HB 2046 — 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
 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
12                   revenue 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:
12                                    PART IV
13                               SKILL 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
26             Games
27      62.     Offenses Related to Illegal Manufacturing, Distribution
28             or Operation of Skill Video Games
29      63.     Miscellaneous Provisions
30                                   CHAPTER 51

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 1                             PRELIMINARY 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.
21                                CHAPTER 52
22                                 PROGRAM
23   Sec.
24   5201.    Regulation of skill video game systems.
25   5202.    Sale, manufacturing, distribution, operation and use of
26                skill 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
16                   skill 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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 1                                   CHAPTER 53
 2                                 ORGANIZATION
 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
17                   tax.
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.
20                                 CHAPTER 54
21                         CERTIFICATION 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
28              of chance is the predominant factor affecting the
29              skill video game's outcome.
30                     (B)   The skill video game requires the prize

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 1              outcome for the single play and over a session of
 2              gameplay to be such that without the player
 3              exercising skill during the main phases of gameplay,
 4              it would be impossible to win the prize offered.
 5                  (C)    There must be no hard-coded minimum or
 6              maximum payout percentage for a skill video game.
 7                  (D)    There must not be any reflexive,
 8              compensating algorithm that makes the skill video
 9              game harder when it detects a highly skilled player
10              or when the skill video game's payout percentage goes
11              above 100%.
12                  (E)    An average player can learn to score and win
13              effectively on a skill video game.
14                  (F)    A player is informed of the criteria used in
15              selecting winners and rules are available for viewing
16              at any time other than in the middle of a skill video
17              game in play.
18                  (G)    Skill video games must be programmed to keep
19              true and accurate gameplay records, with a minimum of
20              100 game recall, and the number of payouts from the
21              skill video game, with a minimum of 10 voucher
22              recall. Accounting meters must be at least eight
23              digits in length, with six digits to the left of the
24              decimal.
25                  (H)    The skill video game is programmed so that a
26              maximum price to play is $5 and the maximum winnings
27              per 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.
17                                   CHAPTER 55
18                                 DISTRIBUTORS
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

20250HB2046PN2615                      - 19 -
 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:
20            This game is licensed by the Pennsylvania Department of
21            Revenue and is NOT operated or maintained by the
22            Pennsylvania State Lottery. Players must be 18 years of
23            age 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.
28                                 CHAPTER 56
29                                 OPERATORS
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.

20250HB2046PN2615                     - 21 -
 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.
15                                   CHAPTER 57
16                                 ESTABLISHMENTS
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
23                   age.
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.

20250HB2046PN2615                     - 22 -
 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
 6                   age.
 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.

20250HB2046PN2615                     - 24 -
 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.
 5                                  CHAPTER 58
 6                                   PLAYERS
 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.
21                                  CHAPTER 59
22                                      TAX
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

20250HB2046PN2615                     - 25 -
 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.
29                                 CHAPTER 60
30                               ADMINISTRATION

20250HB2046PN2615                    - 26 -
 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

20250HB2046PN2615                      - 27 -
 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.
18                                   CHAPTER 61
19                        OFFENSES RELATED TO OPERATION OF
20                          UNLICENSED SKILL VIDEO GAMES
21   Sec.
22   6101.    Criminal distribution and operation of unlicensed skill
23                   video game terminals.
24   § 6101.    Criminal distribution and operation of unlicensed skill
25                   video 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).
24                                  CHAPTER 62
25                  OFFENSES RELATED TO ILLEGAL MANUFACTURING,
26              DISTRIBUTION 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,

20250HB2046PN2615                    - 29 -
 1                 terminal or related equipment.
 2   6204.    Criminal redemption of value to individual under 18 years
 3                 of 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,
28                 terminal 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

20250HB2046PN2615                     - 30 -
 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
15                   years 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
20             being assessed.
21                   (iv)    The economic benefit to the person being
22             assessed for failing to comply with the requirements of
23             this part, a regulation promulgated under this part or an
24             order 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.--

20250HB2046PN2615                        - 32 -
 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
 4             person found to be in violation of this part, a
 5             regulation promulgated under this part or an order issued
 6             under this part.
 7                   (ii)    The revocation or suspension of the license of
 8             a person for conduct or activity or the occurrence of an
 9             event that would have disqualified the person from
10             receiving the license.
11                   (iii)   The ordering of restitution of money or
12             property 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.
 6                                    CHAPTER 63
 7                             MISCELLANEOUS 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 -
 1             or
 2                   (ii)    approve municipal zoning or land use
 3             requirements that restrict or prohibit placement, use or
 4             play of an approved skill video game terminal in a zoning
 5             district 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
 8                   commercial 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 lice

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