Pennyslvania Gov. Josh Shapiro is facing opposition to his plans to tax gaming machines that offer skill games at 52%.
According to reports, Shapiro believes revenue from this tax, combined with taxes from legal cannabis sales, would raise an estimated $292 million for the commonwealth, financing public education and mass transit.
Key takeaways
- Pennsylvania's governor wants a 52% tax on skill games.
- The tax would generate an estimated $292 million.
- Rival Senate bills propose smaller tax rates.
Yet, Gov. Shapiro’s proposal hit a significant roadblock in the form of two Senate bills, both calling for lower tax rates on skill games.
Lawmakers introduce alternative tax plans
Skill games are standard throughout Pennsylvania and commonly offer small prizes for completing tasks such as solving a puzzle. Since they're games of skill, rather than chance, they fall outside the scope of the state’s gambling laws, which means they provide no tax revenue.
Gov. Shapiro and lawmakers agree regulating skill games would be beneficial, but there appears to be considerable disagreement on the tax level to apply to these machines.
State Sen. Gene Yaw proposed a bill (Senate Bill 706) that would introduce a 16% tax, aiming to limit the impact on small businesses that depend on revenue from the games. Meanwhile, Sen. Chris Gebhard introduced Senate Bill 756, putting these games under the Pennsylvania Gaming Control Board's oversight, with a 35% tax rate.
Shapiro backs transit funding
The focus on skill game taxes is partly a result of the controversy surrounding Gov. Shapiro’s budget plan. The $51.5 billion budget proposal includes a provision for increased transit system funding, which would rise to $1.5 billion over five years.
“Just like we repair and maintain the bridges in rural and suburban communities, we owe it to the Pennsylvanians who take mass transit to be there for them and their families, too. Mass transit drives $5.4 billion in economic activity every year in Pennsylvania, and it enables businesses to affordably get their employees to offices and job sites,” said Gov. Shapiro at a press conference last week.
Still, the budget plan faces significant opposition from Senate Republicans, who argue it could lead to substantial tax increases, while Gov. Shapiro’s aim of raising revenue from skill game taxes attracted additional criticism from those who argue it would favor big gambling operators.
“Casinos want skill games to be treated on par with their own offerings because that would make the tax burden intolerable for many small establishments that have come to rely on the devices for secondary revenue,” the Pittsburgh Post-Gazette said in an editorial, criticizing Shapiro’s skill tax.
The state budget is due to be finalized by July 1, and although there's precedent for discussions to continue into July, time is running out for Gov. Shapiro’s plan.
