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Economist Asserts Skill Games Will Hurt the Gambling Industry

Amidst the meteoric growth of Pennsylvania's gaming industry, a new policy brief by Dr. Frank Gamrat, the executive director of the Allegheny Institute for Public Policy, casts a shadow of concern over the future of this economic sector. He believes that skill games, currently a much-debated topic in Pennsylvania and elsewhere, pose a threat to casino gambling.

In his analysis, Dr. Gamrat points to the unregulated proliferation of skill games as a potential threat to the industry's revenue streams. While the state has celebrated record-breaking gambling revenues, reaching nearly $5.7 billion last year, the presence of approximately 15,000 unregulated skill games could start to undercut the profits from the 25,000 regulated slot machines within licensed casinos.

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Of that $5.7 billion, $2.5 billion came through legalized slots, according to the Pennsylvania Gaming Control Board. That's the highest figure recorded in 11 years.

Dr. Gamrat's brief delves into the implications of these skill games operating in a legal grey area. He suggests that their continued existence without oversight may not only siphon business from traditional casinos but also evade the tax contributions that regulated gambling establishments provide to the state.

This concern is compounded by the demographic trends in Pennsylvania, with significant population declines in major counties potentially signaling a decrease in future gaming revenues. The brief underscores the need for a strategic approach to address these challenges, ensuring the sustainability of the gaming industry in Pennsylvania.

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Skill Games Push from the Top

The debate over skill games has caught the attention of state lawmakers and entities, with some advocating for their taxation and regulation. Governor Josh Shapiro has proposed a tax structure for these games in his fiscal budget, indicating a shift towards formal recognition and control.

However, the path forward is complex, with various stakeholders, including skill game manufacturers and casino operators, weighing in on the potential impact of such regulatory measures. Skill games may have received backing from the courts and Shapiro, but the fight isn't over.

Although the Commonwealth Court declared the games legal last December, Philadelphia took a different stance. The City Council unanimously passed legislation prohibiting skill machines in convenience stores and gas stations within city limits.


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