HARRISBURG — Pennsylvania State Police warn that skill games formally become illegal next month and small businesses that don’t comply face “criminal prosecution and immediate seizure of the machines.”
Social clubs, convenience stores, bars and restaurants are among the many small businesses that had housed an estimated 70,000 skill games in a legal gray zone in the Commonwealth. That was before the Pennsylvania Supreme Court definitively ruled on June 15 that the devices qualify as slot machines.
Slot machines are regulated by the state’s Gaming Act and are narrowly permitted at licensed casinos, racetracks, hotels and resorts. Skill game machines operated beyond licensed facilities, which include licensed truck stops, as of Oct. 14 — the end of a 120-day freeze on the Supreme Court’s ruling — violate the state crimes code and are illegal.
State lawmakers were given the four-month window to pursue a new law regulating skill games, which would allow them to remain in operation at small businesses. Short of a rapid solution to a knotty problem that’s vexed the General Assembly for years, proprietors should expect enforcement to begin promptly, according to PSP.
“Enforcement actions may include seizing and forfeiting the machines, associated equipment and money associated with the operation of the machines and/or filing criminal charges where deemed appropriate,” state police advised in guidance released this week.
“The PSP strongly recommends that businesses currently hosting such machines discuss their removal with any distributors or vendors who may own the machines and associated equipment, including ticket redemption terminals,” the guidance continues.
Removal is key to compliance. PSP says powering down machines or unplugging the devices isn’t good enough, they must be taken off premises. Troopers encourage small business owners to coordinate removal with distributors or vendors. If they won’t take the machines back, state police offer assistance to those who “proactively reach out.”
Time clearly is of the essence, and the issue is one that seemingly impacts every legislative district in Pennsylvania.
Lawmakers often stress how crucial skill game revenue has become for small businesses and, more specifically, volunteer fire companies and veteran service organizations. Now, their constituents face the prospect of seeing that revenue vanish along with the machines if regulatory control isn’t established.
Legislative proposals include tax structures on gross revenue — 16%, 35%, 52%. There are fee structures offered, too, to avoid a new tax; for example, $500 per machine. The varied bills propose regulation beyond revenue, such as capping how many machines are permitted statewide, where they could be legally located within communities, and age restrictions akin to alcohol, that is, 21 and older to play.
Revenue estimates vary with each proposal, ranging from hundreds of millions to billions of dollars for a ballooning Commonwealth budget in need of new income.
But neither the House nor the Senate has yet coalesced behind a bill, and both chambers have just six scheduled voting sessions each ahead of the court-imposed deadline — Sept. 28-30, Oct. 5-7.
When Pennsylvania’s latest budget was adopted in July, Senate Republican Majority Leader Joe Pittman said his caucus was open to a regulated marketplace, something caucus leaders on all sides in both chambers seem to agree on. How that’s achieved is the hurdle that’s not been cleared.
Sen. Gene Yaw, R-Bradford/Lycoming/Sullivan/Tioga/Union, initially proposed the 16% tax structure before shifting to a fee-based structure in his latest bipartisan bill proposal. In an op-ed this week, he said “onerous taxation” would kill the skill game industry. Miele Manufacturing, located within Yaw’s Senate district, manufactures games for leading distributor Pace-O-Matic of Georgia, which was at the center of the case decided by the Supreme Court.
Yaw is urging his legislative colleagues to muster behind his fee-based proposal. He estimates that Pennsylvania has already lost out on $1 billion in new revenue, and that inaction would harm neighborhood stores and service organizations.
“Skill games aren’t just entertainment,” Yaw wrote. “They’re a lifeline. For many Pennsylvanians, they are a paycheck and health benefits. For small businesses, they can mean the difference between keeping the doors open and closing them. For veterans’ organizations, fraternal clubs and volunteer organizations, they provide revenue that helps fund their missions and serve their communities.
“Pennsylvania has already lost too much. We can’t afford another delay,” he wrote.