Pennsylvania State Police Captain Jeffrey L. Rineer implored a committee of lawmakers to provide “prompt clarity in the law” governing all unlicensed illegal gambling devices in the Commonwealth outside casinos.
Rineer made the plea before the PA Senate Community, Economic & Recreational Development Committee on Monday morning during the second in a series of hearings to address the proliferation of unlicensed, unregulated, and largely untaxed machines in the state.
The first hearing was a week ago, and there should be a third hearing next Monday focused on video gaming terminals, or VGTs.
Sen. John Yudichak, the committee chairman, and an Independent who caucuses with the Republicans, said after the meeting there is either a consensus on overall regulation of all the machines outside casinos within the next two weeks, and then a vote, or the issue will need to wait until fall due to the summer legislative break.
Additionally, Sen. Tommy Tomlinson, a Republican whose district includes Parx Casino, also has legislation drafted aimed only at skills machines.
Long odds on any legislation soon
The odds are long for a quick resolution. The Legislature is focused largely on approving a state budget before recess.
The likely delay will be a disappointment for Rineer and Delaware County District Attorney Jack Stollsteimer.
Delaware County DA calls for clarity too
Stollsteimer has spoken to PlayPennsylvania about illegal gambling machine laws and enforcement.
He emphatically told the committee, “We need you to speak…not a judge in Beaver County.”
Stollsteimer referred to the lack of clear legal guidance and the resulting grey area when one PA district judge in 2014 decided a specific brand, a Pennsylvania Skill machine, was not a gambling device – a game of chance – because he ruled a degree of skill is required to win.
Illegal machines have flooded PA
But a host of copycat machines and other gambling devices have since flooded the state. That clouds what is legal and what’s not.
That point is even acknowledged by the distributor of Pennsylvania Skill devices.
“There are many illegal VGTs masquerading as skill games that are proliferating in the Commonwealth,” the distributor said after the hearing.
Rineer is a leader of the State Police Bureau of Liquor Control Enforcement, which has de facto taken the lead in enforcement actions on the state level since Attorney General Josh Shapiro last June told his personnel to stop investigations and prosecutions until courts or lawmakers provide guidance.
Rineer’s full statement reads:
“We respectfully ask for prompt clarity in the law regarding these types of devices, as this will facilitate compliance by business owners and licensees and provide law enforcement with a more efficient means to prosecute those who continue to violate the law.
“We have and are continuing to prosecute persons and organizations who engage in illegal activities. These prosecutions are lengthy and expensive, but we will continue to investigate and prosecute these crimes.”
Shapiro’s stance left an enforcement void
A distributor of licensed and legal video gaming terminals in the Keystone state recently pointed to Shapiro’s stance when they lost a site to a distributor of unlicensed devices.
Shapiro’s office has remained silent about the charge by the VGT company. Shapiro is a potential nominee by Democrats as a candidate for governor.
Likewise, Shapiro has failed to address a cold-blooded assassination in Hazelton of convenience store clerk Ashokkumar Patel, shot in the head so Jafet Rodriguez could allegedly pocket cash used to pay winners of an illegal gambling machine.
The AG’s lack of leadership on the issue has left county district attorneys – notably John Adams of Berks County and Stollsteimer of Delaware County – to address illegal machines, though sometimes aided by the State Police.
Sen. Amanda Cappelletti, the minority committee chair whose district includes a portion of Delaware County, said after the meeting she asked to have Stollsteimer testify due to previous reporting about his office at PlayPennsylvania.
She added she was “pleasantly surprised” to have been asked for input by Yudichak, the committee chair. The invitation to the DA to testify followed.
Cappelletti was likewise surprised that there now is a general agreement in the committee that something must be done to reign in the devices, though there’s not yet a consensus on how to go about doing that.
Illegal gambling machines placed in lower-income communities
Stollsteimer testified his investigations have found the machines concentrated in the lower-income municipalities in his county. Delaware County has more than 500,000 residents and is southwest of Philadelphia. He alluded to a new bust made last week during testimony.
Illegal machines often sit right alongside Pennsylvania Lottery machines, said the DA.
Of the illegal machines, Stollsteimer said:
“They are completely and utterly stealing money from the lottery.”
Lottery leader testified unregulated machines make for unfair competition
Drew Svitko, Executive Director of the Lottery, led off his testimony by stating:
“Funding for these important programs and services are being threatened every day by
illegal games of skill. We also know that there is the potential for hundreds of millions of dollars in future harm if these machines are legalized and games of skill remain a competitor to the Lottery in the retail environment.”
Svitko said the competition from the unregulated games had delayed the launch of several Lottery games:
“To explain the impact, you should know that as of today the Lottery estimates that these machines, which have been operating illegally in the commonwealth for years, are located in roughly 29 percent of the Lottery’s network of more than 9,800 retailers.”
And he admitted lottery compensation to outlets begins at just 5%, while unlicensed machine operators often pay 40% of revenue minus winner payments for their floor space.
Svitko said during the 2019-20 Fiscal Year, the Lottery generated more than $1 billion to support older Pennsylvanians for the ninth consecutive year.
Illegal gambling machines “have to go”
Pete Shelly, a spokesman for a coalition of casinos, said after the hearing, “These machines have got to go.”
“The crystal clear message from today’s hearing is that so-called skill games are illegal. These games, as well as other illegal slot machines, are a risk to children, seniors, and communities. We’re seeing violent crimes. As Senator Mike Regan noted, middle schoolers with backpacks are gambling in a pizza joint.”
Pennsylvania Skill has another view
Mike Barley, a spokesman for the Pennsylvania Skill machine distributed by POM, or Pace-O-Matic, sent out a release “setting the record straight” after the hearing.
It read in part:
“Lottery sales have substantially increased since skill games began operations in Pennsylvania, and in fact, the lottery may benefit financially from skill games.
“The Lottery’s own analysis shows that their sales continue to grow, which we applaud. There is no evidence skill games have had any negative effect on the Lottery, and we believe skill games boost lottery sales. To date, the Lottery has failed to make any studies or statistics public to support their claims that skill games harm the Lottery.”
Barley claimed some store owners had seen increased lottery sales in stores once they add skill games.
Thousands of illegal VGTs masquerade as skill games, said Barley. His company supports efforts to crack down on those games.
Legislators returning skill machine money indicates a turn of the tide
Meanwhile, an in-depth USA Today Network story published on the same day as the second PA Senate hearing.
The key paragraph showing which way the political wind is now blowing in Harrisburg reads:
“In the last week, the most powerful senators in the Pennsylvania General Assembly returned tens of thousands of dollars from the skill games industry, with some saying the games are unregulated, ‘illegal gambling’ that is costing the state hundreds of millions of dollars each year.”
According to PA Department of State records, Pace-O-Matic has spent more than $1 million lobbying in Pennsylvania since 2018.
Image c/o PA State Police.