Economist Frank Gamrat Says Skill Games ‘May Threaten’ PA Gambling Industry

Written By Corey Sharp on April 1, 2024
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Frank Gamrat, PhD., Executive Director of the Allegheny Institute for Public Policy, believes that Pennsylvania skill games “may threaten” the gaming industry, he wrote in a brief published last week.

Opposing skill games isn’t uncommon. Several lawmakers and entities are against skill games because of a lack of consumer protection and the business it takes away from land-based and PA online casinos.

Yet, a select few are attempting to tax and regulate skill games, including Gov. Josh Shapiro.

Pennsylvania skill games may ‘make a dent’ in casino slot totals says economist

Gamrat published a three-page policy brief detailing Pennsylvania’s state of gambling. The numbers are quite impressive, as the Keystone State produced nearly $5.7 billion in gambling revenue last year, a new record.

Despite the booming industry, Gamrat writes that there are two issues that could haunt Pennsylvania in near future. The first one he discusses is the controversial topic of skill games.

Skill games are not regulated and taxed in Pennsylvania, which means revenue generated from the machines are not included. Should skill games continue to operate in a grey area, Gamrat mentioned it could create some competition. He said:

“There are an estimated 15,000 skill games across the state while there are an estimated 25,000 retail slot machines at sanctioned casinos. Skill games may start to make a dent in the retail slot figures.”

While Gamrat considers skill games as one issue, he also mentions the declining population in Pennsylvania:

“Another thing to consider is the dropping population in Pennsylvania, down an estimated 10,400 since 2020, and in the largest counties, Philadelphia (-16,300) and Allegheny (-7,800). If the population losses continue in Pennsylvania, gaming revenues could start to drop.”

Despite the two issues Gamrat referenced, Pennsylvania casinos recorded $2.5 billion in slot revenue last year, the highest total since the Pennsylvania Gaming Control Board (PGCB) started tracking in 2013.

Those who are pushing for PA skill games regulation

Gamrat did not address the push for skill games regulation and how it could positively or negatively affect the industry. However, it appears more and more likely that skill games are going to be taxed.

Gov. Shapiro provided a tax structure and revenue totals in his proposed FY budget in February.

Pace-O-Matic (POM), a Georgia-based skill games manufacturer, is in favor of regulation, citing a “long-term, stable market.”

Pennsylvania Senator Gene Yaw (R-23) also proposed a bill that would regulate, and also limit, machines.

Yaw explained to PlayPennsylvania last month why Pennsylvania casinos should back his bill:

“One of the issues are the complaints from casinos that there are too many of these games out there. If there’s too many of them, our legislation will actually cut down the number and regulate them. It’s exactly what [casinos] say needs to be done. So the casino industry should be supporting this legislation, not opposing it.”

There are some key differences between Yaw’s bill and what Shapiro has in mind. However, the two sides are in agreement with the games being regulated and taxed.

Latest Pennsylvania skill games update

Despite the Commonwealth Court ruling the games as legal last December, Philadelphia had other ideas.

Philadelphia City Council unanimously approved legislation that would ban skill machines inside convenient stores and gas stations within city limits. As a result, POM Chief of Affairs Mike Barley told PlayPennsylvania last week:

“Because City Council passed the ordinance, we have been forced to take legal action against the city to protect the interests of hardworking Philadelphia business owners. On Thursday, we filed a lawsuit in the Philadelphia Court of Common Pleas. The lawsuit is premised on the multiple ways the ordinance would violate the state and federal constitutions.”

While it appears that skill games regulation has picked up momentum, POM has a fight on its hand with Philadelphia, which banned the machines for safety reasons.

Either way, skill games could become an asset to the gambling industry if given proper oversight.

Photo by PlayPennsylvania
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Corey Sharp

Corey Sharp is the Lead Writer at PlayPennsylvania bringing you comprehensive coverage of sports betting and gambling in Pennsylvania. Corey is a 4-for-4 Philly sports fan and previously worked as a writer and editor for the Philadelphia Inquirer and NBC Sports Philadelphia.

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