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A bipartisan bill is being proposed by two Pennsylvania senators regarding the regulation of skill games, a contentious issue that has divided lawmakers, skill game suppliers and the state’s regulated gaming industry.
Senators Gene Yaw, a Republican, and Anthony Williams, a Democrat, confirmed the details of their proposal but as of Wednesday (August 13) no copy of their bill has been made available.
The forthcoming bill would implement a monthly $500 fee per skill-game terminal. Yaw and Williams also propose a state-wide cap of 50,000 skill game machines, a modest decline from the estimated 70,000 or more unregulated skill game terminals across Pennsylvania.
The monthly fees would be expected to generate $300m annually for the state.
In addition, the proposal would enable local governments to establish regulations governing the locations where skill games are located, but neither Yaw nor Williams mentioned granting cities and counties the ability to prohibit the machines by opting out of the market.
Mike Barley, chief public affairs officer with Pace-O-Matic, said the company supported the bipartisan effort to create a workable solution for legal skill games.
“Some members of the Senate want to force passage of legislation that would regulate and tax skill games out of existence, harming small businesses, volunteer fire companies and veteran organizations,” Barley said in an statement emailed to Vixio GamblingCompliance on Wednesday, referencing other bills filed to impose similar taxes to those applied to slot machines in casinos.
“We commend Senators Yaw and Williams for looking at the skill game issue holistically, taking into consideration how the games can provide much-needed revenue for the state while protecting organizations and small businesses that count on the supplemental income.”
Yaw, who has been a vocal supporter of regulating skill games, introduced Senate Bill 626 in January which was referred to the Community, Economic and Recreational Development Committee but never received a hearing. The measure would have taxed the machines at 16 percent and have them regulated by the Pennsylvania Department of Revenue, not the Pennsylvania Gaming Control Board (PGCB).
Yaw also introduced Senate Bill 706 in the 2023-2024 session that died in the Community, Economic and Recreational Development Committee. The senator’s support for a 16 percent tax rate is significantly below the 54 percent rate paid on slot machine revenue by casinos.
The argument over how the machines are taxed creates additional problems about universal taxation. The Pennsylvania Constitution requires all taxes on similar products be taxed uniformly.
Slot machines generated more than $2.4bn in revenue during fiscal year 2024-2025, with tax revenue amounting to $1.34bn, according to the PGCB.
Barley reiterated that Pace-O-Matic was willing to work with Governor Josh Shapiro and the legislature to pass “common sense legislation for the skill game industry.”
In February, Shapiro, a Democrat, proposed regulations for the second year in a row to regulate skill games, including taxing the machines at 52 percent and limiting the number of terminals to 40,000 state-wide in five years.
Currently, legalization of skill games seems to be on the backburner in Harrisburg, with both chambers of the Pennsylvania General Assembly appearing to be no closer to settling their differences over passing a new state budget.
The fiscal-year 2025-2026 budget impasse has lasted more than six weeks after the constitutionally mandated June 30 deadline to pass a spending bill.
The legality of skill-game terminals has been a topic of controversy for several years, with several cities trying to ban the machines only to have state courts overturn those ordinances.
In December, the Commonwealth Court of Pennsylvania overturned a Philadelphia city ordinance banning skill-games at most city businesses. The Philadelphia City Council had passed the ban in March 2024, which was signed by Mayor Cherelle Parker, but it was challenged by skill-game distributor G&B Amusements.
The main supplier of skill games is Georgia-based Pace-O-Matic, which has won several court decisions reversing seizures of its machines. Commonly branded as Pennsylvania Skill, the company describes the machines as a “legal and defendable game of skill.”
However, the legality of skill-game machines is once again being considered by the Pennsylvania Supreme Court, which has yet to issue an opinion on a case involving machines that were seized in Dauphin County.
Pennsylvania attorney general Michelle Henry appealed a lower-court decision last year that found the games are based on a player’s ability, not solely chance. The Supreme Court had declined an appeal of a separate ruling that found the machines are not illegal gambling.
The American Gaming Association (AGA) and the Association of Gaming Equipment Manufacturers (AGEM) are opposed to the machines. On Wednesday, the AGA released a new analysis of illegal gaming market in the U.S., describing unregulated skill machines as one of the fastest-growing threats to the legal industry.
There are more than 625,000 machines now operating nationwide, a 7.7 percent increase since 2022. Overall, grey-market machines generate $30.3bn in annual revenue and cost states $9.5bn in tax revenue, according to the AGA.
Pennsylvania Slot Machine Requirements
The proliferation of unregulated skill games has had a serious impact on casino operations in Pennsylvania, with operators seeking to reduce the number of slot machines on their gaming floors.
The PGCB approved the removal of 471 slot machines from four Pennsylvania casinos last year and 586 fewer machines on the gaming floor in fiscal year 2023-2024 than fiscal year 2022-2023.
Republican state Senator Daniel Laughlin, who has filed a bill to eliminate the statutory minimum number of slot machines required on a casino floor, described the 1,500 minimum as “artificial and unnecessary."
In March, the PGCB fined Presque Isle Downs & Casino, owned by Churchill Downs, $50,000 for having less than the approved number of active slot machines on the floor. Last year, the PGCB approved requests from Hollywood Casino at Penn National Race Course and Rivers Casino Pittsburgh to remove slot machines.
Currently, Category 1 and Category 2 casinos are mandated to maintain at least 1,500 slot machines in operation at all times. However, Laughlin's Senate Bill 840 would remove that requirement while still maintaining oversight through the control board.
The bill, which passed the Senate on Saturday, now moves to the House for further consideration.
Under SB 840, casinos would no longer be bound by a minimum slot machine count. Instead, they would have the flexibility to adjust their slot machine inventory based on market demand and operational needs.
However, any reduction exceeding 2 percent of the total slot machine count would require regulatory approval.
