Gov. Josh Shapiro’s 2025-2026 budget for the state of Pennsylvania includes a proposal to regulate skill games, but disagreements about an appropriate tax rate might derail the effort. The current language sets a 52% tax on skill game revenue, which has received pushback from skill game manufacturers and their supporters in the legislature. On the other hand, a lower rate would be equally unpopular with the state’s casinos and other gambling interests.
The most recent pushback against Shapiro’s move to regulate skill games and levy a 52% tax rate came from Sen. Scott Martin, a Lancaster County Republican. He told Pennsylvania NBC affiliate WGAL:
“You have people who are on totally different parts of the equation on where the tax rates should be.”
Battle over tax rates involves major skill-game stakeholder
Georgia skill-game manufacturer Pace-O-Matic has been vocal about its opposition to Shapiro’s proposed 52% tax rate. Earlier this month, the company told PlayPennsylvnia that it doesn’t like the proposed tax rate because it puts businesses at risk:
“We are disappointed at the high tax rate on the games the governor proposes. The governor’s proposed 52% tax rate will hurt the thousands of Pennsylvania bars, restaurants, fraternal clubs, volunteer fire companies, VFWs, and American Legions that count on the supplemental income from skill games. At that high tax rate, many locations cannot afford to keep the games.”
Senate lawmakers pen memos in support of skill-game regulation
While skill games certainly have their opponents, they have their fair share of supporters in Harrisburg. Several lawmakers have penned memos in support of regulation.
For example, Sen. Gene Yaw and Rep. Danilo Burgos have submitted bills that would regulate skill games and enforce a state tax. Both legislators spoke to how skill games benefit local businesses.
“Skill video games are designed to provide supplemental income to small businesses such as bars, restaurants, fraternal and veterans clubs, and convenience stores,” Yaw wrote in a memo about legislation he proposed in 2023. “Skill video games are important to these establishments for one very unique reason – they must be played in person, on-premises only during the days and hours the business is open.”
Burgos noted in a memo about a bill he proposed that skill games were a revenue lifeline for businesses that were struggling during the COVID-19 pandemic.
“Skill video games, which offer players the potential to win money relative to a person’s ability to master the game, have given businesses new life during and since the pandemic, helping them to weather the economic storm.”
However, both Yaw and Burgos called for a 16% tax on skill-game revenue, a far cry from the 52% that Shapiro has proposed for his 2025/2026 state budget.
Skill game history in Pennsylvania
Skill games have long been a fixture in the Keystone State. They’re found at gas stations and convenience stores. They offer gaming that’s similar to a slot machine, but, unlike slot machines, winning requires a certain level of skill.
The games have been a regulatory focal point because they aren’t subject to the same rules as slot machines. As a result, skill games have drawn the ire of the casino industry, which sees them as competition.
But the casino industry isn’t the only entity opposed to unregulated skill games. This past April, Philadelphia Mayor Cherelle Parker signed legislation that banned skill games in the City of Brotherly Love. However, the Commonwealth Court of Pennsylvania overturned Parker’s law in December.
The court’s decision essentially affirmed the legality of skill games, a move that opened the door for skill-game regulatory bills and the inclusion of skill-game tax revenue in the state’s 2025/2026 proposed budget.
Whether Shapiro’s proposed 52% tax rate will make it through the legislative gauntlet remains to be seen. What is likely, though, is that lawmakers will debate the proper tax rate for skill games in the weeks to come.
