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Pennsylvania Skill Games Oversight Gains Traction

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Skill games, video gambling machines that offer cash prizes based on player skill rather than pure chance, are inching closer to a regulated future in Pennsylvania. The topic is now being discussed in legislative committees, although the final outcome is still unclear.

Bringing Skill Games to the Front Line

House Bill 2075, introduced by Representative Danilo Burgos last September, proposes a 16% tax on skill game revenue with the Department of Revenue handling oversight. Burgos' bill estimates a potential windfall of close to $300 million in the first year of regulation.

This move follows Governor Josh Shapiro's inclusion of skill game taxation in his proposed budget for the 2024/2025 fiscal year. However, the path to regulation remains bumpy, with Burgos and Shapiro disagreeing on tax rates and regulatory bodies.

The Commonwealth Court's December 2023 ruling legalizing skill games marked a turning point. Despite opposition from the existing casino industry, which views them as unfair competition that siphons customers away from both brick-and-mortar and online casinos, the court's decision paved the way for their continued operation. Casinos argue that skill games lack consumer protections and negatively impact their revenue.

However, Burgos contends that skill games have been a lifeline for many small businesses struggling in the post-pandemic economic climate. These machines, he argues, provided much-needed revenue during a challenging period, and regulation would not only benefit the businesses but also generate significant tax revenue for the state.

Key Elements Still Being Debated

Governor Shapiro, while agreeing on the need for regulation and taxation, proposes a steeper 42% tax rate and suggests the Pennsylvania Gaming Control Board (PGCB) oversee skill games. His budget projects over $150 million in tax revenue for the first year, significantly lower than Burgos' projection. This discrepancy highlights a key point of contention: the appropriate tax rate and regulatory body.

The future of skill games in specific locations like Philadelphia is also uncertain. While some advocate for statewide regulation, others, concerned about public safety, have proposed localized bans. Philadelphia City Council is currently considering a bill to prohibit skill games in corner stores, raising concerns about potential community impacts.

Pennsylvania skill games are on track for regulation, but significant hurdles remain. Disagreements over tax rates and regulatory bodies, coupled with potential localized bans, make the exact form of regulation unclear.

With both the legislature and the Governor's office pushing for a solution, it's likely that a compromise will be reached, bringing much-needed clarity and generating tax revenue for the state. However, the concerns of the established casino industry and the potential social impact in certain areas will need to be addressed before the games become a fully regulated part of Pennsylvania's gaming landscape.

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