One of the first dominos has fallen in the topic surrounding Pennsylvania skill games. Gov. Josh Shapiro proposed to tax Pennsylvania skill games in his FY 2024/2025 budget.
This is great news for Pace-O-Matic (POM), a Georgia-based skill games manufacturer that has been pushing for regulation for years. On the other hand, the regulated industry wishes the machines got banned because of the lack of consumer protections and the business they take away from the retail and PA online casino market.
PlayPennsylvania spoke with Chief Public Affairs Officer Mike Barley to discuss Shapiro’s inclusion of skill games in the proposed budget.
Why Pace-O-Matic wants Pennsylvania skill games taxed
Gov. Shapiro plans to tax Pennsylvania skill games in his upcoming budget for FY 2024/2025. It makes POM extremely happy that the games will be sticking around.
The Commonwealth Court most recently ruled skill games as legal last December. It begs the question of why POM even wants to be regulated in the first place. It’s possible skill games won’t make as much revenue with the games regulated.
Barley shed some light to PlayPennsylvania on why he wants skill games to be taxed.
“You trade whatever that short-term loss is for a long-term, stable market,” Barley said. “Having that certainty for our small businesses, fraternal clubs and for us is worth it and beneficial. Not to mention, removing illegal equipment off the street and giving law enforcement the tools to have that cleaned up will be beneficial for everyone in the market.”
Barley mentioned that the 42% is a bit high, and is keeping small businesses and fraternal clubs in mind, because they need a fair share, too.
Keystone State casinos oppose PA skill games
Pennsylvania casinos have disagreed with the existence of skill games and filed an amicus brief to the Pennsylvania Supreme Court last month, along with several other organizations.
Back in December, Barley made it known that casinos remained in the way of skill games regulation. Now that Gov. Shapiro appears to be prioritizing skill games, casinos are going to have to step up.
“They have called us illegal for many years, a position that has been proven wrong by the court over and over again, including a unanimous decision by the Commonwealth Court,” Barley said. “I think they are still stuck in that position. 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.”
According to the proposed budget, 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.
Skill games would add another form of regulated gaming to the market, in addition to online casinos, retail casinos and sports betting.
POM thrilled Gov. Shapiro proposed PA skill games regulation
Executives from the company published a press release to celebrate the news.
POM President and CEO, Paul Goldean, said:
“Governor Josh Shapiro is showing incredible leadership on the skill game issue. Our company, as well as thousands of Pennsylvania bars, restaurants, convenience stores, fraternal clubs, VFWs, and American Legions, are eager to pass legislation regulating and taxing skill games. We look forward to working with the Governor, his administration, and the general assembly to pass and formalize a fair regulatory and taxation structure for the skill game industry. Governor Shapiro has adopted the motto ‘Get s— done.’ We embrace that passion and commitment to getting results. While we may have differences on aspects of the Governor’s plan, we look forward to working with the administration and general assembly to regulate and tax skill games. We are eager to help Governor Shapiro and the general assembly add skill game regulations to the column of wins scored by this administration and general assembly.”
Barley added:
“Skill games help Pennsylvania small businesses and fraternal clubs by providing these establishments with sustainable and supplemental revenue. We are eager to continue our work with the Governor and our bipartisan group of supporters in the State Senate and House to pass legislation that will establish guardrails on the number of skill game terminals in a location, where they can be located, and a tax on the revenue generated by the games. While we believe the tax rate being proposed is higher than the industry can sustain and prefer to have a fair and impartial regulator, we stand ready and willing to discuss these issues in the general assembly and the Shapiro Administration.”
While the governor’s tax rate of 42% is just a proposal, POM plans to negotiate a framework that benefits skill games and the Keystone State.
