Representative Russ Diamond is rallying support for a new regulatory framework that includes a 20% tax on skill games in Pennsylvania. This comes as lawmakers face a looming deadline of October 13 to address the legality of these games following a recent state Supreme Court ruling.
The court classified skill game machines as slot machines, placing them under existing gambling regulations. In response, Diamond has circulated a memo proposing a two-bill package aimed at regulating and taxing these games while also initiating broader reforms to the state's gambling laws.
Although the legislation has not been formally introduced, Diamond is actively seeking co-sponsors. His initiative represents a critical attempt to establish a regulatory structure for skill games before the court's 120-day stay expires.
In June, the Pennsylvania Supreme Court ruled that the machines produced by Pace-O-Matic fall under both the state's Gaming Act and its criminal gambling statutes. This decision reversed earlier court rulings that permitted these machines to operate without regulation.
To accommodate businesses that have relied on skill games, the court postponed enforcement of its ruling for 120 days, providing lawmakers with a window to act.
Diamond's first proposed bill would impose a 20% tax on gross terminal revenue from skill games, allowing up to five machines in clubs, liquor-licensed restaurants, bars, and qualified truck stops. The memo does not specify a statewide limit on the number of machines that can operate.
Currently, skill games are prevalent in various businesses, including convenience stores, gas stations, and grocery stores, with estimates suggesting there are between 70,000 and 100,000 machines statewide.
Additionally, Diamond's proposal aims to set the tax rate for casino slots and online casino games at 49.9%. Presently, casino slots are taxed between 48-54%, while online slots incur a 54% tax.
The revenue generated from gaming taxes would be allocated to the State Gaming Fund, with 79% designated for property tax relief, 13.25% for the General Fund, 6.75% for the Race Horse Development Trust Fund, and 1% for the Compulsive and Problem Gambling Treatment Fund. A second bill would outline the distribution method for these funds.
Efforts to regulate skill games in Pennsylvania have been ongoing for years, with Governor Josh Shapiro proposing regulations in his last two budget plans. His latest proposal suggested a 52% tax rate, a cap of 40,000 machines statewide, and a limit of five machines per establishment. Other lawmakers have suggested lower tax rates or different fee structures.
Despite the urgency imposed by the court's deadline, legislators were unable to reach an agreement during the summer budget discussions, leading to the exclusion of skill game regulation from the $50.8 billion budget signed by Shapiro in July.
Diamond's proposal may encounter challenges as it seeks to reform not just skill games but also Pennsylvania's overall gaming framework. Reports indicate skepticism among lawmakers about their ability to agree on such a comprehensive package, especially given their struggles to resolve the skill game issue alone.