Legal Debate Over PA ‘Skill Games’ Intensifies

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Police raids, court orders, and a casino advertising campaign have brought new attention to a type of gambling machine that has been proliferating across Pennsylvania in recent years.

Thousands of the so-called “skill games” deployed in bars, clubs, and convenience stores across the state – popular with players who bypass the 25k slot machines in Pennsylvania casinos to use them — are the center of a controversy that could end up settled by legislative action or court rulings in 2020.

Law enforcement authorities hold that the devices, which have an appearance similar to slot machines but games that are played differently, are illegal. They are primarily in place in central and southeastern Pennsylvania, and state police conducted raids this month confiscating skill game machines from five restaurants or taverns in Dauphin and Cumberland counties.

Commonwealth Court has halted raids for now

A leading supplier of the machines, Pace-O-Matic of Pennsylvania, obtained a Commonwealth Court temporary injunction Dec. 13 barring the police from further seizures of its devices. It won a prior ruling from a Beaver County judge that its “Pennsylvania Skill Game” product does not constitute illegal gambling, because a player’s skill – involving such elements as memory and reflexes – is involved rather than pure chance.

Pace-O-Matic is hoping for a future ruling with statewide effect upholding the legality of its machines, and it has the backing of many clubs and bars that have benefited from the revenue they share with Pace-O-Matic from the players using them and losing. The company also states the games should be legalized, and it would willingly be regulated on their operation and taxed on their profits.

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“We’ve been talking to legislators and we have legislation that’s being drafted,” said Mike Barley, a spokesman for the company. “There are few businesses or industries that say like us, ‘We want to be regulated and taxed.’ Legislators have heard from American Legion clubs and others how much this has helped their businesses continue to exist when they were really in tough spots.”

But in the meantime, the state police, casino industry, and Pennsylvania Lottery are among those trying to stamp out the skill games.

“Unregulated video gambling terminals are a significant issue in the commonwealth, popping up in licensed liquor establishments, convenience stores, and shopping centers,” said state police spokesman Ryan Tarkowski. “Although often marketed as ‘games of skill,’ these terminals are illegal, and people and businesses who engage in illegal gambling risk prosecution.”

Pennsylvania Lottery officials contend they are losing tens of millions of dollars from competition from the machines, which are often hosted by the very same retailers who are lottery vendors.

Parx has been campaigning against the games

Parx Casino, meanwhile, had led a casino industry effort to convince the public they are a danger to the community, because they can be played without the same oversight on age restrictions, minimum payouts, tax distributions, and other facets as the casinos’ own machines.

The Bucks County casino took out ads this month in 11 newspapers from Pittsburgh to Pennsylvania providing a website and phone number at which people could report their awareness of where illegal machines are located, with the information to be turned over to law enforcement.

“We’re not going to wait until all of a sudden the entire state has slot machines on every other street corner,” said Peter Shelly, a spokesman for Parx.

“The volume of the machines is just ridiculous,” he said. “We believe as the commonwealth does that they’re illegal and they’ve got to go. You can’t roll out machine after machine, and then tell the Legislature afterward, ‘We’re happy to be regulated.’”

Pace-O-Matic representatives believe the law is on their side. Prior to the recent raids and injunction, they obtained a Commonwealth Court ruling Nov. 20 holding that their games are not regulated by the Pennsylvania Gaming Control Board and state’s existing gaming law.

That ruling did not, however, explicitly address the legality of the machines. The company hopes a 2014 Beaver County decision in its favor and a state appeal of the temporary injunction, likely to be heard by Commonwealth Court in mid-January, will lead to legal clarity in its favor.

State police to continue investigating, if not prosecuting

Tarkowski said that while prosecutions involving such machines are on hold due to the injunction, investigations of such activity are continuing, as “the number of illegal gambling machines and the number and types of businesses in which they are being placed has grown exponentially.”

Since well before the skill games’ proliferation, machines equipped with video poker, Cherry Master games and other types of play that could be adjusted for illegal payouts by proprietors have long been common in Pennsylvania bars and clubs.

They have been especially common in western Pennsylvania, and generally have operated with a blind eye from law enforcement, except in cases of complaints from the public or suggestions of possible organized crime activity.

Tarkowski said state police have been confiscating hundreds of machines each year this decade, however, ranging from 346 in 2011 to 876 in 2015. He did not have a figure for how many of those were skill games as opposed to other types.

Lawmakers have long debated the issue of legalizing such activity, and since casinos began operating, the state’s fraternal clubs and tavern proprietors have lobbied for a piece of the legal gambling pie to help sustain their operations.

The advent of the skill games has only increased that discussion, with the House Gaming Oversight Committee holding multiple hearings on the topic. Thus far, however, lawmakers have lacked consensus on what to do about various proposals to either ban or regulate them.

Action stemming from that discussion, as well as from the arguments within courtrooms, can be expected in the months ahead. The results will make one side or the other unhappy, but many would also be satisfied to see the ambiguity addressed.

“The Pennsylvania State Police has repeatedly asked the Legislature to provide further clarity in the law to aid in more efficient enforcement of illegal gambling as well as aiding in voluntary compliance by businesses,” Tarkowski said, noting the agency will continue “to work with lawmakers from both parties to draft legislation that brings additional clarity to the law.”

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Gary Rotstein

Gary is a longtime journalist, having spent three decades covering gambling, state government, and other issues for the Pittsburgh Post-Gazette, in addition to stints as managing editor of the Bedford (Pa.) Gazette and as a reporter for United Press International and the Middletown (Conn.) Press.

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