Pennsylvania’s Supreme Court this week heard arguments over whether “skill games” should be classed as illegal gambling devices under the state’s Crimes Code and Gaming Law, according to the New Hope Free Press. The outcome will affect a billion-dollar industry that has spread across the state.
Key Takeaways
- Pennsylvania’s Supreme Court considers the legality of skill games.
- Lawmakers are also debating gambling tax proposals.
- Small businesses warn taxes could hit revenue.
Senior Deputy Attorney General Susan Affronti argued that despite featuring a short memory puzzle, for example, the machines still work as slot devices, as the single skill feature does not transform the fundamental gambling nature of the devices, particularly as most players ignore the optional skill round.
Attorneys for the machines’ distributors countered that the correct legal standard is based on whether skill predominates in determining outcomes. Matthew Haverstick, representing Capital Vending, argued that players who master the pattern-matching challenge can win back their wager plus 5%, and that this payout structure falls outside the state Gaming Control Board’s definition of a slot machine, exceeding statutory payout limits for regulated slots.
The machines have operated in a legal gray area since a 2014 county-level ruling found them permissible. Lawmakers have since attempted to regulate or ban the devices, but courts have repeatedly sided with manufacturers like Pace-O-Matic.
Casino operators have also weighed in, arguing they're losing customers to unregulated competitors and that the state forfeits tax revenue that would otherwise support horse racing, property tax relief, and local government funding.
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Lawmakers consider costly, controversial tax plan
As the Supreme Court examines legality, lawmakers are debating how and whether to tax the industry. Senate Bill 1079 proposes a $500 monthly tax per terminal, which is part of a broader regulatory package that could raise up to $300 million annually.
Supporters, including Sens. Anthony Williams and Gene Yaw, who proposed a 16% tax rate on skill games earlier this year, said the proposed tax is a revenue opportunity that could support transit, infrastructure, and environmental programs while protecting jobs tied to the machines.
But analysts warn the plan’s structure could backfire. A flat monthly tax due before machines generate revenue, they argue, may push small businesses to raise customer prices or remove terminals altogether. Unlike taxes on casino slots or sports betting, which are based on revenue, the proposed fee imposes high upfront costs on bars, clubs, and truck stops where the machines are based.
If too many terminals disappear, the projected revenue boost could evaporate, but if player demand remains high, lawmakers may have found new long-term funding without raising broader taxes.
