Skill games are everywhere in Pennsylvania. Step into a corner bar, a tattoo parlor, or a flea market, and you might even find one nestled in the back.
But their validity isn’t what’s up for debate anymore; the focus has now shifted to what these machines are taking from the state and what they should be giving back.
With an estimated 70,000 skill games in operation across Pennsylvania, Governor Josh Shapiro thinks it’s high time for them to pay their dues.
Governor Shapiro’s Push for Regulation and Taxation
Governor Shapiro’s proposal is as straightforward as it is urgent. These machines, sitting outside the tax-collection net, have caused the Pennsylvania Lottery to lose out on $200 million in the last five years.
For Shapiro, that’s unacceptable. He wants the Pennsylvania Gaming Control Board to oversee them and slap a tax on every dollar played so a portion goes to support the state’s initiatives. The governor framed it like this during his recent budget address: regulating skill games is about protecting Pennsylvania’s most vulnerable citizens.
His tone was clear – the time for free-riding in this industry is over.
Take this as an example of what’s happening. A senior might spend $20 on a skill game in search of quick wins instead of grabbing a few instant lottery tickets. That $20 going into an unregulated machine is $20 not entering programs the lottery funds. It’s a trade-off and something the Pennsylvania Lottery says it cannot afford.
Skill Games vs. Casinos – Key Differences
The line between a skill game and a slot machine may seem blurry at first. Both beep, light up, and gleefully announce wins, but they operate on fundamentally different principles. A skill game rewards quick reflexes or strategic thinking, even if only moderately, while a casino slot relies on pure chance.
This distinction is a big reason why they’ve proliferated so rapidly. Casinos are heavily regulated. They require millions in licensing fees and must adhere to strict taxation. Skill games, though, they slipped in through a loophole presented by their perceived element of skill.
For some, like David Zongaro, a Wilkes-Barre business owner, this difference matters. “People just put a couple of bucks in here; it’s all low-end stuff,” he said. “It’s not like a casino. There’s nobody losing their mortgage payments here.”
Legal Landscape: From Gray Area to Legitimacy
It wasn’t long ago that skill games teetered on the edge of legality. They were considered “gray machines” because their legality was foggy and open to interpretation for years.
But that all changed in 2023 when Pennsylvania’s Commonwealth Court ruled unanimously that a skill game’s reliance on, even minimal, player skill qualifies it as legal.
The court ruling was a green light for skill games, and machines flooded into gas stations and convenience stores almost overnight. Yet, for lawmakers and casinos, this ruling presented a new challenge: how to catch up with regulation before the industry grows too unwieldy.
Concerns Over Problem Gambling and Lack of Protection
While the focus is often on finances, problem gambling presents its own quiet crisis. Skill games, unlike casinos, don’t currently require signage to help gamblers in trouble. No blinking neon reminding players, “Gambling Problem? Call 1-800-GAMBLER.”
But those involved in addiction recovery know the machines are filling their call logs. Joshua Ercole, from the Council on Compulsive Gambling of Pennsylvania, estimates hundreds of calls each year from those citing skill games as a source of distress.
This raises an important question. If the state decides to regulate, should legislation mandate protections like addiction resources? Ercole thinks the answer is obvious.
Small Businesses and Community Benefits of Skill Games
Unlike the states where gambling is illegal, Pennsylvania is home to various well-known casinos, and gambling is pretty popular among residents.
For small business owners, skill games transformed entire operations. Take a vape shop or American Legion hall. Without skill games, these establishments might rely solely on their core customers, but with these machines, foot traffic grows, sometimes dramatically.
One small shop partnered with Miele Amusements to bring in a skill game unit. Within months, that machine became a major draw for locals looking for something casual but fun. That story isn’t unusual – it’s replicated across Pennsylvania.
Skill games offer small businesses an easy entry point into gaming without the barriers casinos face. For many local entrepreneurs, they’re a lifeline.
The Proposed 52% Tax Rate & Industry Concerns
But this apparent lifeline comes at a price – a proposed 52% tax rate, to be exact. That figure mirrors what casinos pay for their slot revenues. For the skill game industry, which operates on much smaller margins, it feels like an impossible number.
Nicole Miele, a leader in the skill gaming space, insists that a 52% tax rate would kill the industry and harm small businesses. But is a compromise rate – one lower than casinos but higher than zero – even conceivable? Stakeholders believe it has to be.
Calls for Fair Regulation and Responsible Gaming Measures
This debate isn’t just about taxation. There’s a growing call for responsible gaming measures, particularly from organizations like the Council on Compulsive Gambling.
At a minimum, advocates want to see requirements like hotline signage near every machine or, at the very least, on-screen prompts guiding players to resources for help.
Perspectives from Pennsylvania’s Gaming Stakeholders
You can’t talk about gaming regulation without hearing all sides. Casinos like Mount Airy applaud Governor Shapiro’s 52% tax proposal. For them, fairness means taxing skill games in the same way as their slot machines.
Small business operators, often backed by industry advocates, counter that such taxes would gut a thriving ecosystem of local partnerships. Somewhere in the middle are gambling reformers, who just want regulations that protect at-risk players.
Threading these needles won’t be easy.
Potential Impacts on Philadelphia’s Gaming Landscape
Philadelphia’s gaming ecosystem is unique. But what happens if skill games become mainstream across public spaces in Philly?
It could go either way. On one hand, more regulated gaming machines mean more tax revenue for city services. On the other hand, these machines could cannibalize casino traffic. Philadelphia’s gaming scene is intricate, and how legislators regulate it will influence its future. We’ll keep you posted.
