Pennsylvania casino regulators seek to get in "skill games" game

Friday 21st February 2020

A sleeping giant is now seeking to enter the growing fight over the legality of the so-far unregulated "skill games" populating Pennsylvania's bars, clubs and convenience stores.

The Pennsylvania Gaming Control Board filed papers Thursday seeking to intervene in a Commonwealth Court case in which one of the industry's leading game-makers, Pace-O-Matic, is seeking a statewide declaration that its machines are legal as is, under state law, and that periodic machine seizures by Pennsylvania State Police and other enforcement agencies should stop.

In their motion, which a PGCB spokesman said followed an executive session discussion by the board, PGCB's attorneys argue that the state's 2004 gambling expansion law was intended to preclude all slot machine play outside board-licensed casinos to eliminate the possibility of two types of machines: "those with player protections and fairness, and those without."

In making its argument, the board noted that in-casino slot machines are tested by the gaming control board. linked to a statewide computer system that allows for an audit of every single play, and required by the law to return 85 cents on the dollar to players over a specified period of time.

The skill games, as they are operating now, don't offer any of those public protections, the board says. Nor do its operators pay the 52 percent state tax on winnings.

The board appears to rest its petition, in part, on a Nov. 20 ruling in the underlying case in which judges found that the games are slot machines under state law. "Skill slot machines" were specifically defined as a type of slot machine in 2017 amendments to the state's gambling law.

In that same decision, however, the court said the Gaming Control Board's has no authority to monitor machines outside of its licensees. In its filing, PGCB argues that it should be permitted to intervene because the underlying gambling expansion act was also meant to bar any similar gambling products outside the state's licensed casinos.

AS such, "the POM skill game is illegal," the attorneys sum up at several points in their pleading.

That argument was first advanced by attorneys for Greenwood Gaming and Entertainment, the operators of Bucks County's Parx Casino, in a separate hearing on machine seizures last month.

Attorneys for Pace-O-Matic and its Pennsylvania subsidiary, POM of Pennsylvania, could not be reached for this report, though they are expected to be given 30 days to respond.

But a spokeswoman for the company released this statement on Thursday evening in response to the Gaming Control Board's filing:

"Our games have been adjudicated legal as games of predominant skill. The Pennsylvania Commonwealth Court has already ruled that our games are not regulated by the gaming code. We are confident our games' legal status will be confirmed. In the meantime, we will continue to work with the legislature to regulate the legal skill game industry."

The statement's reference was to a Beaver County court decision from 2014 that found the Pennsylvania Skill games were not a gambling device per se. That decision is not binding statewide, which is one of the factors behind Pace-O-Matic's current petition for declaratory judgment.

Pace-O-Matic and other firms have been flooding the market with their skill games in recent years. Pace-O-Matic's attorney Matt Haverstick estimated the firm's current machine count in Pennsylvania at about 10,000 last month - which opponents say means they've effectively delivered gambling to corner bars and convenience stores before the state could react.

There are powerful interests on both sides of this fight.

In one corner, there are the game manufacturers, operators and the establishments they do business with - membership-based social clubs, bars and taverns that have felt frozen out of Pennsylvania's growing gambling pie. They say skill games have been a bright spot in a machine-leasing market once built on jukeboxes and video amusement games that's been decimated in recent years by smart phones and other changes in the entertainment world.

On the other side are the state's licensed casinos, angry because the skill games operate without the 34 percent gaming tax imposed on their slot machine profits; and the Pennsylvania Lottery, whose director argues that skill games are a present and future threat to the Lottery's sales growth and, by extension, its support for seniors programs.