Pennsylvania’s Senate Republicans are on the clock to pass a bill regulating skill games— in time for the tax from any new regulations to be included into the state budget’s revenue estimates.

Democrat Gov. Josh Shapiro budgeted revenue from skill games into his 2025/26 budget proposal delivered in February. Shapiro’s policy proposed a 52% tax rate on the gambling machines, the same rate as other similar forms of gambling in the state.

Pressure has been mounting for several years to set up guard rails around the games; some public officials saying crime has increased at businesses where the legally grey machines can be found.

Most Pennsylvania lawmakers want a state law in place for the games. However, there are disagreements on how to regulate the games— especially within the state’s Senate Republican caucus.

The June 30th deadline to pass a state budget is fast approaching. Leaders in the House Democratic Caucus say they are waiting to see what the Senate can send them on the topic.

“We want skill games regulated and taxed,” said Rep. Jordan Harris, the Philadelphia Democrat who chairs the House Appropriations Committee. “But we need legislation in order to accomplish that, and that’s what we are waiting for."

What Are Skill Games?

Skill games are a gambling machine that operate similar to slot machines: put money in, play a game, maybe get money back. But while slot machines give randomized outcomes, skill game manufacturers say players can influence the machine outcome in every gameplay.

The Pennsylvania Commonwealth Court has agreed that skill can guarantee a user wins money every play— and ruled the games are legally different from slot machines.

The legal separation has lead to a difference in treatment. Slot machines are heavily regulated and taxed at a 52% rate. They can only legally be operated at casinos and truck stops (the truck stop versions are called video gaming terminals).

While the courts have given some legal guidance, the Pennsylvania legislature has made no state laws about skill games, which has left the machines in a legal gray area for over a decade.

Some businesses have installed skill games in their stores and use them as supplemental income. Places like bars, VFWs, gas stations, and social clubs will have a line of the machines— and split the profits with the machine manufacturer.

“We recognize that these have become an income source for small businesses, and we don’t want to take that from those legitimate organizations,” said Sen. Joe Pittman, the Republican leader for the Pennsylvania Senate.

Two Problems: Public Safety & Frustrated Casinos

However, public officials also say that crime has increased at locations with the machines: more robberies take place, the gambling machines can fuel addictions, and the machines can easily be accessed by minors. The Pennsylvania District Attorneys Association wrote a letter to Shapiro last year saying the games put a strain on law enforcement.

More businesses are opening where an owner fills a store front with just the games. Some of these establishments use slot machines but call them skill games, which gives law enforcement grounds to shut the operations down. But the lack of a state law on skill games specifically can make the take downs messy.

"This is a matter of public safety at this point. We're increasingly seeing these so-called mini casinos pop up across the state,” Pittman told press earlier this week. "We’re continuing to see increased amounts of violence and robberies in these so-called casinos. It is time for these games to be regulated and taxed."

Beyond public safety— the casino industry strongly dislikes the machines. Pennsylvania casinos pay a lot of state taxes on their slot machines profits, and abide by specific regulations on the games of chance. Additionally, casinos contribute to public safety campaigns about gambling and enforce a list of individuals who bar themselves from gambling establishments.

Skill games being accessible in communities means people don’t have to go to casinos to scratch a gambling itch— while the business owners profiting don’t enforce any guardrails against gambling problems.

The Regulation Debates

Two pieces of legislation and a co-sponsorship memo have been introduced by Republican Senators for the current session.

Sen. Frank Farry is a Republican from the Philadelphia suburbs who has a casino in his district. In past sessions, Farry introduced legislation that lumped skill games in with slot machines and offered a new license for businesses other than casinos. The games would have a roughly 50% tax rate and the bill leans towards stricter regulations overall.

Many Democrats lean towards a 52% tax, as proposed by Shapiro this year.

“I know some folks have a different opinion on where that that tax number should be. And we're open to discussions,” Harris said.

Sen. Gene Yaw has a skill game manufacturer in his district. His SB626 legislation sets a 16% tax rate. Yaw says the games should be defined in law as distinct from slot machines— and keep closer to Commonwealth Court rulings on the topic.

Another area the senators differ on is what state entity should be tasked with enforcing new state laws. Farry wants the games to go under the Gaming Control Board, which currently controls casinos. Yaw wants the games under the Dep. of Revenue, which controls the state lottery.

“With over regulation, and higher tax rate, and the wrong department to administer the law— the net result is going to be the industry world will cease to exist in Pennsylvania,” Yaw said.

Both factions agree there should be an age limit on the games.

Both factions agree there should be limits on where and how many machines can exist in a business.

Senate Republican leadership have introduced their own legislation, prime sponsored by Sen. Chris Gebhard. Sb 756 was introduced in May as a middle ground between the two ends of the skill game spectrum.

The bill proposes a 33% tax rate, puts the skill games under the control of the gaming control board— and does distinctly define skill games (though Yaw disliked parts of their definition). Other tweaks to gambling laws are made in the bill, as well as an update to the minimum number of slot machines a casino can have. That provision curries favor with the Erie area casino Presque Isle Downs.

“We have said very consistently that the product we have introduced is not the gospel,” Pittman said earlier this week, "but it's much more than a starting point in the conversation. It was a serious framework that we think makes sense.”