Pennsylvania: casino leaders call for crackdown on illegal "skill games" costing millions to the state

A group named Pennsylvanians Against Gaming Expansion is calling for a crackdown on illegal “skill games,” which it claims cost residents millions of dollars. PAGE cites an analysis by the Pennsylvania Lottery that shows these games have led to an estimated loss of $650 million in Pennsylvania Lottery scratch sales.

The group, which was launched in 2021, describes itself as organized by leaders of the state's casino industry “in response to the proliferation of illegal slot machines, and legislation to add up to 85,000 Video Gaming Terminals (VGT)s and so-called 'skills games' across the state.” PAGE claims the Pennsylvania State Police, the Office of Attorney General and the Pennsylvania Gaming Control Board also maintain that “skill games” are illegal gaming devices.

“More than $650 million in Pennsylvania Lottery scratch sales have been lost to unregulated Games of Skill machines across the Commonwealth,” says the report quoted by the group. “To put it another way, the $14.9 billion in scratch products sold between October 2017 and March 2022 could have been more than 4.4% higher, which would in turn have generated over $200 million more for older Pennsylvanians and local businesses during that time."

The report is an update to previous Lottery analyses of the impact of skill games. It also found that since 2017, the Pennsylvania Lottery retail network has seen 17 times more skill machines found on-site across the state; eight times the number of retailers with at least one skill machine; six times the maximum number of skill machines found at any one retailer; and the spread of skill machines to every county in the Commonwealth.

"This analysis should serve as a flashing red light for lawmakers. It is time, once and for all, to tighten state law and shut these machines down," said Pete Shelly, spokesman for Pennsylvanians Against Gaming Expansion.

Shelly further urged lawmakers to consider the report and the impacts it shows as they debate proposals to expand gaming, “specifically legislation sponsored by state Sen. Gene Yaw that would regulate skill games, which leading law enforcement agencies have said repeatedly are illegal.”

"These machines do not generate a penny in gaming taxes. They also are bringing crime to communities across the state, and they drain revenue from programs for seniors that the Pennsylvania Lottery funds," Shelly added.

“Skill games,” which are similar to slots and have become popular in stores and small businesses, have long been a source of controversy in the state. While a court decision in 2014 deemed they indeed require skill and are not illegal gambling devices under the state’s crimes code, they are operated outside the reach of the Gaming Control Board, which cannot regulate them because the law only grants it jurisdiction over slots in state-licensed gambling facilities.

Thus, the machines have long operated in a gray area. While small businesses support them, claiming these machines provided much-needed revenue throughout the pandemic, several stakeholders describe them as illegal given consumers can spend and win money as they would on slots but without the Gaming Control Board’s regulation in place. Additionally, as they operate outside of the regulator’s reach, these machines remain untaxed.