The popularity of skill games in Pennsylvania and nationwide has grown in recent years, creating momentum to legalize and regulate the industry. Despite that momentum, PA skill games legislation will likely have to wait for at least another year.
Two events have occurred since July 1, the start of Fiscal Year 2025, that point to that outcome:
- The state removed all language referencing the legalization of skill games from its FY 2024/2025 budget.
- Reports surfaced that negotiations will “probably” have to wait.
Gov. Shapiro supports PA skill games
Pennsylvania skill games have been a highly contested topic lately. The games operate in small businesses, many of which also offer lottery draw games, Keno and other goods.
They are similar to slot machines but contain a skill element that separates them from the games you’d find at a casino.
But unlike skill games, the games on a casino floor exist within a highly regulated and taxed industry. Slot machine operators are taxed 54% of their profits. Skill game operators, on the other hand, contribute none of their revenue to the state.
Governor Josh Shapiro supports regulating skill games, though. He proposed legislation during his FY budget address that would regulate the industry and tax revenue at 42%.
Shapiro estimated a legal, regulated PA skill games industry would generate $150 million in additional state taxes in FY 2025. That number would climb above $300 million starting in FY 2026.
However, the proposal looks like it will have to wait another year. PlayPennsylvania.com reported that, even with Shapiro’s efforts, all language referencing the legalization of skill games was removed from the FY 2025 budget at the start of the Fiscal Year.
A recent report from Erie News Now added that Senate Republicans are claiming “the policy is probably off the table for budget negotiations.”
Differing opinions on skill games in Pennsylvania
In Pennsylvania, the issue of skill games has split citizens into three camps:
- Those who want to ban skill games
- Those who want the state to regulate and tax skill games
- Those who think legislators should keep the law the way it is
Those in favor of banning skill games cite safety and underage gambling concerns from skill games in neighborhoods with easy access to the games.
Philadelphia headlines this camp. In April, Mayor Cherelle Parker signed a bill banning skill games at city gas stations and convenience stores after the City Council unanimously voted to support the bill.
Gov. Shapiro’s case for regulating and taxing skill games centers around making them safer and bringing the state a significant new source of tax revenue.
Lastly, those who favor maintaining the status quo cite a December 2023 Commonwealth Court ruling that skill games were legal statewide. They also argue that skill games are available at small businesses throughout Pennsylvania, including restaurants and convenience stores. Unlike casino operators, many of which are worth millions or billions of dollars, these small businesses rely on the additional revenue stream from skill game machines. A 42% tax on skill game revenue or an outright ban would cut into small businesses’ bottom lines.
Pending PA Supreme Court decision will determine future of skill games
Georgia-based skill game manufacturer Pace-O-Matic (POM), whose machines operate in many Philadelphia businesses, appealed the Philadelphia ruling. The city’s Common Pleas Court rejected its appeal at the end of June.
POM also filed a lawsuit against the City of Philadelphia in March over its pending ban, claiming the ban is unenforceable and that only the state should decide such legalities.
The Pennsylvania Supreme Court accepted a petition from Attorney General Michelle Henry to review last December’s Commonwealth Court ruling saying skill games were legal.
As such, the Supreme Court’s decision will become the law of the land. Regardless of which side it takes, its decision will set a definitive precedent moving forward.
Photo by Matt Rourke / AP
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