HB 2046

                                                  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
1 Amending Title 4 (Amusements) of the Pennsylvania Consolidated
2    Statutes, in revenues, further providing for establishment of
3    State Gaming Fund and net slot machine revenue distribution;
4    providing for skill video gaming; imposing duties on the
5    Department of Revenue; and imposing a tax and criminal and
6    civil penalties.
7    The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9    Section 1.      Section 1403(b.1)(1) of Title 4 of the
10 Pennsylvania Consolidated Statutes is amended to read:
11 § 1403.    Establishment of State Gaming Fund and net slot machine
12revenue distribution.
13    * * *
14    (b.1)    Slot machine tax at Category 4 licensed facilities.--
15(1)   The department shall determine and each Category 4
16    slot machine licensee shall pay a daily tax of [50%] 32% from
17    its daily gross terminal revenue from the slot machines in
18    operation at the Category 4 licensed facility and a local
19    share assessment as provided in subsection (c.1). All money
20    owed to the Commonwealth, a county or a municipality under
1    this section shall be held in trust by the licensed gaming
2    entity for the Commonwealth, the county and the municipality
3    until the money is paid or transferred to the fund. Unless
4    otherwise agreed to by the board, a licensed gaming entity
5    shall establish a separate bank account to maintain gross
6    terminal revenue until such time as the money is paid or
7    transferred under this section. Money in the fund is
8    appropriated to the department on a continuing basis for the
9    purposes set forth in paragraph (2).
10* * *
11    Section 2.     Title 4 is amended by adding a part to read:
12PART IV
13SKILL VIDEO GAMING
14 Chapter
15    51.     Preliminary Provisions
16    52.     Program
17    53.     Organization
18    54.     Certification Requirements
19    55.     Distributors
20    56.     Operators
21    57.     Establishments
22    58.     Players
23    59.     Tax
24    60.     Administration
25    61.     Offenses Related to Operation of Unlicensed Skill Video
26Games
27    62.     Offenses Related to Illegal Manufacturing, Distribution
28or Operation of Skill Video Games
29    63.     Miscellaneous Provisions
30CHAPTER 51
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1PRELIMINARY PROVISIONS
2 Sec.
3 5101.   Scope of part.
4 5102.   Definitions.
5 § 5101.    Scope of part.
6    This part relates to skill video gaming.
7 § 5102.    Definitions.
8    The following words and phrases when used in this part shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11    "Applicant."     A person that applies for permission to engage
12 in an act or activity that is regulated under the provisions of
13 this part.
14    "Bearer scrip."      A ticket that is a printed receipt from a
15 skill video game system and is redeemable for cash equivalents.
16    "Camera system."       A video camera system approved by the
17 department and provided by an operator to an establishment that
18 meets the specifications approved by the department.
19    "Cash."      United States currency or coin.
20    "Cash equivalents."      Instruments with a value equal to United
21 States currency or coin, including certified checks, cashier's
22 checks, money orders or other representations of value that the
23 department deems a cash equivalent.
24    "Controlling interest."       As follows:
25(1)   For a publicly traded entity, the term means the
26    holding of sole voting rights under State law or corporate
27    articles or bylaws that entitle the person to elect or
28    appoint one or more of the members of the board of directors
29    or other governing board or the holding of an ownership or
30    beneficial holding of 5% or more of the securities of the
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1    publicly traded legal entity, unless the presumption of
2    control or ability to elect is rebutted by clear and
3    convincing evidence.
4(2)     For a privately held corporation, partnership,
5    limited liability company or other form of privately held
6    legal entity, the term means the holding of securities in the
7    legal entity, unless the presumption of control is rebutted
8    by clear and convincing evidence.
9    "Department."    The Department of Revenue of the Commonwealth.
10    "Distributor."    An entity licensed by the department that
11 sells, leases, offers or provides and distributes skill video
12 game systems to an operator for use or play in this
13 Commonwealth.
14    "Entity."    A domestic or foreign:
15(1)     business corporation;
16(2)     nonprofit corporation;
17(3)     general partnership;
18(4)     limited partnership;
19(5)     limited liability company;
20(6)     unincorporated nonprofit association;
21(7)     professional association; or
22(8)     business trust, common law business trust or
23    statutory trust.
24    "Establishment."    An entity licensed by the department that
25 permits an operator to place and operate skill video game
26 systems on the establishment's premises under this part.
27    "Gross revenue."    As follows:
28(1)     The total of cash or cash equivalents received by a
29    skill video game system minus the total of cash or cash
30    equivalents paid out to players as a result of playing a
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1    skill video game system.
2(2)     The term does not include counterfeit cash or cash
3    taken in a fraudulent act perpetrated against an operator or
4    establishment for which the operator or establishment is not
5    reimbursed.
6    "Independent testing laboratory."    A nongovernmental entity
7 engaged in the business of examining skill video game software
8 and capable of providing the certification specified in Chapter
9 54 (relating to certification requirements).
10    "Initial license."     A license issued by the department to an
11 approved applicant under this part.
12    "Net profits."    The gross revenue after applicable taxes are
13 paid to the department.
14    "Operator."    An entity licensed by the department to operate
15 a skill video game system by:
16(1)     Purchasing or leasing skill video game systems from
17    a licensed skill video game system distributor.
18(2)     Providing skill video game systems to licensed
19    establishments.
20(3)     Providing onsite collection of skill video game
21    system revenue and skill video game system data reporting as
22    required by this part.
23    "Payout."    The payment of cash or cash equivalent to a player
24 as a result of playing a skill video game system.
25    "Person."    Includes a corporation, partnership, limited
26 liability company, business trust, other association, government
27 entity, other than the Commonwealth, estate, trust, foundation
28 or natural person.
29    "Player."    An individual who is at least 18 years of age when
30 the individual plays a skill video game system.
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1    "Principal."   Any of the following:
2(1)   An officer.
3(2)   A director.
4(3)   A person who directly holds a beneficial interest in
5    or ownership of the securities of an applicant or licensee.
6(4)   A person who has a controlling interest in an
7    applicant or licensee or has the ability to elect a majority
8    of the board of directors of a licensee or to otherwise
9    control a licensee, lender or other licensed financial
10    institution of an applicant or licensee, other than a bank or
11    lending institution which makes a loan or holds a mortgage or
12    other lien acquired in the ordinary course of business,
13    underwriter of an applicant or licensee.
14(5)   A person deemed to be a principal by the department.
15    "Program."   The program to regulate the distribution, sale,
16 transportation, storage and use of skill video game systems
17 established under Chapter 52 (relating to program).
18    "Provisional license."     A license issued under section 6303
19 (relating to provisional licenses).
20    "Registration information."     The information required on the
21 registration form provided by the department.
22    "Skill video game."     A game played on skill video game
23 software that meets the qualifications specified in Chapters 53
24 (relating to organization) and 54 and has been licensed by the
25 department as part of a skill video game system.
26    "Skill video game placement agreement."     An agreement entered
27 into by a distributor with an operator or an operator with an
28 establishment for the placement, operation, service or
29 maintenance of skill video game terminals.
30    "Skill video game software."     A distributor's proprietary
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1 software program developed and designed for a skill video game
2 system as approved by the department.
3    "Skill video game system."    A terminal that is equipped with
4 skill video game software connected to a terminal reporting
5 system.
6    "Terminal identification number."       The unique number utilized
7 to identify and verify a licensed skill video game system.
8    "Terminal reporting system."     A system provided by the
9 distributor and accessible by the department to which each skill
10 video game system communicates for the purpose of auditing
11 capacity and information retrieval of the details of a financial
12 event that occurs in the operation of a skill video game system,
13 including coin in, coin out, ticket in, ticket out and jackpots.
14    "Ticket redemption terminal."        A terminal where a bearer
15 scrip from a skill video game system may be redeemed for cash
16 after a player has validated the player's age by utilizing a
17 State-issued driver's license or identification card. A device
18 used to validate the player's age may only read and verify the
19 age from a State-issued driver's license or identification card
20 and may not collect or retain any additional player information.
21CHAPTER 52
22PROGRAM
23 Sec.
24 5201.    Regulation of skill video game systems.
25 5202.    Sale, manufacturing, distribution, operation and use of
26skill video game systems.
27 § 5201.    Regulation of skill video game systems.
28    (a)    Establishment.--A program to regulate the distribution,
29 sale, transportation, storage and use of skill video game
30 systems is established. The program shall be implemented and
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1 administered by the department. The department shall:
2(1)   Issue licenses to participating individuals or
3    companies to authorize them to design, program, license,
4    sublicense, manufacture, transport, store and make available
5    to the public a skill video game system within this
6    Commonwealth in accordance with this part and regulations
7    promulgated by the department.
8(2)   Establish regulator and enforcement authority over
9    the program.
10(3)   Develop enforcement procedures.
11    (b)   General authority and duties of department.--The
12 department shall have general and sole regulatory authority over
13 the sale, distribution and use of a skill video game system as
14 described under this part.
15    (c)   Specific authority and duties of department.--The
16 department shall have the specific power and duty to:
17(1)   Collect taxes from a distributor.
18(2)   Require and conduct or cause to be conducted
19    criminal history investigations on applicants and licenses
20    under this part.
21(3)   For purposes of licensing and enforcement and
22    background investigations, receive information otherwise
23    protected by 18 Pa.C.S. Ch. 91 (relating to criminal history
24    record information).
25(4)   Issue, approve, renew, revoke, suspend, condition or
26    deny issuance or renewal of a license or approval provided
27    under this part.
28(5)   Require prospective and existing applicants and
29    licensees to submit to fingerprinting by the Pennsylvania
30    State Police, who shall submit the fingerprints to the
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1    Federal Bureau of Investigation or an agency approved by the
2    department for purposes of verifying the identity of the
3    individual and obtaining records of criminal arrest and
4    convictions.
5(6)   Promulgate rules and regulations necessary for the
6    administration and enforcement of this part. Except as
7    provided in section 6003 (relating to temporary regulations),
8    regulations shall be adopted as provided under the act of
9    July 31, 1968 (P.L.769, No.240), referred to as the
10    Commonwealth Documents Law, and the act of June 25, 1982
11    (P.L.633, No.181), known as the Regulatory Review Act.
12(7)   Require each person that holds a license issued
13    under this part to provide the periodic reports required of
14    licensees under this part.
15 § 5202.    Sale, manufacturing, distribution, operation and use of
16skill video game systems.
17    The sale, distribution, operation, possession, transportation
18 and use of a skill video game system in compliance with this
19 part are authorized in this Commonwealth. A skill video game
20 system shall not be deemed:
21(1)   A lottery, gambling device, slot machine, device
22    intrinsically connected with gambling or coin-operated
23    amusement device.
24(2)   Games of chance as defined under section 103 of the
25    act of December 19, 1988 (P.L.1262, No.156), known as the
26    Local Option Small Games of Chance Act.
27(3)   As conducting another business on a licensed
28    premises under the act of April 12, 1951 (P.L.90, No.21),
29    known as the Liquor Code, or 40 Pa. Code § 3.52 (relating to
30    connection with other business).
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1CHAPTER 53
2ORGANIZATION
3 Sec.
4 5301.    Licenses.
5 5302.    Licensing requirements.
6 5303.    Granting licenses.
7 5304.    Application and renewal costs of licenses.
8 5305.    Allocation of skill video game system revenue after tax.
9 5306.    Issuance of license.
10 5307.    Term of license.
11 5308.    License renewal.
12 5309.    Suspension or revocation of license.
13 § 5301.    Licenses.
14    (a)    Issuance.--The department shall have the authority to
15 issue licenses under this part.
16    (b)    Provisional licenses.--The department shall issue a
17 provisional license to operate a skill video game system
18 beginning on the effective date of this subsection to a
19 distributor, operator or establishment that meets the
20 requirements of section 6303 (relating to provisional licenses).
21    (c)    Skill video game system license.--An initial application
22 period shall commence at a date set by the department. An
23 initial license may be utilized on the date the department
24 issues the initial license and shall remain valid for a minimum
25 of one year or until the department establishes a date for the
26 annual renewal of licenses.
27    (d)    License criteria.--The granting of a license by the
28 department shall be subject to and dependent upon the
29 applicant's criminal history record information and other
30 criteria established by department regulation.
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1    (e)    License renewal.--An application to renew a license
2 shall be filed with the department prior to the expiration of
3 the license.
4 § 5302.    Licensing requirements.
5    An entity, including each principal holding a controlling
6 interest, which seeks a distributor, operator and establishment
7 licensee shall be considered an applicant and shall provide the
8 following information for an initial or renewal license:
9(1)   Identification, including a driver's license or
10    passport.
11(2)   Naturalization papers or resident alien
12    identification, if applicable.
13(3)   Resident information for the previous five years.
14(4)   Employment information for the previous five years,
15    including dates employed and the name and address of the
16    employers so that a criminal history and credit check can be
17    completed.
18(5)   An individual questionnaire provided by the
19    department for each principal who lives outside of this
20    Commonwealth.
21(6)   Proof that the applicant has not had a felony
22    conviction within the last 10 years.
23(7)   Proof that the applicant has never been convicted of
24    a gambling-related felony.
25(8)   Proof that the applicant has timely filed and
26    satisfied all Federal, State and local taxes.
27 § 5303.    Granting licenses.
28    (a)    Power of department.--The department may grant, deny or
29 revoke a license under this part.
30    (b)    Determination.--In making a decision under subsection
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1 (a), the department shall determine whether the applicant is
2 able to comply with all applicable laws of this Commonwealth and
3 regulations relating to the activities in which the applicant
4 intends to engage under this part.
5    (c)    Privilege.--The issuance or renewal of a license shall
6 be a revocable privilege.
7    (d)    Multiple licenses.--
8(1)   An entity may only hold one of the following at one
9    time:
10(i)    A distributor license.
11(ii)    An operator license.
12(iii)    An establishment license.
13(2)   To qualify for a provisional license, an entity must
14    have conducted business as an operator in this Commonwealth
15    for the immediately prior two years.
16    (e)    Appeals.--If the department denies an application, the
17 applicant shall have 30 days from the date of the department's
18 mailing of the denial to the applicant to file an appeal of the
19 denial. The appeal shall be filed with the Secretary of Revenue.
20 The appeal of a decision by the Secretary of Revenue shall be
21 filed with Commonwealth Court.
22    (f)    Prior operation.--Prior operation of a skill game shall
23 not be a basis for denying a license.
24 § 5304.    Application and renewal costs of licenses.
25    (a)    Payment.--The fee for an initial or renewal license
26 application shall be payable to the department when the
27 application or renewal is submitted.
28    (b)    Initial license and costs.--An initial license
29 application fee shall be nonrefundable to an applicant. Initial
30 license application fees shall be as follows:
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1(1)   A skill video game system distributor initial
2    application fee, $1,000,000.
3(2)   A skill video game system operator initial license
4    application fee, $100,000.
5(3)   A skill video game system establishment initial
6    license application fee, $1,000.
7    (c)    Renewal license and costs.--A renewal license
8 application fee shall be nonrefundable. Renewal license
9 application fees shall be as follows:
10(1)   A skill video game system distributor annual renewal
11    license application fee, $100,000.
12(2)   A skill video game system operator annual renewal
13    license application fee, $5,000.
14(3)   A skill video game system establishment annual
15    renewal license application fee, $250.
16 § 5305.    Allocation of skill video game system revenue after
17tax.
18    The allocation of percentage of net profits earned shall be
19 as follows:
20(1)   An establishment shall receive 40%.
21(2)   An operator shall receive 40%.
22(3)   A distributor shall receive 20%.
23 § 5306.    Issuance of license.
24    A license issued by the department to a participant shall be
25 effective only for the specified period and shall include
26 information required by the department.
27 § 5307.    Term of license.
28    (a)    Provisional license.--A provisional license shall be
29 valid until the issuance or denial of an initial license.
30    (b)    Initial license.--An initial license shall remain valid
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1 for one calendar year.
2    (c)    Renewal license.--A renewal license shall be valid for
3 one calendar year from the date of issuance.
4 § 5308.    License renewal.
5    (a)    Renewal.--An application for a renewal license shall
6 include information required by the department.
7    (b)    Approval.--The department shall renew a license using
8 the same process for granting licenses under this chapter.
9    (c)    Nonrenewal decision.--A decision to deny or not renew a
10 license by the department shall include a notice specifying in
11 detail how the applicant has not satisfied the department's
12 requirements for renewal. The department may request additional
13 information from the applicant before deciding to grant or deny
14 an application for renewal. If the department denies a renewal,
15 the applicant may appeal the decision to Commonwealth Court.
16 § 5309.    Suspension or revocation of license.
17    The department may suspend or revoke a license if the
18 participant violates any provision of this part or regulation of
19 the department.
20CHAPTER 54
21CERTIFICATION REQUIREMENTS
22 Sec.
23 5401.    Skill video game system testing.
24 5402.    Bonding.
25 5403.    Reporting.
26 § 5401.    Skill video game system testing.
27    (a)    Certification.--Prior to obtaining an initial license
28 under Chapter 53 (relating to organization), a skill video game
29 system must be certified under subsection (b). The following
30 shall apply:
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1      (1)   Before the distributor sells, leases, licenses,
2  provides or distributes game software not qualified or
3  approved by the program as skill video game software, the
4  distributor shall supply to the department an engineering
5  report and opinion in complete forensic detail by an
6  independent testing laboratory, with experience in testing
7  skill video game software and approved by the department, and
8  based on an examination of a prototype or production sample
9  of the skill video game software and approved skill video
10  game system to be certified. The testing required under this
11  paragraph shall be based only on skill video game software,
12  and the technical specifications shall be agreed to be
13  independent from slot machine technical specifications
14  engineered for casino or video game terminal play. The
15  engineering report and opinion shall:
16(i)    Be restricted in scope to technical detail and
17      shall not be otherwise relied upon as a legal opinion
18      regarding whether skill or chance are predominant in
19      winner determination or as an interpretation of law.
20(ii)    Be signed by a principal or executive officer
21      of an independent testing laboratory, which signature
22      shall constitute the laboratory's certification regarding
23      its contents.
24(iii)    State, at a minimum, a written certification
25      to the department that the skill video game software is
26      one in which:
27(A)   Skill of the player rather than an element
28of chance is the predominant factor affecting the
29skill video game's outcome.
30(B)   The skill video game requires the prize
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1outcome for the single play and over a session of
2gameplay to be such that without the player
3exercising skill during the main phases of gameplay,
4it would be impossible to win the prize offered.
5(C)    There must be no hard-coded minimum or
6maximum payout percentage for a skill video game.
7(D)    There must not be any reflexive,
8compensating algorithm that makes the skill video
9game harder when it detects a highly skilled player
10or when the skill video game's payout percentage goes
11above 100%.
12(E)    An average player can learn to score and win
13effectively on a skill video game.
14(F)    A player is informed of the criteria used in
15selecting winners and rules are available for viewing
16at any time other than in the middle of a skill video
17game in play.
18(G)    Skill video games must be programmed to keep
19true and accurate gameplay records, with a minimum of
20100 game recall, and the number of payouts from the
21skill video game, with a minimum of 10 voucher
22recall. Accounting meters must be at least eight
23digits in length, with six digits to the left of the
24decimal.
25(H)    The skill video game is programmed so that a
26maximum price to play is $5 and the maximum winnings
27per individual game are $5,000.
28      (2)   A skill video game system shall remain certified and
29  valid unless material changes are made to the skill video
30  game software or equipment as deemed necessary by the
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1    department.
2(3)   A distributor applicant applying for an initial
3    license shall provide the distributor applicant's skill video
4    game software in a manner consistent with rules and
5    regulations promulgated by the department.
6(4)   Certification of the requirements under this
7    subsection shall be made to the department by the
8    distributor, who shall represent that the certification is
9    being made subject to the penalties of 18 Pa.C.S. § 4904
10    (relating to unsworn falsification to authorities).
11    (b)   Certification.--An independent testing laboratory
12 approved by the department shall provide a certification as
13 provided under this part.
14    (c)   Field verification of certified skill video game
15 software.--The software distributor's skill video game software
16 shall allow for random field verification by an agent or
17 designee of the department. The distributor shall supply the
18 department with the unique signature of the application software
19 being tested and instructions allowing an agent or designee of
20 the department to field verify a production copy of the skill
21 video game system.
22    (d)   Trademark, copyright, trade secret and confidential
23 proprietary material.--Nothing in this part is intended to
24 violate, compromise or facilitate infringement of or make public
25 material created, owned or possessed by a distributor.
26 Intellectual property or other material or information provided
27 by a software distributor to the department for inspection shall
28 be deemed as trademarked, copyrighted, a trade secret or
29 confidential proprietary material, and the material shall not be
30 subject to public access or inspection.
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1 § 5402.    Bonding.
2    (a)    Requirement.--To be eligible for a provisional or
3 initial license, a distributor shall execute a $1,000,000 bond
4 within 30 days of issuance of the license. The bond shall
5 specifically protect the department's tax collection under this
6 part, not the software provider.
7    (b)    Surety.--Each bond shall have as a surety a duly
8 authorized surety company or two sufficient individual sureties
9 approved by the department.
10    (c)    Condition.--The bond is conditioned for the faithful
11 performance of the duties of the software provider to pay
12 applicable taxes, fees and fines required by this part.
13    (d)    Suspension or revocation.--Unless the bond is filed with
14 the department within the 30-day time period under subsection
15 (a), the department may suspend the initial license. Failure to
16 maintain an acceptable bond shall be grounds for license
17 revocation.
18 § 5403.    Reporting.
19    (a)    Monthly report.--Each distributor shall utilize a
20 terminal reporting system for the distributor's skill video game
21 system. A distributor shall submit a monthly report to the
22 department providing the following for the prior month:
23(1)   The complete tracking of all revenue derived through
24    the operation of all skill video game systems in operation
25    within all establishments.
26(2)   The reporting of gameplay statistics, including cash
27    in, cash out and numbers of games played.
28(3)   The physical locations of all skill video game
29    systems in possession of a distributor, operator or
30    establishment in this Commonwealth.
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1    (b)    Annual report.--By July 30 of each year, for the prior
2 year's business, each distributor shall report to the department
3 the following:
4(1)   The total number of skill video game systems that
5    operators purchased from a distributor, including all
6    terminal identification numbers.
7(2)   The number and type of skill video game systems that
8    operators have located within each establishment.
9(3)   The total number of skill video game systems and the
10    terminal identification numbers that each entity has in
11    inventory as of June 30.
12(4)   The total number of skill video game systems in
13    operation by county.
14(5)   The total number of skill video game systems in
15    operation by municipality.
16(6)   Other information that the department may require.
17CHAPTER 55
18DISTRIBUTORS
19 Sec.
20 5501.    Authorization.
21 5502.    System requirements.
22 § 5501.    Authorization.
23    A distributor, once licensed by the department, shall be
24 authorized to distribute terminals and associated devices for
25 skill video gaming that comply with the requirements under
26 Chapter 53 (relating to organization).
27 § 5502.    System requirements.
28    (a)    Currency.--A skill video game system shall be equipped
29 with the ability to accept currency and shall distribute
30 winnings by ejection of a bearer scrip, card or other means
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1 approved by the department redeemable only for cash at the
2 establishment where played. Winnings from players shall be
3 redeemed at a ticket redemption terminal or by an attendant
4 within the establishment where the bearer scrip or card was
5 created.
6    (b)     Internet.--A skill video game system shall be connected
7 to the Internet for purposes of security, authentication and
8 redemption or data collection and control.
9    (c)     External ports.--Except as may be approved by the
10 department for the field verification of skill video game
11 software signatures, a skill video game system shall not have an
12 external data port or disk drive outside of a locked area within
13 the terminal.
14    (d)     Rules of play.--The skill video game system shall
15 prominently display the rules of play either on the game screen
16 or on the terminal.
17    (e)     Placard.--Each skill video game system shall bear a
18 placard in a prominent location and in a prominent color stating
19 as follows:
20This game is licensed by the Pennsylvania Department of
21Revenue and is NOT operated or maintained by the
22Pennsylvania State Lottery. Players must be 18 years of
23age or older to play.
24    (f)     Other markings.--Each skill video game system shall
25 display the name of the distributor of the terminal and contact
26 information for the operator, including a mailing address and
27 telephone number.
28CHAPTER 56
29OPERATORS
30 Sec.
20250HB2046PN2615  - 20 -
1 5601.    Authorization.
2 5602.    Skill video game system placement agreements.
3 5603.    Player security.
4 5604.    Reporting.
5 § 5601.    Authorization.
6    An operator shall:
7(1)   Purchase, lease, license, sublicense or provide
8    approved skill video game systems from a distributor. The
9    distributor shall not be part of the cash flow or financial
10    arrangements involving the operator.
11(2)   Distribute skill video game systems to
12    establishments under terms approved by the department.
13(3)   Collect and report skill video game system income
14    and reconcile with a terminal reporting system.
15(4)   Accept returns of skill video game systems from
16    establishments per regulations promulgated by the department.
17 § 5602.    Skill video game system placement agreements.
18    (a)    Contract.--Within 60 days of receiving an initial
19 license, an operator shall enter into a contract with a licensed
20 distributor or multiple licensed distributors. In addition to
21 any additional minimum standards for the contract that the
22 department requires, a skill video game placement agreement
23 must:
24(1)   Include a provision rendering the agreement invalid
25    if either party's license or application is denied, revoked,
26    not renewed, withdrawn or surrendered.
27(2)   Provide the operator with 40% of the net profits.
28    (b)    Term.--A skill video game placement agreement may be
29 active for a minimum term of five years but shall not exceed 10
30 years.
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1 § 5603.    Player security.
2    Each establishment shall be provided a camera system from the
3 operator which shall be pointed directly on skill video game
4 systems and shall always be active. The camera system shall
5 record and collect all video footage. The video footage shall be
6 maintained and stored for the immediately prior 60 days.
7 § 5604.    Reporting.
8    An operator using the terminal reporting system shall submit
9 a monthly report to the distributor. The distributor shall
10 provide to the department a monthly report that includes the
11 following information for the prior month:
12(1)   The terminal identification number in an operator's
13    inventory and within each establishment.
14(2)   Other information as the department may require.
15CHAPTER 57
16ESTABLISHMENTS
17 Sec.
18 5701.   Authorization.
19 5702.   Skill video game placement agreements.
20 5703.   Limits on skill video game terminals.
21 5704.   Prohibition on miniature casinos and stop and gos.
22 5705.   Limitation of access by individuals under 18 years of
23age.
24 5706.   Qualifications for establishments.
25 § 5701.    Authorization.
26    An establishment shall:
27(1)   Utilize skill video game systems from operators for
28    entertainment and play by the public.
29(2)   Return unused, damaged or inoperable skill video
30    game systems to the operator.
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1 § 5702.    Skill video game placement agreements.
2    (a)    Contract.--Within 60 days of receiving an initial
3 license, an establishment shall enter into a contract with an
4 operator. In addition to any minimum standards for contract that
5 the department requires, a skill video game placement agreement
6 must:
7(1)   Include a provision rendering the skill video game
8    placement agreement invalid if either party's license or
9    application is denied, revoked, not renewed, withdrawn or
10    surrendered.
11(2)   Provide the establishment with 40% of the net
12    profits.
13    (b)    Term.--A skill video game placement agreement may be
14 active for a minimum term of five years but shall not exceed 10
15 years.
16 § 5703.    Limits on skill video game terminals.
17    (a)    Number of terminals.--
18(1)   An establishment may not exceed five approved skill
19    video game terminals.
20(2)   An establishment that is owned by an organization
21    under 26 U.S.C. § 501(c) (relating to exemption from tax on
22    corporations, certain trusts, etc.) and that is licensed by
23    the Pennsylvania Liquor Control Board may not exceed 10
24    approved skill video game terminals.
25    (b)    Placement.--Skill video game terminals shall be placed
26 in public floor space visible to patrons and employees.
27 § 5704.    Prohibition on miniature casinos and stop and gos.
28    (a)    General rule.--Except as provided in subsection (b), an
29 operator is prohibited from installing skill video game systems
30 in an establishment where the sole or primary source of annual
20250HB2046PN2615  - 23 -
1 net revenue is derived from skill video game systems.
2    (b)     Exception.--Subsection (a) shall not apply to an
3 organization established under 26 U.S.C. § 501(c) (relating to
4 exemption from tax on corporations, certain trusts, etc.).
5 § 5705.    Limitation of access by individuals under 18 years of
6age.
7    The department shall promulgate regulations, including
8 employee training for detecting fake identification cards, for
9 licensed establishments to prevent the play of skill video game
10 systems by individuals under 18 years of age. Under no
11 circumstances shall an establishment redeem a skill video game
12 system redeemable bearer scrip, card or other means approved by
13 the department from an individual under 18 years of age.
14 Establishment licensees are required to post problem gaming
15 signage and make problem gaming informational materials, the
16 terms of which shall be established by the department, available
17 at the establishment.
18 § 5706.    Qualifications for establishments.
19    (a)     Locations.--Skill video game systems shall be played
20 only at:
21(1)   an establishment licensed by the Pennsylvania Liquor
22    Control Board;
23(2)   an organization established under 26 U.S.C. § 501(c)
24    (relating to exemption from tax on corporations, certain
25    trusts, etc.); or
26(3)   a business that sells age-restricted products such
27    as tobacco or is licensed by the Pennsylvania Lottery.
28    (b)     License required.--An establishment under subsection (a)
29 must be licensed by the Commonwealth to operate a skill video
30 game system.
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1    (c)    Subdivision prohibited.--An establishment shall consist
2 of one physical building and may not be subdivided for the
3 purposes of obtaining additional licenses to operate skill video
4 game systems.
5CHAPTER 58
6PLAYERS
7 Sec.
8 5801.    Authorization.
9 5802.    Winnings.
10 § 5801.    Authorization.
11    It shall be lawful for a user to play and receive winnings
12 from a skill video game system dispensed in the form of a bearer
13 scrip, card or other means approved by the department which is
14 redeemable only at the establishment for cash. Cash shall not be
15 dispensed directly by the terminal.
16 § 5802.    Winnings.
17    A player's net winnings from the play of a licensed skill
18 video game terminal shall be classified as compensation under
19 section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
20 the Tax Reform Code of 1971.
21CHAPTER 59
22TAX
23 Sec.
24 5901.    Imposition.
25 § 5901.    Imposition.
26    (a)    Duties of distributors.--A tax of 16% of all gross
27 profits generated by skill video game system play shall be paid
28 to the Commonwealth by the distributor. The distributor shall
29 submit to the department by the 20th of each month:
30(1)   A report of gross profits under this subsection for
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1    the prior month.
2(2)   Any tax payments due under this subsection for the
3    prior month.
4    (b)   Deposit.--Revenue received from the tax imposed under
5 this section shall be distributed by the department and shall be
6 proportioned monthly under the following formula:
7(1)   Fifty percent of the revenue shall be deposited into
8    the General Fund.
9(2)   Twenty-five percent of the revenue shall be
10    distributed to the Pennsylvania Standardbred Breeders
11    Development Fund to encourage breeding and racing of
12    Pennsylvania thoroughbreds.
13(3)   Twenty-five percent of the revenue shall be
14    deposited into the Property Tax Relief Fund.
15    (c)   Exemption.--Revenue generated from approved skill video
16 game terminals being played by the public and game credit
17 licenses to supply skill video game systems shall not be
18 subjected to the tax imposed under section 202 of the act of
19 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
20 1971.
21    (d)   Information.--The distributor, operator and
22 establishment shall provide to the department any information
23 required by the department for the department's assessment and
24 review of taxes under this section.
25    (e)   Prohibition on local fees and taxes.--No additional
26 taxes or fees, including amusement taxes, may be imposed on the
27 placement of a skill video game system or the revenue generated
28 by a terminal unless specifically authorized under this part.
29CHAPTER 60
30ADMINISTRATION
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1 Sec.
2 6001.    Governing practices and procedures.
3 6002.    Law enforcement notification.
4 6003.    Temporary regulations.
5 6004.    Reports by licensees.
6 § 6001.   Governing practices and procedures.
7    The provisions of 2 Pa.C.S. (relating to administrative law
8 and procedure) shall apply to all actions of the department
9 under this part constituting an adjudication as defined in 2
10 Pa.C.S. § 101 (relating to definitions).
11 § 6002.   Law enforcement notification.
12    Notwithstanding any provision of this part, the department
13 may notify law enforcement of information relating to any
14 violation or suspected violation of this part.
15 § 6003.   Temporary regulations.
16    (a)    Promulgation.--In order to facilitate the prompt
17 implementation of this part, the department shall promulgate
18 temporary regulations. The department may promulgate temporary
19 regulations not subject to sections 201, 202, 203, 204 and 205
20 of the act of July 31, 1968 (P.L.769, No.240), referred to as
21 the Commonwealth Documents Law, sections 204(b) and 301(10) of
22 the act of October 15, 1980 (P.L.950, No.164), known as the
23 Commonwealth Attorneys Act, and the act of June 25, 1982
24 (P.L.633, No.181), known as the Regulatory Review Act.
25    (b)    Expiration.--The department's authority to adopt
26 temporary regulations under subsection (a) shall expire two
27 years after the effective date of this subsection. Regulations
28 adopted after this period shall be promulgated as provided by
29 law.
30    (c)    Publication.--The department shall transmit notice of
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1 the temporary regulations to the Legislative Reference Bureau
2 for publication in the next available issue of the Pennsylvania
3 Bulletin no later than six months after the effective date of
4 this subsection.
5    (d)    Contents.--Temporary regulations adopted under this
6 section must:
7(1)   Permit skill video game software and skill video
8    game terminals to be updated or otherwise modified, during a
9    two-year period following the adoption, to meet the standards
10    set under the temporary regulations.
11(2)   Take into consideration any incentive or method
12    designed to encourage the building or assembly of skill video
13    game terminals in this Commonwealth.
14 § 6004.    Reports by licensees.
15    An operator and establishment shall file a monthly report
16 with the distributor as designated by the department. The
17 distributor shall make the reports available to the department.
18CHAPTER 61
19OFFENSES RELATED TO OPERATION OF
20UNLICENSED SKILL VIDEO GAMES
21 Sec.
22 6101.    Criminal distribution and operation of unlicensed skill
23video game terminals.
24 § 6101.    Criminal distribution and operation of unlicensed skill
25video game terminals.
26    (a)    Penalties.--In addition to any other penalty provided by
27 law, a person commits a misdemeanor of the first degree if the
28 person owns, operates, maintains, places into operation or has a
29 financial interest in an unlicensed skill video game, skill
30 video game system or skill video game software or a business
20250HB2046PN2615  - 28 -
1 that owns, operates, maintains or places into operation or has a
2 financial interest in an unlicensed skill video game, skill
3 video game system or skill video game software:
4(1)   which is offered or made available to persons to
5    play or participate for direct or indirect consideration,
6    including consideration associated with a related product,
7    service or activity; and
8(2)   for which the person playing the unlicensed skill
9    video game system may become eligible for a cash or cash-
10    equivalent prize, whether or not the eligibility for or value
11    of the cash or cash-equivalent prize is determined by or has
12    any relationship to the outcome of or play of the unlicensed
13    skill video game system.
14    (b)    Forfeiture.--An unlicensed skill video game, skill video
15 game system or skill video game software owned, operated
16 maintained or placed into operation in violation of subsection
17 (a) shall be seized and forfeited to the Commonwealth. The
18 forfeiture shall be conducted in accordance with 42 Pa.C.S. §§
19 5803 (relating to asset forfeiture), 5805 (relating to
20 forfeiture procedure), 5806 (relating to motion for return of
21 property), 5807 (relating to restrictions on use), 5807.1
22 (relating to prohibition on adoptive seizures) and 5808
23 (relating to exceptions).
24CHAPTER 62
25OFFENSES RELATED TO ILLEGAL MANUFACTURING,
26DISTRIBUTION OR OPERATION OF SKILL VIDEO GAMES
27 Sec.
28 6201.    Law enforcement.
29 6202.    Criminal distribution of skill video game systems.
30 6203.    Criminal alteration of skill video game software,
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1terminal or related equipment.
2 6204.    Criminal redemption of value to individual under 18 years
3of age.
4 6205.    Criminal use of nonapproved equipment.
5 6206.    Criminal destruction of property.
6 6207.    Additional penalties.
7 6208.    Surrendering illegal skill video games and equipment.
8 § 6201.    Law enforcement.
9    (a)    General criminal enforcement.--Except as provided in
10 subsection (b), the Bureau of Liquor Control Enforcement of the
11 Pennsylvania State Police shall be responsible for enforcement
12 of the criminal provisions of this part.
13    (b)    Counties of the first class.--In addition to the Bureau
14 of Liquor Control Enforcement of the Pennsylvania State Police,
15 a local law enforcement agency may enforce the criminal
16 provisions of this part in a county of the first class.
17    (c)    Definition.--As used in this section, the term "local
18 law enforcement agency" includes the Philadelphia Police
19 Department.
20 § 6202.    Criminal distribution of skill video game systems.
21    In addition to any other penalty provided by law, a person
22 commits a misdemeanor of the first degree if the person
23 illegally sells, leases, licenses, sublicenses or distributes to
24 any person or entity a skill video game system without being
25 properly licensed by the department and contracted with a
26 software provider.
27 § 6203.    Criminal alteration of skill video game software,
28terminal or related equipment.
29    In addition to any other penalty provided by law, a person
30 commits a felony of the third degree if the person
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1 intentionally, knowingly or recklessly alters a skill video game
2 system, skill video game software or skill video game terminal
3 in any manner so that:
4(1)   chance, rather than predominant skill, is the factor
5    affecting the prize outcome of the skill video game on a
6    single-play basis and on the basis of a session of single
7    plays;
8(2)   a player does not have an opportunity on every play
9    to win back more than what was spent to play the skill video
10    game; or
11(3)   a skill video game terminal is capable of issuing
12    currency, coins, a stored-value card or other cash equivalent
13    or other medium of exchange.
14 § 6204.    Criminal redemption of value to individual under 18
15years of age.
16    In addition to any other penalty provided by law, a person
17 commits a summary offense if the person provides value of any
18 kind to an individual under 18 years of age in exchange for an
19 approved skill video game terminal redeemable bearer scrip.
20 § 6205.    Criminal use of nonapproved equipment.
21    (a)    Offense defined.--In addition to any other penalty
22 provided by law, a person commits a felony of the third degree
23 if the person operates a skill video game system or ticket
24 redemption terminal that is not approved in accordance with this
25 part.
26    (b)    Fine.--A person committing an offense under subsection
27 (a) shall be subject to a fine of not more than $25,000 for each
28 terminal affected.
29 § 6206.    Criminal destruction of property.
30    In addition to any other penalty provided by law, a person
20250HB2046PN2615  - 31 -
1 commits a felony of the third degree if the person breaks into,
2 destroys or inflicts damage to, or attempts to break into,
3 destroy or inflict damage to, a skill video game system or
4 ticket redemption terminal, regardless of the amount of damage
5 or the dollar amount taken.
6 § 6207.    Additional penalties.
7    (a)    Civil penalties.--In addition to any other remedy
8 available to the department, the department may assess a civil
9 penalty for any violation of this part, a regulation promulgated
10 under this part or order issued under this part. The following
11 penalties shall apply:
12(1)   The department may assess a civil penalty of not
13    more than $25,000 for each violation and an additional
14    penalty of not more than $1,000 for each day of a continuing
15    violation. In determining the amount of each penalty, the
16    department shall take the following into consideration:
17(i)    The gravity of the violation.
18(ii)    The willfulness of the violation.
19(iii)    Previous violations, if any, by the person
20being assessed.
21(iv)    The economic benefit to the person being
22assessed for failing to comply with the requirements of
23this part, a regulation promulgated under this part or an
24order issued under this part.
25(2)   The department may issue a written warning in lieu
26    of a civil penalty to a person or entity who aids, abets,
27    counsels, induces, procures or causes another person to
28    violate this part, a regulation promulgated under this part
29    or an order issued under this part.
30    (b)    Sanctions.--
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1(1)   In addition to any other penalty authorized by law,
2    the department may impose the following sanctions:
3(i)    The revocation or suspension of the license of a
4person found to be in violation of this part, a
5regulation promulgated under this part or an order issued
6under this part.
7(ii)    The revocation or suspension of the license of
8a person for conduct or activity or the occurrence of an
9event that would have disqualified the person from
10receiving the license.
11(iii)   The ordering of restitution of money or
12property unlawfully obtained or retained by a licensee.
13(2)   A person who aids, abets, counsels, induces,
14    procures or causes another person to violate this part shall
15    be subject to the sanctions provided under paragraph (1).
16    (c)    Cost of action.--The department may assess against a
17 person determined to be in violation of this part the cost of
18 investigation of the violation.
19    (d)    Insignificant violations.--Nothing in this section shall
20 be construed to require the assessment of a civil penalty or the
21 imposition of a sanction for an insignificant violation of this
22 part if the department determines that the public interest will
23 be adequately served under the circumstances by the issuance of
24 a written warning.
25 § 6208.    Surrendering illegal skill video games and equipment.
26    For a period of 90 days from the effective date of this
27 section, a skill video game, skill video game device or other
28 skill video game equipment not licensed by this part or another
29 law of this Commonwealth may, without criminal penalty or fine,
30 be surrendered by a person to the Commonwealth at designated
20250HB2046PN2615  - 33 -
1 drop-off facilities around this Commonwealth as determined by
2 law enforcement and the department. All games, devices and
3 equipment surrendered shall be recycled or destroyed at the
4 direction of law enforcement. Costs for this service shall be
5 covered by fees and taxes generated under this part.
6CHAPTER 63
7MISCELLANEOUS PROVISIONS
8 Sec.
9 6301.   Conflict.
10 6302.   Zoning.
11 6303.   Provisional licenses.
12 6304.   Civil actions.
13 6305.   Notice.
14 § 6301.    Conflict.
15    The sale, manufacture, distribution, possession and use of
16 approved skill video games, skill video game terminals or other
17 related skill video game equipment approved by the department in
18 compliance with this part shall not be deemed to be a violation
19 of Part II (relating to gaming), 18 Pa.C.S. § 5513 (relating to
20 gambling devices, gambling, etc.) or the act of December 19,
21 1988 (P.L.1262, No.156), known as the Local Option Small Games
22 of Chance Act.
23 § 6302.    Zoning.
24    The following shall apply regarding zoning:
25(1)   A distributor, operator and establishment shall only
26    have to meet the same municipal zoning and use requirements
27    as other similar business types that are located in the same
28    zoning district.
29(2)   A municipality may not:
30(i)   prohibit the placement or play of skill games;
20250HB2046PN2615  - 34 -
1or
2(ii)    approve municipal zoning or land use
3requirements that restrict or prohibit placement, use or
4play of an approved skill video game terminal in a zoning
5district that allows any of the following:
6(A)   the sale of beer, wine and spirits;
7(B)   the sale or play of State lottery games at
8commercial establishments; or
9(C)   gaming or wagering conducted under Part II
10(relating to gaming).
11 § 6303.    Provisional licenses.
12    (a)    Provisional licenses.--
13(1)   A distributor that has filed registration
14    information with the department under this section shall be
15    permitted to continue operation.
16(2)   Within 30 days after the effective date of this
17    paragraph, a distributor shall collect and submit to the
18    department the licenses application fee payments and
19    registration information of all licensees. The following
20    shall apply:
21(i)    A submission to the department under this
22paragraph shall include prepayment of the initial license
23fee and the registration information.
24(ii)    A distributor shall promptly submit
25registration information to the department as the
26information pertains to operators and establishments in
27compliance with the guidelines provided by the
28department.
29(iii)    Upon submission of registration information, a
30participant shall be considered to have a provisional
20250HB2046PN2615  - 35 -
1      license pending.
2(iv)    The fee shall be the same as the initial
3      license application fee under section 5304 (relating to
4      application and renewal costs of licenses). A payment
5      under this paragraph shall be considered payment in full
6      for an initial license application fee.
7(v)    A provisional license shall be valid until the
8      department approves and issues the initial license under
9      this part.
10(vi)    A payment shall be forfeited if the department
11      declines to issue the initial license or revokes the
12      provisional license.
13(vii)    If a license is denied or revoked, the
14      licensee shall cease the distribution, operation or use
15      of skill video game systems or related equipment.
16(viii)    An establishment shall not be allowed to
17      operate with a provisional license without having been
18      approved by a distributor who has submitted the
19      establishment's name and information to the department.
20(ix)    A distributor, operator and establishment may
21      buy, use, sell, lease, license or otherwise provide skill
22      video game systems or related equipment as prescribed by
23      the department.
24(x)    A distributor may not sell, lease, license or
25      otherwise provide skill video game systems or ticket
26      redemption terminals to an operator or establishment that
27      does not qualify or hold a provisional license. If the
28      operator or establishment qualifies or holds a
29      provisional license, the distributor shall deal with the
30      operator and may not directly deal with the
20250HB2046PN2615  - 36 -
1establishment.
2(xi)    A distributor or operator may not sell, lease,
3license or otherwise provide a skill video game system or
4ticket redemption terminal to an establishment that does
5not qualify or hold a provisional license.
6(xii)    During the provisional license period, the
7taxes required under Chapter 59 (relating to tax) shall
8apply to provisional licensees.
9(xiii)    Each month, a distributor shall be required
10to submit a report of terminal identification numbers,
11location names, addresses, cash-in, cash-out, tax amounts
12per terminal and tax payments to the department no later
13than the 15th day of the following month.
14(3)   Beginning 30 days after the effective date of this
15    paragraph, a distributor or operator may not apply for a
16    provisional license.
17(4)   An establishment may continue to obtain provisional
18    licenses in accordance with this section.
19(5)   One year after receipt of an initial license, an
20    entity shall apply for a renewal license.
21(6)   An operator shall, for the purpose of the imposition
22    of tax under Article II of the act of March 4, 1971 (P.L.6,
23    No.2), known as the Tax Reform Code of 1971, retain ownership
24    of skill video game systems and ticket redemption terminals.
25    (b)   License fee.--An applicant who applies and pays for a
26 provisional license application shall not be required to pay an
27 additional initial license application fee once final rules and
28 regulations are promulgated by the department. If, for any
29 reason, the applicant is denied, the applicant shall forfeit the
30 payment to the department.
20250HB2046PN2615  - 37 -
1    (c)    Enforcement.--Within 30 days after the effective date of
2 this subsection, a distributor shall coordinate with the
3 department to ensure that only provisional licensees are
4 operating accepted skill video games and approved skill video
5 game terminals. A distributor shall provide all tools for law
6 enforcement to validate approved skill video game software and
7 skill video game terminals in the field utilizing terminal
8 identification numbers.
9 § 6304.    Civil actions.
10    The following apply regarding civil actions:
11(1)   A civil action may be brought by a private party
12    against a person who conducts any of the following activities
13    in this Commonwealth without a valid license to conduct the
14    activities under this part:
15(i)    sells, leases, licenses or otherwise provides
16skill video game software;
17(ii)    sells, leases, licenses, provides or otherwise
18distributes approved skill video game terminals; or
19(iii)    possesses and is permitting play of an
20approved skill video game terminal.
21(2)   A person commits a felony of the third degree if the
22    person performs any of the acts for which a private party may
23    bring a civil action under paragraph (1).
24 § 6305.    Notice.
25    The department shall provide notice to the Legislative
26 Reference Bureau for publication in the next available issue of
27 the Pennsylvania Bulletin of the department's date of
28 commencement of licensing under Chapter 53 (relating to
29 organization).
30    Section 3.  This act shall take effect as follows:
20250HB2046PN2615  - 38 -
1(1)   The following provisions shall take effect
2   immediately:
3The addition of 4 Pa.C.S. Ch. 63.
4This section.
5(2)   The remainder of this act shall take effect in 90
6   days.
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