1Providing for the licensing and regulation of video gaming;
2prescribing powers and duties of the Pennsylvania State
3Police and the Department of Revenue; establishing the State
4Video Gaming Fund; and prescribing penalties.

5TABLE OF CONTENTS

6Section 1. Short title.

7Section 2. Scope of act.

8Section 3. Definitions.

9Section 4. Video gaming.

10Section 5. Licensing of manufacturers, operators and service
11technicians.

12Section 6. Licensed establishment license.

13Section 7. Limitations on licensed establishments.

14Section 8. Central communications system.

15Section 9. Video gaming machine prototype.

16Section 10. Fees.

17Section 11. Unlawful use by minors.

18Section 12. Inducements prohibited.

19Section 13. Multiple types of licenses prohibited.

1Section 14. Illegal activities.

2Section 15. Distribution of net profits.

3Section 16. State Video Gaming Fund.

4Section 17. Preemption of local taxes and license fees.

5Section 18. Exemption from State gaming laws.

6Section 19. Exemption from Federal regulation.

7Section 20. Effective date.

8The General Assembly of the Commonwealth of Pennsylvania
9hereby enacts as follows:

10Section 1. Short title.

11This act shall be known and may be cited as the Video Gaming
12Act.

13Section 2. Scope of act.

14This act allows for the licensing and regulation of video
15gaming in this Commonwealth.

16Section 3. Definitions.

17The following words and phrases when used in this act shall
18have the meanings given to them in this section unless the
19context clearly indicates otherwise:

20"Coin-operated amusement machine." A machine that requires
21the insertion of a coin, currency or tokens to play or activate
22a game, the outcome of which is primarily determined by the
23skill of the player. The term does not include a video lottery
24terminal.

25"Department." The Department of Revenue of the Commonwealth.

26"Fund." The State Video Gaming Fund established by this act.

27"Gaming machine." A device or machine that has the outcome
28of play primarily determined by chance. The term includes an
29antique slot machine under 18 Pa.C.S. § 5513(c) (relating to
30gambling devices, gambling, etc.) when used for profit. The term

1shall not include any of the following:

2(1) A coin-operated amusement machine.

3(2) A video lottery terminal that has all of its seals
4or identification plates.

5(3) Slot machines as defined under 4 Pa.C.S. § 1103
6(relating to definitions).

7(4) A game of chance under the act of December 19, 1988
8(P.L.1262, No.156), known as the Local Option Small Games of
9Chance Act.

10(5) Lottery terminals used under the act of August 26,
111971 (P.L.351, No.91), known as the State Lottery Law.

12"Licensed establishment." A restaurant, bar, tavern, hotel
13or club that has a valid liquor or malt or brewed beverage
14license under Article IV of the act of April 12, 1951 (P.L.90,
15No.21), known as the Liquor Code.

16"Manufacturer." An individual, partnership, association or
17corporation that:

18(1) Is licensed by the Department of Revenue.

19(2) Manufactures or assembles video gaming machines.

20"Net profits." All money put into a video gaming machine
21minus the cash awards paid out to players.

22"Operator." An individual, partnership, association or
23corporation licensed by the Department of Revenue to buy, sell,
24own, maintain, service or distribute video gaming machines for
25placement in licensed establishments. The term does not include
26a manufacturer.

27"Secretary." The Secretary of Revenue.

28"Service technician." An individual holding a service
29technician's license issued by the Department of Revenue
30allowing the individual to service, maintain and repair video

1gaming machines.

2"State Lottery." The lottery established and operated under
3the act of August 26, 1971 (P.L.351, No.91), known as the State
4Lottery Law.

5"Video gaming machine." A device or machine that upon
6insertion of a coin or currency will play or simulate the play
7of a video poker, keno, blackjack or any other game authorized
8by the Department of Revenue that utilizes a video display and
9microprocessors and in which by the skill of the player or by
10chance the player may receive free games or credits that may be
11redeemed for cash.

12The term shall not include any of the following:

13(1) Small games of chance as authorized under the act of
14December 19, 1988 (P.L.1262, No.156), known as the Local
15Option Small Games of Chance Act.

16(2) Lottery games of the Pennsylvania State Lottery as
17authorized under the act of August 26, 1971 (P.L.351, No.91),
18known as the State Lottery Law.

19(3) Bingo as authorized under the act of July 10, 1981
20(P.L.214, No.67), known as the Bingo Law.

21(4) Slot machines or table games as authorized under 4
22Pa.C.S. (relating to amusements).

23Section 4. Video gaming.

24The department shall regulate and adopt standards for video
25gaming activities and provide for video gaming at licensed
26establishments as authorized under this act. With the exception
27of tickets indicating credits won, which are redeemable for
28cash, no machine may directly dispense coins, cash, tokens or
29anything else of value.

30Section 5. Licensing of manufacturers, operators and service

1technicians.

2(a) Eligibility.--A person may apply to the secretary for a
3manufacturer's license, an operator's license or a service
4technician's license under this section on a form prescribed by
5the department.

6(b) Requirements.--The following shall apply to licenses
7issued under this section:

8(1) All licenses shall be issued at the discretion of
9the secretary. The secretary shall make a determination
10within 60 days of receiving all required information from the
11applicant. Nothing in this act is intended or shall be
12construed to create an entitlement to a license by any
13person.

14(2) The secretary may refuse to issue a license under
15this section or may suspend or revoke a license if any of the
16following apply:

17(i) The applicant or the applicant's business is not
18in compliance with all laws of this Commonwealth.

19(ii) The secretary finds that the experience,
20character and general fitness of the applicant and any
21officers, directors, stockholders and partners of the
22applicant and any other person that shares or will share
23in the profits or participates or will participate in the
24management of the affairs of the applicant will not be
25consistent with the public interest.

26(iii) The applicant or an officer, director,
27stockholder or partner of the applicant or any other
28person that shares or will share in the profits or
29participates or will participate in the management of the
30affairs of the applicant has done any of the following:

1(A) Failed to comply with the terms of a license
2issued under this section.

3(B) Violated any rule, regulation or order of
4the department.

5(iv) A person other than the applicant shares or
6will share in the profits of the applicant other than as
7a bona fide owner of a financial interest in the
8applicant or participates or will participate in the
9management of the affairs of the applicant.

10(3) The secretary may issue a temporary license upon the
11terms and conditions as the secretary deems necessary,
12desirable or proper to effectuate the provisions of this act.

13(4) The secretary shall refuse to grant or renew a
14license issued under this section and may revoke a license if
15the applicant is not compliant with the tax laws of this
16Commonwealth.

17(c) Term and application fees.--

18(1) A license issued under this section shall be valid
19for a period of three years from the date of issuance and may
20be renewed for three-year terms upon application of the
21applicant.

22(2) An applicant for a license under this section must
23pay a nonrefundable initial application fee of $500 and a
24nonrefundable renewal application fee of $100.

25(d) Suitability.--In addition to any other specifications
26and qualifications established by the department, the
27Pennsylvania State Police shall conduct a background
28investigation of any applicant under this section, as follows:

29(1) The applicant shall be required to consent to a
30background investigation of the applicant, its owners,

1officers, directors, stockholders and partners and any other
2person that shares or will share in the profits or
3participates or will participate in the management of the
4affairs of the applicant and shall provide any and all
5information requested by the Pennsylvania State Police and
6consent to a release to obtain any and all information
7necessary for the completion of the background investigation,
8which shall include fingerprints.

9(2) The background investigation shall include a
10security, criminal, credit and suitability investigation by
11the Pennsylvania State Police, which shall include records of
12criminal arrests and convictions, no matter where occurring,
13including federal criminal history record information. None
14of the information obtained by the Pennsylvania State Police
15under this subsection shall be disclosed publicly nor be
16subject to disclosure under the act of February 14, 2008
17(P.L.6, No.3), known as the Right-to-Know Law.

18(3) Each application for a license under this section
19must be accompanied by a nonrefundable fee in such amount as
20established by the Pennsylvania State Police for the cost of
21each individual requiring a background investigation. The
22reasonable and necessary costs and expenses incurred in any
23background investigation shall be reimbursed to the
24Pennsylvania State Police by the applicant.

25(4) Upon completion of the background investigation, the
26Pennsylvania State Police shall determine whether the
27experience, character and general fitness of the applicant
28and its owners, officers, directors, stockholders and
29partners, and any other person that shares or will share in
30the profits or participates or will participate in the

1management of the affairs of the applicant, are such that the
2participation of the applicant in the operations of video
3gaming under this act will be consistent with the public
4interest. The Pennsylvania State Police shall notify the
5department of its determination and may share information
6with the department to the extent permitted by Federal and
7State law as determined by the Pennsylvania State Police.

8(5) In determining whether participation by an applicant
9is consistent with the public interest, the Pennsylvania
10State Police's standards shall include whether the applicant
11and its owners, officers, directors, stockholders and
12partners, and any other person that shares or will share in
13the profits or participates or will participate in the
14management of the affairs of the applicant:

15(i) Have been convicted of a crime involving moral
16turpitude.

17(ii) Have been convicted of illegal gambling
18activities, including with respect to lotteries, gambling
19devices, gambling or pool selling under 18 Pa.C.S. §§
205512 (relating to lotteries, etc.), 5513 (relating to
21gambling devices, gambling, etc.) or 5514 (relating to
22pool selling and bookmaking) or the similar laws of
23another state.

24(iii) Have been convicted of any fraud or
25misrepresentation in any context.

26(6) The department may not issue a license to any
27applicant whose participation is deemed by the Pennsylvania
28State Police to be inconsistent with the public interest.
29Determination of suitability by the Pennsylvania State Police
30shall not entitle an applicant to receive a license under

1this act.

2(7) A finding of suitability is a privilege. No
3applicant has a vested or property right in being found
4suitable for licensure under this section. A determination of
5suitability or unsuitability shall not be subject to
6challenge or appeal.

7(8) Upon any change in the owners, officers, directors,
8stockholders and partners of an applicant or any other person
9that shares or will share in the profits or participates or
10will participate in the management of the affairs of an
11applicant, the applicant shall consent to an updated
12background investigation and updated finding of suitability
13by the Pennsylvania State Police under this subsection. The
14department shall revoke the license issued to an applicant in
15the case of a finding that the applicant is no longer
16suitable under this paragraph.

17(e) Employees.--An employee of an applicant who has or will
18have access to video gaming machines must receive and maintain a
19finding of suitability based on a background check from the
20Pennsylvania State Police consistent with the provisions of
21subsection (d). No employee of an applicant shall have access to
22video gaming machines until such time as the employee has
23received a finding of suitability from the Pennsylvania State
24Police.

25Section 6. Licensed establishment license.

26The department shall issue a license to any licensed
27establishment upon showing that its liquor or retail dispenser
28license is valid and is in good standing with the Pennsylvania
29Liquor Control Board. The annual fee for a licensed
30establishment shall be $500 per video gaming machine.

1Section 7. Limitations on licensed establishments.

2(a) General rule.--Licensed establishments shall be subject
3to the following limitations:

4(1) No licensed establishment may have more than ten
5video gaming machines.

6(2) No applicant may hold more than one type of license
7authorized by this act.

8(3) Each licensee must pay its license fee. Payment of
9the fee by a person, partnership or corporation other than
10the licensee is prohibited.

11(b) Unlawful acts.--

12(1) No licensed establishment shall permit:

13(i) An individual under 21 years of age to operate
14or attempt to operate a video gaming machine.

15(ii) An individual under 21 years of age to redeem
16or attempt to redeem credits or tickets won or to receive
17or attempt to receive cash or prizes from a video gaming
18machine.

19(iii) A visibly intoxicated person to play a video
20gaming machine.

21(iv) An individual to tamper with the connection of
22a video gaming machine to the central computer.

23(2) In addition to any other penalties provided by law,
24a person who violates paragraph (1)(i), (ii) or (iii) commits
25a summary offense.

26(c) Seizure, forfeiture and destruction of gaming
27machines.--Gaming machines shall be considered to be per se
28illegal. Gaming machines and the proceeds therefrom may be
29seized upon view as illegal contraband by agents of the
30department and any other law enforcement agency. The owner of a

1gaming machine shall have no right to compensation for the
2seizure and destruction of a gaming machine or the proceeds of a
3gaming machine.

4(d) Penalties.--

5(1) In the case of a gaming machine seized from a
6licensed establishment, for a first violation, a penalty of
7at least $1,000 and not more than $5,000 and a suspension of
8the licensed establishment owner's liquor license for not
9less than seven consecutive days and, for each subsequent
10violation, a penalty of $15,000 and a suspension of the
11liquor license for not less than 14 consecutive days.

12(2) In the case of a gaming machine seized from a place
13of business other than a licensed establishment, for a first
14violation, a penalty of at least $1,000 and not more than
15$5,000 against the owner of the business from which the
16gaming machine was seized and, for each subsequent violation,
17a penalty of $15,000.

18Section 8. Central computer system.

19The department shall utilize the central computer system
20utilized by the State Lottery. All licensed video gaming
21machines must be linked to the central computer system at the
22State Lottery.

23Section 9. Video gaming machine prototype.

24(a) General rule.--The department shall develop a prototype
25video gaming machine that includes hardware and software
26specifications. The specifications shall include the following
27provisions:

28(1) All video gaming machines shall interact with the
29central computer system.

30(2) Irremovable identification plates shall appear on

1the exterior of the video gaming machine containing the name
2of the manufacturer and the serial and model number of the
3video gaming machine.

4(3) Rules of play shall be displayed on the video gaming
5machine face or screen as promulgated by regulation of the
6department.

7(4) A video gaming machine may not directly dispense
8coins, cash, tokens or any other article of exchange or value
9except for tickets. The tickets shall be dispensed by
10pressing the ticket-dispensing button on the machine at the
11end of one's turn or play. The ticket shall indicate the
12total amount of credits and the cash award and the player
13must turn in this ticket to the appropriate person at the
14licensed establishment to receive the cash award. The cost of
15the credit shall be $.25 and the number of credits played per
16game shall not exceed ten.

17(5) No cash award for any individual game may exceed
18$1,000.

19(6) All video gaming machines shall be designed and
20manufactured with total accountability to include gross
21proceeds, net profits, winning percentages and any other
22information the department requires.

23(7) A video gaming machine shall pay out a minimum of
2485% of the amount wagered.

25(8) All video gaming machines shall contain a prominent
26sign on the front of the machine with the following
27statement:

28If you or someone you know has a gambling problem, help is
29available. Call (Toll-free telephone number provided by the
30State).

1(b) Agreement with Pennsylvania Gaming Control Board.--The
2department may enter into an agreement with the Pennsylvania
3Gaming Control Board to develop and verify specifications for
4video gaming machines.

5Section 10. Fees.

6(a) Operator license fee.--The annual fee for an operator
7license shall be $25,000 for the first 50 video gaming machines
8and an additional $500 per video gaming machine license in
9excess of 50. An operator license permits the operator to sell
10video gaming machines to another licensed operator.

11(b) Manufacturer license fee.--The annual fee for a
12manufacturer license shall be $10,000.

13(c) Service technician license fee.--The annual fee for a
14service technician license shall be $100.

15(d) Deposit of fees.--All license fees shall be deposited
16into the Fund.

17Section 11. Unlawful use by minors.

18(a) Prohibition.--

19(1) No individual under 21 years of age may use or play
20a video gaming machine.

21(2) An individual who violates this subsection commits a
22summary offense.

23(b) Licensees.--

24(1) A licensed establishment may not, regardless of
25knowledge or intent, permit an individual under 21 years of
26age to play or use a video gaming machine.

27(2) A licensed establishment that violates this
28subsection commits a misdemeanor of the second degree.

29Section 12. Inducements prohibited.

30(a) General rule.--No video gaming operator may offer or

1give any type of inducement or incentive to a licensed
2establishment to secure a machine placement agreement.

3(b) Definition.--As used in this section, the term
4"inducement" or "incentive" means consideration from a licensed
5machine vendor to a licensed establishment owner as an
6enticement to solicit or maintain the licensed establishment
7owner's business. The term includes cash, gifts, loans and
8prepayment of commissions.

9Section 13. Multiple types of licenses prohibited.

10(a) Manufacturer restriction.--No manufacturer may be
11licensed as an operator or own, manage or control a licensed
12establishment. A manufacturer may be licensed only to sell to
13licensed operators.

14(b) Operator restriction.--

15(1) No licensed operator may:

16(i) be licensed as a manufacturer; or

17(ii) own, manage or control a licensed
18establishment.

19(2) A licensed operator shall be licensed only to
20contract with licensed establishments.

21(3) Nothing in this subsection shall be construed to
22prohibit a licensed operator from selling used equipment to
23another licensed operator.

24(c) Establishment owner restriction.--No owner of a licensed
25establishment may be licensed as a manufacturer or operator. An
26owner of a licensed establishment may only contract with an
27operator or service technician to place and service equipment.

28Section 14. Illegal activities.

29No person may sell, distribute, service, own, operate or
30place on location a video gaming machine unless the person is

1licensed under this act and is in compliance with all
2requirements of this act.

3Section 15. Distribution of net profits.

4Net profits shall be calculated by subtracting cash awards
5from the total consideration played on the machine. The net
6profits from each video gaming machine shall be distributed in
7the following manner:

8(1) Thirty percent to the licensed establishment.

9(2) Thirty percent to the licensed operator.

10(3) Forty percent to the fund.

11Section 16. State Video Gaming Fund.

12(a) Establishment.--The State Video Gaming Fund is
13established in the State Treasury.

14(b) Deposit of fees.--Fees under section 10(d) and the
15portion of net profits under section 15(3) shall be deposited
16into the fund.

17(c) Deductions.--

18(1) The department shall determine costs, expenses or
19payments to be deducted from the fund to the appropriate
20agency necessary to administer the act.

21(2) The deductions made under this subsection shall not
22exceed 10% of the total funds available in the fund.

23(3) The following costs and expenses shall be paid from
24the fund upon appropriation by the General Assembly:

25(i) The costs and expenses to be incurred by the
26department in administering this act based upon a budget
27submitted by the department under subsection (d).

28(ii) The costs and expenses to be incurred by the
29Pennsylvania State Police and the Office of Attorney
30General and not otherwise reimbursable under this act in

1administering, regulating and enforcing this act based
2upon a budget submitted by the department under
3subsection (d).

4(iii) The costs and expenses to be incurred by the
5Pennsylvania Gaming Control Board, if an agreement is
6entered into with the department under section 9(b), in
7carrying out its responsibilities under this act based
8upon a budget submitted by the department under
9subsection (d).

10(d) Itemized budget reporting.--

11(1) The department, the Pennsylvania Gaming Control
12Board, the Pennsylvania State Police and the Office of
13Attorney General shall prepare and annually submit to the
14chairman of the Appropriations Committee of the Senate and
15the chairman of the Appropriations Committee of the House of
16Representatives an itemized budget consisting of amounts to
17be appropriated out of the fund as provided for in subsection
18(a).

19(2) As soon as practicable after receiving copies of the
20itemized budgets submitted under paragraph (1), the
21department shall prepare and submit to the chairman of the
22Appropriations Committee of the Senate and the Appropriations
23Committee of the House of Representatives analyses of and
24make recommendations regarding the itemized budgets.

25(3) After determining the appropriate funding based on
26paragraphs (1) and (2), the funds shall be appropriated by
27the General Assembly to the appropriate department or agency.

28(e) Funding for compulsive gambling programs.--The
29department shall allocate at least $500,000 annually for the
30purpose of treating compulsive gambling in this Commonwealth.

1This allocation shall be appropriated out of the fund as
2provided for in subsection (a).

3(f) Interfund transfers.--Monthly, the State Treasurer shall
4transfer the remaining balance in the fund which is not
5allocated in subsections (c) or (e) to the State Lottery Fund
6established in section 311 under the act of August 26, 1971
7(P.L.351, No.91), known as the State Lottery Law.

8Section 17. Preemption of local taxes and license fees.

9(a) General rule.--Video gaming machines shall be exempt
10from taxes levied under the following:

11(1) The act of August 5, 1932 (Sp.Sess., P.L.45, No.45),
12referred to as the Sterling Act.

13(2) The act of December 31, 1965 (P.L.1257, No.511),
14known as The Local Tax Enabling Act.

15(3) 53 Pa.C.S. Pt. III Subpt. E (relating to home rule
16and optional plan government).

17(4) Any statute that confers taxing authority to a
18political subdivision.

19(b) Exemption and limitation.--

20(1) Video gaming machines are exempt from local
21licensing fees.

22(2) Local licensing fees imposed on all other coin-
23operated amusement machines shall not exceed $150.

24Section 18. Exemption from State gaming laws.

25Video gaming machines authorized under this act and their use
26as authorized under this chapter are exempt from 18 Pa.C.S. §
275513 (relating to gambling devices, gambling, etc.).

28Section 19. Exemption from Federal regulation.

29The General Assembly declares that the Commonwealth is exempt
30from section 2 of the Gambling Devices Transportation Act (64

1Stat. 1134, 15 U.S.C. § 1172 et seq.). Shipments of approved
2video gaming machines into this Commonwealth in compliance with
3sections 3 and 4 of the Gambling Devices Transportation Act (64
4Stat. 1134, 15 U.S.C. §§ 1173 and 1174) shall be deemed legal
5shipments into this Commonwealth.

6Section 20. Effective date.

7This act shall take effect in 60 days.