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The Pennsylvania Supreme Court has ruled that skill games are subject to the state’s Gaming Act and Crimes Code, overturning lower court decisions that had allowed the machines to operate outside slot machine regulations.
The decision gives lawmakers a 120-day window to act before law enforcement can move against owners and operators. The court acknowledged the “potential disturbance” the ruling could cause and stayed enforcement during that period. Without legislative action, machines could be subject to seizure.
The ruling affects an estimated 70,000 devices operating in taverns, gas stations, corner stores, VFWs, bars and other businesses across Pennsylvania. It also carries budget implications as lawmakers consider whether to regulate and tax the sector.
The Independent Fiscal Office has estimated that a tax-and-regulation framework could eventually generate more than $1 billion annually.
Justice David Wecht, writing for the majority, said the case was not about personal views on gambling. “How one feels about access to ‘skill games’ or other types of slot machines – or about the broader legislation and normalization of gambling in our society, for that matter – is irrelevant,” he wrote.
“This is, rather, a matter of straightforward application of existing statutory law.”
Two cases were decided together. One involved a 2019 petition after police seized machines from a bar and skill games supplier. The other was brought by Pace-O-Matic, a major skill games developer and distributor, seeking a judgment on whether the games were legal.
The court said Pace-O-Matic devices are “several times over” a slot machine and that the legal definition “describes the POM device with precision.” The justices also said Commonwealth Court’s interpretation was “deeply flawed” and “incorrect on both points.”
Lower courts had sided with the skill games industry, finding that the games involved enough skill to avoid slot machine regulation.
The Supreme Court said any minor skill element was irrelevant because the devices meet the statutory and ordinary definitions of slot machines. The justices also noted that the Gaming Act applies beyond licensed casino slot machines.
Pennsylvania Attorney General Dave Sunday called the ruling a “significant victory for consumers, taxpayers, and the rule of law in Pennsylvania.”
Pace-O-Matic said it was disappointed and argued the ruling did not reflect the facts presented in lower court proceedings. The company said more than 10,000 small businesses and fraternal clubs could lose an important revenue source if the games are removed or taxed under what it described as excessive regulation.
It said it would continue working with lawmakers during the stay and supported legislation such as Senator Yaw’s SB 1079 and Representative Burgos’ HB 2213.
Republicans who control the state Senate said the issue is now a “critical piece” of resolving this year’s budget. Senate GOP leaders have backed a 35% tax rate, while other Republicans have proposed 16%.
Gov. Josh Shapiro’s proposed budget called for a 52% rate, closer to taxes on casino slot machines and electronic games. State House Democrats and Shapiro’s office said they are reviewing the decision.
The state budget is due June 30, though lawmakers have missed the deadline in recent years. State Rep. Ben Waxman, a Philadelphia Democrat, warned against moving too quickly, saying: “What we are talking about here is the potential largest expansion of gambling in Pennsylvania history since the casinos.”