SB 626 — An Act providing for skill video gaming; imposing duties on the Department of Revenue; providing for issuance of licenses for skill video gaming; imposing a tax and criminal and civil penalties; and providing for zoning.

PRINTER'S NO.   643

                    THE GENERAL ASSEMBLY OF PENNSYLVANIA



                       SENATE BILL
                       No. 626
                                                Session of
                                                  2025

     INTRODUCED BY YAW AND VOGEL, APRIL 14, 2025

     REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,
        APRIL 14, 2025


                                     AN ACT
 1   Providing for skill video gaming; imposing duties on the
 2      Department of Revenue; providing for issuance of licenses for
 3      skill video gaming; imposing a tax and criminal and civil
 4      penalties; and providing for zoning.
 5                              TABLE OF CONTENTS
 6   Chapter 1.   Preliminary Provisions
 7   Section 101.   Short title.
 8   Section 102.   Definitions.
 9   Chapter 3.   Program
10   Section 301.   Regulation of skill video game systems.
11   Section 302.   Sale, manufacturing, distribution, operation and
12                use of skill video game systems.
13   Chapter 5.   Organization
14   Section 501.   Licenses.
15   Section 502.   Licensing requirements.
16   Section 503.   Granting licenses.
17   Section 504.   Application and renewal costs of licenses.
18   Section 505.   Allocation of skill video game system revenue
19                after tax.
 1   Section 506.    Issuance of license.
 2   Section 507.    Term of license.
 3   Section 508.    License renewal.
 4   Section 509.    Suspension or revocation of license.
 5   Chapter 7.    Certification Requirements
 6   Section 701.    Skill video game system testing.
 7   Section 702.    Bonding.
 8   Section 703.    Reporting.
 9   Chapter 9.    Distributors
10   Section 901.    Authorization.
11   Section 902.    System requirements.
12   Chapter 11.    Operators
13   Section 1101.    Authorization.
14   Section 1102.    Skill video game system placement agreements.
15   Section 1103.    Player security.
16   Section 1104.    Reporting.
17   Chapter 13.    Establishments
18   Section 1301.    Authorization.
19   Section 1302.    Skill video game placement agreements.
20   Section 1303.    Limits on skill video game terminals.
21   Section 1304.    Prohibition on miniature casinos and stop and
22                 gos.
23   Section 1305.    Limitation of access by individuals under 18
24                 years of age.
25   Section 1306.    Qualifications for establishments.
26   Chapter 15.    Players
27   Section 1501.    Authorization.
28   Section 1502.    Winnings.
29   Chapter 17.    Tax
30   Section 1701.    Tax imposed.

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 1   Chapter 19.    Administration
 2   Section 1901.    Governing practices and procedures.
 3   Section 1902.    Law enforcement notification.
 4   Section 1903.    Temporary regulation.
 5   Section 1904.    Reports by licensees.
 6   Chapter 21.    Offenses Related to Operation of Unlicensed Skill
 7                 Video Games
 8   Section 2101.    Criminal distribution and operation of unlicensed
 9                 skill video game terminals.
10   Chapter 23.    Offenses Related to Illegal Manufacturing,
11                 Distribution or Operation of Skill Video Games
12   Section 2301.    Law enforcement.
13   Section 2302.    Criminal distribution of skill video game
14                 systems.
15   Section 2303.    Criminal alteration of skill video game software,
16                 terminal or related equipment.
17   Section 2304.    Criminal redemption of value to individual under
18                 18 years of age.
19   Section 2305.    Additional penalties.
20   Section 2306.    Surrendering illegal skill video games and
21                 equipment.
22   Chapter 25.    Miscellaneous Provisions
23   Section 2501.    Conflict.
24   Section 2502.    Zoning.
25   Section 2503.    Provisional licenses.
26   Section 2504.    Civil actions.
27   Section 2505.    Notice.
28   Section 2506.    Effective date.
29      The General Assembly of the Commonwealth of Pennsylvania
30   hereby enacts as follows:

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 1                                  CHAPTER 1
 2                           PRELIMINARY PROVISIONS
 3   Section 101.    Short title.
 4      This act shall be known and may be cited as the Skill Video
 5   Gaming Act.
 6   Section 102.    Definitions.
 7      The following words and phrases when used in this act shall
 8   have the meanings given to them in this section unless the
 9   context clearly indicates otherwise:
10      "Applicant."    A person which applies for permission to engage
11   in an act or activity that is regulated under the provisions of
12   this act.
13      "Bearer scrip."     A ticket that is a printed receipt from a
14   skill video game system and is redeemable for cash equivalents.
15      "Camera system."    A video camera system approved by the
16   department and provided by an operator to an establishment that
17   meets the specifications approved by the department.
18      "Cash."     United States currency or coin.
19      "Cash equivalents."    Instruments with a value equal to United
20   States currency or coin, including certified checks, cashier's
21   checks, money orders or other representations of value that the
22   department deems a cash equivalent.
23      "Controlling interest."     As follows:
24          (1)     For a publicly traded entity, the term means the
25      holding of sole voting rights under State law or corporate
26      articles or bylaws that entitle the person to elect or
27      appoint one or more of the members of the board of directors
28      or other governing board or the holding of an ownership or
29      beneficial holding of 5% or more of the securities of the
30      publicly traded legal entity, unless the presumption of

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 1      control or ability to elect is rebutted by clear and
 2      convincing evidence.
 3          (2)     For a privately held corporation, partnership,
 4      limited liability company or other form of privately held
 5      legal entity, the term means the holding of securities in the
 6      legal entity, unless the presumption of control is rebutted
 7      by clear and convincing evidence.
 8      "Department."    The Department of Revenue of the Commonwealth.
 9      "Distributor."    An entity licensed by the department that
10   sells, leases, offers or provides and distributes skill video
11   game systems to an operator for use or play in this
12   Commonwealth.
13      "Entity."    A domestic or foreign:
14          (1)     business corporation;
15          (2)     nonprofit corporation;
16          (3)     general partnership;
17          (4)     limited partnership;
18          (5)     limited liability company;
19          (6)     unincorporated nonprofit association;
20          (7)     professional association; or
21          (8)     business trust, common law business trust or
22      statutory trust.
23      "Establishment."    An entity licensed by the department that
24   permits an operator to place and operate skill video game
25   systems on the establishment's premises under this act.
26      "Gross revenue."    The total of cash or cash equivalents
27   received by a skill video game system minus the total of cash or
28   cash equivalents paid out to players as a result of playing a
29   skill video game system. The term does not include counterfeit
30   cash or cash taken in a fraudulent act perpetrated against an

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 1   operator or establishment for which the operator or
 2   establishment is not reimbursed.
 3        "Independent testing laboratory."    A nongovernmental entity
 4   engaged in the business of examining skill video game software
 5   and capable of providing the certification specified in Chapter
 6   7.
 7        "Initial license."    A license issued by the department to an
 8   approved applicant under this act.
 9        "Net profits."    The gross revenue after applicable taxes are
10   paid to the department.
11        "Operator."    An entity licensed by the department to operate
12   a skill video game system by:
13            (1)     Purchasing or leasing skill video game systems from
14        a licensed skill video game system distributor.
15            (2)     Providing skill video game systems to licensed
16        establishments.
17            (3)     Providing onsite collection of skill video game
18        system revenue and skill video game system data reporting as
19        required by this act.
20        "Payout."    The payment of cash or cash equivalent to player
21   as a result of playing a skill video game system.
22        "Person."    Includes a corporation, partnership, limited
23   liability company, business trust, other association, government
24   entity, other than the Commonwealth, estate, trust, foundation
25   or natural person.
26        "Player."    An individual who is at least 18 years of age when
27   the individual plays a skill video game system.
28        "Principal."    Any of the following:
29            (1)     An officer.
30            (2)     A director.

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 1          (3)   A person who directly holds a beneficial interest in
 2      or ownership of the securities of an applicant or licensee.
 3          (4)   A person who has a controlling interest in an
 4      applicant or licensee or has the ability to elect a majority
 5      of the board of directors of a licensee or to otherwise
 6      control a licensee, lender or other licensed financial
 7      institution of an applicant or licensee, other than a bank or
 8      lending institution which makes a loan or holds a mortgage or
 9      other lien acquired in the ordinary course of business,
10      underwriter of an applicant or licensee.
11          (5)   A person deemed to be a principal by the department.
12      "Program."   The program to regulate the distribution, sale,
13   transportation, storage and use of skill video game systems
14   established under Chapter 3.
15      "Provisional license."   A license issued under section 2503.
16      "Registration information."     The information required on the
17   registration form provided by the department.
18      "Skill video game."   A game played on skill video game
19   software that meets the qualifications specified in Chapters 5
20   and 7 and has been licensed by the department as part of a skill
21   video game system.
22      "Skill video game placement agreement."     An agreement entered
23   into by a distributor with an operator or an operator with an
24   establishment for the placement, operation, service or
25   maintenance of skill video game terminals.
26      "Skill video game software."     A distributor's proprietary
27   software program developed and designed for a skill video game
28   system as approved by the department.
29      "Skill video game system."    A terminal that is equipped with
30   skill video game software connected to a terminal reporting

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 1   system.
 2      "Terminal identification number."        The unique number utilized
 3   to identify and verify a licensed skill video game system.
 4      "Terminal reporting system."      A system provided by the
 5   distributor and accessible by the department to which each skill
 6   video game system communicates for the purpose of auditing
 7   capacity and information retrieval of the details of a financial
 8   event that occurs in the operation of a skill video game system,
 9   including coin in, coin out, ticket in, ticket out and jackpots.
10      "Ticket redemption terminal."         A terminal where a bearer
11   scrip from a skill video game system may be redeemed for cash
12   after a player has validated the player's age by utilizing a
13   State-issued driver's license or identification card. A device
14   used to validate the player's age may only read and verify the
15   age from a State-issued driver's license or identification card
16   and may not collect or retain any additional player information.
17                                  CHAPTER 3
18                                   PROGRAM
19   Section 301.     Regulation of skill video game systems.
20      (a)    Establishment.--A program to regulate the distribution,
21   sale, transportation, storage and use of skill video game
22   systems is established. The program shall be implemented and
23   administered by the department. The department shall:
24             (1)   Issue licenses to participating individuals or
25      companies to authorize them to design, program, license,
26      sublicense, manufacture, transport, store and make available
27      to the public a skill video game system within this
28      Commonwealth in accordance with this act and regulations
29      promulgated by the department.
30             (2)   Establish regulator and enforcement authority over

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 1      the program.
 2            (3)   Develop enforcement procedures.
 3      (b)   General authority and duties of department.--The
 4   department shall have general and sole regulatory authority over
 5   the sale, distribution and use of a skill video game system as
 6   described under this act.
 7      (c)   Specific authority and duties of department.--The
 8   department shall have the specific power and duty to:
 9            (1)   Collect taxes from a distributor.
10            (2)   Require and conduct or cause to be conducted
11      criminal history investigations on applicants and licenses
12      under this act.
13            (3)   For purposes of licensing and enforcement and
14      background investigations, receive information otherwise
15      protected by 18 Pa.C.S. Ch. 91 (relating to criminal history
16      record information).
17            (4)   Issue, approve, renew, revoke, suspend, condition or
18      deny issuance or renewal of a license or approval provided
19      under this act.
20            (5)   Require prospective and existing applicants and
21      licensees to submit to fingerprinting by the Pennsylvania
22      State Police, who shall submit the fingerprints to the
23      Federal Bureau of Investigation or an agency approved by the
24      department for purposes of verifying the identity of the
25      individual and obtaining records of criminal arrest and
26      convictions.
27            (6)   Promulgate rules and regulations necessary for the
28      administration and enforcement of this act. Except as
29      provided in section 1903, regulations shall be adopted as
30      provided under the act of July 31, 1968 (P.L.769, No.240),

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 1      referred to as the Commonwealth Documents Law, and the act of
 2      June 25, 1982 (P.L.633, No.181), known as the Regulatory
 3      Review Act.
 4            (7)   Require each person that holds a license issued
 5      under this act to provide the periodic reports required of
 6      licensees under this act.
 7   Section 302.     Sale, manufacturing, distribution, operation and
 8                  use of skill video game systems.
 9      The sale, distribution, operation, possession, transportation
10   and use of a skill video game system in compliance with this act
11   are authorized in this Commonwealth. A skill video game system
12   shall not be deemed:
13            (1)   A lottery, gambling device, slot machine, device
14      intrinsically connected with gambling or coin-operated
15      amusement device.
16            (2)   "Games of chance" as defined under section 103 of
17      the act of December 19, 1988 (P.L.1262, No.156), known as the
18      Local Option Small Games of Chance Act.
19            (3)   As conducting another business on a licensed
20      premises under the act of April 12, 1951 (P.L.90, No.21),
21      known as the Liquor Code, or 40 Pa. Code § 3.52 (relating to
22      connection with other business).
23                                  CHAPTER 5
24                                 ORGANIZATION
25   Section 501.     Licenses.
26      (a)   Issuance.--The department shall have the authority to
27   issue licenses under this act.
28      (b)   Provisional licenses.--The department shall issue a
29   provisional license to operate a skill video game system
30   beginning on the effective date of this subsection to a

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 1   distributor, operator or establishment that meets the
 2   requirements of section 2503.
 3      (c)   Skill video game system license.--An initial application
 4   period shall commence at a date set by the department. An
 5   initial license may be utilized on the date the department
 6   issues the initial license and shall remain valid for a minimum
 7   of one year or until the department establishes a date for the
 8   annual renewal of licenses.
 9      (d)   License criteria.--The granting of a license by the
10   department shall be subject to and dependent upon the
11   applicant's criminal history record information and other
12   criteria established by department regulation.
13      (e)   License renewal.--An application to renew a license
14   shall be filed with the department prior to the expiration of
15   the license.
16   Section 502.    Licensing requirements.
17      An entity, including each principal holding a controlling
18   interest, which seeks a distributor, operator and establishment
19   licensee shall be considered an applicant and shall provide the
20   following information for an initial or renewal license:
21            (1)   Identification, including a driver's license or
22      passport.
23            (2)   Naturalization papers or resident alien
24      identification, if applicable.
25            (3)   Resident information for the previous five years.
26            (4)   Employment information for the previous five years,
27      including dates employed and the name and address of the
28      employers so that a criminal history and credit check can be
29      completed.
30            (5)   An individual questionnaire provided by the

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 1      department for each principal who lives outside of this
 2      Commonwealth.
 3            (6)   Proof that the applicant has not had a felony
 4      conviction within the last five years.
 5            (7)   Proof that the applicant has never been convicted of
 6      a gambling-related felony.
 7            (8)   Proof that the applicant has timely filed and
 8      satisfied all Federal, State and local taxes.
 9   Section 503.    Granting licenses.
10      (a)     Process.--The department may grant, deny or revoke a
11   license under this act.
12      (b)     Determination.--In making a decision under subsection
13   (a), the department shall determine whether the applicant is
14   able to comply with all applicable laws of this Commonwealth and
15   regulations relating to the activities in which the applicant
16   intends to engage under this act.
17      (c)     Privilege.--The issuance or renewal of a license shall
18   be a revocable privilege.
19      (d)     Multiple licenses.--An entity holding a license may only
20   hold one type of license and may not hold another type of
21   license.
22      (e)     Appeals.--If the department denies an application, the
23   applicant shall have 30 days from the date of the department's
24   mailing of the denial to the applicant to file an appeal of the
25   denial. The appeal shall be filed with the Secretary of Revenue.
26   The appeal of a decision by the Secretary of Revenue shall be
27   filed with Commonwealth Court.
28      (f)     Prior operation.--Prior operation of a skill game shall
29   not be a basis for denying a license.
30   Section 504.    Application and renewal costs of licenses.

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 1      (a)   Payment.--The fee for an initial or renewal license
 2   application shall be payable to the department when the
 3   application or renewal is submitted.
 4      (b)   Initial license and costs.--An initial license
 5   application fee shall be nonrefundable to an applicant. Initial
 6   license application fees shall be as follows:
 7            (1)   A skill video game system distributor initial
 8      application fee, $1,000,000.
 9            (2)   A skill video game system operator initial license
10      application fee, $25,000.
11            (3)   A skill video game system establishment initial
12      license application fee, $250.
13      (c)   Renewal license and costs.--A renewal license
14   application fee shall be nonrefundable. Renewal license
15   application fees shall be as follows:
16            (1)   A skill video game system distributor annual renewal
17      license application fee, $100,000.
18            (2)   A skill video game system operator annual renewal
19      license application fee, $5,000.
20            (3)   A skill video game system establishment annual
21      renewal license application fee, $250.
22   Section 505.     Allocation of skill video game system revenue
23                  after tax.
24      The allocation of percentage of net profits earned shall be
25   as follows:
26            (1)   An establishment shall receive 40%.
27            (2)   An operator shall receive 40%.
28            (3)   A distributor shall receive 20%.
29   Section 506.     Issuance of license.
30      A license issued by the department to a participant shall be

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 1   effective only for the specified period and shall include
 2   information required by the department.
 3   Section 507.   Term of license.
 4      (a)   Provisional license.--A provisional license shall be
 5   valid until the issuance or denial of an initial license.
 6      (b)   Initial license.--An initial license shall remain valid
 7   for one calendar year.
 8      (c)   Renewal license.--A renewal license shall be valid for
 9   one calendar year from the date of issuance.
10   Section 508.   License renewal.
11      (a)   Renewal.--An application for a renewal license shall
12   include information required by the department.
13      (b)   Approval.--The department shall renew a license using
14   the same process for granting licenses under this chapter.
15      (c)   Nonrenewal decision.--A decision to deny or not renew a
16   license by the department shall include a notice specifying in
17   detail how the applicant has not satisfied the department's
18   requirements for renewal. The department may request additional
19   information from the applicant before deciding to grant or deny
20   an application for renewal. If the department denies a renewal,
21   the applicant may appeal the decision to Commonwealth Court.
22   Section 509.   Suspension or revocation of license.
23      The department may suspend or revoke a license if the
24   participant violates any provision of this act or regulation of
25   the department.
26                               CHAPTER 7
27                       CERTIFICATION REQUIREMENTS
28   Section 701.   Skill video game system testing.
29      (a)   Certification.--Prior to obtaining an initial license
30   under Chapter 5, a skill video game system must be certified

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 1   under subsection (b) in accordance with the following:
 2          (1)   Before the distributor sells, leases, licenses,
 3      provides or distributes game software not qualified or
 4      approved by the program as skill video game software, the
 5      distributor shall supply to the department an engineering
 6      report and opinion in complete forensic detail by an
 7      independent testing laboratory, with experience in testing
 8      skill video game software and approved by the department, and
 9      based on an examination of a prototype or production sample
10      of the skill video game software and approved skill video
11      game system to be certified. The testing required under this
12      paragraph shall be based only on skill video game software,
13      and the technical specifications shall be agreed to be
14      independent from slot machine technical specifications
15      engineered for casino or video game terminal play. The
16      engineering report and opinion shall:
17                (i)    Be restricted in scope to technical detail and
18          shall not be otherwise relied upon as a legal opinion
19          regarding whether skill or chance are predominant in
20          winner determination or as an interpretation of law.
21                (ii)    Be signed by a principal or executive officer
22          of an independent testing laboratory, which signature
23          shall constitute the laboratory's certification regarding
24          its contents.
25                (iii)    State, at a minimum, a written certification
26          to the department that the skill video game software is
27          one in which:
28                       (A)   Skill of the player rather than an element
29                of chance is the predominant factor affecting the
30                skill video game's outcome.

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 1                  (B)   The skill video game requires the prize
 2             outcome for the single play and over a session of
 3             gameplay to be such that without the player
 4             exercising skill during the main phases of gameplay,
 5             it would be impossible to win the prize offered.
 6                  (C)   There must be no hard-coded minimum or
 7             maximum payout percentage for a skill video game.
 8                  (D)   There must not be any reflexive,
 9             compensating algorithm that makes the skill video
10             game harder when it detects a highly skilled player
11             or when the skill video game's payout percentage goes
12             above 100%.
13                  (E)   An average player can learn to score and win
14             effectively on a skill video game.
15                  (F)   A player is informed of the criteria used in
16             selecting winners and rules are available for viewing
17             at any time other than in the middle of a skill video
18             game in play.
19                  (G)   Skill video games must be programmed to keep
20             true and accurate gameplay records, with a minimum of
21             10 game recall, and the number of payouts from the
22             skill video game, with a minimum of 10 voucher
23             recall. Accounting meters must be at least eight
24             digits in length, with six digits to the left of the
25             decimal.
26                  (H)   The skill video game is programmed so that a
27             maximum price to play is $5 and the maximum winnings
28             per individual game are $5,000.
29                  (I)   The skill video game allows for the display
30             of the software version, as well as lists of hardware

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 1                  components of the approved terminal, in an easily
 2                  identifiable and accurate manner.
 3            (2)   A skill video game system shall remain certified and
 4      valid unless material changes are made to the skill video
 5      game software or equipment as deemed necessary by the
 6      department.
 7            (3)   A distributor applicant applying for an initial
 8      license shall provide the distributor applicant's skill video
 9      game software in a manner consistent with rules and
10      regulations promulgated by the department.
11            (4)   Certification of the requirements under this
12      subsection shall be made to the department by the
13      distributor, who shall represent that the certification is
14      being made subject to the penalties of 18 Pa.C.S. § 4904
15      (relating to unsworn falsification to authorities).
16      (b)   Certification.--An independent testing laboratory
17   approved by the department shall provide a certification as
18   provided under this act.
19      (c)   Field verification of certified skill video game
20   software.--The software distributor's skill video game software
21   shall allow for random field verification by an agent or
22   designee of the department. The distributor shall supply the
23   department with the unique signature of the application software
24   being tested and instructions allowing an agent or designee of
25   the department to field verify a production copy of the skill
26   video game system.
27      (d)   Trademark, copyright, trade secret and confidential
28   proprietary material.--Nothing in this act is intended to
29   violate, compromise or facilitate infringement of or make public
30   material created, owned or possessed by a distributor.

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 1   Intellectual property or other material or information provided
 2   by a software distributor to the department for inspection shall
 3   be deemed as trademarked, copyrighted, a trade secret or
 4   confidential proprietary material, and the material shall not be
 5   subject to public access or inspection.
 6   Section 702.    Bonding.
 7      (a)   Eligibility.--To be eligible for a provisional or
 8   initial license, a distributor shall execute a $1,000,000 bond
 9   within 30 days of issuance of the license. The bond shall
10   specifically protect the department's tax collection under this
11   act, not the software provider.
12      (b)   Surety.--Each bond shall have as a surety a duly
13   authorized surety company or two sufficient individual sureties
14   approved by the department.
15      (c)   Condition.--The bond is conditioned for the faithful
16   performance of the duties of the software provider to pay
17   applicable taxes, fees and fines required by this act.
18      (d)   Suspension or revocation.--Unless the bond is filed with
19   the department within the 30-day time period under subsection
20   (a), the department may suspend the initial license. Failure to
21   maintain an acceptable bond shall be grounds for license
22   revocation.
23   Section 703.    Reporting.
24      (a)   Monthly report.--Each distributor shall utilize a
25   terminal reporting system for the distributor's skill video game
26   system. A distributor shall submit a monthly report to the
27   department providing the following for the prior month:
28            (1)   The complete tracking of all revenue derived through
29      the operation of all skill video game systems in operation
30      within all establishments.

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 1            (2)   The reporting of gameplay statistics, including cash
 2      in, cash out and numbers of games played.
 3            (3)   The physical locations of all skill video game
 4      systems in possession of a distributor, operator or
 5      establishment in this Commonwealth.
 6      (b)   Annual report.--By July 30 of each year, for the prior
 7   year's business, each distributor shall report to the department
 8   the following:
 9            (1)   The total number of skill video game systems that
10      operators purchased from a distributor, including all
11      terminal identification numbers.
12            (2)   The number and type of skill video game systems that
13      operators have located within each establishment.
14            (3)   The total number of skill video game systems and the
15      terminal identification numbers that each entity has in
16      inventory as of June 30.
17            (4)   The total number of skill video game systems in
18      operation by county.
19            (5)   The total number of skill video game systems in
20      operation by municipality.
21                                 CHAPTER 9
22                                DISTRIBUTORS
23   Section 901.    Authorization.
24      A distributor, once licensed by the department, shall be
25   authorized to distribute terminals and associated devices for
26   skill video gaming that comply with the requirements under
27   Chapter 5.
28   Section 902.    System requirements.
29      (a)   Currency.--A skill video game system shall be equipped
30   with the ability to accept currency and shall distribute

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 1   winnings by ejection of a bearer scrip, card or other means
 2   approved by the department redeemable only for cash at the
 3   establishment where played. Winnings from players shall be
 4   redeemed at a ticket redemption terminal or by an attendant
 5   within the establishment where the bearer scrip or card was
 6   created.
 7      (b)     Internet.--A skill video game system shall be connected
 8   to the Internet for purposes of security, authentication and
 9   redemption or data collection and control.
10      (c)     External ports.--Except as may be approved by the
11   department for the field verification of skill video game
12   software signatures, a skill video game system shall not have an
13   external data port or disk drive outside of a locked area within
14   the terminal.
15      (d)     Rules of play.--The skill video game system shall
16   prominently display the rules of play either on the game screen
17   or on the terminal.
18      (e)     Placard.--Each skill video game system shall bear a
19   placard in a prominent location and in a prominent color stating
20   as follows:
21            This game is licensed by the Pennsylvania Department of
22            Revenue and is NOT operated or maintained by the
23            Pennsylvania State Lottery. Players must be 18 years of
24            age or older to play.
25      (f)     Age verification.--The skill video game system shall be
26   operated only if the establishment has validated the player's
27   age by utilizing a State-issued driver's license or
28   identification card. A device used to validate the player's age
29   may only read and verify the age from a State-issued driver's
30   license or identification card and may not collect or retain any

20250SB0626PN0643                     - 20 -
 1   additional player information.
 2      (g)   Other markings.--Each skill video game system shall
 3   display the name of the distributor of the terminal and contact
 4   information for the operator, including a mailing address and
 5   telephone number.
 6                                 CHAPTER 11
 7                                 OPERATORS
 8   Section 1101.    Authorization.
 9      An operator shall do the following:
10            (1)   Purchase, lease, license, sublicense or provide
11      approved skill video game systems from a distributor.
12            (2)   Distribute skill video game systems to
13      establishments under terms approved by the department.
14            (3)   Collect and report skill video game system income
15      and reconcile with a terminal reporting system.
16            (4)   Accept returns of skill video game systems from
17      establishments per regulations promulgated by the department.
18   Section 1102.    Skill video game system placement agreements.
19      (a)   Contract.--Within 60 days of receiving an initial
20   license, an operator shall enter into a contract with a licensed
21   distributor. In addition to any additional minimum standards for
22   the contract that the department requires, a skill video game
23   placement agreement shall:
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.

20250SB0626PN0643                      - 21 -
 1   Section 1103.    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   Section 1104.    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   terminal identification number in an operator's inventory and
12   within each establishment for the prior month.
13                                   CHAPTER 13
14                                 ESTABLISHMENTS
15   Section 1301.    Authorization.
16      An establishment shall do the following:
17            (1)   Utilize skill video game systems from operators for
18      entertainment and play by the public.
19            (2)   Return unused, damaged or inoperable skill video
20      game systems to the operator.
21   Section 1302.    Skill video game placement agreements.
22      (a)   Contract.--Within 60 days of receiving an initial
23   license, an establishment shall enter into a contract with an
24   operator. In addition to any minimum standards for contract that
25   the department requires, a skill video game placement agreement
26   shall:
27            (1)   Include a provision rendering the skill video game
28      placement agreement invalid if either party's license or
29      application is denied, revoked, not renewed, withdrawn or
30      surrendered.

20250SB0626PN0643                      - 22 -
 1            (2)   Provide the establishment with 40% of the net
 2      profits.
 3      (b)   Term.--A skill video game placement agreement may be
 4   active for a minimum term of five years but shall not exceed 10
 5   years.
 6   Section 1303.     Limits on skill video game terminals.
 7      (a)   Terminals.--An establishment may have a maximum of two
 8   skill video game terminals per 500 square feet of public floor
 9   common space available to the patrons of the establishment.
10      (b)   Number of terminals.--
11            (1)   An establishment may not exceed five approved skill
12      video game terminals.
13            (2)   An establishment that is owned by an organization
14      under 26 U.S.C. § 501(c) (relating to exemption from tax on
15      corporations, certain trusts, etc.) may not exceed 10
16      approved skill video game terminals.
17      (c)   Placement.--Skill video game terminals shall be placed
18   in public floor space visible to patrons and employees.
19   Section 1304.     Prohibition on miniature casinos and stop and
20                  gos.
21      (a)   General rule.--An operator is prohibited from installing
22   skill video game systems in an establishment where the sole or
23   primary source of annual net revenue is derived from skill video
24   game systems.
25      (b)   Exemption.--Subsection (a) shall not apply to an
26   organization established under 26 U.S.C. § 501(c) (relating to
27   exemption from tax on corporations, certain trusts, etc.).
28   Section 1305.     Limitation of access by individuals under 18
29                  years of age.
30      The department shall promulgate regulations, including

20250SB0626PN0643                    - 23 -
 1   employee training for detecting fake identification cards, for
 2   licensed establishments to ensure the play of skill video game
 3   systems by individuals under 18 years of age. Under no
 4   circumstances shall an establishment redeem a skill video game
 5   system redeemable bearer scrip, card or other means approved by
 6   the department from an individual under 18 years of age.
 7   Establishment licensees are required to post problem gaming
 8   signage and make problem gaming informational materials, the
 9   terms of which shall be established by the department, available
10   at the establishment.
11   Section 1306.    Qualifications for establishments.
12      (a)   Play.--Skill video game systems shall be played only at:
13            (1)   an establishment licensed by the Pennsylvania Liquor
14      Control Board;
15            (2)   an organization established under 26 U.S.C. § 501(c)
16      (relating to exemption from tax on corporations, certain
17      trusts, etc.); or
18            (3)   a business that sells age-restricted products such
19      as tobacco or is licensed by the Pennsylvania Lottery.
20      (b)   License required.--An establishment under subsection (a)
21   must be licensed by the Commonwealth to operate a skill video
22   game system.
23      (c)   Subdivision prohibited.--An establishment shall consist
24   of one physical building and may not be subdivided for the
25   purposes of obtaining additional licenses to operate skill video
26   game systems.
27                                 CHAPTER 15
28                                  PLAYERS
29   Section 1501.    Authorization.
30      It shall be lawful for a user to play and receive winnings

20250SB0626PN0643                      - 24 -
 1   from a skill video game system dispensed in the form of a bearer
 2   scrip, card or other means approved by the department which is
 3   redeemable only at the establishment for cash. Cash shall not be
 4   dispensed directly by the terminal.
 5   Section 1502.    Winnings.
 6      A player's net winnings from the play of a licensed skill
 7   video game terminal shall be classified as compensation under
 8   section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
 9   the Tax Reform Code of 1971.
10                                   CHAPTER 17
11                                      TAX
12   Section 1701.    Tax imposed.
13      (a)   Tax.--A tax of 16% of all gross profits generated by
14   skill video game system play shall be paid to the Commonwealth
15   by the distributor. The distributor shall submit to the
16   department by the 20th of each month:
17            (1)   A report of gross profits under this subsection for
18      the prior month.
19            (2)   Any tax payments due under this subsection for the
20      prior month.
21      (b)   Deposit.--Revenue received from the tax imposed under
22   this section shall be distributed by the department and shall be
23   proportioned monthly under the following formula:
24            (1)   Fifty percent of the revenue shall be deposited into
25      the Clean Streams Fund.
26            (2)   Twenty-two percent of the revenue shall be
27      distributed to individual counties proportionally based upon
28      the gross profits derived from the operation of all skill
29      video game systems within that county.
30            (3)   Twenty-two percent of the revenue shall be

20250SB0626PN0643                     - 25 -
 1      distributed to individual municipalities based on the gross
 2      profits derived from the operation of skill video game
 3      systems within that municipality.
 4            (4)   Six percent of the revenue shall be distributed to
 5      the Bureau of Liquor Control Enforcement for the purpose of
 6      enforcing this act.
 7      (c)   Exemption.--Revenue generated from approved skill video
 8   game terminals being played by the public and game credit
 9   licenses to supply skill video game systems shall not be
10   subjected to the tax imposed under section 202 of the act of
11   March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
12   1971.
13      (d)   Information.--The distributor, operator and
14   establishment shall provide to the department any information
15   required by the department for the department's assessment and
16   review of taxes under this section.
17      (e)   Prohibition on local fees and taxes.--No additional
18   taxes or fees, including amusement taxes, may be imposed on the
19   placement of a skill video game system or the revenue generated
20   by a terminal unless specifically authorized under this act.
21                                 CHAPTER 19
22                               ADMINISTRATION
23   Section 1901.    Governing practices and procedures.
24      The provisions of 2 Pa.C.S. (relating to administrative law
25   and procedure) shall apply to all actions of the department
26   under this act constituting an adjudication as defined in 2
27   Pa.C.S. § 101 (relating to definitions).
28   Section 1902.    Law enforcement notification.
29      The department may notify law enforcement of information
30   relating to any violation or suspected violation of this act.

20250SB0626PN0643                    - 26 -
 1   Section 1903.   Temporary regulation.
 2      (a)   Promulgation.--In order to facilitate the prompt
 3   implementation of this act, the department shall promulgate
 4   temporary regulations as outlined in section 2503. The
 5   department may promulgate temporary regulations not subject to
 6   sections 201, 202, 203, 204 and 205 of the act of July 31, 1968
 7   (P.L.769, No.240), referred to as the Commonwealth Documents
 8   Law, sections 204(b) and 301(10) of the act of October 15, 1980
 9   (P.L.950, No.164), known as the Commonwealth Attorneys Act, and
10   the act of June 25, 1982 (P.L.633, No.181), known as the
11   Regulatory Review Act.
12      (b)   Expiration.--The department's authority to adopt
13   temporary regulations under subsection (a) shall expire two
14   years after the effective date of this subsection. Regulations
15   adopted after this period shall be promulgated as provided by
16   law.
17      (c)   Publication.--The department shall transmit notice of
18   the temporary regulations to the Legislative Reference Bureau
19   for publication in the next available issue of the Pennsylvania
20   Bulletin no later than six months after the effective date of
21   this subsection.
22   Section 1904.   Reports by licensees.
23      An operator and establishment shall file a monthly report
24   with the distributor as designated by the department. The
25   distributor shall make the reports available to the department.
26                                 CHAPTER 21
27                      OFFENSES RELATED TO OPERATION OF
28                        UNLICENSED SKILL VIDEO GAMES
29   Section 2101.   Criminal distribution and operation of unlicensed
30               skill video game terminals.

20250SB0626PN0643                   - 27 -
 1      (a)   Penalties.--In addition to any other penalty provided by
 2   law, a person commits a misdemeanor of the first degree if the
 3   person owns, operates, maintains, places into operation or has a
 4   financial interest in an unlicensed skill video game, skill
 5   video game system or skill video game software or a business
 6   that owns, operates, maintains or places into operation or has a
 7   financial interest in an unlicensed skill video game, skill
 8   video game system or skill video game software:
 9            (1)   which is offered or made available to persons to
10      play or participate for direct or indirect consideration,
11      including consideration associated with a related product,
12      service or activity; and
13            (2)   for which the person playing the unlicensed skill
14      video game system may become eligible for a cash or cash-
15      equivalent prize, whether or not the eligibility for or value
16      of the cash or cash-equivalent prize is determined by or has
17      any relationship to the outcome of or play of the unlicensed
18      skill video game system.
19      (b)   Forfeiture.--An unlicensed skill video game, skill video
20   game system or skill video game software owned, operated
21   maintained or placed into operation in violation of subsection
22   (a) shall be seized and forfeited to the Commonwealth. The
23   forfeiture shall be conducted in accordance with 42 Pa.C.S. §§
24   5803 (relating to asset forfeiture), 5805 (relating to
25   forfeiture procedure), 5806 (relating to motion for return of
26   property), 5807 (relating to restrictions on use), 5807.1
27   (relating to prohibition on adoptive seizures) and 5808
28   (relating to exceptions).
29                                  CHAPTER 23
30                  OFFENSES RELATED TO ILLEGAL MANUFACTURING,

20250SB0626PN0643                    - 28 -
 1              DISTRIBUTION OR OPERATION OF SKILL VIDEO GAMES
 2   Section 2301.     Law enforcement.
 3      (a)   General criminal enforcement.--Except as provided in
 4   subsection (b), the Bureau of Liquor Control Enforcement of the
 5   Pennsylvania State Police shall be responsible for enforcement
 6   of the criminal provisions of this act.
 7      (b)   Counties of the first class.--In addition to the Bureau
 8   of Liquor Control Enforcement of the Pennsylvania State Police,
 9   a local law enforcement agency may enforce the criminal
10   provisions of this act in a county of the first class.
11      (c)   Definition.--As used in this section, the term "local
12   law enforcement agency" includes the Philadelphia Police
13   Department.
14   Section 2302.     Criminal distribution of skill video game
15                  systems.
16      In addition to any other penalty provided by law, a person
17   commits a misdemeanor of the first degree if the person
18   illegally sells, leases, licenses, sublicenses or distributes to
19   any person or entity a skill video game system without being
20   properly licensed by the department and contracted with a
21   software provider.
22   Section 2303.     Criminal alteration of skill video game software,
23                  terminal or related equipment.
24      In addition to any other penalty provided by law, a person
25   commits a felony of the third degree if the person
26   intentionally, knowingly or recklessly alters a skill video game
27   system, skill video game software or skill video game terminal
28   in any manner so that:
29            (1)   chance, rather than predominant skill, is the factor
30      affecting the prize outcome of the skill video game on a

20250SB0626PN0643                     - 29 -
 1      single-play basis and on the basis of a session of single
 2      plays;
 3            (2)   a player does not have an opportunity on every play
 4      to win back more than what was spent to play the skill video
 5      game; or
 6            (3)   a skill video game terminal is capable of issuing
 7      currency, coins, a stored-value card or other cash equivalent
 8      or other medium of exchange.
 9   Section 2304.        Criminal redemption of value to individual under
10                  18 years of age.
11      In addition to any other penalty provided by law, a person
12   commits a summary offense if the person provides value of any
13   kind to an individual under 18 years of age in exchange for an
14   approved skill video game terminal redeemable bearer scrip.
15   Section 2305.        Additional penalties.
16      (a)   Civil penalties.--In addition to any other remedy
17   available to the department, the department may assess a civil
18   penalty for any violation of this act, a regulation promulgated
19   under this act or order issued under this act. The following
20   penalties shall apply:
21            (1)   The department may assess a civil penalty of not
22      more than $25,000 for each violation and an additional
23      penalty of not more than $1,000 for each day of a continuing
24      violation. In determining the amount of each penalty, the
25      department shall take the following into consideration:
26                  (i)    The gravity of the violation.
27                  (ii)    The willfulness of the violation.
28                  (iii)    Previous violations, if any, by the person
29            being assessed.
30                  (iv)    The economic benefit to the person being

20250SB0626PN0643                       - 30 -
 1            assessed for failing to comply with the requirements of
 2            this act, a regulation promulgated under this act or an
 3            order issued under this act.
 4            (2)    The department may issue a written warning in lieu
 5      of a civil penalty to a person or entity who aids, abets,
 6      counsels, induces, procures or causes another person to
 7      violate this act, a regulation promulgated under this act or
 8      an order issued under this act.
 9      (b)   Sanctions.--
10            (1)    In addition to any other penalty authorized by law,
11      the department may impose the following sanctions:
12                   (i)    The revocation or suspension of the license of a
13            person found to be in violation of this act, a regulation
14            promulgated under this act or an order issued under this
15            act.
16                   (ii)    The revocation or suspension of the license of
17            a person for conduct or activity or the occurrence of an
18            event that would have disqualified the person from
19            receiving the license.
20                   (iii)   The ordering of restitution of money or
21            property unlawfully obtained or retained by a licensee.
22            (2)    A person who aids, abets, counsels, induces,
23      procures or causes another person to violate this act shall
24      be subject to the sanctions provided under paragraph (1).
25      (c)   Cost of action.--The department may assess against a
26   person determined to be in violation of this act the cost of
27   investigation of the violation.
28      (d)   Insignificant violations.--Nothing in this section shall
29   be construed to require the assessment of a civil penalty or the
30   imposition of a sanction for an insignificant violation of this

20250SB0626PN0643                        - 31 -
 1   act if the department determines that the public interest will
 2   be adequately served under the circumstances by the issuance of
 3   a written warning.
 4   Section 2306.   Surrendering illegal skill video games and
 5              equipment.
 6      For a period of 90 days from the effective date of this
 7   section, a skill video game, skill video game device or other
 8   skill video game equipment not licensed by this act or another
 9   law of this Commonwealth may, without criminal penalty or fine,
10   be surrendered by a person to the Commonwealth at designated
11   drop-off facilities around this Commonwealth as determined by
12   law enforcement and the department. All games, devices and
13   equipment surrendered shall be recycled or destroyed at the
14   direction of law enforcement. Costs for this service shall be
15   covered by fees and taxes generated under this act.
16                                CHAPTER 25
17                        MISCELLANEOUS PROVISIONS
18   Section 2501.   Conflict.
19      The sale, manufacture, distribution, possession and use of
20   approved skill video games, skill video game terminals or other
21   related skill video game equipment approved by the department in
22   compliance with this act shall not be deemed to be a violation
23   of 4 Pa.C.S. Pt. II (relating to gaming), 18 Pa.C.S. § 5513
24   (relating to gambling devices, gambling, etc.) or the act of
25   December 19, 1988 (P.L.1262, No.156), known as the Local Option
26   Small Games of Chance Act.
27   Section 2502.   Zoning.
28      A distributor, operator and establishment shall only have to
29   meet the same municipal zoning and use requirements as other
30   similar business types that are located in the same zoning

20250SB0626PN0643                  - 32 -
 1   district. A municipality may not:
 2            (1)   prohibit the placement or play of skill games; or
 3            (2)   approve municipal zoning or land use requirements
 4      that restrict or prohibit placement, use or play of an
 5      approved skill video game terminal in a zoning district that
 6      allows any of the following:
 7                  (i)    the sale of beer, wine and spirits;
 8                  (ii)    the sale or play of State lottery games at
 9            commercial establishments; or
10                  (iii)    gaming or wagering conducted under 4 Pa.C.S.
11            Pt. II (relating to gaming).
12   Section 2503.        Provisional licenses.
13      (a)   Provisional licenses.--
14            (1)   A distributor that has filed registration
15      information with the department under this section shall be
16      permitted to continue operation.
17            (2)   Within 30 days after the effective date of this
18      paragraph, a distributor shall collect and submit to the
19      department the licenses application fee payments and
20      registration information of all licensees. The following
21      shall apply:
22                  (i)    A submission to the department under this
23            paragraph shall include prepayment of the initial license
24            fee and the registration information.
25                  (ii)    A distributor shall promptly submit
26            registration information to the department as the
27            information pertains to operators and establishments in
28            compliance with the guidelines provided by the
29            department.
30                  (iii)    Upon submission of registration information, a

20250SB0626PN0643                       - 33 -
 1        participant shall be considered to have a provisional
 2        license pending.
 3             (iv)    The fee shall be the same as the initial
 4        license application fee under section 504. 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 act.
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.
28             (xi)    A distributor or operator may not sell, lease,
29        license or otherwise provide a skill video game system or
30        ticket redemption terminal to an establishment that does

20250SB0626PN0643                  - 34 -
 1            not qualify or hold a provisional license.
 2                  (xii)    During the provisional license period, the
 3            taxes required under Chapter 17 shall apply to
 4       

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