Pa. Senate committee takes up the future of illegal skill games as top lawmakers return industry funds

Illegal skill games look a lot like Pennsylvania Lottery machines, and they’re popping up in businesses statewide. But the unregulated machines are creating an unfair playing field within the gaming industry while taking millions of dollars from senior programs.

The illegal machines — which are often untaxed — were the topic of a Monday Senate Community, Economic, and Recreational Development Committee public hearing on the future of gaming in Pennsylvania.

And testifiers — a representative from the Pennsylvania Lottery, the Pennsylvania State Police, and a county district attorney had the same message: They need help from the Legislature.

Before the Pennsylvania Lottery — which generates billions of dollars for programs that benefit senior citizens — wants to sell a new game, it’s required to publicize the rules, the odds of winning, and the ways to win. It’s a process that takes months but one that aims to make sure players feel like they’re being treated fairly, state Lottery Executive Director Drew Svitko told lawmakers Monday. 

Illegal skill game machines aren’t subject to the same process, he added. And as the machines continue to increase in number, while state Lottery revenue is expected to decrease, Svitko said — estimating a $145 million loss in scratch-off ticket sales per year alone.

“We’re meeting a lot of resistance and typically, it’s because of the presence of these illegal machines, which pay cash every week in an unregulated, untaxed environment that they can do that, and these machines are hurting our ability to deliver a great program,” Svitko said, adding that the state Lottery can’t compete with the illegal machines.

Capt. Jeffrey Rineer, who’s the Operations Division Director for the Pennsylvania State Police’s Bureau of Liquor Control Enforcement, told committee members that these illegal machines have made their way to malls, convenience stores, and storefronts, and vary in their definitions of “skill.”

“There is no set definition of what is being called a skill game; it is merely an industry term that is designed to market these devices as something other than a slot machine,” he said.

Rineer noted political donations from the gaming industry, and added that contributions could be perceived as creating an “unfair marketplace.”

In the last week, Senate President Pro Tempore Jake Corman, R-Centre, and Senate Majority Leader Kim Ward, R-Westmoreland, said they returned thousands of dollars in donations from the skill games industry, USA Today’s Pennsylvania Capital Bureau reported.

Jason Thompson, a spokesperson for Corman, could not confirm the exact dollar amount but said Corman was “uncomfortable with legal issues pertaining to the industry.”

“Skill games are unregulated at best and illegal at worst,” Thompson told the Capital-Star. “We have a successful gaming industry in Pennsylvania because gaming operators are both highly regulated and highly taxed; skill games do not check either of those boxes.”

Erica Clayton Wright, a spokesperson for Ward, said the senator received one $15,000 contribution to her leadership PAC, and an additional $1,500 over the last two years made to the Friends of Kim Ward, her campaign committee.

Wright told the Capital-Star that the treasurer for both was instructed to return the contributions last week.

The Operators for Skill PAC allocated $15,000 to FOR-WARD PAC, a new political action committee, which is chaired by Douglas Rickard, who also serves as treasurer for Skill PAC and works as a paid lobbyist for the Georgia-based Pace-O-Matic, which describes itself as the “leading development of legally compliant games of skill.”

Thomas Ward, Kim Ward’s husband, also serves as chairman for the FOR-WARD PAC. According to campaign finance documents, the funds were donated to Chermak for PA and the Friends of Chris Gebhard.

Wright told the Capital-Star that those contributions were returned and that there is no influence from the skill game industry.

But with no law to regulate where illegal skill game machines can be placed, Delaware County District Attorney Jack Stollsteimer testified that law enforcement in his jurisdiction has started to “triage the problem” by targeting convenience stores, gas stations, and places where illegal skill machines are out in the open instead of bars and taverns.

He added that “inaction” from the Legislature, conflicting legal opinions, and confusion over which machines are legal have made the problem worse.

“These are completely and utterly stealing money from the Pennsylvania Lottery. I have no doubt about that,” Stollsteimer said. “And there is no skill involved. It’s like putting your finger in the dyke for law enforcement.” 

He added: “Literally, there are hundreds of them that are popping up almost every day in Delaware County.”