Despite having one of the most open gambling markets in the nation, Pennsylvania residents are still seeking out skill games. The machines, which operate in a legal gray area and have similarities to slots, are unregulated. Now, lawmakers in Harrisburg are looking to bring them out of the gray market.
Over the past 15 or so years, Pennsylvania has fully embraced legal gambling. Just within the past three years, PA residents have seen most forms of online wagering legalized. This includes sportsbooks, table games, slots, and online poker. There are also more than a dozen full-service casinos littered throughout the Keystone State.
Yet, skill games remain popular. Possibly because they are beyond the reach of state regulators and tax authorities.
What Are Pennsylvania Skill Games?
The machines that are ubiquitous in truck stops, convenience stores, seedy bars, and fraternal halls certainly look like slot machines. You put in some amount of money, flashy graphics play, and bells and whistles sound. Sometimes, the player receives money back after the whole show.
But what law enforcement views as illegal gaming devices, businesses owners see as a key source of revenue. Skill games draw people to their service station or bar and keep them there. Not only does the owner make money off the game but on all the other purchases the customer makes while playing.
However, gaming devices are illegal in PA outside of the casinos.
Why Is It Difficult to Regulate Skill Games?
The Pennsylvania State Police along with lawmakers and the companies behind the casinos have all tried to put a stop to skill games in the past. With no luck. Similar states like Virginia and Missouri have had similar struggles.
Because the machines are not taxed or licensed, they offer huge profit margins for both manufacturer and store owner. And these businesses spend some of those profits lobbying their elected officials.
Skill games are especially common in rural areas of Pennsylvania. Business owners in these locations are already struggling with a depressed economy in the wake of the shale gas boom. And they firmly support leaving skill games alone.
What Is the Proposed PA Skill Games Law?
Now, two key lawmakers are making another push to regulate the video gaming terminals statewide. The two elected officials are responsive to business owners’ concerns. A primary goal of the legislation would be ensuring skill games are not taxed and regulated out of existence.
State Senator Gene Yaw defended skill games at a press conference announcing the legislation. In fact, he stated that skill games are “allowing these businesses to provide health insurance for their workers, increased salaries, and in some cases, keeping the doors open.”
Under the proposed law, terminal revenue would be taxed at 16%. This is similar to taxes for online poker and table games in the Commonwealth. But it would be levied on net revenue, ie. only the amount left after the skill game paid out winners.
It is unclear whether manufacturers or businesses would need to pay a license fee on each machine. The legislation is still being drafted, so it has a long way to go before landing on the governor’s desk.
