Former Pennsylvania governor, Ed Rendell, who was instrumental in instituting the Gaming Act, believes that skill games should be on the same tax structure as slots.
Rendell (above) said he got backlash for levying a 52% tax on slots. However, Pennsylvania has evolved into one of the most successful retail casino industries in the country.
Pennsylvania skill games are currently legal, but unregulated. There is a tax structure currently in session, along with Gov. Josh Shapiro‘s proposal in his upcoming FY budget.
Rendell calls skill games proposals ‘disastrous’
Pace-O-Matic, a Georgia-based skill games manufacturer, has been seeking regulation for years in Pennsylvania. However, the former governor is calling into question the potential tax structure for the machines.
Pennsylvania Senator Gene Yaw (R-23) proposed a bill last year, which includes a 16% tax rate. Shapiro proposed a 42% rate in his FY 2024/2025 budget. Neither is good enough for Rendell.
“I am alarmed to hear that several current members of the General Assembly are proposing a disastrous tax giveaway that I believe would benefit deep-pocketed, out-of-state gaming interests who have been flooding Pennsylvania with political campaign contributions,” Rendell said in a GoErie op-ed.
“This is the definition of fiscal irresponsibility, in my opinion,” he continued.
Rendell gave himself a pat on a back for orchestrating a tax structure for Pennsylvania casinos that ultimately worked. In 2023, slots produced nearly $2.5 billion in revenue with more than $1.3 billion collected in taxes for the state.
Yaw is estimating around $300 million in tax revenue from his 16% skill games tax. Shapiro is projecting $317.9 million by FY 2028/2029.
The Independent Fiscal Office (IFO), a government agency that provides revenue projections and analysis, predicts the state could generate $421 million by the same period at Shapiro’s rate.
Given Rendell’s authority and contributions to Pennsylvania’s gambling industry, his advice should not be taken lightly.
POM has one more hurdle to clear
While Rendell, and POM, are focused on the tax rate, it’s possible no one in the industry will have to worry about it. The Pennsylvania Supreme Court announced last week it is going to rule on the legality of skill games. The court document reads:
“Does an electronic slot machine cease to be an illegal ‘gambling device,’ governed predominantly by chance, if the machine’s manufacturers embed into its programming a so-called “skill” element that is almost entirely hidden from view and is almost impossible to complete?
“Should gambling statutes governing ‘slot machines’ be read in pari materia to supply an appropriate definition of the term?”
This comes off the heels of the Commonwealth Court unanimously ruling the games as legal back in December. While the decision is now up to the Supreme Court, POM is not all that concerned, telling PlayPennsylvania last week:
“We remain confident in the merits of our case, as their legality has been upheld unanimously by the Commonwealth Court as well as in every court where the legality of our games has been challenged.
“Our attorneys will continue to defend the legality of our skill games, which support local small businesses and fraternal clubs across the Commonwealth.”
POM has to defend its games one more time, and likely the last, to be able to successfully operate in the Keystone State.
