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PRINTER'S NO. 1251
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
950
Session of
2021
INTRODUCED BY YAW, MENSCH, BREWSTER, GEBHARD AND J. WARD,
DECEMBER 1, 2021
REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,
DECEMBER 1, 2021
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.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Program
Section 301. Regulation of skill video game systems.
Section 302. Sale, manufacturing, distribution, operation and
use of skill video game systems.
Chapter 5. Organization
Section 501. Licenses.
Section 502. Licensing requirements.
Section 503. Granting licenses.
Section 504. Application and renewal costs of licenses.
Section 505. Allocation of skill video game system revenue
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after tax.
Section 506. Issuance of license.
Section 507. Term of license.
Section 508. License renewal.
Section 509. Suspension or revocation of license.
Chapter 7. Certification Requirements
Section 701. Skill video game system testing.
Section 702. Bonding.
Section 703. Reporting.
Chapter 9. Distributors
Section 901. Authorization.
Section 902. System requirements.
Chapter 11. Operators
Section 1101. Authorization.
Section 1102. Skill video game system placement agreements.
Section 1103. Player security.
Section 1104. Reporting.
Chapter 13. Establishments
Section 1301. Authorization.
Section 1302. Skill video game placement agreements.
Section 1303. Limits on skill video game terminals.
Section 1304. Prohibition on miniature casinos and stop and
gos.
Section 1305. Limitation of access by individuals under 18
years of age.
Section 1306. Qualifications for establishments.
Chapter 15. Players
Section 1501. Authorization.
Section 1502. Winnings.
Chapter 17. Tax
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Section 1701. Tax imposed.
Chapter 19. Administration
Section 1901. Governing practices and procedures.
Section 1902. Law enforcement notification.
Section 1903. Temporary regulation.
Section 1904. Reports by licensees.
Chapter 21. Offenses Related to Operation of Illegal Gambling
Devices and Unlicensed Skill Video Games
Section 2101. Criminal distribution and operation of unlicensed
skill video game terminals.
Chapter 23. Offenses Related to Illegal Manufacturing,
Distribution or Operation of Skill Video Games
Section 2301. Law enforcement.
Section 2302. Criminal distribution of skill video game
systems.
Section 2303. Criminal alteration of skill video game software,
terminal or related equipment.
Section 2304. Criminal redemption of value to individual under
18 years of age.
Section 2305. Additional penalties.
Section 2306. Surrendering illegal skill video games and
equipment.
Chapter 25. Miscellaneous Provisions
Section 2501. Conflict.
Section 2502. Zoning.
Section 2503. Provisional licenses.
Section 2504. Civil actions.
Section 2505. Notice.
Section 2506. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
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hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Skill Video
Gaming Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicant." A person which applies for permission to engage
in an act or activity that is regulated under the provisions of
this act.
"Bearer script." A ticket that is a printed receipt from a
skill video game system and is redeemable for cash equivalents.
"Camera system." A video camera system approved by the
department and provided by an operator to an establishment that
meets the specifications approved by the department.
"Cash." United States currency or coin.
"Cash equivalents." Instruments with a value equal to United
States currency or coin, including certified checks, cashier's
checks, money orders or other representations of value that the
department deems a cash equivalent.
"Controlling interest." As follows:
(1) For a publicly traded entity, the term means the
holding of sole voting rights under State law or corporate
articles or bylaws entitle the person to elect or appoint one
or more of the members of the board of directors or other
governing board or the holding of an ownership or beneficial
holding of 5% or more of the securities of the publicly
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traded legal entity, unless the presumption of control or
ability to elect is rebutted by clear and convincing
evidence.
(2) For a privately held corporation, partnership,
limited liability company or other form of privately held
legal entity, the term means the holding of securities in the
legal entity, unless the presumption of control is rebutted
by clear and convincing evidence.
"Department." The Department of Revenue of the Commonwealth.
"Distributor." An entity licensed by the department that
sells, leases, offers or provides and distributes skill video
game systems to an operator for use or play in this
Commonwealth.
"Entity." A domestic or foreign:
(1) business corporation;
(2) nonprofit corporation;
(3) general partnership;
(4) limited partnership;
(5) limited liability company;
(6) unincorporated nonprofit association;
(7) professional association; or
(8) business trust, common law business trust or
statutory trust.
"Establishment." An entity licensed by the department that
permits an operator to place and operate skill video game
systems on the establishment's premises under this act.
"Gross revenue." The total of cash or cash equivalents
received by a skill video game system minus the total of cash or
cash equivalents paid out to players as a result of playing a
skill video game system. The term does not include counterfeit
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cash or cash taken in a fraudulent act perpetrated against an
operator for which the operator is not reimbursed.
"Independent testing laboratory." A nongovernmental entity
engaged in the business of examining skill video game software
and capable of providing the certification specified in Chapter
7.
"Initial license." A license issued by the department to an
approved applicant under this act.
"IRC of 1986." The Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 1 et seq.).
"Net profits." The gross revenue after applicable taxes are
paid to the department.
"Operator." An entity licensed by the department to operate
a skill video game system by:
(1) Purchasing or leasing skill video game systems from
a licensed skill video game system distributor.
(2) Providing skill video game systems to licensed
establishments.
(3) Providing onsite collection of skill video game
system revenue and skill video game system data reporting as
required by this act.
"Payout." The payment of cash or cash equivalent to player
as a result of playing a skill video game system.
"Person." Includes a corporation, partnership, limited
liability company, business trust, other association, government
entity, other than the Commonwealth, estate, trust, foundation
or natural person.
"Player." An individual who is at least 18 years of age when
the individual plays a skill video game system.
"Principal." Any of the following:
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(1) An officer.
(2) A director.
(3) A person who directly holds a beneficial interest in
or ownership of the securities of an applicant or licensee.
(4) A person who has a controlling interest in an
applicant or licensee or has the ability to elect a majority
of the board of directors of a licensee or to otherwise
control a licensee, lender or other licensed financial
institution of an applicant or licensee, other than a bank or
lending institution which makes a loan or holds a mortgage or
other lien acquired in the ordinary course of business,
underwriter of an applicant or licensee
(5) A person deemed to be a principal by the department.
"Program." The program to regulate the distribution, sale,
transportation, storage and use of skill video game systems
established under Chapter 3.
"Provisional license." A license issued under section 2503.
"Registration information." The information required on the
registration form provided by the department.
"Skill video game." A game played on skill video game
software that meets the qualifications specified in Chapters 5
and 7 and has been licensed by the department as part of a skill
video game system.
"Skill video game placement agreement." An agreement entered
into by a distributor with an operator or an operator with an
establishment for the placement, operation, service or
maintenance of skill video game terminals.
"Skill video game software." A distributor's proprietary
software program developed and designed for a skill video game
system as approved by the department.
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"Skill video game system." A terminal that is equipped with
skill video game software connected to a terminal reporting
system.
"Terminal identification number." The unique number utilized
to identify and verify a licensed skill video game system.
"Terminal reporting system." A system provided by the
distributor and accessible by the department to which each skill
video game system communicates for the purpose of auditing
capacity and information retrieval of the details of a financial
event that occurs in the operation of a skill video game system,
including coin in, coin out, ticket in, ticket out and jackpots.
"Ticket redemption terminal." A terminal where a bearer
scrip from a skill video game system may be redeemed for cash
after a player has validated the player's age by utilizing a
state-issued driver's license or identification card.
CHAPTER 3
PROGRAM
Section 301. Regulation of skill video game systems.
(a) Establishment.--A program to regulate the distribution,
sale, transportation, storage and use of skill video game
systems is established. The program shall be implemented and
administered by the department. The department shall:
(1) Issue licenses to participating individuals or
companies to authorize them to design, program, license,
sublicense, manufacture, transport, store and make available
to the public a skill video game system within this
Commonwealth in accordance with this act and regulations
promulgated by the department.
(2) Establish regulator and enforcement authority over
the program.
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(3) Develop enforcement procedures.
(b) General authority and duties of department.--The
department shall have general and sole regulatory authority over
the sale, distribution and use of a skill video game system as
described under this act.
(c) Specific authority and duties of department.--The
department shall have the specific power and duty to:
(1) Collect taxes from a distributor.
(2) Require and conduct or cause to be conducted
criminal history investigations on applicants and licenses
under this act.
(3) For purposes of licensing and enforcement and
background investigations, receive information otherwise
protected by 18 Pa.C.S. Ch. 91 (relating to criminal history
record information).
(4) Issue, approve, renew, revoke, suspend, condition or
deny issuance or renewal of a license or approval provided
under this act.
(5) Require prospective and existing applicants and
licenses to submit to fingerprinting by the Pennsylvania
State Police, who shall submit the fingerprints to the
Federal Bureau of Investigation or an agency approved by the
department for purposes of verifying the identity of the
individual and obtaining records of criminal arrest and
convictions.
(6) Promulgate rules and regulations necessary for the
administration and enforcement of this act. Except as
provided in section 1903, regulations shall be adopted as
provided under the act of July 31, 1968 (P.L.769, No.240),
referred to as the Commonwealth Documents Law, and the act of
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June 25, 1982 (P.L.633, No.181), known as the Regulatory
Review Act.
(7) Require each person that holds a license issued
under this act to provide the periodic reports required of
licensees under this act.
Section 302. Sale, manufacturing, distribution, operation and
use of skill video game systems.
Notwithstanding any other provision of law to the contrary,
the sale, distribution, operation, possession, transportation
and use of a skill video game system in compliance with this act
are authorized in this Commonwealth. A skill video game system
shall not be deemed:
(1) A lottery, gambling device, slot machine, device
intrinsically connected with gambling or coin-operated
amusement device.
(2) "Games of chance" as defined under section 103 of
the act of December 19, 1988 (P.L.1262, No.156), known as the
Local Option Small Games of Chance Act.
CHAPTER 5
ORGANIZATION
Section 501. Licenses.
(a) Issuance.--The department shall have the authority to
issue licenses under this act.
(b) Provisional licenses.--The department shall issue a
provisional license to operate a skill video game system
beginning on the effective date of this section to a
distributor, operator or establishment that meets the
requirements of section 2503.
(c) Skill video game system license.--An initial application
period shall commence at a date set by the department. An
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initial license may be utilized on the date the department
issues the initial license and shall remain valid for a minimum
of one year or until the department establishes a date for the
annual renewal of licenses.
(d) License criteria.--The granting of a license by the
department shall be subject to and dependent upon the
applicant's criminal history record information and other
criteria established by department regulation.
(e) License renewal.--An application to renew a license
shall be filed with the department prior to the expiration of
the license.
Section 502. Licensing requirements.
An entity, including each principal holding a controlling
interest, which seeks a distributor, operator and establishment
licensee shall be considered an applicant and shall provide the
following information for an initial or renewal license:
(1) Identification, including a driver's license or
passport.
(2) Naturalization papers or resident alien
identification, if applicable.
(3) Resident information for the previous five years.
(4) Employment information for the previous five years,
including dates employed and the name and address of the
employers so that a criminal history and credit check can be
completed.
(5) An interview for each principal who lives in this
Commonwealth.
(6) An individual questionnaire provided by the
department for each principal who lives outside of this
Commonwealth.
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(7) Proof that the applicant has not had a felony
conviction within the last five years.
(8) Proof that the applicant has never been convicted of
a gambling-related felony.
(9) Proof that the applicant has not committed a crime
of moral turpitude in the last five years.
(10) Proof that the applicant has timely filed and
satisfied all Federal, State and local taxes.
Section 503. Granting licenses.
(a) General rule.--The department may grant, deny or revoke
a license under this act.
(b) Determination.--In making a decision under subsection
(a), the department shall determine whether the applicant is
able to comply with all applicable laws of this Commonwealth and
regulations relating to the activities in which the applicant
intends to engage under this act.
(c) Sale and transferability of license.--A license issued
under this act may be sold and is transferable subject to the
transferee's acceptability and ability to satisfy each
requirement of this act.
(d) Privilege.--The issuance or renewal of a license shall
be a revocable privilege.
(e) Multiple licenses.--A distributor, operator and
establishment may not hold multiple licenses.
(f) Appeals.--If the department denies an application, the
applicant shall have 30 days from the date of the department's
mailing of the denial to the applicant to file an appeal of the
denial. The appeal shall be filed with the Secretary of Revenue.
The appeal of a decision by the Secretary of Revenue shall be
filed with Commonwealth Court.
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Section 504. Application and renewal costs of licenses.
(a) Payment.--The fee for an initial or renewal license
application shall be payable to the department when the
application or renewal is submitted.
(b) Initial license and costs.--An initial license
application fee shall be nonrefundable to an applicant. Initial
license application fees shall be as follows:
(1) A skill video game system distributor initial
application fee, $1,000,000.
(2) A skill video game system operator initial license
application fee, $25,000.
(3) A skill video game system establishment initial
license application fee, $250.
(c) Renewal license and costs.--A renewal license
application fee shall be nonrefundable. Renewal license
application fees shall be as follows:
(1) A skill video game system distributor annual renewal
license application fee, $100,000.
(2) A skill video game system operator annual renewal
license application fee, $5,000.
(3) A skill video game system establishment annual
renewal license application fee, $250.
Section 505. Allocation of skill video game system revenue
after tax.
The allocation of percentage of net profits earned shall be
as follows:
(1) An establishment shall receive 40%.
(2) An operator shall receive 40%.
(3) A distributor shall receive 20%.
Section 506. Issuance of license.
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A license issued by the department to a participant shall be
effective only for the specified period and shall include
information required by the department.
Section 507. Term of license.
(a) Provisional license.--A provisional license shall be
valid until the issuance or denial of an initial license.
(b) Initial license.--An initial license shall remain valid
for one calendar year.
(c) Renewal license.--A renewal license shall be valid for
one calendar year from the date of issuance.
Section 508. License renewal.
(a) Renewal.--An application for a renewal license shall
include information required by the department.
(b) Approval.--The department shall renew a license using
the same process for granting licenses under Chapter 5.
(c) Nonrenewal decision.--A decision to deny or not renew a
license by the department shall include a notice specifying in
detail how the applicant has not satisfied the department's
requirements for renewal. The department may request additional
information from the applicant before deciding to grant or deny
an application for renewal. Within 30 days of the department's
decision to deny renewal, the applicant may request a hearing.
If a hearing is requested, the department shall set a hearing
date within 30 days of the nonrenewal decision.
Section 509. Suspension or revocation of license.
The department may suspend or revoke a license if the
participant violates any provision of this act or regulation of
the department.
CHAPTER 7
CERTIFICATION REQUIREMENTS
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Section 701. Skill video game system testing.
(a) Certification.--Prior to obtaining a license under
Chapter 5, a skill video game system must be certified under
subsection (b). The following shall apply:
(1) Before the distributor sells, leases, licenses,
provides or distributes game software not qualified or
approved by the program as skill video game software, the
distributor shall supply to the department an engineering
report and opinion in complete forensic detail by an
independent testing laboratory approved by the department and
based on an examination of a prototype or production sample
of the skill video game software and approved skill video
game system to be certified. The engineering report and
opinion shall:
(i) Be restricted in scope to technical detail and
shall not be otherwise relied upon as a legal opinion
regarding whether skill or chance are predominant in
winner determination or as an interpretation of law.
(ii) Be signed by a principal or executive officer
of an independent testing laboratory, which signature
shall constitute the laboratory's certification regarding
its contents.
(iii) State, at a minimum, a written certification
to the department that the skill video game software is
one in which:
(A) Skill of the player rather than an element
of chance is the predominant factor affecting the
skill video game's outcome.
(B) The skill video game requires the prize
outcome for the single play and over a session of
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gameplay to be such that without the player
exercising skill during the main phases of gameplay,
it would be impossible to win the prize offered.
(C) There must be no hard-coded minimum or
maximum payout percentage for a skill video game.
(D) There must not be any reflexive,
compensating algorithm that makes the skill video
game harder when it detects a highly skilled player
or when the skill video game's payout percentage goes
above 100%.
(E) An average player can learn to score and win
effectively on a skill video game.
(F) A player is informed of the criteria used in
selecting winners and rules are available for viewing
at any time other than in the middle of a skill video
game in play.
(G) Skill video games must be programmed to keep
true and accurate gameplay records, with a minimum of
ten game recall, and the number of payouts from the
skill video game, with a minimum of 10 voucher
recall. Accounting meters must be at least eight
digits in length, with six digits to the left of the
decimal.
(H) The skill video game is programmed so that a
maximum price to play is $5 and the maximum winnings
per individual game are $5,000.
(I) The skill video game allows for the display
of the software version, as well as lists of hardware
components of the approved terminal, in an easily
identifiable and accurate manner.
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(2) A skill video game system shall remain certified and
valid unless material changes are made to the skill video
game software or equipment as deemed necessary by the
department.
(3) A distributor applicant applying for an initial
license shall provide the distributor applicant's skill video
game software in a manner consistent with rules and
regulations promulgated by the department.
(4) Any change to skill video game software which has
been previously approved by the department shall be submitted
to the department for approval in a manner designated by the
department.
(5) Certification of the requirements under this
subsection shall be made to the department by the
distributor, who shall represent that the certification is
being made subject to the penalties of 18 Pa.C.S. § 4904
(relating to unsworn falsification to authorities).
(b) Certification.--An independent testing laboratory
approved by the department shall provide a certification as
provided under this act.
(c) Field verification of certified skill video game
software.--The software distributor's skill video game software
shall allow for random field verification by an agent or
designee of the department. The distributor shall supply the
department with the unique signature of the application software
being tested and instructions allowing an agent or designee of
the department to field verify a production copy of the skill
video game system.
(d) Trademark, copyright, trade secret and confidential
proprietary material.--Nothing in this act is intended to
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violate, compromise or facilitate infringement of or make public
material created, owned or possessed by a distributor.
Intellectual property or other material or information provided
by a software distributor to the department for inspection shall
be deemed as trademarked, copyrighted, a trade secret or
confidential proprietary material, and the material shall not be
subject to public access or inspection.
Section 702. Bonding.
(a) General rule.--To be eligible for an initial license, a
distributor shall execute a $1,000,000 bond within 30 days of
issuance of the license. The bond shall specifically protect the
department's tax collection under this act, not the software
provider.
(b) Surety.--Each bond shall have as a surety a duly
authorized surety company or two sufficient individual sureties
approved by the department.
(c) Condition.--The bond is conditioned for the faithful
performance of the duties of the software provider to pay
applicable taxes required by this act to the department.
(d) Suspension or revocation.--Unless the bond is filed with
the department within the 30-day time period under subsection
(a), the department may suspend the initial license. Failure to
maintain an acceptable bond shall be grounds for license
revocation.
Section 703. Reporting.
(a) Monthly report.--Each distributor shall utilize a
terminal reporting system for the distributor's skill video game
system. A distributor shall submit a monthly report to the
department providing the following for the prior month:
(1) The complete tracking of all revenue derived through
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the operation of all skill video game systems in operation
within all establishments.
(2) The reporting of gameplay statistics, including cash
in, cash out and numbers of games played.
(3) The physical locations of all skill video game
systems in possession of a distributor, operator or
establishment in this Commonwealth.
(b) Annual report.--By July 30 of each year, for the prior
year's business, each distributor shall report to the department
the following:
(1) The total number of skill video game systems that
operators purchased from a distributor, including all
terminal identification numbers.
(2) The number and type of skill video game systems that
operators have located within each establishment.
(3) The total number of skill video game systems and the
terminal identification numbers that each entity has in
inventory as of June 30.
(4) The total number of skill video game systems in
operation by county.
(5) The total number of skill video game systems in
operation by municipality.
(6) Other information that the department may require.
CHAPTER 9
DISTRIBUTORS
Section 901. Authorization.
A distributor, once licensed by the department, shall be
authorized to distribute terminals and associated devices for
skill video gaming that comply with the requirements under
Chapter 5.
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Section 902. System requirements.
(a) Currency.--A skill video game system shall be equipped
with the ability to accept currency and shall distribute
winnings by ejection of a bearer scrip, card or other means
approved by the department redeemable only for cash at the
establishment where played. Winnings from players may be
redeemed at a redemption terminal within the establishment where
the bearer scrip or card was created.
(b) Internet.--A skill video game system shall be connected
to the Internet for purposes of security, authentication and
redemption or data collection and control.
(c) External ports.--Except as may be approved by the
department for the field verification of skill video game
software signatures, a skill video game system shall not have an
external data port or disk drive outside of a locked area within
the terminal.
(d) Rules of play.--The skill video game system shall
prominently display the rules of play either on the game screen
or on the terminal.
(e) Placard.--Each skill video game system shall bear a
placard in a prominent location and in a prominent color stating
as follows:
This game is licensed by the Pennsylvania Department of
Revenue and is NOT operated or maintained by the Pennsylvania
State Lottery.
(f) Other markings.--Each skill video game system shall
display the name of the distributor of the terminal and contact
information for the operator, including a mailing address and
telephone number.
CHAPTER 11
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OPERATORS
Section 1101. Authorization.
An operator shall do the following:
(1) Purchase, lease, license, sublicense or provide
approved skill video game systems from a distributor.
(2) Distribute skill video game systems to
establishments under terms approved by the department.
(3) Collect and report skill video game system income
and reconcile with a terminal reporting system.
(4) Accept returns of skill video game systems from
establishments per regulations promulgated by the department.
Section 1102. Skill video game system placement agreements.
(a) Contract.--Within 60 days of receiving an initial
license, an operator shall enter into a contract with a licensed
distributor. In addition to any additional minimum standards for
the contract that the department requires, a skill video game
placement agreement shall:
(1) Include a provision rendering the agreement invalid
if either party's license or application is denied, revoked,
not renewed, withdrawn or surrendered.
(2) Provide the operator with 40% of the net profits.
(b) Term.--A skill video game placement agreement may be
active for a minimum term of five years but shall not exceed 10
years.
Section 1103. Player security.
Each establishment shall be provided a camera system from the
operator which shall be pointed directly on skill video game
systems and shall always be active. The camera system shall
record and collect all video footage. The video footage shall be
maintained and stored for the immediately prior 60 days.
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Section 1104. Reporting.
An operator using the terminal reporting system shall submit
a monthly report to the distributor. The distributor shall
provide to the department a monthly report that includes the
following information for the prior month:
(1) The terminal identification number in an operator's
inventory and within each establishment.
(2) Other information as the department may require.
CHAPTER 13
ESTABLISHMENTS
Section 1301. Authorization.
An establishment shall do the following:
(1) Utilize skill video game systems from operators for
entertainment and play by the public.
(2) Return unused, damaged or inoperable skill video
game systems to the operator.
Section 1302. Skill video game placement agreements.
(a) Contract.--Within 60 days of receiving an initial
license, an establishment shall enter into a contract with an
operator. In addition to any minimum standards for contract that
the department requires, a skill video game placement agreement
shall:
(1) Include a provision rendering the skill video game
placement agreement invalid if either party's license or
application is denied, revoked, not renewed, withdrawn or
surrendered.
(2) Provide the establishment with 40% of the net
profits.
(b) Term.--A skill video game placement agreement may be
active for a minimum term of five years but shall not exceed 10
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years.
Section 1303. Limits on skill video game terminals.
(a) Terminals.--An establishment may have a maximum of two
skill video game terminals per 500 square feet of public floor
common space available to the patrons of the establishment.
(b) Number of terminals.--
(1) An establishment may not exceed five approved skill
video game terminals.
(2) An establishment that is owned by an organization
under section 501(c) of the IRC of 1986 may not exceed 10
approved skill video game terminals.
(c) Placement.--Skill video game terminals shall be placed
in public floor space visible to patrons and employees.
Section 1304. Prohibition on miniature casinos and stop and
gos.
(a) General rule.--An operator is prohibited from installing
skill video game systems in an establishment where the sole or
primary source of net revenue is derived from skill video game
systems.
(b) Exemption.--Subsection (a) shall not apply to an
organization established under section 501(c) of the IRC of
1986.
Section 1305. Limitation of access by individuals under 18
years of age.
The department shall promulgate regulations, including
employee training, for licensed establishments to eliminate, as
much as reasonably practicable, the play of skill video game
systems by individuals under 18 years of age. Under no
circumstances shall an establishment redeem a skill video game
system redeemable bearer scrip, card or other means approved by
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the department from an individual under 18 years of age.
Establishment licensees are required to post problem gaming
signage and make problem gaming informational materials, the
terms of which shall be established by the department, available
at the establishment.
Section 1306. Qualifications for establishments.
(a) General rule.--Skill video game systems shall be played
only at:
(1) an establishment licensed by the Pennsylvania Liquor
Control Board;
(2) an organization established under section 501(c) of
the IRC of 1986; or
(3) a business that sells age-restricted products such
as tobacco and alcohol.
(b) License required.--An establishment under subsection (a)
must be licensed by the Commonwealth to operate a skill video
game system.
(c) Subdivision prohibited.--An establishment shall consist
of one physical building and may not be subdivided for the
purposes of obtaining additional licenses to operate skill video
game systems.
CHAPTER 15
PLAYERS
Section 1501. Authorization.
It shall be lawful for a user to play and receive winnings
from a skill video game system dispensed in the form of a bearer
scrip, card or other means approved by the department which is
redeemable only at the establishment for cash. Cash shall not be
dispensed directly by the terminal.
Section 1502. Winnings.
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A player's net winnings from the play of a licensed skill
video game terminal shall be classified as compensation under
section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971.
CHAPTER 17
TAX
Section 1701. Tax imposed.
(a) General rule.--A tax of 16% of all gross profits
generated by skill video game system play shall be paid to the
Commonwealth by the distributor. The distributor shall submit to
the department by the 20th of each month:
(1) A report of gross profits under this subsection for
the prior month.
(2) Any tax payments due under this subsection for the
prior month.
(b) Deposit.--Revenue received from the tax imposed under
this section shall be distributed by the department and shall be
proportioned monthly under the following formula:
(1) Fifty percent of the revenue shall be deposited into
the General Fund.
(2) Twenty-two percent of the revenue shall be
distributed to individual counties proportionally based upon
the gross profits derived from the operation of all skill
video game systems within that county.
(3) Twenty-two percent of the revenue shall be
distributed to individual municipalities based on the gross
profits derived from the operation of skill video game
systems within that municipality.
(4) Six percent of the revenue shall be distributed to
the Bureau of Liquor Control Enforcement for the purpose of
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enforcing this act.
(c) Exemption.--Revenue generated from approved skill video
game terminals being played by the public and game credit
licenses to supply skill video game systems shall not be
subjected to the tax imposed under section 202 of the act of
March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
1971.
(d) Information.--The distributor, operator and
establishment shall provide to the department any information
required by the department for the department's assessment and
review of taxes under this section.
CHAPTER 19
ADMINISTRATION
Section 1901. Governing practices and procedures.
The provisions of 2 Pa.C.S. (relating to administrative law
and procedure) shall apply to all actions of the department
under this act constituting an adjudication as defined in 2
Pa.C.S. § 101 (relating to definitions).
Section 1902. Law enforcement notification.
Notwithstanding any provision of this act or any other law to
the contrary, the department may notify law enforcement of
information relating to any violation or suspected violation of
this act.
Section 1903. Temporary regulation.
(a) Promulgation.--In order to facilitate the prompt
implementation of this act, the department shall promulgate
temporary regulations as outlined in section 2503. The
department may promulgate temporary regulations not subject to
sections 201, 202, 203, 204, and 205 of the act of July 31, 1968
(P.L.769, No.240), referred to as the Commonwealth Documents
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Law, sections 204(b) and 301(10) of the act of October 15, 1980
(P.L.950, No.164), known as the Commonwealth Attorneys Act, and
the act of June 25, 1982 (P.L.633, No.181), known as the
Regulatory Review Act.
(b) Expiration.--The department's authority to adopt
temporary regulations under subsection (a) shall expire two
years after the effective date of this section. Regulations
adopted after this period shall be promulgated as provided by
law.
(c) Publication.--The department shall transmit notice of
the temporary regulations to the Legislative Reference Bureau
for publication in the Pennsylvania Bulletin no later than six
months after the effective date of this section.
Section 1904. Reports by licensees.
An operator and establishment shall file a monthly report
with the distributor as designated by the department. The
distributor shall make the reports available to the department.
CHAPTER 21
OFFENSES RELATED TO OPERATION OF ILLEGAL GAMBLING
DEVICES AND UNLICENSED SKILL VIDEO GAMES
Section 2101. Criminal distribution and operation of unlicensed
skill video game terminals.
In addition to any other penalty provided by law, a person
commits a misdemeanor of the first degree if the person owns,
operates, maintains, places into operation or has a financial
interest in an unlicensed skill video game system or business
that owns, operates, maintains or places into operation or has a
financial interest in an unlicensed skill video game system:
(1) which is offered or made available to persons to
play or participate for direct or indirect consideration,
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including consideration associated with a related product,
service or activity; and
(2) for which the person playing the unlicensed skill
video game system may become eligible for a cash or cash-
equivalent prize, whether or not the eligibility for or value
of the cash or cash-equivalent prize is determined by or has
any relationship to the outcome of or play of the unlicensed
skill video game system.
CHAPTER 23
OFFENSES RELATED TO ILLEGAL MANUFACTURING,
DISTRIBUTION OR OPERATION OF SKILL VIDEO GAMES
Section 2301. Law enforcement.
(a) General criminal enforcement.--Except as provided in
subsection (b), the Bureau of Liquor Control Enforcement of the
Pennsylvania State Police shall be responsible for enforcement
of the criminal provisions of this act.
(b) Counties of the first class.--In addition to the Bureau
of Liquor Control Enforcement of the Pennsylvania State Police,
a local law enforcement agency may enforce the criminal
provisions of this act in a county of the first class.
(c) Definition.--As used in this section, the term "local
law enforcement agency" includes the Philadelphia Police
Department.
Section 2302. Criminal distribution of skill video game
systems.
In addition to any other penalty provided by law, a person
commits a misdemeanor of the first degree if the person
illegally sells, leases, licenses, sublicenses or distributes to
any person or entity a skill video game system without being
properly licensed by the department and contracted with a
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software provider.
Section 2303. Criminal alteration of skill video game software,
terminal or related equipment.
In addition to any other penalty provided by law, a person
commits a felony of the third degree if the person
intentionally, knowingly or recklessly alters a skill video game
system, skill video game software or skill video game terminal
in any manner so that:
(1) chance, rather than skill, is the factor affecting
the prize outcome of the skill video game on a single-play
basis and on the basis of a session of single plays;
(2) a player does not have an opportunity on every play
to win back more than what was spent to play the skill video
game; or
(3) a skill video game terminal is capable of issuing
currency, coins, a stored-value card or other cash equivalent
or other medium of exchange.
Section 2304. Criminal redemption of value to individual under
18 years of age.
In addition to any other penalty provided by law, a person
commits a summary offense if the person provides value of any
kind to an individual under 18 years of age in exchange for an
approved skill video game terminal redeemable bearer scrip.
Section 2305. Additional penalties.
(a) Civil penalties.--In addition to any other remedy
available to the department, the department may assess a civil
penalty for any violation of this act, a regulation promulgated
under this act or order issued under this act. The following
penalties shall apply:
(1) The department may assess a civil penalty of not
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more than $10,000 for each violation and an additional
penalty of not more than $1,000 for each day of a continuing
violation. In determining the amount of each penalty, the
department shall take the following into consideration:
(i) The gravity of the violation.
(ii) The willfulness of the violation.
(iii) Previous violations, if any, by the person
being assessed.
(iv) The economic benefit to the person being
assessed for failing to comply with the requirements of
this act, a regulation promulgated under this act or an
order issued under this act.
(2) The department may issue a written warning in lieu
of a civil penalty to a person or entity who aids, abets,
counsels, induces, procures or causes another person to
violate this act, a regulation promulgated under this act or
an order issued under this act.
(b) Sanctions.--
(1) In addition to any other penalty authorized by law,
the department may impose the following sanctions:
(i) The revocation or suspension of the license of a
person found to be in violation of this act, a regulation
promulgated under this act or an order issued under this
act.
(ii) The revocation or suspension of the license of
a person for conduct or activity or the occurrence of an
event that would have disqualified the person from
receiving the license.
(iii) The ordering of restitution of money or
property unlawfully obtained or retained by a licensee.
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(2) A person who aids, abets, counsels, induces,
procures or causes another person to violate this act shall
be subject to the sanctions provided under paragraph (1).
(c) Cost of action.--The department may assess against a
person determined to be in violation of this act the cost of
investigation of the violation.
(d) Insignificant violations.--Nothing in this section shall
be construed to require the assessment of a civil penalty or the
imposition of a sanction for an insignificant violation of this
act if the department determines that the public interest will
be adequately served under the circumstances by the issuance of
a written warning.
Section 2306. Surrendering illegal skill video games and
equipment.
For a period of 90 days from the effective date of this
section, a skill video game, skill video game device or other
skill video game equipment not licensed by this act or another
law of this Commonwealth may, without criminal penalty or fine,
be surrendered by a person to the Commonwealth at designated
drop-off facilities around this Commonwealth as determined by
law enforcement and the department. All games, devices and
equipment surrendered shall be recycled or destroyed at the
direction of law enforcement. Costs for this service shall be
covered by fees and taxes generated under this act.
CHAPTER 25
MISCELLANEOUS PROVISIONS
Section 2501. Conflict.
The sale, manufacture, distribution, possession and use of
approved skill video games, skill video game terminals or other
related skill video game equipment approved by the department in
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compliance with this act shall not be deemed to be a violation
of 4 Pa.C.S. Pt. II (relating to gaming), 18 Pa.C.S. § 5513
(relating to gambling devices, gambling, etc.) or the act of
December 19, 1988 (P.L.1262, No.156), known as the Local Option
Small Games of Chance Act.
Section 2502. Zoning.
The following shall apply:
(1) A distributor, operator and establishment shall only
have to meet the same municipal zoning and use requirements
as other similar business types that are located in the same
zoning district.
(2) A municipality may not approve municipal zoning or
land use requirements that restrict or prohibit placement,
use or play of an approved skill video game terminal in a
zoning district that allows any of the following:
(i) the sale of beer, wine and spirits;
(ii) the sale or play of State lottery games at
commercial establishments; or
(iii) gaming or wagering conducted under 4 Pa.C.S.
Pt. II (relating to gaming).
Section 2503. Provisional licenses.
(a) Provisional licenses.--
(1) A distributor that has filed registration
information with the department under this section shall be
permitted to continue operation.
(2) Within 30 days after the effective date of this
section, a distributor shall collect and submit to the
department the licenses application fee payments and
registration information of all licensees. The following
shall apply:
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(i) A submission to the department under this
paragraph shall include prepayment of the initial license
fee and the registration information.
(ii) A distributor shall promptly submit
registration information to the department as the
information pertains to operators and establishments in
compliance with the guidelines provided by the
department.
(iii) Upon submission of registration information, a
participant shall be considered to have a provisional
license pending.
(iv) The fee shall be the same as the initial
license application fee under section 504. A payment
under this paragraph shall be considered payment in full
for an initial license application fee.
(v) A provisional license shall be valid until the
department approves and issues the initial license under
this act. Certification of the skill video game software
by an independent software testing laboratory under
Chapter 7 shall be required for approval under this
subparagraph.
(vi) A payment shall be forfeited if the department
declines to issue the initial license or revokes the
provisional license.
(vii) If a license is denied or revoked, the
licensee shall cease the distribution, operation or use
of skill video game systems or related equipment.
(viii) An establishment shall not be allowed to
operate with a provisional license without having been
approved by a distributor who has submitted the
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establishment's name and information to the department.
(ix) A distributor, operator and establishment may
buy, use, sell, lease, license or otherwise provide skill
video game systems or related equipment as prescribed by
the department.
(x) A distributor may not sell, lease, license or
otherwise provide skill video game systems or ticket
redemption terminals to an operator or establishment that
does not qualify or hold a provisional license.
(xi) A distributor or operator may not sell, lease,
license or otherwise provide a skill video game system or
ticket redemption terminal to an establishment that does
not qualify or hold a provisional license.
(xii) During the provisional license period, the
taxes required under Chapter 17 shall apply to
provisional licensees.
(xiii) Each month, a distributor shall be required
to submit a report of terminal identification numbers,
location names, addresses, cash-in, cash-out, tax amounts
per terminal and tax payments to the department no later
than the 15th day of the following month.
(3) Beginning 60 days after the effective date of this
section, a distributor or operator may not apply for a
provisional license.
(4) An establishment may continue to obtain provisional
licenses in accordance with this section.
(5) One year after receipt of an initial license, an
entity shall apply for a renewal license.
(b) License fee.--An applicant who applies and pays for a
provisional license application shall not be required to pay an
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additional initial license application fee once final rules and
regulations are promulgated by the department. If, for any
reason, the applicant is denied, the applicant shall forfeit the
payment to the department.
(c) Enforcement.--Within 30 days after the effective date of
this section, a distributor shall coordinate with the department
to ensure that only provisional licensees are operating accepted
skill video games and approved skill video game terminals. A
distributor shall provide all tools for law enforcement to
validate approved skill video game software and skill video game
terminals in the field utilizing terminal identification
numbers.
Section 2504. Civil actions.
A civil action may be brought by a private party against a
person who conducts any of the following activities in this
Commonwealth without a valid license to conduct the activities
under this act:
(1) sells, leases, licenses or otherwise provides skill
video game software;
(2) sells, leases, licenses, provides or otherwise
distributes approved skill video game terminals; or
(3) possesses and is permitting play of an approved
skill video game terminal.
Section 2505. Notice.
The department shall provide notice to the Legislative
Reference Bureau for publication in the Pennsylvania Bulletin of
the department's date of commencement of licensing under Chapter
3.
Section 2506. Effective date.
This act shall take effect as follows:
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(1) The following provisions shall take effect
immediately:
(i) This section.
(ii) Chapter 25 of this act shall take effect
immediately.
(2) The remainder of this act shall take effect in 90
days.
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