Summary:
- Skill games remain untaxed and unregulated after lawmakers failed to reach a deal in this year’s budget.
- Competing tax proposals, heavy lobbying, and a pending state Supreme Court case continue to complicate the issue.
- Both Gov. Shapiro and legislative leaders say skill-game reform will be a priority next year as the state faces a budget gap.
Pennsylvania lawmakers wrapped up this year’s budget without settling one of the state’s most complicated issues: what to do about slot-style skill games.
The widely-spread found everywhere from bars to gas stations continue to sit in a legal gray zone, untaxed and unregulated. Even though both parties agree something needs to change, the topic slipped through the cracks again.
Gov. Josh Shapiro has already said the matter is “unfinished business” and legislative leaders signaled they’re ready to revisit it in 2026.
As Senate Majority Leader Joe Pittman put it after the budget vote,
This building has a long history of going through gaming debates, and they are very complex and very tedious and very difficult. I certainly believe gaming reform is, and must be, an important policy initiative going forward.
Money at the Center
Money is a big part of the debate. The state is facing a structural deficit, and expanding gambling taxes is one way to raise revenue without touching income or sales taxes.
Pennsylvania already brought in a record $2.7 billion last year from casino games, online gambling, sports betting, and truck stop video terminals. Tapping into the skill-games market could add more.
Shapiro suggested taxing the games at 52% of gross revenue, estimating the state could gain about $400 million. Senate Republicans countered with a 35% rate.
Casinos, which pay 55% on electronic games, want skill games taxed at a similar level. None of these proposals gained traction.
Lobbyists for Pace-O-Matic, a major skill-games company, pushed for a bill from Sen. Gene Yaw that included a 16% tax instead. As negotiations stalled, Yaw and Democratic Sen. Anthony Williams floated a different idea: a flat $500 monthly fee per machine. They said it could bring in around $300 million while avoiding a tax fight. Williams added that the bill also aims to rein in “stop-and-go” stores in Philadelphia that can double as illegal gaming hubs.
On top of the political wrangling, the state Supreme Court is weighing whether these machines should legally count as gambling.
The attorney general’s office argued, “A game that looks like a slot machine, and plays like a slot machine, is a slot machine”. Pace-O-Matic’s attorney Matthew Haverstick said the devices follow established legal precedent and added,
Why (do skill machines) make money? Because somebody really brilliant came up with an idea that they tested … It was held to be legal, and nobody appealed.
Lobbying pressure has only intensified. Casinos, sports-betting companies, video terminal operators, and skill-games manufacturers all have something at stake, and they spend heavily to make sure lawmakers pay attention. Over the last two years, gaming interests donated $1.7 million to top state leaders and the governor.
While skill-games reform didn’t make the cut this year, one thing is for certain: the debate is far from over.
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