HARRISBURG — Video skill games spread rapidly across Pennsylvania, welcomed by bars, social clubs and convenience stores as a crucial cash cow, and now the gaming terminals have grown into a central issue in budget negotiations.
There’s no formal count on how many machines are in use, how many are operated above board, and how much revenue they generate. Anecdotally, the games are ubiquitous in bars and quick retail stops. Given the fervent support from tavern owners and the like, they’re clearly profitable.
“Let’s be clear, Steggie’s is here today in big part because of the legal skill games we have in our bar. Nearly 10 years ago, we installed these games that bring in customers and provide a lifeline for businesses like ours,” Mary Jo Bishop said during a rally Tuesday inside the State Capitol Rotunda. She and her husband, Paul, operate a family business founded 80 years ago — Steggie’s 9th Ward Cafe in Lebanon.
“One thing I already knew firsthand was how much good our organizations can do thanks to legal skill games. In fact, we keep our mission of helping people only because of the revenue from skill games,” said Eric Hoover, newly elected state president of the Fraternal Order of Eagles in Pennsylvania.
“If those games disappeared tomorrow,” Hoover said, “we would need to lay off staff.”
Skill games are legal in Pennsylvania. The Commonwealth Court ruled in 2023 that while similar in some respects to video slot machines, skill games utilize a player’s memory and don’t operate solely on chance.
They aren’t gambling devices and don’t violate state gaming law, the court found.
Regulations to ensure fair play, enforce age restrictions akin to cigarettes and alcohol, and generate tax revenue for the state government have been bandied about for the past several budget cycles.
Gov. Josh Shapiro, a Democrat, proposed a 52% tax in line with what some casinos pay on slot machines. It’s the lone line of new tax revenue reportedly on the table in budget talks as recreational marijuana legalization seems unlikely.
Republicans in the state Senate introduced dueling bills to regulate and tax skill games, pitting a senior legislator opposite of a proposal backed by the party’s majority leadership.
Sen. Gene Yaw, R-Lycoming, has a skill game manufacturer in his district, Miele Manufacturing, and says he’s worked more than four years on a regulation proposal introduced this session, Senate Bill 626. He’s proposed a 16% tax rate, an 18-and-over age structure, per-game maximums of $5 to play and $5,000 in winnings, and limits of five machines at businesses and 10 machines at social clubs like a VFW or American Legion. It would also ban standalone parlors where skill games are the primary source of revenue.
According to Yaw, the supplemental income has become crucial to small businesses and a primary driver of money reinvested by service organizations into local communities.
“We could have passed this bill two years ago and we didn’t. We would have had $500 million,” Yaw said after the Capitol rally.
On the competing legislation backed by party leaders, Senate Bill 756, Yaw said he was never asked for input on what’s been described as a compromise offering, and he thinks he knows why.
“The purpose behind (SB 756) is not finding a resolution of skill games, the purpose is elimination, flat out elimination,” Yaw said.
Yaw has the support of Rep. Danilo Burgos, D-Philadelphia, who likened support for skill games to supporting “Main Street over Wall Street,” a reference to the billion-dollar casino industry. Burgos said he would soon introduce companion legislation to Yaw’s proposal and said that he does have the ear of majority House Democratic Caucus leadership.
“We’re working on it. We do understand that we need to expand the tax base and reasonable members are ready to work on it. I’m working with my leadership to make sure that the bill that I put forward, hopefully, will be the one considered to move forward and send over to the Senate,” Burgos said after the rally.
Senate Bill 756 was introduced by Republican Sen. Chris Gebhard and counts Republican Senate Majority Leader Joe Pittman and Republican Senate President Pro Tempore Kim Ward as formal cosponsors.
The bill proposes a 35% tax rate on gross terminal revenue, one that supporters of Yaw’s bill say would undercut the supplemental revenue to the point that many clubs and bars would close.
The age restriction for players would be 21, and permitted venues — places with liquor licenses — would be allowed up to seven skill game terminals.
Regulations proposed in the measure would be enforced by the Pennsylvania Gaming Control Board, the casino industry regulator that Yaw says has an interest in shuttering skill games.
Provisions in Yaw’s bill would be enforced by the Bureau of Liquor Control Enforcement.
Ward and Pittman couldn’t be reached for comment Tuesday.
“We’ve looked the other way for several years, and now we have small businesses that have come to rely on these machines,” Pittman said last week when addressing skill games.
“We’re sensitive to small businesses, we’re sensitive to the mom-and-pops that now use these for ancillary income. We don’t want to be hurtful in that regard, but at the same token we have to bring a regulatory framework,” Pittman said, noting the court ruling that found skill games legal.
“My personal opinion is this is gambling. It needs to be regulated, it needs to be age-restricted and it needs to recognize the other forms of gaming that we have in this commonwealth,” he said.