Pennsylvania skill games appear to be headed toward regulation as Gov. Josh Shapiro proposed a tax for the machines in his proposed FY 2024/2025 budget. Despite that, Pennsylvania casinos will continue to fight to ban the games.
PlayPennsylvania received emailed responses from Parx Casino CEO, Eric Hausler, regarding the governor’s inclusion of skill games in his new budget.
Hausler claims the games lack consumer protection and take business away from the regulated industry, including PA online casinos. However, should a “rigorous” tax framework exist, it’s possible that skill games could co-exist with the rest of the market.
Keystone State casinos are still pleading to ban PA skill games
It’s clear that the regulated industry wants skill games to go away. It doesn’t look like that’s happening, especially after the Commonwealth Court ruled the games as legal last December.
Gov. Shapiro is cementing that status even further after including skill games in his proposed budget for the next fiscal year. In spite of that, Hausler told PlayPennsylvania on Thursday the industry is not giving up its fight to ban the machines.
“There is no guarantee that the legislature and the governor will be able to agree on a regulatory and tax framework,” Hausler said. “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. We are confident the Supreme Court will take a more fulsome view of what constitutes a slot machine.”
The majority of Pennsylvania casinos, including Parx Casino, filed amicus briefs last month to the Pennsylvania Supreme Court, urging the highest level to weigh in on the matter.
The Pennsylvania Attorney General’s Office (OAG), Pennsylvania Gaming Control Board (PGCB) and American Gaming Association (AGA) each filed briefs of their own, too.
Keystone State casinos leave door open for PA skill games regulation
In Hausler’s responses to PlayPennsylvania, he cracked the door open for the possibility of regulating skill games. We asked Hausler about the biggest concerns surrounding skill games. He said:
“There are games in pizza parlors, convenience stores, fast-food restaurants, malls and storefronts, basically everywhere at this point. They are hurting the regulated gaming industry that supports thousands of jobs and pays billions in taxes to the Commonwealth each year to support property tax relief and other essential programs. We are essentially competing against unregulated casinos all over Pennsylvania as the size of these skill slot parlors gets more audacious every week.”
The opening came forth in the second part of the question, when we asked if the potential regulation affects his biggest concerns. Hausler responded:
“A rigorous regulatory and tax structure for skill games should remedy many of these concerns and put sensible limits on the location of these games.”
Pace-O-Matic (POM), a Georgia-based skill games manufacturer, is seeking regulation to create a “long-term, stable market.” POM Chief Public Affairs Officer, Mike Barley, told PlayPennsylvania on Wednesday that he hopes Pennsylvania casinos step up.
“It’s truthful, the only thing that’s stood between regulation and taxation has been their opposition. I think with the governor’s announcement, it’ll force them to at least engage, which we’re anxious for.”
There appears to be a sliver of hope of the two sides coming together, should the regulatory and tax framework satisfy both parties. Gov. Shapiro estimates more than $150 million in tax revenue next fiscal year from skill games. By FY 2025-2026, machines could produce over $313 million in tax earnings.
Pennsylvania skill games’ current situation is ‘untenable’
The overarching theme coming from the regulated gambling industry is that the games cannot keep operating in a gray area.
“Right now, there is an untenable situation where someone can lease an empty storefront, put in skill games and not pay any taxes or offer any customary consumer protections that the public expects from regulated gaming,” Hausler explained.
Hausler went on to say that skill games exploit consumer protections, especially for those with gambling addictions, as well as minors. He also brought up an instance of the Internal Revenue Service (IRS) seizing the assets of a former POM executive.
“If that individual worked in the regulated casino business, he would have been subject to an extensive background check by the PGCB including a review of his finances,” Hausler noted. “The entire licensing regime in Pennsylvania was put in place to keep criminal and unsavory individuals from being involved in the industry and it has been largely successful.”
It could be a while before a decision is made on skill games once and for all. However, skill games are trending toward being regulated and taxed. It’ll be interesting to see how it all plays out in the coming months.
