Pennsylvania Supreme Court to Decide Fate of Skill Games’ Legality

Pennsylvania Supreme Court deciding the fate of skill games
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The legality of so-called skill games in Pennsylvania will be determined by the state’s Supreme Court. This week, the Pennsylvania Supreme Court announced it will accept the petition from state Attorney General Michelle Henry (D) to review a lower court’s opinion that skill games aren’t slot machines. Last December, a Commonwealth Court upheld the Dauphin County Court of Common Pleas’ ruling that since a skill game’s outcome isn’t solely dependent on chance — as is a slot machine — the devices don’t fall under the scope of the state’s Gaming Act.

Ongoing Legal Debate

Attorney General Henry, along with other state officials and several district attorneys, argue that skill games are merely cleverly designed slot machines with minimal skill elements. They claim that these elements often involve simple tasks, such as identifying a winning payline by tapping matching symbols. However, advocates for skill games insist that a player’s aptitude can significantly influence the machine’s payout rate, and players can recover losses by completing memory challenges.

The case that the Pennsylvania Supreme Court will review originated in Dauphin County in 2019 when state police raided Champions Sports Bar and seized several skill games along with $525 in cash. Champions sued, and state courts have since sided with the plaintiff. These court decisions have hindered state law enforcement from confiscating the games, which Henry’s office alleges are illegal gambling devices.

Definition of a Slot Machine

The Supreme Court will determine whether skill games constitute illegal, unregulated gambling devices. The court will also consider how a slot machine is defined in Pennsylvania.

The Pennsylvania Race Horse Development and Gaming Act, passed in 2004, authorized slot machines and has been amended several times to expand the state gaming industry. The Gaming Act defines a slot machine as “any mechanical, electrical, or computerized contrivance, terminal, machine, or other device” that operates upon the “insertion of a coin, bill, ticket, or token.” More importantly, it defines a slot machine as any machine that incorporates “skill or application of the element of chance, or both.”

The statute also provides definitions for “skill slot machines,” where the skill of the player, rather than the element of chance, is the predominant factor in affecting the outcome of the game. A “hybrid slot machine” is defined where chance and skill are mutually responsible for the player’s outcome.

Skill Gaming Industry

Pennsylvania is home to more unregulated skill games than any other US state. The American Gaming Association estimates there are at least 67,000 machines in restaurants and bars, convenience stores, gas stations, grocery markets, and shopping centers.

Revenue from the devices is split between the host business, machine developer, and route distributor. Proponents argue that this money has helped offset inflationary costs and retain small business jobs.

The skill game lobby is seeking to be taxed and regulated to secure the games’ spot in the Pennsylvania gaming industry. However, they request a tax rate considerably lower than the effective 54% tax that casinos pay on their slot machine revenue.

Conclusion

The Pennsylvania Supreme Court’s decision will have significant implications for the state’s gaming industry. As the court reviews the legality of skill games and the definitions of slot machines, the outcome could either bolster or dismantle the thriving, yet controversial, skill gaming market in Pennsylvania. The decision will also set a precedent for how other states might handle similar cases in the future.