Evaluating Skill Games in Pennsylvania: Whether to Regulate or Prohibit?

Pennsylvania is grappling with a pivotal decision regarding the future of skill games within its gaming landscape. A policy hearing hosted by Senator Amanda Cappelletti and Senator Katie Muth shed light on the ongoing debate surrounding these games, raising questions about regulation, taxation, and potential bans. Regulatory authorities, including the Pennsylvania Gaming Control Board (PGCB) and representatives from casinos, presented their perspectives on an issue that has stirred controversy for years.

Skill games, a form of unregulated gaming, have emerged as a parallel to traditional casino slot machines. As the debate around their status intensifies, Pennsylvania's state legislature faces three main options:

• Maintaining an unregulated skill game environment
• Instituting the regulation of skill games with a corresponding tax structure
• Altogether, banning all skill games in the Pennsylvania gaming market

Skill games, a type of unregulated gaming, are digital amusements similar to traditional casino slot machines. Their operation and mechanics often involve elements of player skill and decision-making, setting them apart from games of pure chance.

This distinctive blend of skill-based interaction and potential monetary rewards has prompted discussions and debates about their classification and regulatory framework within the context of Pennsylvania's gaming landscape.

Regulatory discussions on skill games have been dynamic, with PGCB Chair Denise Smyler expressing skepticism about the feasibility of regulating them. Her concerns revolve around establishing regulatory parity between skill games and Video Gaming Terminals (VGTs) in casinos.

Pennsylvania Senator Gene Yaw's proposed tax rate of 16% for skill games further underscores the divide, given that casino slot machines are taxed at 52%. During the recent policy hearing, PGCB Executive Director Kevin O'Toole presented an alternative viewpoint.

O'Toole requested the authority to regulate skill games if they were to be legalized, asserting the PGCB's unique competence in overseeing slot machine activity. His confidence in the PGCB's ability to manage skill games' regulation was matched by a potential increase in staffing should such a scenario materialize.

Regulators consider skill games as direct competitors to casino slot machines, underscoring the urgency for legislative clarity. O'Toole emphasized the necessity of a legislative decision to resolve uncertainty and provide peace of mind for all stakeholders. The onus rests on the General Assembly determining whether to permit or prohibit skill games.

The American Gaming Association (AGA) and Pennsylvania casinos advocate outright banning skill games. The AGA conducted a survey, revealing concerns among respondents about the lack of player protections, accessibility to children, and the potential for increased crime associated with skill games.

AGA President and CEO Bill Miller emphasized that these unregulated machines pose a threat that should be eliminated rather than regulated. Penn Entertainment VP of Public Affairs and Government Relations, Jeff Morris, echoed these sentiments, describing skill games as an "unregulated, unmitigated disaster." He cited the absence of consumer protections, increased crime rates, and adverse impacts on casino revenue.

The Pennsylvania Supreme Court currently holds the case concerning skill games, with prominent Pennsylvania casinos such as Parx Casino, Mohegan Pennsylvania, Hollywood Casino at Penn National Race Course, and others opposing their operation.

This legal dispute encompasses parties ranging from the PGCB and the Department of Revenue to Pace-O-Matic (POM), a Georgia-based manufacturer of skill game machines.

The timeline for reaching a decision on the fate of skill games remains uncertain. While courts have previously ruled in favor of skill games operating as they are, the ongoing debates, legal challenges, and shifting viewpoints highlight the complexity of the issue. The outcome will have far-reaching implications for Pennsylvania's gaming industry and its alignment with modern regulatory standards.

The discourse surrounding skill games in Pennsylvania encapsulates the multifaceted nature of the state's gaming landscape. As policymakers, regulators, and stakeholders navigate the intricate nuances of skill games, the final decision will shape the industry's future trajectory.

Whether through regulation, prohibition, or an alternative approach, the resolution of this matter will determine not only the legal standing of skill games but also their impact on the broader gaming ecosystem.