In what feels like no time at all, it’s already been almost eight years since Pennsylvania first legalized online casinos. As one of only seven states to have taken this step so far, the Keystone State has since gone on to become a leader in the industry.
As a result, Pennsylvania’s gaming revenue has skyrocketed since the introduction of the first online casino in 2019. Per the PA Gaming Board, the state generated $2.18 billion in gaming revenue and over $2 billion in taxable revenue. Despite this, the state has often deliberated over whether to increase its business tax base by regulating skill-based games too.
iGaming has been nothing short of a revelation in Pennsylvania and other states like New Jersey that have legalized it. Modern online gambling sites are extremely popular in the US. As contemporary platforms now offer niche benefits like crypto betting, generous welcome bonuses, and instant payouts, local players are already playing their favorite casino games on internationally licensed sites too. Websites like the instantcasino.com platform ensure a simpler registration process, offer a wide variety of payment options (blockchain and crypto included), and provide some advanced security tech.
With all these changes pouring into an already dynamic market, Pennsylvania lawmakers are again looking to regulate skill games In an effort to bolster its status as a state that offers regulated iGaming. By adding this genre of gaming to its gambling regulations, the state will be able to benefit from added taxes. A popular type of gaming, skill games, and their operators, have traditionally avoided being lumped in with online casino platforms.
As a result, they have avoided the steep tax rates that online casinos and sports betting platforms registered in the state are subjected to. With sports betting operators taxed at 36% and online slot games taxed as much as 54%, the issue of whether skill games should be taxed has become a highly contentious one.
Last week, State Senator Gene Yaw initiated the process to propose legislation that would officially recognize and regulate electronic games resembling slot machines. These machines have become colloquially known locally as 'Pennsylvania Skill.' Now present throughout the state in a range of establishments, they are produced by Pace-O-Matic (POM) based in Georgia.
The company asserts that these games are lawful due to the inclusion of skill-based elements that can influence the outcome. This is in direct contrast to the legal definition of gambling games which are classified solely as games of chance. However, with these ‘skill’ games, players have other options.
For instance, they can use a skill element by placing a “wild” symbol on the reel grid within a set timeframe to secure a winning combination. However, the proposed bill faces significant opposition from several quarters, including Pennsylvania's casino operators, the American Gaming Association (AGA), and the Association of Gaming Equipment Manufacturers (AGEM), who both often collaborate to combat unregulated gaming. Their primary concern is that these machines operate without any oversight regarding their fairness and lack measures for responsible gaming and anti-money laundering.
In contrast to this, gambling operators face a massive regulatory burden. Apart from paying massive amounts in taxes on their revenue, they must also comply with a range of licensing and regulatory legal obligations. Operators in Pennsylvania are forced to maintain everything from the info they collect and store when players register to betting limits and a range of other administrative burdens.
However, critics have long argued that skill-based games are not subject to taxes, which creates an unequal playing field when compared to casino slots. Despite the opposition, Pennsylvania courts have issued rulings favoring POM, reinforcing the company's position regarding the legality of its machines.
POM contends that the ongoing robust earnings from casino slots, despite the presence of skill games, is proof that their products do not adversely affect the traditional slot machine market. However, casino operators and slot machine manufacturers highlight their adherence to stringent regulatory checks and fees, which companies like POM are not subjected to.
Given the vast amounts of money this issue potentially deals with, Senator Yaw has received notable campaign donations from manufacturers of these games. He’s also repeatedly introduced similar bills in previous sessions, though none have progressed to a vote. He advocates for the regulation of these games, emphasizing their economic contribution to local business.
Meanwhile, Mike Barley, POM's chief public affairs officer, emphasizes that regulating these games would aid 15,000 workers across small businesses and nonprofits in the state, helping them manage financial pressures like inflation and workforce shortages. Proposed measures in Yaw’s bill include setting a legal age for players and connecting machines to a central system to ensure proper tax collection. Advocates suggest a tax rate of 16%.
This issue has also seen legal action from casino operators, who in July filed a lawsuit demanding that skill games be taxed, arguing that the absence of such a tax on skill games while imposing a 54% tax on casino slots is unconstitutional.
Senator Gene Yaw's persistent efforts to legalize and regulate 'Pennsylvania Skill' games face opposition from casinos citing unfair tax advantages and lack of regulation. Despite legal challenges and industry resistance, proponents argue for the economic benefits to small businesses and the necessity of legislative action.
