An Act amending Title 4 (Amusements) of the Pennsylvania Consolidated Statutes, in revenues, further providing for establishment of State Gaming Fund and net slot machine revenue distribution; providing for skill video gaming; imposing duties on the Department of Revenue; and imposing a tax and criminal and civil penalties.

PRINTER'S NO. 2615
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2046
Session of
2025
INTRODUCED BY BURGOS, FRITZ, HAMM, ABNEY, GUZMAN, HILL-EVANS,
RIVERA, T. DAVIS, YOUNG, INGLIS AND GREEN, NOVEMBER 18, 2025
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, NOVEMBER 18, 2025
AN ACT
Amending Title 4 (Amusements) of the Pennsylvania Consolidated
Statutes, in revenues, further providing for establishment of
State Gaming Fund and net slot machine revenue distribution;
providing for skill video gaming; imposing duties on the
Department of Revenue; and imposing a tax and criminal and
civil penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 1403(b.1)(1) of Title 4 of the
Pennsylvania Consolidated Statutes is amended to read:
§ 1403. Establishment of State Gaming Fund and net slot machine
revenue distribution.
* * *
(b.1) Slot machine tax at Category 4 licensed facilities.--
(1) The department shall determine and each Category 4
slot machine licensee shall pay a daily tax of [50%] 32% from
its daily gross terminal revenue from the slot machines in
operation at the Category 4 licensed facility and a local
share assessment as provided in subsection (c.1). All money
owed to the Commonwealth, a county or a municipality under
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this section shall be held in trust by the licensed gaming
entity for the Commonwealth, the county and the municipality
until the money is paid or transferred to the fund. Unless
otherwise agreed to by the board, a licensed gaming entity
shall establish a separate bank account to maintain gross
terminal revenue until such time as the money is paid or
transferred under this section. Money in the fund is
appropriated to the department on a continuing basis for the
purposes set forth in paragraph (2).
* * *
Section 2. Title 4 is amended by adding a part to read:
PART IV
SKILL VIDEO GAMING
Chapter
51. Preliminary Provisions
52. Program
53. Organization
5 4. Certification Requirements
55. Distributors
56. Operators
57. Establishments
58. Players
59. Tax
60. Administration
61. Offenses Related to Operation of Unlicensed Skill Video
Games
62. O ffenses Related to Illegal Manufacturing, Distribution
or Operation of Skill Video Games
63. Miscellaneous Provisions
CHAPTER 51
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PRELIMINARY PROVISIONS
Sec.
5101. Scope of part.
5102. Definitions.
§ 5101. Scope of part.
This part relates to skill video gaming.
§ 5102. Definitions.
The following words and phrases when used in this part shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicant." A person that applies for permission to engage
in an act or activity that is regulated under the provisions of
this part.
"Bearer scrip." A ticket that is a printed receipt from a
skill video game system and is redeemable for cash equivalents .
"Camera system." A video camera system approved by the
department and provided by an operator to an establishment that
meets the specifications approved by the department.
"Cash." United States currency or coin.
"Cash equivalents." Instruments with a value equal to United
States currency or coin, including certified checks, cashier's
checks, mone y orders or other representations of value that the
department d eems a cash equivalent.
"Controlling interest." As follows:
(1) For a publicly traded entity, the term means the
holding of sole voting rights under State law or corporate
articles or bylaws that entitle the person to elect or
appoint one or more of the members of the board of directors
or other governing board or the holding of an ownership or
beneficial holding of 5% or more of the securities of the
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publicly traded legal entity, unless the presumption of
control or ability to elect is rebutted by clear and
convincing evidence.
(2) For a privately held corporation, partnership,
limited liability company or other form of privately held
legal entity, the term means the holding of securities in the
legal entity, unless the presumption of control is rebutted
by clear and convincing evidence.
"Department." The Department of Revenue of the Commonwealth.
"Distributor." An entity licensed by the department that
sells, leases, offers or provides and distributes skill video
game systems to an operator for use or play in this
Commonwealth.
"Entity." A domestic or foreign:
(1) business corporation;
(2) nonprofit corporation;
(3) general partnership;
(4) limited partnership;
(5) limited liability company;
(6) unincorporated nonprofit association;
(7) professional association; or
(8) business trust, common law business trust or
statutory trust.
"Establishment." An entity licensed by the department that
permits an operator to place and operate skill video game
systems on the establishment's premises under this part.
"Gross revenue." As follows:
(1) The total of cash or cash equivalents received by a
skill video game system minus the total of cash or cash
equivalents paid out to players as a result of playing a
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skill video game system.
(2) The term does not include counterfeit cash or cash
taken in a fraudulent act perpetrated against an operator or
establishment for which the operator or establishment is not
reimbursed.
"Independent testing laboratory." A nongovernmental entity
engaged in the business of examining skill video game software
and capable of providing the certification specified in Chapter
54 (relating to certification requirements).
"Initial license." A license issued by the department to an
approved applicant under this part.
"Net profits." The gross revenue after applicable taxes are
paid to the department.
"Operator." An entity licensed by the department to operate
a skill video game system by:
(1) Purchasing or leasing skill video game systems from
a licensed skill video game system distributor.
(2) Providing skill video game systems to licensed
establishments.
(3) Providing onsite collection of skill video game
system revenue and skill video game system data reporting as
required by this part.
"Payout." The payment of cash or cash equivalent to a player
as a result of playing a skill video game system.
"Person." Includes a corporation, partnership, limited
liability company, business trust, other association, government
entity, other than the Commonwealth, estate, trust, foundation
or natural person.
"Player." An individual who is at least 18 years of age when
the individual plays a skill video game system.
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"Principal." Any of the following:
(1) An officer.
(2) A director.
(3) A person who directly holds a beneficial interest in
or ownership of the securities of an applicant or licensee.
(4) A person who has a controlling interest in an
applicant or licensee or has the ability to elect a majority
of the board of directors of a licensee or to otherwise
control a licensee, lender or other licensed financial
institution of an applicant or licensee, other than a bank or
lending institution which makes a loan or holds a mortgage or
other lien acquired in the ordinary course of business,
underwriter of an applicant or licensee.
(5) A person deemed to be a principal by the department.
"Program." The program to regulate the distribution, sale,
transportation, storage and use of skill video game systems
established under Chapter 52 (relating to program).
"Provisional license." A license issued under section 6303
(relating to provisional licenses).
"Registration information." The information required on the
registration form provided by the department.
"Skill video game." A game played on skill video game
software that meets the qualifications specified in Chapters 53
(relating to organization) and 54 and has been licensed by the
department as part of a skill video game system.
"Skill video game placement agreement." An agreement entered
into by a distributor with an operator or an operator with an
establishment for the placement, operation, service or
maintenance of skill video game terminals.
"Skill video game software." A distributor's proprietary
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software program developed and designed for a skill video game
system as approved by the department.
"Skill video game system." A terminal that is equipped with
skill video game software connected to a terminal reporting
system.
"Terminal identification number." The unique number utilized
to identify and verify a licensed skill video game system.
"Terminal reporting system." A system provided by the
distributor and accessible by the department to which each skill
video game system communicates for the purpose of auditing
capacity and information retrieval of the details of a financial
event that occurs in the operation of a skill video game system,
including coin in, coin out, ticket in, ticket out and jackpots.
"Ticket redemption terminal." A terminal whe re a bearer
scrip from a skill video game system may be rede emed for cash
after a player has validated the player's age by utilizing a
State-issued driver's license or identification card. A device
used to validate the player's age may only read and verify the
age from a State-issued driver's license or identification card
and may not collect or retain any additional player information.
CHAPTER 52
PROGRAM
Sec.
5201. Regulation of skill video game systems.
5202. Sale, manufacturing, distribution, operation and use of
skill video game systems.
§ 5201. Regulation of skill video game systems.
(a) Establishment.--A program to regulate the distribution,
sale, transportation, storage and use of skill video game
systems is established. The program shall be implemented and
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administered by the department. The department shall:
(1) Issue licenses to participating individuals or
companies to authorize them to design, program, license,
sublicense, manufacture, transport, store and make available
to the public a skill video game system within this
Commonwealth in accordance with this part and regulations
promulgated by the department.
(2) Establish regulator and enforcement authority over
the program.
(3) Develop enforcement procedures.
(b) General authority and duties of department.--The
department shall have general and sole regulatory authority over
the sale, distribution and use of a skill video game system as
described under this part.
(c) Specific authority and duties of department.--The
department shall have the specific power and duty to:
(1) Collect taxes from a distributor.
(2) Require and conduct or cause to be conducted
criminal history investigations on applicants and licenses
under this part.
(3) For purposes of licensing and enforcement and
background investigations, receive information otherwise
protected by 18 Pa.C.S. Ch. 91 (relating to criminal history
record information).
(4) Issue, approve, renew, revoke, suspend, condition or
deny issuance or renewal of a license or approval provided
under this part.
(5) Require prospective and existing applicants and
licensees to submit to fingerprinting by the Pennsylvania
State Police, who shall submit the fingerprints to the
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Federal Bureau of Investigation or an agency approved by the
department for purposes of verifying the identity of the
individual and obtaining records of criminal arrest and
convictions.
(6) Promulgate rules and regulations necessary for the
administration and enforcement of this part. Except as
provided in section 6003 (relating to temporary regulations),
regulations shall be adopted as provided under the act of
July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law, and the act of June 25, 1982
(P.L.633, No.181), known as the Regulatory Review Act.
(7) Require each person that holds a license issued
under this part to provide the periodic reports required of
licensees under this part.
§ 5202. Sale, manufacturing, distribution, operation and use of
skill video game systems.
The sale, distribution, operation, possession, transportation
and use of a skill video game system in compliance with this
part are authorized in this Commonwealth. A skill video game
system shall not be deemed:
(1) A lottery, gambling device, slot machine, device
intrinsically connected with gambling or coin-operated
amusement device.
(2) Games of chance as defined under section 103 of the
act of December 19, 1988 (P.L.1262, No.156), known as the
Local Option Small Games of Chance Act.
(3) As conducting another business on a licensed
premises under the act of April 12, 1951 (P.L.90, No.21),
known as the Liquor Code, or 40 Pa. Code § 3.52 (relating to
connection with other business).
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CHAPTER 53
ORGANIZATION
Sec.
5301. Licenses.
5302. Licensing requirements.
5303. Granting licenses.
5304. Application and renewal costs of licenses.
5305. Allocation of skill video game system revenue after tax.
5306. Issuance of license.
5307. Term of license.
5308. License renewal.
5309. Suspension or revocation of license.
§ 5301. Licenses.
(a) Issuance.--The department shall have the authority to
issue licenses under this part.
(b) Provisional licenses.--The department shall issue a
provisional license to operate a skill video game system
beginning on the effective date of this subsection to a
distributor, operator or establishment that meets the
requirements of section 6303 (relating to provisional licenses).
(c) Skill video game system license.--An initial application
period shall commence at a date set by the department. An
initial license may be utilized on the date the department
issues the initial license and shall remain valid for a minimum
of one year or until the department establishes a date for the
annual renewal of licenses.
(d) License criteria.--The granting of a license by the
department shall be subject to and dependent upon the
applicant's criminal history record information and other
criteria established by department regulation.
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(e) License renewal.--An application to renew a license
shall be filed with the department prior to the expiration of
the license.
§ 5302. Licensing requirements.
An entity, including each principal holding a controlling
interest, which seeks a distributor, operator and establishment
licensee shall be considered an applicant and shall provide the
following information for an initial or renewal license:
(1) Identification, including a driver's license or
passport.
(2) Naturalization papers or resident alien
identification, if applicable.
(3) Resident information for the previous five years.
(4) Employment information for the previous five years,
including dates employed and the name and address of the
employers so that a criminal history and credit check can be
completed.
(5) An individual questionnaire provided by the
department for each principal who lives outside of this
Commonwealth.
(6) Proof that the applicant has not had a felony
conviction within the last 10 years.
(7) Proof that the applicant has never been convicted of
a gambling-related felony.
(8) Proof that the applicant has timely filed and
satisfied all Federal, State and local taxes.
§ 5303. Granting licenses.
(a) Power of department.--The department may grant, deny or
revoke a license under this part.
(b) Determination.--In making a decision under subsection
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(a), the department shall determine whether the applicant is
able to comply with all applicable laws of this Commonwealth and
regulations relating to the activities in which the applicant
intends to engage under this part.
(c) Privilege.--The issuance or renewal of a license shall
be a revocable privilege.
(d) Multiple licenses.--
(1) An entity may only hold one of the following at one
time:
(i) A distributor license.
(ii) An operator license.
(iii) An establishment license .
(2) To qualify for a provisional license, an entity must
have conducted business as an operator in this Commonwealth
for the immediately prior two years.
(e) Appeals.--If the department denies an application, the
applicant shall have 30 days from the date of the department's
mailing of the denial to the applicant to file an appeal of the
denial. The appeal shall be filed with the Secretary of Revenue.
The appeal of a decision by the Secretary of Revenue shall be
filed with Commonwealth Court.
(f) Prior operation.--Prior operation of a skill game shall
not be a basis for denying a license.
§ 5304. Application and renewal costs of licenses.
(a) Payment.--The fee for an initial or renewal license
application shall be payable to the department when the
application or renewal is submitted.
(b) Initial license and costs.--An initial license
application fee shall be nonrefundable to an applicant. Initial
license application fees shall be as follows:
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(1) A skill video game system distributor initial
application fee, $1,000,000.
(2) A skill video game system operator initial license
application fee, $100,000.
(3) A skill video game system establishment initial
license application fee, $1,000.
(c) Renewal license and costs.--A renewal license
application fee shall be nonrefundable. Renewal license
application fees shall be as follows:
(1) A skill video game system distributor annual renewal
license application fee, $100,000.
(2) A skill video game system operator annual renewal
license application fee, $5,000.
(3) A skill video game system establishment annual
renewal license application fee, $250.
§ 5305. Allocation of skill video game system revenue after
tax.
The allocation of percentage of net profits earned shall be
as follows:
(1) An establishment shall receive 40%.
(2) An operator shall receive 40%.
(3) A distributor shall receive 20%.
§ 5306. Issuance of license.
A license issued by the department to a participant shall be
effective only for the specified period and shall include
information required by the department.
§ 5307. Term of license.
(a) Provisional license.--A provisional license shall be
valid until the issuance or denial of an initial license.
(b) Initial license.--An initial license shall remain valid
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for one calendar year.
(c) Renewal license.--A renewal license shall be valid for
one calendar year from the date of issuance.
§ 5308. License renewal.
(a) Renewal.--An application for a renewal license shall
include information required by the department.
(b) Approval.--The department shall renew a license using
the same process for granting licenses under this chapter.
(c) Nonrenewal decision.--A decision to deny or not renew a
license by the department shall include a notice specifying in
detail how the applicant has not satisfied the department's
requirements for renewal. The department may request additional
information from the applicant before deciding to grant or deny
an application for renewal. If the department denies a renewal,
the applicant may appeal the decision to Commonwealth Court.
§ 5309. Suspension or revocation of license.
The department may suspend or revoke a license if the
participant violates any provision of this part or regulation of
the department.
CHAPTER 54
CERTIFICATION REQUIREMENTS
Sec.
5401. Skill video game system testing.
5402. Bonding.
5403. Reporting.
§ 5401. Skill video game system testing.
(a) Certification.--Prior to obtaining an initial license
under Chapter 53 (relating to organization), a skill video game
system must be certified under subsection (b). The following
shall apply:
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(1) Before the distributor sells, leases, licenses,
provides or distributes game software not qualified or
approved by the program as skill video game software, the
distributor shall supply to the department an engineering
report and opinion in complete forensic detail by an
independent testing laboratory , with experience in testing
skill video game software and approved by the department , and
based on an examination of a prototype or production sample
of the skill video game software and approved skill video
game system to be certified. The testing required under this
paragraph shall be based only on skill video game software,
and the technical specifications shall be agreed to be
independent from slot machine technical specifications
engineered for casino or video game terminal play. The
engineering report and opinion shall:
(i) Be restricted in scope to technical detail and
shall not be otherwise relied upon as a legal opinion
regarding whether skill or chance are predominant in
winner determination or as an interpretation of law.
(ii) Be signed by a principal or executive officer
of an independent testing laboratory, which signature
shall constitute the laboratory's certification regarding
its contents.
(iii) State, at a minimum, a written certification
to the department that the skill video game software is
one in which:
(A) Skill of the player rather than an element
of chance is the predominant factor affecting the
skill video game's outcome.
(B) The skill video game requires the prize
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outcome for the single play and over a session of
gameplay to be such that without the player
exercising skill during the main phases of gameplay,
it would be impossible to win the prize offered.
(C) There must be no hard-coded minimum or
maximum payout percentage for a skill video game.
(D) There must not be any reflexive,
compensating algorithm that makes the skill video
game harder when it detects a highly skilled player
or when the skill video game's payout percentage goes
above 100%.
(E) An average player can learn to score and win
effectively on a skill video game.
(F) A player is informed of the criteria used in
selecting winners and rules are available for viewing
at any time other than in the middle of a skill video
game in play.
(G) Skill video games must be programmed to keep
true and accurate gameplay records, with a minimum of
100 game recall, and the number of payouts from the
skill video game, with a minimum of 10 voucher
recall. Accounting meters must be at least eight
digits in length, with six digits to the left of the
decimal.
(H) The skill video game is programmed so that a
maximum price to play is $5 and the maximum winnings
per individual game are $5,000.
(2) A skill video game system shall remain certified and
valid unless material changes are made to the skill video
game software or equipment as deemed necessary by the
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department.
(3) A distributor applicant applying for an initial
license shall provide the distributor applicant's skill video
game software in a manner consistent with rules and
regulations promulgated by the department.
(4) Certification of the requirements under this
subsection shall be made to the department by the
distributor, who shall represent that the certification is
being made subject to the penalties of 18 Pa.C.S. § 4904
(relating to unsworn falsification to authorities).
(b) Certification.-- An independent testing laboratory
approved by the department shall provide a certification as
provided under this part.
(c) Field verification of certified skill video game
software.--The software distributor's skill video game software
shall allow for random field verification by an agent or
designee of the department. The distributor shall supply the
department with the unique signature of the application software
being tested and instructions allowing an agent or designee of
the department to field verify a production copy of the skill
video game system.
(d) Trademark, copyright, trade secret and confidential
proprietary material.--Nothing in this part is intended to
violate, compromise or facilitate infringement of or make public
material created, owned or possessed by a distributor.
Intellectual property or other material or information provided
by a software distributor to the department for inspection shall
be deemed as trademarked, copyrighted, a trade secret or
confidential proprietary material, and the material shall not be
subject to public access or inspection.
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§ 5402. Bonding.
(a) Requirement.--To be eligible for a provisional or
initial license, a distributor shall execute a $1,000,000 bond
within 30 days of issuance of the license. The bond shall
specifically protect the department's tax collection under this
part, not the software provider.
(b) Surety.--Each bond shall have as a surety a duly
authorized surety company or two sufficient individual sureties
approved by the department.
(c) Condition.--The bond is conditioned for the faithful
performance of the duties of the software provider to pay
applicable taxes, fees and fines required by this part.
(d) Suspension or revocation.--Unless the bond is filed with
the department within the 30-day time period under subsection
(a), the department may suspend the initial license. Failure to
maintain an acceptable bond shall be grounds for license
revocation.
§ 5403. Reporting.
(a) Monthly report.--Each distributor shall utilize a
terminal reporting system for the distributor's skill video game
system. A distributor shall submit a monthly report to the
department providing the following for the prior month:
(1) The complete tracking of all revenue derived through
the operation of all skill video game systems in operation
within all establishments.
(2) The reporting of gameplay statistics, including cash
in, cash out and numbers of games played.
(3) The physical locations of all skill video game
systems in possession of a distributor, operator or
establishment in this Commonwealth.
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(b) Annual report.--By July 30 of each year, for the prior
year's business, each distributor shall report to the department
the following:
(1) The total number of skill video game systems that
operators purchased from a distributor, including all
terminal identification numbers.
(2) The number and type of skill video game systems that
operators have located within each establishment.
(3) The total number of skill video game systems and the
terminal identification numbers that each entity has in
inventory as of June 30.
(4) The total number of skill video game systems in
operation by county.
(5) The total number of skill video game systems in
operation by municipality.
(6) Other information that the department may require.
CHAPTER 55
DISTRIBUTORS
Sec.
5501. Authorization.
5502. System requirements.
§ 5501. Authorization.
A distributor, once licensed by the department, shall be
authorized to distribute terminals and associated devices for
skill video gaming that comply with the requirements under
Chapter 53 (relating to organization).
§ 5502. System requirements.
(a) Currency.--A skill video game system shall be equipped
with the ability to accept currency and shall distribute
winnings by ejection of a bearer scrip , card or other means
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approved by the department redeemable only for cash at the
establishment where played. Winnings from players shall be
redeemed at a ticket redemption terminal or by an attendant
within the establishment where the bearer scrip or card was
created.
(b) Internet.--A skill video game system shall be connected
to the Internet for purposes of security, authentication and
redemption or data collection and control.
(c) External ports.--Except as may be approved by the
department for the field verification of skill video game
software signatures, a skill video game system shall not have an
external data port or disk drive outside of a locked area within
the terminal.
(d) Rules of play.--The skill video game system shall
prominently display the rules of play either on the game screen
or on the terminal.
(e) Placard.--Each skill video game system shall bear a
placard in a prominent location and in a prominent color stating
as follows:
This game is licensed by the Pennsylvania Department of
Revenue and is NOT operated or maintained by the
Pennsylvania State Lottery. Players must be 18 years of
age or older to play.
(f) Other markings.--Each skill video game system shall
display the name of the distributor of the terminal and contact
information for the operator, including a mailing address and
telephone number.
CHAPTER 56
OPERATORS
Sec.
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5601. Authorization.
5602. Skill video game system placement agreements.
5603. Player security.
5604. Reporting.
§ 5601. Authorization.
An operator shall:
(1) Purchase, lease, license, sublicense or provide
approved skill video game systems from a distributor. The
distributor shall not be part of the cash flow or financial
arrangements involving the operator.
(2) Distribute skill video game systems to
establishments under terms approved by the department.
(3) Collect and report skill video game system income
and reconcile with a terminal reporting system.
(4) Accept returns of skill video game systems from
establishments per regulations promulgated by the department.
§ 5602. Skill video game system placement agreements.
(a) Contract.--Within 60 days of receiving an initial
license, an operator shall enter into a contract with a licensed
distributor or multiple licensed distributors. In addition to
any additional minimum standards for the contract that the
department requires, a skill video game placement agreement
must:
(1) Include a provision rendering the agreement invalid
if either party's license or application is denied, revoked,
not renewed, withdrawn or surrendered.
(2) Provide the operator with 40% of the net profits.
(b) Term.--A skill video game placement agreement may be
active for a minimum term of five years but shall not exceed 10
years.
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§ 5603. Player security.
Each establishment shall be provided a camera system from the
operator which shall be pointed directly on skill video game
systems and shall always be active. The camera system shall
record and collect all video footage. The video footage shall be
maintained and stored for the immediately prior 60 days.
§ 5604. Reporting.
An operator using the terminal reporting system shall submit
a monthly report to the distributor. The distributor shall
provide to the department a monthly report that includes the
following information for the prior month:
(1) The terminal identification number in an operator's
inventory and within each establishment.
(2) Other information as the department may require.
CHAPTER 57
ESTABLISHMENTS
Sec.
5701. Authorization.
5702. Skill video game placement agreements.
5703. Limits on skill video game terminals.
5704. Prohibition on miniature casinos and stop and gos.
5705. Limitation of access by individuals under 18 years of
age.
5706. Qualifications for establishments.
§ 5701. Authorization.
An establishment shall:
(1) Utilize skill video game systems from operators for
entertainment and play by the public.
(2) Return unused, damaged or inoperable skill video
game systems to the operator.
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§ 5702. Skill video game placement agreements.
(a) Contract.--Within 60 days of receiving an initial
license, an establishment shall enter into a contract with an
operator. In addition to any minimum standards for contract that
the department requires, a skill video game placement agreement
must:
(1) Include a provision rendering the skill video game
placement agreement invalid if either party's license or
application is denied, revoked, not renewed, withdrawn or
surrendered.
(2) Provide the establishment with 40% of the net
profits.
(b) Term.--A skill video game placement agreement may be
active for a minimum term of five years but shall not exceed 10
years.
§ 5703. Limits on skill video game terminals.
(a) Number of terminals.--
(1) An establishment may not exceed five approved skill
video game terminals.
(2) An establishment that is owned by an organization
under 26 U.S.C. § 501(c) (relating to exemption from tax on
corporations, certain trusts, etc.) and that is licensed by
the Pennsylvania Liquor Control Board may not exceed 10
approved skill video game terminals.
(b) Placement.--Skill video game terminals shall be placed
in public floor space visible to patrons and employees.
§ 5704. Prohibition on miniature casinos and stop and gos.
(a) General rule.--Except as provided in subsection (b), an
operator is prohibited from installing skill video game systems
in an establishment where the sole or primary source of annual
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net revenue is derived from skill video game systems.
(b) Exception.--Subsection (a) shall not apply to an
organization established under 26 U.S.C. § 501(c) (relating to
exemption from tax on corporations, certain trusts, etc.).
§ 5705. Limitation of access by individuals under 18 years of
age.
The department shall promulgate regulations, including
employee training for detecting fake identification cards, for
licensed establishments to prevent the play of skill video game
systems by individuals under 18 years of age. Under no
circumstances shall an establishment redeem a skill video game
system redeemable bearer scrip, card or other means approved by
the department from an individual under 18 years of age.
Establishment licensees are required to post problem gaming
signage and make problem gaming informational materials, the
terms of which shall be established by the department, available
at the establishment.
§ 5706. Qualifications for establishments.
(a) Locations.--Skill video game systems shall be played
only at:
(1) an establishment licensed by the Pennsylvania Liquor
Control Board;
(2) an organization established under 26 U.S.C. § 501(c)
(relating to exemption from tax on corporations, certain
trusts, etc.); or
(3) a business that sells age-restricted products such
as tobacco or is licensed by the Pennsylvania Lottery.
(b) License required.--An establishment under subsection (a)
must be licensed by the Commonwealth to operate a skill video
game system.
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(c) Subdivision prohibited.--An establishment shall consist
of one physical building and may not be subdivided for the
purposes of obtaining additional licenses to operate skill video
game systems.
CHAPTER 58
PLAYERS
Sec.
5801. Authorization.
5802. Winnings.
§ 5801. Authorization.
It shall be lawful for a user to play and receive winnings
from a skill video game system dispensed in the form of a bearer
scrip, card or other means approved by the department which is
redeemable only at the establishment for cash. Cash shall not be
dispensed directly by the terminal.
§ 5802. Winnings.
A player's net winnings from the play of a licensed skill
video game terminal shall be classified as compensation under
section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971.
CHAPTER 59
TAX
Sec.
5901. Imposition.
§ 5901. Imposition.
(a) Duties of distributors.--A tax of 16% of all gross
profits generated by skill video game system play shall be paid
to the Commonwealth by the distributor. The distributor shall
submit to the department by the 20th of each month:
(1) A report of gross profits under this subsection for
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the prior month.
(2) Any tax payments due under this subsection for the
prior month.
(b) Deposit.--Revenue received from the tax imposed under
this section shall be distributed by the department and shall be
proportioned monthly under the following formula:
(1) Fifty percent of t he revenue shall be deposited into
the General Fund.
(2) Twenty-five percent of the revenue shall be
distributed to the Pennsylvania Standardbred Breeders
Development Fund to encourage breeding and racing of
Pennsylvania thoroughbreds.
(3) Twenty-five percent of the revenue shall be
deposited into the Property Tax Relief Fund.
(c) Exemption.- -Revenue ge nerated from approved skill video
game terminals being played by the public and game credit
licenses to supply skill video game systems shall not be
subjected to the tax imposed under section 202 of the act of
March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
1971.
(d) Information.--The distributor, operator and
establishment shall provide to the department any information
required by the department for the department's assessment and
review of taxes under this section.
(e) Prohibition on local fees and taxes.--No additional
taxes or fees, including amusement taxes, may be imposed on the
placement of a skill video game system or the revenue generated
by a terminal unless specifically authorized under this part.
CHAPTER 60
ADMINISTRATION
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Sec.
6001. Governing practices and procedures.
6002. Law enforcement notification.
6003. Temporary regulations.
6004. Reports by licensees.
§ 6001. Governing practices and procedures.
The provisions of 2 Pa.C.S. (relating to administrative law
and procedure) shall apply to all actions of the department
under this part constituting an adjudication as defined in 2
Pa.C.S. § 101 (relating to definitions).
§ 6002. Law enforcement notification.
Notwithstanding any provision of this part, the department
may notify law enforcement of information relating to any
violation or suspected violation of this part.
§ 6003. Temporary regulations.
(a) Promulgation.--In order to facilitate the prompt
implementation of this part, the department shall promulgate
temporary regulations. The department may promulgate temporary
regulations not subject to sections 201, 202, 203, 204 and 205
of the act of July 31, 1968 (P.L.769, No.240), refer red to as
the Commonwealth Documents Law, sections 204(b) and 301(10) of
the act of October 15, 1980 (P.L.950, No.164), known as the
Commonwealth Attorneys Act, and the act of June 25, 1982
(P.L.633, No.181), known as the Regulatory Review Act.
(b) Expiration.--The department's authority to adopt
temporary regulations under subsection (a) shall expire two
years after the effective date of this subsection. Regulations
adopted after this period shall be promulgated as provided by
law.
(c) Publication.--The department shall transmit notice of
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the temporary regulations to the Legislative Reference Bureau
for publication in the next available issue of the Pennsylvania
Bulletin no later than six months after the effective date of
this subsection.
(d) Contents.--Temporary regulations adopted under this
section must:
(1) Permit skill video game software and skill video
game terminals to be updated or otherwise modified, during a
two-year period following the adoption, to meet the standards
set under the temporary regulations.
(2) Take into consideration any incentive or method
designed to encourage the building or assembly of skill video
game terminals in this Commonwealth.
§ 6004. Reports by licensees.
An operator and establishment shall file a monthly report
with the distri butor as designated by the department. The
distributor shall make the reports available to the department.
CHAPTER 61
OFFENSES RELATED TO OPERATION OF
UNLICENSED SKILL VIDEO GAMES
Sec.
6101. Criminal distribution and operation of unlicensed skill
video game terminals.
§ 6101. Criminal distribution and operation of unlicensed skill
video game terminals.
(a) Penalties.--In addition to any other penalty provided by
law, a person commits a misdemeanor of the first degree if the
person owns, operates, maintains, places into operation or has a
financial interest in an unlicensed skill video game, skill
video game system or skill video game software or a business
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that owns, operates, maintains or places into operation or has a
financial interest in an unlicensed skill video game, skill
video game system or skill video game software:
(1) which is offered or made available to persons to
play or participate for direct or indirect consideration,
including consideration associated with a related product,
service or activity; and
(2) for which the person playing the unlicensed skill
video game system may become eligible for a cash or cash-
equivalent prize, whether or not the eligibility for or value
of the cash or cash-equivalent prize is determined by or has
any relationship to the outcome of or play of the unlicensed
skill video game system.
(b) Forfeiture.--An unlicensed skill video game, skill video
game system or skill video game software owned, operated
maintained or placed into operation in violation of subsection
(a) shall be seized and forfeited to the Commonwealth. The
forfeiture shall be conducted in accordance with 42 Pa.C.S. §§
5803 (relating to asset forfeiture), 5805 (relating to
forfeiture procedure), 5806 (relating to motion for return of
property), 5807 (relating to restrictions on use), 5807.1
(relating to prohibition on adoptive seizures) and 5808
(relating to exceptions).
CHAPTER 62
OFFENSES RELATED TO ILLEGAL MANUFACTURING,
DISTRIBUTION OR OPERATION OF SKILL VIDEO GAMES
Sec.
6201. Law enforcement.
6202. Criminal distribution of skill video game systems.
6203. Criminal alteration of skill video game software,
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terminal or related equipment.
6204. Criminal redemption of value to individual under 18 years
of age.
6205. Criminal use of nonapproved equipment.
6206. Criminal destruction of property.
6207. Additional penalties.
6208. Surrendering illegal skill video games and equipment.
§ 6201. Law enforcement.
(a) General criminal enforcement.--Except as provided in
subsection (b), the Bureau of Liquor Control Enforcement of the
Pennsylvania State Police shall be responsible for enforcement
of the criminal provisions of this part.
(b) Counties of the first class.--In addition to the Bureau
of Liquor Control Enforcement of the Pennsylvania State Police,
a local law enforcement agency may enforce the criminal
provisions of this part in a county of the first class.
(c) Definition.--As used in this section, the term "local
law enforcement agency" includes the Philadelphia Police
Department.
§ 6202. Criminal distribution of skill video game systems.
In addition to any other penalty provided by law, a person
commits a misdemeanor of the first degree if the person
illegally sells, leases, licenses, sublicenses or distributes to
any person or entity a skill video game system without being
properly licensed by the department and contracted with a
software provider.
§ 6203. Criminal alteration of skill video game software,
terminal or related equipment.
In addition to any other penalty provided by law, a person
commits a felony of the third degree if the person
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intentionally, knowingly or recklessly alters a skill video game
system, skill video game software or skill video game terminal
in any manner so that:
(1) chance, rather than predominant skill, is the factor
affecting the prize outcome of the skill video game on a
single-play basis and on the basis of a session of single
plays;
(2) a player does not have an opportunity on every play
to win back more than what was spent to play the skill video
game; or
(3) a skill video game terminal is capable of issuing
currency, coins, a stored-value card or other cash equivalent
or other medium of exchange.
§ 6204. Criminal redemption of value to individual under 18
years of age.
In addition to any other penalty provided by law, a person
commits a summary offense if the person provides value of any
kind to an individual under 18 years of age in exchange for an
approved skill video game terminal redeemable bearer scrip.
§ 6205. Criminal use of nonapproved equipment.
(a) Offense defined.--In addition to any other penalty
provided by law, a person commits a felony of the third degree
if the person operates a skill video game system or ticket
redemption terminal that is not approved in accordance with this
part.
(b) Fine.--A person committing an offense under subsection
(a) shall be subject to a fine of not more than $25,000 for each
terminal affected.
§ 6206. Criminal destruction of property.
In addition to any other penalty provided by law, a person
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commits a felony of the third degree if the person breaks into,
destroys or inflicts damage to, or attempts to break into,
destroy or inflict damage to, a skill video game system or
ticket redemption terminal, regardless of the amount of damage
or the dollar amount taken.
§ 6207. Additional penalties.
(a) Civil penalties.--In addition to any other remedy
available to the department, the department may assess a civil
penalty for any violation of this part, a regulation promulgated
under this part or order issued under this part. The following
penalties shall apply:
(1) The department may assess a civil penalty of not
more than $25,000 for each violation and an additional
penalty of not more than $1,000 for each day of a continuing
violation. In determining the amount of each penalty, the
department shall take the following into consideration:
(i) The gravity of the violation.
(ii) The willfulness of the violation.
(iii) Previous violations, if any, by the person
being assessed.
(iv) The economic benefit to the person being
assessed for failing to comply with the requirements of
this part, a regulation promulgated under this part or an
order issued under this part.
(2) The department may issue a written warning in lieu
of a civil penalty to a person or entity who aids, abets,
counsels, induces, procures or causes another person to
violate this part, a regulation promulgated under this part
or an order issued under this part.
(b) Sanctions.--
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(1) In addition to any other penalty authorized by law,
the department may impose the following sanctions:
(i) The revocation or suspension of the license of a
person found to be in violation of this part, a
regulation promulgated under this part or an order issued
under this part.
(ii) The revocation or suspension of the license of
a person for conduct or activity or the occurrence of an
event that would have disqualified the person from
receiving the license.
(iii) The ordering of restitution of money or
property unlawfully obtained or retained by a licensee.
(2) A person who aids, abets, counsels, induces,
procures or causes another person to violate this part shall
be subject to the sanctions provided under paragraph (1).
(c) Cost of action.--The department may assess against a
person determined to be in violation of this part the cost of
investigation of the violation.
(d) Insignificant violations.--Nothing in this section shall
be construed to require the assessment of a civil penalty or the
imposition of a sanction for an insignificant violation of this
part if the department determines that the public interest will
be adequately served under the circumstances by the issuance of
a written warning.
§ 6208. Surrendering illegal skill video games and equipment.
For a period of 90 days from the effective date of this
section, a skill video game, skill video game device or other
skill video game equipment not licensed by this part or another
law of this Commonwealth may, without criminal penalty or fine,
be surrendered by a person to the Commonwealth at designated
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drop-off facilities around this Commonwealth as determined by
law enforcement and the department. All games, devices and
equipment surrendered shall be recycled or destroyed at the
direction of law enforcement. Costs for this service shall be
covered by fees and taxes generated under this part.
CHAPTER 63
MISCELLANEOUS PROVISIONS
Sec.
6301. Conflict.
6302. Zoning.
6303. Provisional licenses.
6304. Civil actions.
6305. Notice.
§ 6301. Conflict.
The sale, manufacture, distribution, possession and use of
approved skill video games, skill video game terminals or other
related skill video game equipment approved by the department in
compliance with this part shall not be deemed to be a violation
of Part II (relating to gaming), 18 Pa.C.S. § 5513 (relating to
gambling devices, gambling, etc.) or the act of December 19,
1988 (P.L.1262, No.156), known as the Local Option Small Games
of Chance Act.
§ 6302. Zoning.
The following shall apply regarding zoning:
(1) A distributor, operator and establishment shall only
have to meet the same municipal zoning and use requirements
as other similar business types that are located in the same
zoning district.
(2) A municipality may not:
(i) prohibit the placement or play of skill games;
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or
(ii) approve municipal zoning or land use
requirements that restrict or prohibit placement, use or
play of an approved skill video game terminal in a zoning
district that allows any of t he following:
(A) the sale of beer, wine and spirits;
(B) the sale or play of State lottery games at
commercial establishments; or
(C) gaming or wagering conducted under Part II
(relating to gaming).
§ 6303. Provisional licenses.
(a) Provisional licenses.--
(1) A distributor that has filed registration
information with the department under this section shall be
permitted to continue operation.
(2) Within 30 days after the effective date of this
paragraph, a distributor shall collect and submit to the
department the licenses application fee payments and
registration information of all licensees. The following
shall apply:
(i) A submission to the department under this
paragraph shall include prepayment of the initial license
fee and the registration information.
(ii) A distributor shall promptly submit
registration information to the department as the
information pertains to operators and establishments in
compliance with the guidelines provided by the
department.
(iii) Upon submission of registration information, a
participant shall be considered to have a provisional
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license pending.
(iv) The fee shall be the same as the initial
license application fee under section 5304 (relating to
application and renewal costs of licenses). A payment
under this paragraph shall be considered payment in full
for an initial license application fee.
(v) A provisional license shall be valid until the
department approves and issues the initial license under
this part.
(vi) A payment shall be forfeited if the department
declines to issue the initial license or revokes the
provisional license.
(vii) If a license is denied or revoked, the
licensee shall cease the distribution, operation or use
of skill video game systems or related equipment.
(viii) An establishment shall not be allowed to
operate with a provisional license without having been
approved by a distributor who has submitted the
establishment's name and information to the department.
(ix) A distributor, operator and establishment may
buy, use, sell, lease, license or otherwise provide skill
video game systems or related equipment as prescribed by
the department.
(x) A distributor may not sell, lease, license or
otherwise provide skill video game systems or ticket
redemption terminals to an operator or establishment that
does not qualify or hold a provisional license. If the
operator or establishment qualifies or holds a
provisional license, the distributor shall deal with the
operator and may not directly deal with the
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establishment.
(xi) A distributor or operator may not sell, lease,
license or otherwise provide a skill video game system or
ticket redemption terminal to an establishment that does
not qualify or hold a provisional license.
(xii) During the provisional license period, the
taxes required under Chapter 59 (relating to tax) shall
apply to provisional licensees.
(xiii) Each month, a distributor shall be required
to submit a report of terminal identification numbers,
location names, addresses, cash-in, cash-out, tax amounts
per terminal and tax payments to the department no later
than the 15th day of the following month.
(3) Beginning 30 days after the effective date of this
paragraph, a distributor or operator may not apply for a
provisional license.
(4) An establishment may continue to obtain provisional
licenses in accordance with this section.
(5) One year after receipt of an initial license, an
entity shall apply for a renewal license.
(6) An operator shall, for the purpose of the imposition
of tax under Article II of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, retain ownership
of skill video game systems and ticket redemption terminals.
(b) License fee.--An applicant who applies and pays for a
provisional license application shall not be required to pay an
additional initial license application fee once final rules and
regulations are promulgated by the depa rtment. If, for any
reason, the applicant is denied, the applicant shall forfeit the
payment to the department.
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(c) Enforcement.--Within 30 days after the effective date of
this subsection, a distributor shall coordinate with the
department to ensure that only provisional licensees are
operating accepted skill video games and approved skill video
game terminals. A distributor shall provide all tools for law
enforcement to validate approved skill video game software and
skill video game terminals in the field utilizing terminal
identification numbers.
§ 6304. Civil actions.
The following apply regarding civil actions:
(1) A civil action may be brought by a private party
against a person who conducts any of the following activities
in this Commonwealth without a valid license to conduct the
activities under this part:
(i) sells, leases, licenses or otherwise provides
skill video game software;
(ii) sells, leases, licenses, provides or otherwise
distributes approved skill video game terminals; or
(iii) possesses and is permitting play of an
approved skill video game terminal.
(2) A person commits a felony of the third degree if the
person performs any of the acts for which a private party may
bring a civil action under paragraph (1).
§ 6305. Notice.
The department shall provide notice to the Legislative
Reference Bureau for publication in the next available issue of
the Pennsylvania Bulletin of the department's date of
commencement of licensing under Chapter 53 (relating to
organization).
Section 3. This act shall take effect as follows:
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(1) The following provisions shall take effect
immediately:
The addition of 4 Pa.C.S. Ch. 63.
This section.
(2) The remainder of this act shall take effect in 90
days.
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