Governor Josh Shapiro delivered his FY 2024/2025 budget address at the ornate Capitol Rotunda in Harrisburg earlier today. In his budget, Shapiro announced that he plans to regulate Pennsylvania skill games in July.
The debate regarding skill games has been ongoing for several years. It appears that we have more clarity than ever. Skill games will not get banned, but rather legally implemented as a taxed form of gambling.
There is nothing final as of yet, as this is a proposed budget created by Shapiro. The news is much to the dismay of retail and PA online casinos, which attempted to ban skill games altogether.
Pennsylvania skill games tax featured in Governor’s FY budget
The state is getting closer and closer to finalizing the skill games debate. If it’s up to Gov. Shapiro, the games don’t appear to be operating in a gray area for much longer.
Just two months after the Commonwealth Court ruled the games as legal, Gov. Shapiro included skill machines into the FY 2024/2025 budget with a proposed tax structure. Here is the following explanation regarding skill games regulation, according to the budget:
“A tax of 42 percent on the daily gross gaming revenue from electronic gaming machines that involve an element of skill and are regulated by the Pennsylvania Gaming Control Board (PGCB). This budget assumes the board collects the tax and deposits the money into a restricted account, which is then transferred to the General Fund. Estimates assume an effective date of July 1, 2024, with initial revenue collections realized in 2024-25.”
It could still take months before the budget is finalized. However, there’s more momentum for skill games to be regulated within the state sooner rather than later.
Pennsylvania skill games would be under the jurisdiction of the PGCB, which requested the responsibility of regulating the machines during a policy hearing last August.
What this means for the Pennsylvania gambling market
The inclusion of regulating skill games creates a new vertical of gambling. Skill games are now slated to co-exist with retail and online casinos.
It’s exactly what the doctor ordered for Pace-O-Matic (POM), a Georgia-based skill games manufacturer. After the legal industry broke another annual record, POM’s Chief Public Affairs Officer, Mike Barley, pleaded for skill games regulation and wished for Pennsylvania to stand out of the way. He said last month:
“It’s time for casinos to stop lobbing attacks against skill games. These revenue numbers are the latest proof that skill games have no impact on casinos’ bottom line. … How often do industries come to the legislature asking to be regulated? We want lawmakers to look past this harmful narrative spun by the casinos – that is not backed by facts – and support small businesses by passing commonsense regulation of skill games.”
Should the games be regulated, Shapiro estimates the games will generate more than $150 million in tax revenue next fiscal year. By FY 2025-2026, skill machines could produce more than $313 million in tax earnings.
The retail industry and online casino industries would likely not be affected all that much. The games exist as it is, and retail casinos posted $2.5 billion in 2023 slot revenue, the most since the PGCB started tracking results in 2013. Pennsylvania online casinos also set a yearly record, posting $2.1 billion last year.
The tax dollars raised from skill games are going to benefit Pennsylvanians the most. All verticals of gambling appear to be successful in the Keystone State.