PGCB Speaks Out Against PA Skill Games, Joins Case Against POM

Posted on February 21, 2020 - Last Updated on February 24, 2020

Reversing its hands-off approach to unregulated gambling devices distributed by the Pace-O-Matic company (POM) under the name PA “skill games,” the Pennsylvania Gaming Control Board (PGCB) now wants to join a court case reviewing the legality of the machines.

The case also examines the authority to police and regulate the devices.

The civil court challenge stems from a past seizure by the Philadelphia Police Department of POM machines and their wagering proceeds, and enforcement actions by the Bureau of Liquor Control Enforcement.

PGCB now wants a say on the POM devices

In its petition to join the pending civil case before the court, the PGCB said the Beaver County case applies to merely one POM machine and its software. That means the case does not set a precedent for all of the “machines which POM claims to be ‘skill-based.'”

The petition by the PGCB, signed by Kevin O’Toole, executive director, denied that skill-based slot machines are legal “outside a Board-licensed slot machine facility.”

Just days ago, Doug Harbach, a spokesman for the PGCB declined to comment on efforts to curtail the proliferation of wagering devices in use outside casinos, explaining:

“Unregulated or illegal machines are a criminal matter, not a regulatory matter for which we are responsible.”

But the board has reconsidered based on a November court decision labeling skill devices as slot machines, Harbach explained.

“At that point, the Board began investigating its role as an intervenor in the case since law gives authority to the PGCB as the sole regulator of slot machines in the Commonwealth with a role to protect the public through this regulation of these machines. Until the document was filed by our agency, we could not comment on the matter since we were not part of the case.”

POM and company officials unlicensed, according to PGCB

Neither POM, nor its leadership, have licenses from the PGCB, according to the petition.

And the company does not pay a “34% daily tax from its gross terminal revenue from its skill machines.” Nor does it pay any “local share” assessment to host municipalities, fees that also come from slot operators.

The petition also said POM “does not restrict the age of persons who play its skill machines in operation in the Commonwealth to persons of 21 years of age and older,” the legal age to wager on a casino slot machine.

Another issue taken by the PGCB is that POM does nothing to combat or treat problem gambling and does not maintain an exclusion list for gamblers.

The case where PGGB is asking to intervene stems from POM seeking a ruling that their company’s devices are legal games of skill under Pennsylvania law. POM is further seeking an injunction (again) to prohibit seizures, arrests, and prosecutions against those machines and their owners.

A judge recently denied their attempt to maintain an injunction against enforcement and seizure activities so long as efforts do not target just POM wagering devices. It was the same case the PGCB cited when it filed to enter into the ongoing legal action.

POM spokesman finds PGCB reversal odd

Michael Barley, a spokesman for POM of Pennsylvania, a Williamsport business that is part of Miele Manufacturing Inc., said he found the reversal odd but added he had no insight into what changed the Board’s position.

However, he did make a statement to PlayPennsylvania Thursday evening:

“Our games have been adjudicated legal as games of predominant skill. The Commonwealth Court has already ruled that our games are not regulated by the gaming code. We are confident our games’ legal status will be confirmed.

“In the meantime, we will continue to work with the Legislature to regulate the legal skill game industry.”

Legal ambiguity over POM devices

Questions about the legal status of gambling devices not placed in licensed casinos, especially those labeled skill games, have pin-balled around recently because there are two legal cases which on their face appear at odds.

A court in Beaver County, PA in 2014, ruled one of POM’s machines depends on skill, not random chance. That decision exempted the device from enforcement standards that pertain to regulated and licensed slot machines.

Last fall, another court case found so-called skill games to be no more than a type of slot machine, and thus subject to regulation, licensing, and taxation.

That decision opened the door to law enforcement confiscations of the machines, which POM had halted by the courts temporarily. A court decision last month denied POM’s request to continue to protect their machines from seizure by State Police.

But a final decision as to the legal status of the machines remains to be made.

While there are 24,000 casino slot machines, the State Police estimate at least 15,000 unregulated devices are operating in PA, and the number could be 20,000. POM accounts for about 10,000 of the machines.

Illegal gambling partnership hails PGCB intervention

Pennsylvanians Against Illegal Gambling (PAIG), a coalition of casino forces, hailed the PGCB’s decision to join the suit.

The group pointed out the PGCB filing contends “unauthorized slot machines illegally diverts tax monies from lawful slot machines and other gaming products like the lottery from the intended Commonwealth beneficiary.”

Pete Shelly, a spokesman for PAIG, said in a statement:

“Bottom line: these machines are out of control and they have got to go. The state’s gaming regulators are joining with the PA State Police, Gov. Wolf, the PA Lottery and Pennsylvanians across the state who want these illegal machines outlawed. It’s time for lawmakers to act to ban these machines once and for all from our state.

“Governor Wolf’s administration has made a compelling case that these machines are illegal, unregulated and are hurting seniors. There is a groundswell of support across the state calling for action to ban these machines and shut these illegal pop-up casinos down.”

Shelly said officials from the state lottery and the Pennsylvania Department of Aging recently testified that the machines are “siphoning anywhere from $200 million to $600 million from state programs for seniors.”

While the precise effects such machines have on tax funds or the regulated gaming industry remains unclear, you can bet that several entities in PA hope a decision on the matter will come soon, once and for all.

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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