PRINTER'S NO. 785
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 706
Session of
2023
INTRODUCED BY YAW, DUSH, ARGALL, ROTHMAN, PENNYCUICK, LAUGHLIN,
VOGEL, BREWSTER AND CULVER, MAY 26, 2023
REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,
MAY 26, 2023
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
 1 after tax.
2 Section 506. Issuance of license.
3 Section 507. Term of license.
4 Section 508. License renewal.
5 Section 509. Suspension or revocation of license.
6 Chapter 7. Certification Requirements
7 Section 701. Skill video game system testing.
8 Section 702. Bonding.
9 Section 703. Reporting.
10 Chapter 9. Distributors
11 Section 901. Authorization.
12 Section 902. System requirements.
13 Chapter 11. Operators
14 Section 1101. Authorization.
15 Section 1102. Skill video game system placement agreements.
16 Section 1103. Player security.
17 Section 1104. Reporting.
18 Chapter 13. Establishments
19 Section 1301. Authorization.
20 Section 1302. Skill video game placement agreements.
21 Section 1303. Limits on skill video game terminals.
22 Section 1304. Prohibition on miniature casinos and stop and
23 gos.
24 Section 1305. Limitation of access by individuals under 18
25 years of age.
26 Section 1306. Qualifications for establishments.
27 Chapter 15. Players
28 Section 1501. Authorization.
29 Section 1502. Winnings.
30 Chapter 17. Tax
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 1 Section 1701. Tax imposed.
2 Chapter 19. Administration
3 Section 1901. Governing practices and procedures.
4 Section 1902. Law enforcement notification.
5 Section 1903. Temporary regulation.
6 Section 1904. Reports by licensees.
7 Chapter 21. Offenses Related to Operation of Unlicensed Skill
8 Video Games
9 Section 2101. Criminal distribution and operation of unlicensed
10 skill video game terminals.
11 Chapter 23. Offenses Related to Illegal Manufacturing,
12 Distribution or Operation of Skill Video Games
13 Section 2301. Law enforcement.
14 Section 2302. Criminal distribution of skill video game
15 systems.
16 Section 2303. Criminal alteration of skill video game software,
17 terminal or related equipment.
18 Section 2304. Criminal redemption of value to individual under
19 18 years of age.
20 Section 2305. Additional penalties.
21 Section 2306. Surrendering illegal skill video games and
22 equipment.
23 Chapter 25. Miscellaneous Provisions
24 Section 2501. Conflict.
25 Section 2502. Zoning.
26 Section 2503. Provisional licenses.
27 Section 2504. Civil actions.
28 Section 2505. Notice.
29 Section 2506. Effective date.
30 The General Assembly of the Commonwealth of Pennsylvania
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 1 hereby enacts as follows:
2 CHAPTER 1
3 PRELIMINARY PROVISIONS
4 Section 101. Short title.
5 This act shall be known and may be cited as the Skill Video
6 Gaming Act.
7 Section 102. Definitions.
8 The following words and phrases when used in this act shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Applicant." A person which applies for permission to engage
12 in an act or activity that is regulated under the provisions of
13 this act.
14 "Bearer script." A ticket that is a printed receipt from a
15 skill video game system and is redeemable for cash equivalents.
16 "Camera system." A video camera system approved by the
17 department and provided by an operator to an establishment that
18 meets the specifications approved by the department.
19 "Cash." United States currency or coin.
20 "Cash equivalents." Instruments with a value equal to United
21 States currency or coin, including certified checks, cashier's
22 checks, money orders or other representations of value that the
23 department deems a cash equivalent.
24 "Controlling interest." As follows:
25 (1) For a publicly traded entity, the term means the
26 holding of sole voting rights under State law or corporate
27 articles or bylaws that entitle the person to elect or
28 appoint one or more of the members of the board of directors
29 or other governing board or the holding of an ownership or
30 beneficial holding of 5% or more of the securities of the
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 1 publicly traded legal entity, unless the presumption of
2 control or ability to elect is rebutted by clear and
3 convincing evidence.
4 (2) For a privately held corporation, partnership,
5 limited liability company or other form of privately held
6 legal entity, the term means the holding of securities in the
7 legal entity, unless the presumption of control is rebutted
8 by clear and convincing evidence.
9 "Department." The Department of Revenue of the Commonwealth.
10 "Distributor." An entity licensed by the department that
11 sells, leases, offers or provides and distributes skill video
12 game systems to an operator for use or play in this
13 Commonwealth.
14 "Entity." A domestic or foreign:
15 (1) business corporation;
16 (2) nonprofit corporation;
17 (3) general partnership;
18 (4) limited partnership;
19 (5) limited liability company;
20 (6) unincorporated nonprofit association;
21 (7) professional association; or
22 (8) business trust, common law business trust or
23 statutory trust.
24 "Establishment." An entity licensed by the department that
25 permits an operator to place and operate skill video game
26 systems on the establishment's premises under this act.
27 "Gross revenue." The total of cash or cash equivalents
28 received by a skill video game system minus the total of cash or
29 cash equivalents paid out to players as a result of playing a
30 skill video game system. The term does not include counterfeit
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 1 cash or cash taken in a fraudulent act perpetrated against an
2 operator or establishment for which the operator or
3 establishment is not reimbursed.
4 "Independent testing laboratory." A nongovernmental entity
5 engaged in the business of examining skill video game software
6 and capable of providing the certification specified in Chapter
7 7.
8 "Initial license." A license issued by the department to an
9 approved applicant under this act.
10 "Net profits." The gross revenue after applicable taxes are
11 paid to the department.
12 "Operator." An entity licensed by the department to operate
13 a skill video game system by:
14 (1) Purchasing or leasing skill video game systems from
15 a licensed skill video game system distributor.
16 (2) Providing skill video game systems to licensed
17 establishments.
18 (3) Providing onsite collection of skill video game
19 system revenue and skill video game system data reporting as
20 required by this act.
21 "Payout." The payment of cash or cash equivalent to player
22 as a result of playing a skill video game system.
23 "Person." Includes a corporation, partnership, limited
24 liability company, business trust, other association, government
25 entity, other than the Commonwealth, estate, trust, foundation
26 or natural person.
27 "Player." An individual who is at least 18 years of age when
28 the individual plays a skill video game system.
29 "Principal." Any of the following:
30 (1) An officer.
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 1 (2) A director.
2 (3) A person who directly holds a beneficial interest in
3 or ownership of the securities of an applicant or licensee.
4 (4) A person who has a controlling interest in an
5 applicant or licensee or has the ability to elect a majority
6 of the board of directors of a licensee or to otherwise
7 control a licensee, lender or other licensed financial
8 institution of an applicant or licensee, other than a bank or
9 lending institution which makes a loan or holds a mortgage or
10 other lien acquired in the ordinary course of business,
11 underwriter of an applicant or licensee.
12 (5) A person deemed to be a principal by the department.
13 "Program." The program to regulate the distribution, sale,
14 transportation, storage and use of skill video game systems
15 established under Chapter 3.
16 "Provisional license." A license issued under section 2503.
17 "Registration information." The information required on the
18 registration form provided by the department.
19 "Skill video game." A game played on skill video game
20 software that meets the qualifications specified in Chapters 5
21 and 7 and has been licensed by the department as part of a skill
22 video game system.
23 "Skill video game placement agreement." An agreement entered
24 into by a distributor with an operator or an operator with an
25 establishment for the placement, operation, service or
26 maintenance of skill video game terminals.
27 "Skill video game software." A distributor's proprietary
28 software program developed and designed for a skill video game
29 system as approved by the department.
30 "Skill video game system." A terminal that is equipped with
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 1 skill video game software connected to a terminal reporting
2 system.
3 "Terminal identification number." The unique number utilized
4 to identify and verify a licensed skill video game system.
5 "Terminal reporting system." A system provided by the
6 distributor and accessible by the department to which each skill
7 video game system communicates for the purpose of auditing
8 capacity and information retrieval of the details of a financial
9 event that occurs in the operation of a skill video game system,
10 including coin in, coin out, ticket in, ticket out and jackpots.
11 "Ticket redemption terminal." A terminal where a bearer
12 scrip from a skill video game system may be redeemed for cash
13 after a player has validated the player's age by utilizing a
14 state-issued driver's license or identification card. A device
15 used to validate the player's age may only read and verify the
16 age from a State-issued driver's license or identification card
17 and may not collect or retain any additional player information.
18 CHAPTER 3
19 PROGRAM
20 Section 301. Regulation of skill video game systems.
21 (a) Establishment.--A program to regulate the distribution,
22 sale, transportation, storage and use of skill video game
23 systems is established. The program shall be implemented and
24 administered by the department. The department shall:
25 (1) Issue licenses to participating individuals or
26 companies to authorize them to design, program, license,
27 sublicense, manufacture, transport, store and make available
28 to the public a skill video game system within this
29 Commonwealth in accordance with this act and regulations
30 promulgated by the department.
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 1 (2) Establish regulator and enforcement authority over
2 the program.
3 (3) Develop enforcement procedures.
4 (b) General authority and duties of department.--The
5 department shall have general and sole regulatory authority over
6 the sale, distribution and use of a skill video game system as
7 described under this act.
8 (c) Specific authority and duties of department.--The
9 department shall have the specific power and duty to:
10 (1) Collect taxes from a distributor.
11 (2) Require and conduct or cause to be conducted
12 criminal history investigations on applicants and licenses
13 under this act.
14 (3) For purposes of licensing and enforcement and
15 background investigations, receive information otherwise
16 protected by 18 Pa.C.S. Ch. 91 (relating to criminal history
17 record information).
18 (4) Issue, approve, renew, revoke, suspend, condition or
19 deny issuance or renewal of a license or approval provided
20 under this act.
21 (5) Require prospective and existing applicants and
22 licensees to submit to fingerprinting by the Pennsylvania
23 State Police, who shall submit the fingerprints to the
24 Federal Bureau of Investigation or an agency approved by the
25 department for purposes of verifying the identity of the
26 individual and obtaining records of criminal arrest and
27 convictions.
28 (6) Promulgate rules and regulations necessary for the
29 administration and enforcement of this act. Except as
30 provided in section 1903, regulations shall be adopted as
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 1 provided under the act of July 31, 1968 (P.L.769, No.240),
2 referred to as the Commonwealth Documents Law, and the act of
3 June 25, 1982 (P.L.633, No.181), known as the Regulatory
4 Review Act.
5 (7) Require each person that holds a license issued
6 under this act to provide the periodic reports required of
7 licensees under this act.
8 Section 302. Sale, manufacturing, distribution, operation and
9 use of skill video game systems.
10 Notwithstanding any other provision of law to the contrary,
11 the sale, distribution, operation, possession, transportation
12 and use of a skill video game system in compliance with this act
13 are authorized in this Commonwealth. A skill video game system
14 shall not be deemed:
15 (1) A lottery, gambling device, slot machine, device
16 intrinsically connected with gambling or coin-operated
17 amusement device.
18 (2) "Games of chance" as defined under section 103 of
19 the act of December 19, 1988 (P.L.1262, No.156), known as the
20 Local Option Small Games of Chance Act.
21 (3) As conducting another business on a licensed
22 premises under the act of April 12, 1951 (P.L.90, No.21),
23 known as the Liquor Code, or 40 Pa. Code § 3.52 (relating to
24 connection with other business).
25 CHAPTER 5
26 ORGANIZATION
27 Section 501. Licenses.
28 (a) Issuance.--The department shall have the authority to
29 issue licenses under this act.
30 (b) Provisional licenses.--The department shall issue a
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 1 provisional license to operate a skill video game system
2 beginning on the effective date of this subsection to a
3 distributor, operator or establishment that meets the
4 requirements of section 2503.
5 (c) Skill video game system license.--An initial application
6 period shall commence at a date set by the department. An
7 initial license may be utilized on the date the department
8 issues the initial license and shall remain valid for a minimum
9 of one year or until the department establishes a date for the
10 annual renewal of licenses.
11 (d) License criteria.--The granting of a license by the
12 department shall be subject to and dependent upon the
13 applicant's criminal history record information and other
14 criteria established by department regulation.
15 (e) License renewal.--An application to renew a license
16 shall be filed with the department prior to the expiration of
17 the license.
18 Section 502. Licensing requirements.
19 An entity, including each principal holding a controlling
20 interest, which seeks a distributor, operator and establishment
21 licensee shall be considered an applicant and shall provide the
22 following information for an initial or renewal license:
23 (1) I