners contend that the Board committed legal error and abused its discretion
in denying the A pplications

.

1. Character Suitability and the Public Interest In their second and fourth arguments, which are related, Petitioners argue that the Board abused its discretion and committed legal error in concluding that (1) Petitioners failed to establish by clear and convincing evidence that they possess the requisit e “good character, honesty and integrity” for the issuance of video gaming
terminal licenses ; and (2) issuing the requested licenses would be contrary to the public interest. We agree on both counts.

a. Character

As set forth above, p ursuant to Section 3301(b)(11) of the Video Gaming Act, t he Board has the power to grant a n application for a video gaming terminal license if it is satisfied that the applican t “ has demonstrated by clear and convincing evidence that the person is of good character, honesty and integrity whose prior activities
, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest . . . .” 4 Pa. C.S. § 3301(b)(11). See also 4 Pa. C.S. § 3301(b)(2) (the
Board has the discretion to is sue or deny issuance of terminal operator licenses). The Board also has the authority to deny a license if it finds that an applicant , or its officers, employees
, or agents “ have furnished false or misleading information to the [B]oard or failed to comply with the provisions of this part or the rules and regulations of the [B]oard and that it would be in the public interest to deny . . . the license

. . . . ” 4 Pa. C.S. § 3302 (a)(1) (emphasis added)

. See also 4 Pa. C.S. § 3502(f) (p rincipals of16

potential operators also must obtain necessary licenses “to meet the character requirements of this section . . . ” ) ; 4 Pa. C.S. § 3504(c) (“[T]he [B]oard may issue a principal license if the applicant has proven by clear and convincing evidence that the applicant is a person of good character, honesty and integrity and is eligible and suitable to be licensed as a principal.”)

.

We find these provisions of the Video Gaming Act to be cl ear and free from ambiguity, and
, therefore
, the Board’s interpretation of them is entitled to no deference by this Court. Crown Castle

. The Board ’s Corrected Adjudication includes

a broad and detailed discussion of the Board’s opinion s of , and policy objectives regarding, the skill games industry. (Corrected Adjudication at 27

- 37 .) T he Board
indicates that, overall, it believes that “ gaming is best conducted in an environment
that is strictly controlled and regulated ” and that skill games are a “substantial public
threat.” Id. at 37. The Board then precipitously concludes that “the Brozzettis and Teitelbaum’s continued involvement in this industry casts substantial doubt on whether they possess the good character and integrity required for a video gaming terminal principal license.” Id.

The Board identifies in its Corrected Adjudication two overarching problems with the skill games industry : (1) it is entirely unregulated and , therefore, is not required to, and does not, provide adequate pr otections against underage and problem gambling ; and (2) its existence causes a substantial decrease in tax revenue generated by the legalized gambling industry, from casinos particularly. The Board
bases these conclusions on testimony given by Major Mill er and Mr. Svitko before the Pennsylvania House of Representatives and other testimony and evidence submitted to
the Board by casino representatives in unrelated proceedings . Even assuming that the issues identified by the Board correspond to some degree with the reality of the skill17

games industry (which we do not, because we need not, address ), the General Assembly has not made any legislative findings in this respect and has no t enacted any legislati on to date that attempts to remove the veritabl e scourge that the Board believes the skill games industry has left in its wake. Thus, the Board’s findings in this regard remain its own policy determinations and nothing more.

M ore importantly, the Board does not indicate anywhere in its Corrected Adjudication how the problems it finds with the skill games industry denigrate and render unsuitable the “character, honesty and integrity” of these specific Petitioners

. The Board nowhere in its Corrected Adjudication identifies any criminal convictions or investigations, tax

- evading financial practices, connections with organized crime, false statements, or other nefarious or even allegedly nefarious conduct by any of the Petitioners. Nor does the Board indicate anywhere that any of the Petitioners refu sed to participate in, or provide information in association with, the extensive licensure investigations conducted by BIE. As Petitioners point out in their brief, the evidence
suggest s quite the contrary. See Petitioners’ Br. at 30

- 32. T he Board’s findings and conclusions that Petitioners do not have the requisite character, integrity
, and honesty for licensure is based exclusively on their association with the skill games industry and the problems the Board perceives to be associated with i t. We find such association in itself to be wholly insufficient to support the Board’s denial of the Applications. T he
Board’s d enunciation of Petitioners’ character by mere association with this industry
, which the Board simply does not like
, cannot, wi thout more, constitute a valid and reasonable exercise of the Board’s discretion in considering and denying th ese Applications. 11

11 The Board noted, however, that video gaming terminal license applicants can redeem their character and suitability in the eyes of the B oard i f they make the “reasonable” decision to exit the (Footnote continued on next page...)18

We therefore conclude that the Board erred and abused its discretion in denying the Applications based on its conclusion th at Petitioners lack the requisite
character for the issuance of the requested licenses

. b. Public Interest Petitioners next argue that the Board committed legal error and abused its
discretion in concluding that granting the Applications would be contrary t o the public
interest. As noted above, t here are two relevant provisions of the Video Gaming Act that empower the Board to deny a video gaming terminal license application based
on the Board’s assessment of the public interest. First, Section 3301(b)(11 ) gives the Board the power to grant a lic ense application if the Board concludes that the applicant
has establish ed , by clear and convincing evidence, that (1) it has the requisite good character, honesty, and integrity
, and (2) its “prior activities, criminal record, if any, reputation, habits, and associations do not pose a threat to the public interest . . . .” 4 Pa. C.S. § 3301(b)(11). Thus, pursuant to S ection 3301(b)(11), the Board may not grant (and therefore must deny) a license application if the applicant fails to satisfy
either or bot h of those components with clear and convincing evidence.

Second
, pursuant to Section 3302(a)(1), the Board affirmatively may deny a license application , in its sole discretion, if it concludes (1) that the applicant or its employees or agents have furnished false or misleading information to the Board or failed to comply with the provisions of the Video Gaming Act, and (2) that denying the license application would be in the public interest. 4 Pa. C.S. § 3302 (a)(1)

.

skill games industry. (Corrected Adjudication at 38

. ) But, b ecause the Brozzettis and Teitelbaum have made the unreasonable decision “to remain in the industry despite the vehement [] public opposit ion by government agencies and public officials who right ful ly view [skill games] as a threat to the public,” i d.
, they have foregone the high road to licensure.19

Here, although it is not clear which of these two sections of the Video Gaming Act the Board relied upon in denying the Applications, neither supports the Board’s findings. Under Section 3301( b )(1 1 ), we already have concluded that the
Board erred and abus ed its discretion in concluding that Petitioners did not establish that they have the requisite character for licensure. Additionally, there is no evidence in the record, and the Board did not rely on any, establish ing that any “prior activities”
or “asso ciations” of Petitioners tend to undermine the public interest . 4 Pa. C.S. § 3302(a)(1). Once again, although the Board made its policy directives clear in the Corrected Adjudication, there simply is no evidence suggesting that these Petitioners’
activit ies or associations either threaten the public interest or will negatively impact the video gaming industry. Rather, t he Board concluded that granting Petitioners’
A pplications would undermine the public interest because, in the Board’s view, skill

games themselves are contrary to the public interest. This, once again, is guilt

- by

association with an industry that, whatever the Board’s opinion, remains legal and legitimate in Pennsylvania.

The Board relies heavily on this Court’s decision in Sonic Service s, Inc. v. Pennsylvania Gaming Control Board , 219 A.3d 296 (Pa. Cmwlth. 2019), to argue that an applicant’s questionable prior activities and business associations may serve as a legitimate basis to deny the issuance of a license. Sonic Services is easily distinguishable . In Sonic Services , the Board revoked the Gaming Service Provider Registration of Sonic Services, Inc. (Sonic) based on its principal’s ties to organized
crime. Id. We affirmed the Board’s adjudication, concluding that substantial evidence garnered after a year

- long investigation into Sonic’s business associations supported
the finding that Sonic had connections to organized crime. Id. at 303

- 04. We further20

conclu ded that such connections would “tarnish the integrity of gaming to the public .”
Id. at 306. Here, the Board’s finding that granting the Applications would be contrary to the public interest is based on neither hard facts discovered duri ng an extended inv estigation nor on substantial evidence (nay, any evidence) of Petitioners’
associations with criminal activities. Rather, the Board’s finding is based on its own policy objectives , which have not to date t ranslated into any legislative findings in any

sta tute criminalizing or otherwise regulating the skill games industry. Those policy objectives may or may not be accurate, but, in either case, Petitioners’ associations with the skill games industry do es not , as did the associations with organized crime in
Sonic Services
, significantly undermine the protection of the public or the integrity of
licensed gaming. Sonic Services , 219 A.3d at 306.

Lastly, r egarding Section 3302(a), there is no evidence that Petitioners
either furnished false or misleading i nformation to the Board or failed to comply with the provisions of the Video Gaming Act. 4 Pa. C.S. § 3302(a). Because the Board

must , and did not, find that one of those prerequisites exists, it had no authority under Section 3302(a)(1) to deny the Applications. Accordingly, we conclude that the Board
erred and abused its discretion in denying the Applications on the ground that granting
them would be con trary to the public interest.
2. Illegal Gambling Devices
Petitioners next argue that the Board erred and abused its discretion in denying Better Bets’ and the Brozzettis’ license A pplications on the basis that they operate illegal gambling devices in violation of Section 5513 of the Crimes Code , 18 Pa. C.S. § 5513. We agree.21

The entirety of the Board’s analysis on this issue comprises three

sentence s and is based exclusively on the parties’ stipulation that Hugo, which is owned in part by the B rozzettis, operates the Diamond Choice G ames that were determined to be illegal gambling devices in the Luzerne County Case

. See Corrected Adjudication at 27 ; see also id

. at 37 ( “the suitability of the Brozzettis is further tarnished by their operation of two games

— [the Diamond Choice G ames ]

— that were determined to be illegal gambling devices by a Pennsylvania [c] ourt”). There are multiple deficiencies in the Board’s finding s in this regard that render it arbitrary and
a manifest abuse of discretion. First, and o nce again, the Board made no relevant findings specifically with regard to the Brozzettis or Better Bets

. Rather, the Board
found that a separate entity (Hugo)
, which is owned only in part by the Brozzettis, at some point operated gaming devices in Luzerne County that were, in a civil forfeiture
action initiated by the Commonwealth, determined to be illegal gambling devices
under Section 5513. 12 Even assuming the illegality of the Di a mond Choice G ames , such attenuated connections betwee n Hugo’s business activities and the Brozzettis is insufficient to establish that they or Better Bets operate illegal gambling devices and,
on that exclusive basi s , are not suitable for video gaming terminal licensure.

Second, in making its findings, the Board relied on a single common pleas
decision rendered in civil forfeiture litigation that involv ed only a single type of skill

game

. The Board simultaneously ignored several other common pleas ’ decisions that
have held various types of skill games to not be illegal gambling devices under Section
5513. See, e.g.
, Beaver County Case
, R.R. at 963a

- 75a

. Two of those decisions

12 The O rder in the Luzerne County Case merely grant ed the Commonwealth’s “Motion for Order of Forfeiture” and declare d the Diamond Choice G ames to be forfeited to the Office of Attorney General. (R.R. at 976a.) Specific findings and analysis regarding those games’ character or legality are not included in the record.22

currently are on appeal and are scheduled to be argued seriately before an en banc panel
of this Court in October 2023

. See In re: Three Pennsylvania Skill Amusement Devices, One Green Bank Bag Containing $525.00 in U.S. Currency, and Seven Receipts (Pa. Cmwlth., No. 707 C

. D

. 20 23) ; In re: Four Pennsylvania Skill Amusement Devices and One Ticket Redemption Terminal Containing $18,692.00 in U .S. Currency (Pa.
Cmwlth. , No. 761 C

. D

. 2023 ).

Fina lly, the Board’s scant connection between the Brozzettis’ and Better
Bets’ A pplications and any criminal gaming activity is only exacerbated by the fact that the Board has no regulatory authority over skill games and is not empowered by
the Video Gaming Act to conduct criminal investigations, prosecute criminal violations, or make findings of criminal culpability. See POM of Pennsylvania , LLC v. Department of Revenue
, 221 A.3d 717, 736 (Pa. Cmwlth. 2019); 4 Pa. C.S. § § 3904(a)(3)
, (7) ; 3904( b ) , (d)

.

In sum, we agree with Petitioners that the Board erred as a matter of law and manifestly abused its discretion (1) in concluding that the Brozzettis , through Hugo, operate illegal gambling devices , and on that basis, (2) den ying the Brozzettis’
and Better Bets’ video gaming terminal license A pplications.
3. Substantial Evidence In their first issue, Petitioners argue that the Board ’s findings of fact and
conclusions of law are not based on substantial evidence because they (1) are based on the opinion testimony of Major Miller and Mr. Svitko; and ( 2) are outside evidence and testimony the Board has received from casino representatives in other proceedings.
Because we already have assumed the competency of this evidence and the propriety
of the Board’s consideration of it to conclud e that the Board erred and abused its23

discretion in denying the Applications , we need not consider these issues. In light of our conclusions above, they are moot.
4. Due Process
In their fifth issue
, Petitioners challenge OEC’s Denial Notices on due process grounds, arguing that they did not sufficiently advise Petitioners that denial
would be recommended based , in part, on a finding that granting the Applications would be contrary to the public inte rest. This issue likewise is moot. We already have
determined in any event that the Board erred and abused its discretion in concluding that granting the Applications would be contrary to the public interest.
V. CONCLUSION
Because we conclude that the Board erred and abused its discretion in denying the A pplications on the grounds set forth in its Corrected Adjudication, we

reverse and remand to the Board with instructions to issue the requested licenses.

________ ________________________ PATRICIA A. McCULLOUGH, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIA

Better Bets Ventures, LLC
, :

Petitioner : CASES CONSOLIDATED

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 386 C.D. 2022

: Michael Brozzetti, :

Petitioner :

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 387 C.D. 2022

: Frank Brozzetti, :

Petitioner :

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 388 C.D. 2022

: Lendell Gaming, LLC, :

Petitioner :

:
v. : : Pennsylvania Gaming Control : Board, :

Respondent : No. 389 C.D. 2022

: Richard Teitelbaum, :

Petitioner :

:
v. : :Pennsylvania Gaming Control :

Board, :

Respondent : No. 390 C.D. 2022

:

ORDER

AND NOW, this 12th day of October , 20 23, the March 2 3 , 2022
order s , as amended on March 24, 2022, of the Pennsylvania Gaming Control Board (Board) are hereby REVERSED , and this matter is REMANDED to the Board with
instructions to issue the requested license s

.

Jurisdiction relinquished.

________________________________ PATRICIA A. McCULLOUGH, Jud ge