The legality of skill games has been a matter of debate for many years. Now, the Pennsylvania Supreme Court will make a decision about whether they are legal or should be shut down. Skill games resemble slot games but are found in convenience stores or bars instead of casinos. The Pennsylvania casino industry regards these machines as illegal but the manufacturers and retailers don’t agree. They say these are games of skill and not of chance.
The Supreme Court will consider an appeal
The Pennsylvania Supreme Court has granted a petition that allows the Commonwealth of Pennsylvania to appeal. It will consider an appeal against a lower court decision by the office of the Attorney General. The decision of the lower court was that skill games rely on a player’s ability, unlike slot machines which are completely unpredictable and depend on chance.
Parx Casino and other casinos in Pennsylvania argue that these machines are illegal and they lose revenue to them. Casinos have to pay 54% tax on slot machine revenue whereas skill game revenue isn’t subject to taxation. This creates an unfair burden on casinos. Jeffrey Rosenthal, a lawyer representing Parx Casino in Philadelphia, says that the Supreme Court’s decision to take the case is significant. Its decision could set the rules for years to come on how to treat the machines under the law.
Thousands of skill games across Pennsylvania
The Attorney General’s office reports that thousands of skill game devices are appearing across the state although the exact number of terminals is unknown. The American Gaming Association (AGA) estimates there were at least 67,000 in Pennsylvania as of 2022. This is more than there are in any other state. As these machines are unregulated, there is concern about the well-being of people playing them. Some believe that not regulating the machines could result in a public safety crisis. Regulated casinos have to abide by rules and regulations that protect players.
Lawmakers fight over taxation and regulation
Clear guidance on how to apply relevant statutes is necessary. Only the Supreme Court can provide this as it is the final authority on how US law works. If the Supreme Court rules against skills games, this would be a victory for the regulated gambling industry. Local lawmakers in Philadelphia have already approved legislation banning businesses from housing games of skill unless they have a casino or liquor license.
In his executive budget proposal, Governor Shapiro announced that he would support the regulating and taxing of skill games. His proposal was for a 42% tax on gross daily gaming revenue from skill games and regulation by the Gaming Control Board. The skill game industry is urging lawmakers to regulate the machines. This would help to protect them from seizure. Discussions are taking place in the legislature as to the form the regulatory system would take. Proponents of the machines argue that they provide supplemental revenue to many small businesses in the state.
Similar fights in other states
Various states have taken different approaches to skill games within their borders but similar fights are playing out in Virginia, Kentucky, and Texas. The Virginia Supreme Court re-established the ban on the machines in late 2023. SB212 to legalize VA skill games passed the Senate and the House of Delegates earlier this year and is awaiting Governor Youngkin’s signature. He returned the bill with amendments which were rejected by the Senate. This left the 2023 Supreme Court ruling in place. Regardless of how the Supreme Court rules, any eventual decision could have a ripple effect and give other states grappling with the same issue more direction.
