Pennsylvania Chief Gaming Regulator Asks Lawmakers to Resolve Skill Gaming Issue

Posted on: August 27, 2023, 11:43h. 

Last updated on: August 27, 2023, 11:44h.

The Pennsylvania Gaming Control Board’s (PGCB) top official is calling on state lawmakers to settle the skill gaming debate.

Pennsylvania skill gaming casino gambling slot machine
A Pennsylvania Skill gaming machine is played at a Flying J gas station in Milton, Pa., on June 3, 2019. Pennsylvania’s top gaming regulator is asking state lawmakers to settle the skill gaming dilemma in the commonwealth. (Image: New Castle News)

Skill gaming machines remain in countless bars, restaurants, gas stations, and grocery stores across the commonwealth. There are even standalone brick-and-mortar retail locations solely dedicated to the controversial gaming devices.

Kevin O’Toole, the executive director of the PGCB, recently testified before the Pennsylvania Senate Democratic Policy Committee where he voiced his stance that lawmakers need to intervene and determine whether they wish to legalize and regulate the machines or ban them. But the grey area that they currently operate in isn’t in the state’s or consumers’ best interest, O’Toole stressed.

The legal landscape by which skill-based gaming operates is certainly unsettled and not legislatively determined. To resolve this uncertainty, a legislative determination one way or the other will need to be made,” O’Toole said.

Officials with the Pennsylvania Lottery and representatives from the state’s licensed commercial gaming industry say skill gaming machines poach revenue from their highly regulated and taxed operations. Opponents believe the games led to an estimated $250 million tax revenue shortfall that the lottery and casinos would have otherwise generated if skill games were not prevalent in the Keystone State.

Skill games in Pennsylvania remain unregulated. There are no consumer protections such as a guaranteed minimum payout rate or assurances that underage people cannot access the machines. Skill gaming revenue is also not subjected to a state tax. The money is instead split between the machine manufacturer, route distributor, and host business.

Consensus Needed

Skill games look, sound, and operate similarly to an older slot machine but differ in that a customer’s gameplay can affect the outcome. That aptitude element usually involves the player simply identifying a winning payline. A slot machine does that automatically for the gambler.

The skill element, proponents and at least one state judge reason, exclude the machines from the regulatory oversight of the Pennsylvania Gaming Act because the law only governs games of chance. Commonwealth Court Judge Patricia McCullough in 2019 said the Gaming Act cannot govern such machines, and therefore law enforcement should stop seizing them.

The PGCB, however, is still litigating the matter on its belief that the machines constitute gambling and games of chance. Proponents of the skill games say the subsequent revenue has been critical for small businesses and has allowed them to better keep up with inflation and rising employee costs.

O’Toole maintains that the state General Assembly needs to act.

It is entirely up to the General Assembly whether to legalize and tax these machines or to prohibit them,” O’Toole said.

But the state’s top gaming regulator says it’s his wish that if the legislature motions to authorize skill gaming, they amend the Gaming Act to allow the PGCB to incorporate regulations on their operations.

“It is the board’s position that should the General Assembly decide to legalize and regulate skill-based gaming that the regulation of this activity be put under the board’s jurisdiction as the board is the only agency with the ability and experience to regulate slot machine activity,” O’Toole pleaded.

Legislative Effort

State Sen. Gene Yaw (R-Lycoming) earlier this year introduced a measure seeking to establish a regulatory framework for skill games.

The statute suggested a $1 million one-time licensing fee for skill gaming manufacturers/distributors and for each host business to pay an annual $250 fee. The bill would also place a 16% tax on skill gaming revenue.

Yaw’s measure — Senate Bill 706, the “Skill Video Gaming Act” — was introduced in May but has stalled in the Community, Economic, and Recreational Development Committee.   

State Sen. Amanda Cappelletti (D-Montgomery) believes the state should take the opposite approach and outlaw skill games. Cappelletti says she’s drafting a bill that would make skill games illegal in the commonwealth.