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Tax revenue from Pennsylvania’s regulated casinos, online casinos, and sports betting market help fund programs like property tax relief, local government initiatives, and problem gambling services, according to the Pennsylvania Gaming Control Board.
Now, PA lawmakers are debating whether skill games should become part of that tax structure.
Competing proposals differ sharply on where potential skill games revenue should go and how heavily the machines should be taxed.
Court rules skill games legal
Skill games are slots-like machines commonly found in bars, restaurants, convenience stores, veterans’ organizations and social clubs across the state.
Unlike Pennsylvania’s regulated casinos and online casinos, the machines currently operate without formal state oversight or taxation, despite a 2023 Commonwealth Court ruling that found the games legal.
The debate has gained urgency as lawmakers weigh regulation proposals while skill games continue operating statewide without contributing tax revenue under Pennsylvania’s gambling framework.
Supporters argue Pennsylvania should formally regulate and tax skill games, while casino operators and other critics say the machines should face standards comparable to those imposed on regulated gambling operators.
Pennsylvania’s regulated gambling industry generates billions annually through retail casinos, online gambling, and sports betting, with operators also paying substantial licensing fees and operating under strict compliance requirements.
Different funding priorities
Several lawmakers have introduced competing proposals to regulate Pennsylvania skill games, but the bills differ sharply in where tax revenue would go.
House Bill 2046, introduced by Rep. Danilo Burgos, would direct 50% of tax revenue toward Pennsylvania’s General Fund, while 25% would go toward the Pennsylvania Standardbred Breeders Development Fund, and another 25% would support the Property Tax Relief Fund.
Sen. Gene Yaw’s Senate Bill 626 takes a more local and environmental-focused approach. Under the proposal, 50% of tax revenue would go toward the Clean Streams Fund, while counties and municipalities would each receive 22% based on local skill games activity. Another 6% would support enforcement through the Bureau of Liquor Control Enforcement.
House Bill 2075 follows a structure closer to Yaw’s proposal, directing 50% of revenue toward the General Fund while also allocating portions to local counties and municipalities instead of property tax relief and horse racing programs.
Together, the proposals show lawmakers are debating more than whether Pennsylvania skill games should be regulated. They are also divided on what public purpose the industry should ultimately serve.
Oversight and a new revenue stream
Supporters argue Pennsylvania already has a large skill games market operating without the licensing, testing, and enforcement standards required for regulated gambling operators.
Under Burgos’ proposal, skill games would undergo independent testing to verify that skill is the primary factor in determining outcomes, while operators and distributors would have to acquire state licenses.
In a recent opinion piece, Rep. Joe Hamm argued legalization would “ensure that games are regulated and legal, that communities benefit, and that the taxpayers are protected.”
Hamm also argued skill games help support bars, restaurants, veterans’ organizations, and small businesses that rely on machine revenue to help sustain operations.
Supporters also point to estimates suggesting a regulated market could generate hundreds of millions annually through taxes and machine fees.
Direct competition, no oversight
Pennsylvania casinos remain the most vocal opponents of skill games legalization.
Casino operators argue the machines compete directly with regulated slot machines while avoiding comparable taxes, licensing costs, and oversight requirements imposed on casinos and online gambling operators.
Industry groups have repeatedly pushed lawmakers to impose stricter regulations and higher taxes on skill games if legalization moves forward, arguing the current system creates an uneven competitive landscape.
The debate increasingly centers not just on whether Pennsylvania should regulate skill games, but whether the industry should function more like the state’s existing casino market or as a separate funding stream for local communities.
