Pennsylvania is launching iLottery,online casino,sports betting

These Dubiously Legal “Skill” Machines Are Giving Lotto And VGTs Some Trouble

wooden blocks for Tic Tac Toe

It appears unregulated gambling machines with a questionable legal status are spreading across Pennsylvania like never before.

According to an expose appearing this week on PennLive.com, the machines have popped up at convenience stores, gas stations, and various restaurants and bars on main streets all over small-town Pennsylvania.

Some arcades, or rooms full of the machines that appear to be de facto mini-casinos, have even opened up in various municipalities across the state.

Operators and manufacturers appear to be hiding behind a 2014 Beaver County court decision declaring the machines games of skill. Since they are not games of chance, like slot machines at a licensed PA casino, or the 40,000 illegal video gaming terminals (VGTs) estimated to be operating across the state, a Beaver County court ruled the games are not subject to the same laws, regulations, or taxes.

The machines feature games like Tic-Tac-Toe or traditional slots that have an element of skill. Like the ability to push a button at just the right time, stopping the reels in a winning position.

Skill-game machines or gambling devices?

Apparently, a Bucks County Superior Court decision also determined the skill component involved makes these machines something other than gambling devices.

The games haven’t exactly gone mainstream just yet.

In fact, PennLive suggest the state’s major convenience store and gas station chains have yet to make a decision on their legality. However, smaller towns in Pennsylvania and the many independent convenience stores and gas stations that call them home, have adopted the machines. So much so, they appear to have created a cottage gambling industry that’s growing every day.

The day after the state passed a comprehensive gambling expansion law in October 2017, authorizing things like online gambling and online lottery, the PA Lottery got approval to launch monitor games like Keno and Virtual Sports.

Keno launched in 9,400 lottery retailers and approximately 600 bar and restaurants across the state on May 1. The bars and restaurants sell tickets. Plus, they give players the chance to watch the drawings on large-screen monitors at the locations.

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Hurting PA Lottery sales?

However, Pennsylvania Lottery spokesman Gary Miller told PennLive.com monitor game sales teams have reported a number of businesses declining to offer the product. Many are saying no because they already have these skill-game machines on site. Miller also estimated as many as 1,000 PA Lottery retailers across the state have also installed the games. This is a move that could ultimately have a negative impact on lottery sales. Particularly, Miller says, since customers can easily confuse these “illegal, unregulated machines with legitimate Lottery machines.”

In an effort to stamp out the estimated 40,000 illegal VGTs operating in Pennsylvania bars, restaurants, and social clubs, state lawmakers considered legalizing, regulating and taxing the machines.

However, they settled on authorizing VGTs at truck stops only, as a part of the gambling expansion law passed in October 2017.

Not every truck stop in the state is eligible. Requirements range from having to have sold an average of 50,000 gallons of diesel per month to having a convenience store licensed as a lottery retailer. That leaves only an estimated 120 truck stop sites in the state table to qualify.

Each approved location is only allowed to install five machines. Therefore, the maximum number of legal VGTs that could be installed in PA would be approximately 600.

With so few opportunities to implement VGTs, it is difficult to compete with these increasingly popular skill-game machines.

Police call games illegal, skill or not

Major Scott Miller is the director of the Pennsylvania State Police Bureau of Liquor Enforcement. He told PennLive the organization considers skill-game machines illegal.

However, enforcement has amounted to little more than monitoring the machines or suggesting to bar and club owners their liquor license could be in jeopardy if they install them.

In rare cases where bar and restaurant owners have been charged, they’ve pleaded guilty to licensing violations. The fines associated have been between $550 and $750. Just the small cost of doing business, really, considering the machines can reportedly bring in as much as $2,500 a week in revenue.

Skill game machine manufacturers continue to claim legal precedent is on their side. In fact, they claim to pay their fair share of taxes already. Plus, they understand the state wants to regulate the budding industry. However, they say the Department of Agriculture or Revenue should handle it.

In the meantime, these skill-game manufacturers say they are simply filling a need. Plus, they’re helping small business owners get more people in the door, growing their businesses.

Marty Derbyshire

About

Martin Derbyshire has more than ten years of experience reporting on the poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.