Pennsylvania Skill Gaming Legislation Forthcoming to Regulate Machines

Pennsylvania skill gaming machines continue to multiply inside restaurants and bars across the commonwealth. One state Senator says it’s long past due that the state legalizes the controversial gaming terminals in order to protect consumers and generate tax revenue.

Pennsylvania skill gaming machines casino gambling
Pennsylvania Skill gaming machines at a Flying J truck stop in Danville, Pa. Pennsylvania skill gaming terminals remain unregulated and untaxed, but forthcoming legislation will seek to regulate the controversial machines. (Image: The Danville News)

Skill gaming machines look, sound, and function similarly to Las Vegas-style slot machines. But they come with one major difference in that the player must identify a winning payline compared with a traditional slot machine that automatically pays out on a winning spin.

The “skill” element of recognizing winning lines, supporters of the machines that are currently unregulated and untaxed say, renders the apparatuses immune from the Pennsylvania Gaming Act. The state’s commercial gaming law only regulates legal gaming machines.

Several state judges have ruled in agreement with the skill gaming interests in that the products are games of skill and therefore fall outside the scope of the gaming law.

The legal status of skill gaming machines continues to be challenged in court. The Pennsylvania Lottery and the state’s regulated gaming interests want skill games deemed illegal.

The casinos argue that with skill gaming machines in most cities and towns, gamblers wishing to play a slot machine no longer have to travel to one of their 17 land-based casinos. The casinos are also furious that while their state-issued gaming licenses cost tens of millions of dollars and their operations are subjected to considerable taxes and fees, the skill interests paid $0 to enter the state gaming market.

Skill Gaming Bill

State Sen. Gene Yaw (R-Williamsport) says there’s enough gaming money to go around to support both the current legal gaming industry and the unregulated skill gaming market.

“Critics opine that skill games take money away from the state’s lottery and casinos, but the facts simply do not support this assertion,” Yaw tweeted this week in reference to Pennsylvania’s legal gaming interests generating a record $5.2 billion in gross revenue last year.

In a memo to his Harrisburg colleagues, Yaw this week says he’s finalizing legislation to legalize, regulate, and tax the skill gaming machines.

Pennsylvania’s skill game terminals are manufactured right here in Lycoming County and the finished products exist in fraternal clubs, veterans’ organizations and taverns, as well as other local businesses throughout the commonwealth,” Yaw said. “Skill games are a piece of the small business economy in our state, and it’s time we recognize the benefits of this emerging industry and offer regulatory support, so that we can ensure it flourishes — safely and responsibly.”

Estimates suggest there are as many as 70,000 skill gaming machines currently operating in the commonwealth. Yaw believes regulating and taxing the machines could generate upwards of $300 million annually in new tax revenue for the state and counties where the devices operate.

“It’s like we have a winning lottery ticket here,” Yaw added. “Why not cash it and take advantage of it?”

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Ongoing Lawsuit

Late last month, an appeal to the Pennsylvania Supreme Court was filed on behalf of six brick-and-mortar casinos. The appeal asks the state’s highest court to reconsider a 2019 ruling from Commonwealth Court Judge Patricia McCullough that concluded certain skill gaming machines are not governed by the Gaming Act and therefore cannot be seized by law enforcement.

McCullough’s ruling provided a sense of immunity for skill gaming machines manufactured by Pace-O-Matic (POM). The Georgia-based manufacturer is behind the popular Pennsylvania Skill terminals.

The Pennsylvania Supreme Court has not yet announced whether it will take up the matter.

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