Pennsylvania’s skill games industry is running out of time. The machines, which can be found in bars, social clubs, convenience stores, gas stations and other businesses across the state, are facing a major legal change after the Pennsylvania Supreme Court ruled in June that they qualify as slot machines under state law. The court then gave lawmakers and the industry a 120-day window before enforcement could begin.
That window expires October 13, leaving the General Assembly with weeks to decide whether Pennsylvania will create a dedicated regulatory framework or allow the machines to fall under existing slot-machine restrictions. Rep. Russ Diamond is now putting his own framework on the table.
Diamond Wants Skill Games Brought into the Legal Market
Diamond, the Republican chair of the House Gaming Oversight Committee, has introduced HB 2801 and HB 2802 after months of discussions involving gaming stakeholders, skill-game suppliers, regulators and members of the public. The official House record identifies the bills as part of his “Skill Games & Gaming Modernization” proposal.
The proposal would treat skill games as a regulated form of gaming rather than leaving businesses and operators to navigate the uncertainty created by the Supreme Court ruling.
One of its headline provisions is a 20% tax on skill-game revenue. The proposal would also limit the number of machines to five at clubs, liquor-licensed restaurants and bars, as well as qualified truck stops. That would create a much more defined operating model for businesses that currently host the machines.
The Plan Goes Beyond Skill Games
Diamond’s legislation is not limited to creating rules for the machines themselves, as the proposal would also cut the tax rate on casino slot-machine revenue to 49.9% and establish the same rate for online casino gaming. The legislation therefore represents a broader attempt to adjust Pennsylvania’s gaming framework rather than simply solving the immediate skill-game dispute.
Another major part of the proposal is property tax relief. According to Diamond’s announcement, the plan would provide a direct annual gaming dividend to Pennsylvania’s 2.87 million qualified homeowners. The proposal estimates a payment of at least $702 per year for every qualified homeowner, assuming no growth in existing legal gaming revenue and excluding any additional skill-game revenue.
Homeowners already receiving homestead or farmstead relief would see an estimated additional annual benefit ranging from $459 to $602 depending on their school district. The proposal claims 96% of Pennsylvania homeowners would receive greater property-tax relief under the plan.
October 13 Is Driving the Debate
The timing is perhaps the biggest issue facing lawmakers, considering Pennsylvania State Police have already warned businesses that skill-game machines operating outside licensed casinos and qualifying truck stops will be unlawful after the October 13 safe-harbor period expires. Enforcement could include seizure of machines and associated proceeds, as well as criminal charges where appropriate.
That leaves a narrow window for lawmakers to settle questions around taxation, licensing, locations, enforcement and consumer protections.
