Pennsylvania Supreme Court’s Skill Game Decision Puts Lawmakers on the Clock
The clock is ticking for skill games in Pennsylvania
If Pennsylvania is going to regulate its booming skill games industry, it will have to do so quickly, as the state’s Supreme Court ruled them illegal but allowed a 120-day grace period.
Lower courts had found the games to be legal, and the state legislature became deadlocked over what to do about them. Some lawmakers wanted to ban them. Others wanted to regulate and tax them. Further complicating matters was a debate within the pro-regulation camp about an appropriate tax rate.
The devices in question resemble slot machines but include skill elements designed to avoid states’ definitions of a “game of chance.” Such features take many forms. In the case of Pace-o-Matic, whose machines are at the heart of this particular case, there are two.
In the base game, players must place a wild symbol to form winning combinations, though they are still reliant on luck for the “puzzle” to be solvable. However, losing wagers allow the player to play a memory game called “Follow Me” to earn back their bet plus five percent. Pace-o-Matic contends that makes the game entirely skill-based, as every bet can, in principle, be a winner for a sufficiently skilled and dedicated player.
However, the Follow Me round is extremely difficult and takes about 12 minutes to complete successfully. It is, prosecutors argued, “designed to be skipped.”
In the end, however, the Supreme Court found such technicalities irrelevant. It ruled that legislative changes had already closed that loophole and eliminated the “predominant factor test” — that is, whether a game is mostly luck or mostly skill — that had been crucial to earlier rulings.
‘No Amount of Skill Is Sufficient’
By a split 4-2 decision, the Supreme Court found that legislators’ mention of “skill slot machine” and hybrid slot machine” in a 2017 amendment was sufficient to make their intention clear. The majority opinion, penned by Justice David Wecht, states:
“It is not this Court that declares ‘skill games’ to be unlawful. Rather, it is the General Assembly that did so nearly a decade ago. If interested parties find the application of the General Assembly’s laws to be undesirable, the proper remedy lies with the same legislative body that wrote those laws. The solution is not for courts to adopt strained and untenable readings of statutes to avoid their application.”
More importantly, he later clarifies that this logic would apply regardless of the nature or degree of the skill elements:
“No amount of skill, chance, or any combination thereof will remove a device from the ambit of a ‘slot machine’ after Act 42 of 2017.”
That’s crucial, because it means the decision does not apply only to Pace-o-Matic, but to all its rivals in the skill gaming space. That includes even Banilla, whose games seemed to have been spared after the Supreme Court declined to hear an appeal of its case in 2024, just before agreeing to hear the Pace-o-Matic case.
Status Quo Given 120-Day Expiration Date
Following the lower courts’ rulings that the games were legal, skill games proliferated in Pennsylvania. For several years running, lawmakers have scrambled to act on the machines in some way, but without success.
Initially, there were competing efforts by separate groups of lawmakers to either outlaw or regulate them. The efforts to ban them have petered out, perhaps due to the number of small businesses that now depend on the machines. Industry groups have argued that “thousands” of jobs now depend on what is estimated to be 70,000 machines in operation across the state.
At times, the effort to regulate the machines has appeared close to passing, but the final sticking point has been the tax rate. Pennsylvania casino and video gaming interests have argued that regulated skill machines should be taxed at the same rate — 54% — as conventional slots and video-gaming terminals. Any lower rate, they say, would provide skill games an unfair advantage. The skill games lobby, on the other hand, says the business model is different and would not be sustainable on those terms.
As a result, neither of this year’s regulation bills specifies a tax rate. A bill in the Senate implies that there would be one, but leaves it to be determined by future legislation. Conversely, the House’s bill proposes a flat fee of $500 per month per machine in lieu of a percentage of revenue.
Until now, the deadlock favored the skill games industry, as it could continue operating in a tax-free gray area. Now, further stalling is impossible. The court stayed it own decision for 120 days to allow lawmakers one last kick at the can. If they still have not agreed on a solution by mid-September, the machines will have to shut down or face a renewed crackdown.
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