Skill Games Avoid Regulation in Pennsylvania as State Supreme Court Considers Legality

^{Pennsylvania lawmakers haven’t regulated or taxed "skill games," and now the sector is facing pressure due to a case currently in the state Supreme Court. (Photo: Keith Srakocic / Alamy)}

So-called "skill games" have survived another year without facing regulation from lawmakers in Pennsylvania, but that doesn’t mean the slots-like machines are in the clear in the Keystone State. 

Despite bipartisan support for legislation that would regulate skill games in the state, nothing about the issue was included in the Pennsylvania state budget passed on Nov. 12.

Lawmakers Agree on Need for Regulation, But Not Tax Rates

Currently, skill games sit in a sort of legal limbo in Pennsylvania. There are no taxes collected from them and no regulations on them, which has allowed them to be installed in gas stations, bars, and other locations across the state. 

Multiple plans were brought forth in 2025 to change this status by officially regulating the machines and collecting tax revenue from them:

• Pennsylvania Governor Josh Shapiro included a 52% tax on skill games revenue in his proposed budget, while Republicans countered with a plan that would have taxed the machines at a 35% rate. 
• Existing casinos wanted the machines taxed at the same 55% rate as other electronic games in the state; skill games developers wanted a lower 16% tax.
• Another plan suggested charging a flat monthly fee per machine.

In the end, none of these plans have gone very far. Despite widespread agreement that something has to be done to oversee the skill games industry, Pennsylvania will head into 2026 without regulation on the machines.

“This building has a long history of going through gaming debates, and they are very complex and very tedious and very difficult,” State Senate Majority Leader Joe Pittman (R-Indiana) said earlier in November. “I certainly believe gaming reform is – and most be – an important policy initiative going forward.”

Pennsylvania Courts Considering Skill Games Legality

But even if legislators don’t make a definitive move on skill games, it’s possible that the courts could step in instead.

Currently, the Pennsylvania Supreme Court is considering a case to determine whether skill games should be classified as gambling devices. The Pennsylvania attorney general and Department of Revenue are appealing previous rulings that have found that such machines were not gambling devices. 

Pace-O-Matic – a company that manufactures skill machines, has argued that because a second stage of their games allow players the ability to win on every spin, their games are legally distinct from slots and other gambling devices. However, the state disputes this distinction, as do many in the gaming industry.

“It is not enough for that component of the game to be considered predominant,” Susan Affronti, a lawyer from the attorney general’s office, told the court, arguing that chance still outweighs player control.

But Pace-O-Matic officials have pointed to a 2023 Commonwealth Court ruling – one the Supreme Court declined to review last year – which found that similar machines developed by Banilla Games were not considered gambling devices.

“The loophole that has been talking about in this case, it’s not a loophole. It’s the law,” Pace-O-Matic compliance officer Brian Langan said in testimony. “[Pace-O-Matic founder Michael Pace] was smart enough to design a machine to be in accordance with the law.” 

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