Are they games of skill or luck — or a little of both?
The state Supreme Court will soon decide the fate of so-called skill game machines, the slot-like devices that have proliferated in recent years in bars, convenience stores and gas stations across Northeast Pennsylvania and around the state. Lower courts have ruled they are not gambling devices that can be regulated under current state law.
Some operators have launched stand-alone skill-game parlors that have been dubbed “mini casinos” that offer a VIP atmosphere with amenities like massage chairs and provide free alcohol to players, such as the Keystone Klub, which has venues in Edwardsville and West Pittston and two locations in Scranton.
Unlike slots in casinos, which are taxed at roughly 54%, the skill games remain untaxed and unregulated. Gov. Josh Shapiro had been hoping to add a 52% tax on the skill games, estimated to generate around $1 billion a year, as part of his 2026-2027 budget, which is due by the end of the month.
Are taxing and regulating skill games again going to be considered during the budget process? (JASON ARDAN – CITIZENS VOICE)
Skill-machine lobbyists insist the machines are not gambling devices based solely on the luck of a random spin, as skilled players have a chance to win on every wager by moving symbols up or down to get three in a row in the money line — or by solving a post-spin memorization puzzle similar to the 1980s game “Simon Says.’
State officials argue much more luck than skill is involved to win — and few players even know about the post-spin chance to recoup your wager.
“It’s luck. All we do is put money in and hope you hit,” said Lester Jackson, 69, of Wilkes-Barre, while playing at the Edwardsville Keystone Club in the Gateway Shopping Center. “But it relieves a lot of stress. And it pays out fair. It gives people something to do instead of running all the way up the casino.”
“Uniquely tied to the budget”
Regardless of what the Supreme Court decides — whether they are skill machines or gambling devices — state Rep. Eddie Day Pashinski, D-121, of Wilkes-Barre, predicts they will be legal and taxed in the near future.
The state legislature has been waiting on the Supreme Court ruling before introducing legislation.
“You’re never going to stop people from smoking, drinking or gambling, but we can regulate it, make it safe as possible, and make sure it’s honest,” said Pashinski, who is retiring at the end of this year. “The bottom line is: how can we regulate it, but in a way so it still can provide opportunity for people who enjoy that and get the dollars out of it so it could help everyone else? All they are doing now is enticing people to create that habit, which is costly, and there is no benefit out of it for the community.”
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, like the Keystone Klub in Edwardsville.(Bob Kalinowski / Staff Photographer)
Pashinski noted revenue generated by the 54% casino slot tax contributes millions of dollars to fund Local Services Account grants to local municipalities.
He believes the skill game operators were seeking a tax of less than 20%.
State Rep. Alec Ryncavage, R-119, of Hanover Twp., said he supports a “balanced approach” in taxing and regulating the industry. He said he is against the standalone skill machine parlors.
“These skill devices do help support our small businesses, our VFWs, our American Legions,” Ryncavage said. “In terms of concerns, I don’t want these devices to end up like mini-casinos. Across my district, they are popping up everywhere. These are unmonitored facilities where they are offering free booze and food to gamble. They don’t have to have a liquor license because they are not charging for the booze and they are essentially becoming mini-casinos.”
Ryncavage said the issue is “uniquely tied to the budget.” He said the governor had been banking on three possible options to fund his budget: the legalization and taxation of adult-use cannabis, taxing skill games or raising the minimum wage, which would boost the state’s revenue from the earned income tax.
“He has to accomplish one of those things. I think skill games is probably the lowest hanging fruit,” Ryncavage said. “And we have 30 days to get our budget done.”
The Associated Press reported the skills game industry spent about $8 million in May’s primary election trying to oust three incumbent Republican state senators, including state Sen. Lisa Baker, R-20, of Lehman Twp., believing they supported a higher tax on the industry. All three senators won their primary elections.
The state’s Independent Fiscal Office estimated taxing skill machines at Shapiro’s suggested 52% would generate about $1 billion the first year, based on taxing 40,000 licensed and regulated machines that would be tied into the state Department of Revenue’s main computer database.
It estimated there are about 50,000 of the machines currently in operation in the state, the fiscal office said.
Under the proposal, each licensed establishment would be allowed a maximum of five machines.
The Independent Fiscal Office estimates the current payout for skill game machines is 75% while the minimum payout for state-regulated casino slot machines is 85%. The state is proposing to lower the skill game payout minimum to 70% to shift more burden to the player instead of the machine operator or owner, the Independent Fiscal Office wrote in a recent report.
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania.(Bob Kalinowski / Staff Photographer)
Fairly taxing the modern-day skill machines has become a bipartisan issue, State Sen. Marty Flynn, D-22, of Dunmore, said.
“At the end of the day, these are unregulated, untaxed slot machines. The Legislature must do something to address their proliferation in our communities. Compounding the issue is the impact these machines are having on Pennsylvania. They generate more than a billion dollars in revenue outside of the state’s regulated gaming system, resulting in significant lost tax revenue that could be supporting our communities,” Flynn said. “It’s not fair to the casinos and other regulated gaming operators that follow the rules and contribute to the Commonwealth, and it’s certainly not fair to Pennsylvanians who are losing out on resources that could help fund important services. These machines are also taking revenue away from the Pennsylvania Lottery, which helps fund programs that many seniors rely on every day.”
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in Hanover Twp.(Bob Kalinowski / Staff Photographer)
Key industry player responds
Officials with Georgia-based Pace-O-Matic, one of the major vendors of skill game machines in Pennsylvania, argue their games are based on skill, not luck.
“Courts, including the Pennsylvania Commonwealth Court, have all said that Pennsylvania Skill Games are legal and games of predominant skill. With patience, a player can win every time they play a legal skill game. The more you play, the more you learn about the game and increase your ability to win.,” Jeanette Krebs, a spokeswoman for PA Skill, an affiliate of Pace-O-Matic, wrote in an email.
Revenue from the machines provide “critical supplemental revenue” to local communities, Krebs said.
She said her operator would gladly pay a reasonable tax on revenue, but 52% is too much.
“Pennsylvania Skill has been asking for responsible regulation and a fair tax on skill games for over a decade. We have said we would gladly pay an additional, industry-specific tax. The 52% tax, however, would kill the skill game industry,” Krebs said. “Small bars, restaurants, VFWs, American Legions, fraternal groups and volunteer fire companies that have Pennsylvania Skill games would NOT be able to pay such a high tax. These places would not be able to operate the games, and some would close. It also means the state would not get the revenue it anticipates from the tax.”
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in the Keyser Oak Shopping Center in Scranton.(Bob Kalinowski / Staff Photographer)
Pace-O-Matic prides itself on providing machines “in places where they are not the only source of income for a location,” Krebs said.
She said the company has donated more than $1.4 million in the last few years to organizations across the state, including veteran organizations, homeless shelters, food banks, first responders, animal rescues and other worthy causes.
“Legal skill games are a lifeline to many small businesses, veteran groups, fire halls and fraternal groups,” Krebs said. “Some would not be able to stay open without them.“
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in Hanover Twp.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including the Keystone Klub at the Gateway Shopping Center in Edwardsville.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in the Keyser Oak Shopping Center in Scranton.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in Hanover Twp.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in the Keyser Oak Shopping Center in Scranton.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, like the Keystone Klub in Edwardsville.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in the Keyser Oak Shopping Center in Scranton.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including this former location on North Market Street in Nanticoke.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including the Keystone Klub at the Gateway Shopping Center in Edwardsville. (Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, like the Park Skill Zone at the Park Market in Nanticoke.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at the Main Street Smoke Attack on South Main Street in Wilkes-Barre.
(Bob Kalinowski / Staff Photographer)
Lester Jackson, 69, of Wilkes-Barre, says he likes placing wagers on the skill machines at the Edwardsville Keystone Klub. (Bob Kalinowski / Staff Photographer)
Lester Jackson, 69, of Wilkes-Barre, says he likes placing wagers on the skill machines at the Edwardsville Keystone Klub.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in Hanover Twp. along the Sans Souci Parkway.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at the Main Street Smoke Attack on South Main Street in Wilkes-Barre.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in Hanover Twp. (Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania.
(Bob Kalinowski / Staff Photographer)
Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at the Main Street Smoke Attack on South Main Street in Wilkes-Barre.
(Bob Kalinowski / Staff Photographer)
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Slot-like skill game machines have proliferated across the state and Northeast Pennsylvania, including at this location in Hanover Twp.
(Bob Kalinowski / Staff Photographer)