Published: May 12, 2023

$300M skill games tax proposal emerges in Pennsylvania

(The Center Square) – Details of a proposed regulatory framework for skill games emerged this week.

The games – which look like slot machines, but give users control of the outcome – sit in restaurants, veterans’ halls, and truck stops. So far, however, the machines operate outside of state law.

Chief legislative advocate Sen. Gene Yaw, R-Williamsport, said 90% of the revenue generated from skill games stays in the state – “mainly in the communities where the games are located.”

“Thousands of skill games exist throughout the state, and they cannot and should not be ignored,” he said.cement responsibility to the Bureau of Liquor Control Enforcement.

“Pennsylvania is missing out on the opportunity for significant additional revenue,” Yaw said. “It’s time we recognize the benefits of this emerging industry and offer regulatory support.”

The legislation could net Pennsylvania “in excess of $300 million” annually, though Yaw’s office did not return a request for comment on how he arrived at that figure.

Critics argue the legislation may cut into casino and state lottery revenues – the latter of which supports programs for seniors and disabled residents.

Yaw introduced a similar bill in th

Yaw’s proposal,  Senate Bill 706, would give regulatory authority to the Pennsylvania Department of Revenue and enfor

e last legislative session. In an  op-ed, he said both casino and lottery games offer access 24/7, 365 days a year, so skill games won’t make much of a dent in their profits.

Besides, he added, the machines support social clubs and small businesses – including a handful of state-based skill games manufacturers: Pennsylvania Skill, Miele Manufacturing and Pace-o-Matic.

Yaw’s proposal would require a $1 million license application fee for skill game distributors, a $25,000 fee for operators and $250 for establishments, along with a yearly renewal fee.

Skill games would then pay a 16% tax. Half would funnel to state’s general fund account; 22% would remit to counties and municipalities, and the rest would support the bureau’s enforcement efforts.

Limits would also be placed on how many machines could be at each establishment.  Previously, Yaw said the state would not allow “a program of mini-casinos.”

Pennsylvania is not the first Mid-Atlantic state to pursue skill games regulation. A one-year legalization of skill games in Virginia brought in $129 million of tax revenue, with some rural counties generating up to 2.3% of all tax revenues from the games.

Virginia, however, is more restrictive on gambling than Pennsylvania. It levied an effective tax rate of 26% on skill games, according to a report from the state’s Joint Legislative Audit and Review Commission.

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