The new fiscal year has begun without any movement related to Pennsylvania skill games taxes. Right now, language that referenced the legalization of skill games has also been removed from the FY 2024/2025 budget.
Gov. Josh Shapiro proposed a 42% tax on skill games back in February during his budget address.
However, legality of skill games has come into question once again, as the Pennsylvania Supreme Court is set to hear the case soon. Should machines be ruled legal, tax structure conversation will likely start back up.
Skill games regulation talks pause amid Supreme Court decision
Shapiro had every intention of banking on the legality of skill games, including tax revenue into his budget for the next five years. Shapiro budgeted for $150 million during FY 2024/2025. Here’s what he accounted for over the next four years:
- 2025/2026: $313.4 million
- 2026/2027: $314.8 million
- 2027/2028: $316.8 million
- 2028/2029: $317.9 million
However, as the deadline passed, and with the Pennsylvania Supreme Court having other ideas, it’s extremely unlikely the state collects any revenue from skill machines in FY 2024/2025.
Because of the legality of the machines reaching the Supreme Court, House Appropriations Committee Chair Jordan Harris (D., Philadelphia) said, “there are some in the building who are now pausing at the moment,” according to PA Spotlight, and that legalization language in the budget has been removed.
What are the chances PA skill games are banned?
That the legality of skill games has reached the Supreme Court is not good for manufacturers such as Pace-O-Matic.
However, the one thing going for POM is that it has won every court case up to this point, including the Commonwealth Court unanimously ruling the games as legal in December.
POM is up for another ruling, telling PlayPennsylvania last month:
“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.”
The legality of skill machines is more bleak than it was before the Supreme Court decided to hear the case. The highest court is going to look into the skill element of the machines and determine whether it is “almost entirely hidden” and “almost impossible to complete.” Then, it is going to judge skill games on the same subject matter as slot machines.
Skill games has been upheld in every court level in the state. It would be surprising if the Supreme Court decided to ban the games.
Multiple tax structures to consider
There are numerous opinions on the tax structure should the games remain legal in the Keystone State. As previously stated, Gov. Shapiro set aside a 42% tax back in February, which is considerably higher than other proposals.
There are two bills in the House and Senate, introduced by Pennsylvania Senator Gene Yaw (R-23) and Representative Danilo Burgos. Those regulations include a 16% tax, which would estimate annual revenue of $300 million. Also, it would limit small businesses to five machines.
“One of the issues are the complaints from casinos that there are too many of these games out there,” Yaw told PlayPennsylvania in March. “If there’s too many of them, our legislation will actually cut down the number and regulate them. It’s exactly what [casinos] say needs to be done. So the casino industry should be supporting this legislation, not opposing it.”
Former Gov. Ed Rendell believes that the machines should be taxed at the same rate as Pennsylvania casino slots, should they remain legal. Anything lower “is the definition of fiscal irresponsibility, in my opinion,” he said.
While the tax debate is all over the map, so is the legality of the game, which needs to be addressed first.
