Pennsylvania Senator Gene Yaw (R-23) is putting on a full-court press to regulate skill games. Yaw introduced Senate Bill 706, which consists of a tax structure for skill games to operate as a legal, regulated form of gambling in Pennsylvania.
Yaw recently wrote in the Pennsylvania Taverns & Players Association (PA TAP), explaining why the regulation of skill games makes sense for the Keystone State. He said skill games do not cut into Pennsylvania casino sales.
The regulated gaming community has expressed opposition to skill games.
Details of PA skill games Senate Bill 706
Yaw introduced legislation for the regulation of skill games in April. Last month, Yaw put together a regulatory framework and tax structure on skill games in Pennsylvania. Yaw said in his Senate Bill 706:
“Many skill game terminals are manufactured in Pennsylvania and 90% of the revenue they generate stays here, mainly in the communities where the games are located. Thousands of skill games exist throughout the state, and they cannot and should not be ignored. Skill video games are meeting a growing demand for this type of entertainment and with each passing day, Pennsylvania is missing out on the opportunity for significant additional revenue. It’s time we recognize the benefits of this emerging industry and offer regulatory support.”
Here are some of the details in Yaw’s proposal:
- License application fee of $1 million for skill game distributors
- $25,000 fee for operators
- $250 fee for establishments
- Yearly renewal fee structure
Regulating skill games could generate an estimated $300 million in immediate annual tax revenue, according to Yaw. Other details on the tax structure include:
- 16% tax on legal skill games
- From the 16% tax, 50% will be deposited into the General Fund, while 22% will be proportionally distributed to both individual counties and municipalities based on their respective gross profit
- The remaining revenue will be directed to Bureau of Liquor Control Enforcement (LCE) for enforcement purposes
Yaw doubles down in Pennsylvania Taverns & Players Association
Yaw penned an op-ed in the PA TAP earlier this month, echoing much of what he proposed in his Senate bill. The PA TAP is a non-profit organization fighting for skill games legislation to aid Pennsylvania small businesses.
In Yaw’s write up, he mentioned examples of how skill games don’t eat into retail casino revenue. In an excerpt from Yaw’s article, he writes:
“Critics opine that skill games take money away from the state’s lottery and casinos, but the facts simply do not support this assertion.
“Over the last few years, both the lottery and casino revenues have reported record-high earnings. Moreover, casino and lottery games are available seven days a week, 24 hours a day, 365 days a year by way of any personal device. It’s hard to understand how casinos and the lottery could experience negative impacts, given these facts.
“A study from Peter Zaleski, an economist and former professor at Villanova University, looked at four nearby states with lotteries but no skill games: Delaware, Massachusetts, New Jersey and New York. From 2012 to 2019, Pennsylvania’s lottery sales growth exceeded these states by a rate of 2.22%.
“Again, the facts simply do not support the argument that skill games are a threat to the Pennsylvania lottery.”
The difficulties of regulating Pennsylvania skill games
The decision to regulate skill games is up to the legislation in PA, not the Pennsylvania Gaming Control Board (PGCB). The PGCB simply regulates and monitors all legal forms of gaming in the Keystone State.
Though the PGCB doesn’t have a say in the matter, it still has an opinion. It is also involved in a lawsuit to ban skill games.
PGCB Chair, Denise Smyler, addressed an audience at the East Coast Gaming Congress in April with concerns of skill games:
“We are more concerned and focused about consumer protection. There are no age restrictions, anybody of any age can go in and play these machines. We have 20,000 people signed up for our self-exclusion program and any one of those 20,000 people can go into these illegal gaming establishments and spend as much time and money gambling. It cuts against them trying to fight their addiction.”
Smyler went on to discuss whether regulated skill games and casinos can coexist:
“It is upon the shoulders of the legislature to determine whether they want to regulate them. I don’t see how you can regulate them if they’re not on equal footing with the VGTs and casinos. Are they going to have the same tax structure? It’s 52% on slot machines and VGTs. Are they going to go through the same rigorous background investigations? Anybody with a criminal record would not pass the background investigation. And it’s not just them, their employees and their games. Would all of that pass? That’s what it would take to regulate them.”
The PGCB did not offer a comment on Yaw’s tax structure to PlayPennsylvania.
Legal battle between skill games and Pennsylvania casinos
The skill games decision sits in the Pennsylvania Supreme Court, where Lamb McErlane represents six PA casinos in opposition of skill games:
- Parx Casino
- Mohegan Pennsylvania
- Hollywood Casino at Penn National Race Course
- Hollywood Casino at The Meadows
- Harrah’s Philadelphia
- Wind Creek Bethlehem
The six casinos are joining the PGCB and the Department of Revenue against Pace-O-Matic (POM), a manufacturer of skill game machines.
There have been three other cases in which skill games have been deemed legal, according to numerous court orders within the state.