Pa. Supreme Court: Skill games are slot machines
Pennsylvania’s Supreme Court delivered a game-changing decision on the nature of skill games on Monday, June 15, ruling the machines are to be legally considered gambling devices — a decision that could have serious financial implications for businesses which distribute and operate the tens of thousands of units across the state.
Pennsylvania Attorney General Dave Sunday hailed the high court’s decision in a statement issued Monday.
“Today’s ruling is a significant victory for consumers, taxpayers and the rule of law in Pennsylvania,” Sunday said. “The Supreme Court recognized what our office has argued from the beginning — these machines operate as gambling devices and cannot legally exist without the same oversight, regulation and accountability as other forms of legalized gaming in the Commonwealth. Pennsylvanians deserve protections that ensure games are fair, transparent and operated within the bounds of the law.”
Monday’s ruling effectively overturns a 2023 decision from Pennsylvania’s Commonwealth Court, which ruled skill games were legal games of skill and not subject to regulation under the Pennsylvania Race Horse Development and Gaming Act.
“The Commonwealth Court’s interpretation of the governing statutes … is deeply flawed,” wrote Justice David Wecht in his majority opinion. “The Commonwealth Court was incorrect on both points. Under a plain reading of the law, ‘skill game’ devices are subject to both the Gaming Act and the Crimes Code.”
“We appreciate the clarity the Supreme Court has given with today’s ruling,” wrote state Sen. Kim Ward, R-39th, and Joe Pittman, R-41st, on behalf of the Senate Republican Caucus in an official statement. “The proliferation of skill games is a matter of public safety which must be addressed and given the timing of this decision, we believe gaming reform is a critical piece of resolving this year’s budget.”
The decision could have major financial consequences for the operators of the machines, many of whom are small businesses which rely on them for revenue.
Prior to the Supreme Court’s decision, skill games operated in a legal gray area. They can commonly be found in dedicated game parlors, as well as bars, restaurants, laundromats, convenience stores and other establishments. According to a statement from the Pennsylvania Office of the Attorney General, an estimated 70,000 skill game machines are currently in operation in the state.
However, the state Supreme Court’s decision brings skill games to the same status as slot machines, which are subject to both the Crimes Code and the Gaming Act — the latter of which allowed the legalization of slot machines at specific facilities starting in 2004.
“What this does is, it puts (skill games) into the category of illegal gambling devices, so it essentially reintroduces the Crimes Code into the equation,” said Don Shiffer, an attorney with experience representing skill games interests in Pennsylvania. “They could be seized and the owners or users of them fined under the Liquor Control Enforcement Division of the Pennsylvania State Police.”
The Supreme Court’s ruling also states law enforcement can’t take any action against owners or operators of skill games for 120 days — or until Tuesday, Oct. 13.
This effectively gives Pennsylvania’s lawmakers four months to create a legal framework for the continued legal existence of skill games — if any — as well as an agreement for how to tax the games.
Pennsylvania lawmakers and skill game interests have grappled over the tax rate issue for years, with Gov. Josh Shapiro proposing a skill game tax rate of 52% in his March state budget proposal.
“As it is right now, unless the legislature acts to promulgate a law to allow (skill games) to be legal in some form, they are illegal as a matter of law and therefore must be removed,” Shiffer said. “It’ll be a disastrous effect on the economies of these businesses, without a doubt.”
Shiffer, who expressed disapproval of the Supreme Court’s decision, believes the decision was made as a way to push the General Assembly to come to a decision on the regulation and taxation of skill games.
“I believe that the Supreme Court misinterpreted the definition of slot machines under the Pennsylvania Gaming Act. There was a pretty strong and solid body of case law that supported reasonable decisions to the contrary,” Shiffer said. “I think this was the Supreme Court’s way of spurring the General Assembly along to determine what a reasonable tax rate is and I think that view is supported by the 120-day moratorium on enforcement.”
Pace-O-Matic, a Georgia company which distributes skill games in Pennsylvania, also expressed disappointment in the Supreme Court’s decision in a statement issued over news wires Monday.
“We are disappointed with the decision by the Pennsylvania Supreme Court and strongly believe it does not accurately reflect the facts presented,” the company said. “Sadly, this opinion will have far-reaching consequences, with more than 10,000 Pennsylvania small businesses and fraternal clubs becoming the real victims.”
