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The Pennsylvania Supreme Court will begin oral arguments to determine the legality of skill games on Nov. 20.
It has been 16 months since the court accepted a Petition for Allowance of Appeal from the Commonwealth of Pennsylvania. Now, there’s finally a date on the calendar.
Pennsylvania skill games have been a major controversy in the state for years. It poses a significant threat to retail and Pennsylvania online casinos, some contend.
Skill games are technically legal
Pace-O-Matic (POM), a Georgia-based skill games manufacturer, is the main supplier of the machines throughout the state. Spokesperson Mike Barley told PlayPennsylvania on Tuesday morning:
“Pace-O-Matic has successfully defended the legality of our Pennsylvania skill games repeatedly.
“We are confident that the facts and law support our position that Pennsylvania skill games are legal and predominant games of skill.”
The Commonwealth Court of Pennsylvania has already ruled the games as legal. The Supreme Court could reverse that ruling.
The Commonwealth Court ruled that they are games of skill, not chance, according to a 2023 court order:
“In light of our conclusion that the POM machines are not slot machines under the Crimes Code, we need not resolve this further dispute of the parties. Regardless of which interpretation is proper, because the POM machines are not slot machines, the POM machines are not illegal per se.”
Skill games are not regulated and taxed in Pennsylvania, which is much to the dismay of the regulated industry, especially Pennsylvania casinos. POM has been seeking fair regulation for years.
Parx Casino CEO Eric Hausler told PlayPennsylvania in May 2024 that it would prefer an outright ban on skill games, but it would accept a “rigorous regulatory and tax structure.”
“We continue to believe that the games in operation today are essentially slot machines. We still believe that the old adage applies: If it looks like a duck, walks like a duck, and quacks like a duck, it is a duck.”
The highest court in the state is going to address the following two issues, according to a court order:
“Does an electronic slot machine cease to be an illegal ‘gambling device,’ governed predominantly by chance, if the machine’s manufacturers embed into its programming a so-called ‘skill’ element that is almost entirely hidden from view and is almost impossible to complete?
“Should gambling statutes governing ‘slot machines’ be read in pari materia to supply an appropriate definition of the term?”
Pari materia is Latin for “on the same subject matter.”
A ban could jeopardize tax revenue
Skill games do produce a significant amount of revenue for small business owners, who advocated for the games last week in Hershey. The money allows those companies to pay employees overtime and health insurance, they argue.
If the games are ruled illegal, the state could be throwing away roughly $300 million in tax revenue.
Gov. Josh Shapiro, who is in favor of taxing skill games, estimated $317.9 million in taxes for the Keystone State by FY 2028/2029 at a 42% rate. He proposed a 52% tax rate in February.
There are a handful of bills that have been introduced, or will be introduced, that call for regulations that could bring in around $300 million a year in revenue in a few years:
- Gov. Josh Shapiro: Calls for a 52% tax on skill games
- Sen. Gene Yaw: Introduced SB 626, which enacts a 16% tax on the machines
- Sen. Chris Gebhard: Introduced SB 756, which includes a 35% tax on the machines
- Rep. Kerry Benninghoff: Introduced HB 1619, which would place no additional tax on the games
Yaw has plans to introduce another bill that establishes a monthly fee for hosting skill games. He did not mention a tax rate in his memo.
Rep. Robert Leadbeter wrote a memo that would put skill games into Pennsylvania casinos, with revenue benefitting school choice programs.
Despite legality still in question, there are multiple lawmakers that favor regulations over a ban. POM and skill games have won every court case to date, which is why it’s hard to envision a Pennsylvania without the machines.
