Republican again proposes taxing skill games, calling them part ‘of the small business economy’

By: - April 13, 2023 11:38 am
Pennsylvania Capitol Building. May 24, 2022. Harrisburg, Pa. (Photo by Amanda Berg, for the Capital-Star).

Pennsylvania Capitol Building in Harrisburg, Pa. (Photo by Amanda Berg for the Capital-Star).

They’ve made their way into bars, restaurants, clubs, and convenience stores. But skill games have generated controversy for years.

One Pennsylvania Senate Republican has again proposed regulating them statewide.

Skill games, which look like casino slots, aren’t regulated under existing state law, drawing complaints from the casino industry about inequitable financial accountability, lost revenue for the Pennsylvania Lottery, and concerns about illegal gambling from the State Police. Lawmakers have faced lobbying on both sides of the issue, grappling with how to address the machines, whose manufacturers say require skill, not luck, to win.

Sen. Gene Yaw, R-Lycoming, announced plans this week to reintroduce legislation requiring that all skill games be “connected to a terminal collection and control system,” allowing the state to monitor all transactions and monitor for tax collection.

“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,” he said in a statement, estimating his proposal could generate an additional $300 million in tax revenue.

The legislation, expected to be formally introduced later this month, would include penalties for those who operate unlicensed and illegal gambling games.

During a recent House Appropriations Committee hearing, Pennsylvania Lottery Executive Director Drew Svitko told lawmakers that skill games have resulted in lost profits, noting that they’ve been tracking the presence of skill game machines and revenue losses related to their operation since 2017.

“We’re losing about $170 million over the course of the next year,” Svitko, who noted that the Lottery has grown its profits, said. “Those are lost scratch-off sales, not sales we’ll make up.”

Acting Secretary of Revenue Pat Browne, who previously served in the Senate, said the department’s official position on skill games is to engage with the General Assembly about a system of “regulation and taxation” to put skill games on the same level as other legal gambling activities in the commonwealth.

In 2021, Yaw, who said skill games are a lifesaver for businesses, introduced the “Skill Gaming Act” alongside state Reps. Jeff Wheeland, R-Lycoming, and Danilo Burgos, D-Philadelphia, in their respective chambers. The proposals, however, never saw a vote.

During the same year, lawmakers in the General Assembly returned campaign contributions from the Operators for Skill Political Action Committee, which receives funding from the gaming industry, including Pace-O-Matic employees. 

Pace-O-Matic, a Georgia-based company that manufactures “Pennsylvania Skill” machines, has spent millions of dollars lobbying in Pennsylvania.

Yaw kept contributions from the PAC, referencing a 2014 court decision in Beaver County that deemed the machines legal.

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