Skill or
States with casinos continue to battle unregulated “ skill games ,” and gaming associations continue to seek their ban , even as a few states begin to regulate and tax the slot-like games
By John Brennan
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The American Gaming Association represents numerous companies that run legal gambling businesses in the U . S ., including casinos .
In a comprehensive report issued last fall , the headline on AGA ’ s website noted that “ Americans gamble more than half a trillion dollars illegally each year .” That includes $ 337.9 million in illegal online casino play and $ 63.8 billion at illegal sportsbooks — most of them online and based in foreign countries .
But the third category — at $ 109.2 billion — is described not as “ illegal machines ” but “ unregulated machines .” Why is that ? The answer is complicated . OK , very complicated . That ’ s because a significant part of that $ 109.2 billion includes so-called “ skill games ” machines that look superficially like slot machines , but which include player options that can improve their chances of winning . Is that illegal ?
Almost certainly so in some states , definitely not in others — and the status is murky in still others , all depending on the state ’ s specific gaming regulations and laws . A number of states feature lawmakers , regulators and law enforcement officials doing what they can to outlaw these games — in large part to protect the interests of regulated gambling outfits such as casinos , horse racing tracks and state lotteries .
But in Pennsylvania , such efforts have been unsuccessful because the state ’ s laws are too vague on the issue . Yet in Virginia , a 2021 law passed that explicitly outlaws the machines may prove to be too specific . “ It is a bit of a Goldilocks problem ,” says Chris Cylke , AGA senior vice president of government relations , in terms of figuring out exactly how to outlaw such machines if a state is so inclined .
But for Michael Barley , the chief public affairs officer for leading skill
games supplier Pace-O-Matic , there ’ s no reason for there to be an issue at all . He says the solution is to enact legislation that permits and regulates the games .
“ When has a regulatory ban ever worked ?” asks Barley , whose machines are present in 11 states . “ We tried Prohibition , and that didn ’ t work . Why not just regulate and tax us ?”
But Cylke counters that “ people in the gray machines market just try to obfuscate the fact of what the games really are , and they gum up the works with political contributions . It ’ s a weak argument .”
The company stance is that it wants to see Pennsylvania in particular join a handful of jurisdictions such as Wyoming , Georgia and Washington , D . C . in formally regulating their machines . In fact , three Keystone legislators have sponsored a bill to do just that .
The legal battle in Pennsylvania dates back even before a 2014 court ruling that found that the state ’ s gaming laws do not permit oversight of skill-based games by regulators . A 2019 ruling further emphasized that point , making it apparent that it would take passage of a new , more specific law to change the status quo .
“ The Gaming Act was intended to license slot machine operations at racetracks , casinos , hotels , and established resort hotels ,” the Commonwealth ’ s Court ruling read . “ The Pace-O-Matic games are not located at any of these types of facilities and there is absolutely no suggestion ... that the Gaming Act was intended to apply to the facilities where the games are located , e . g ., taverns and social clubs , or that the Gaming Act regulates the placement of slot machines at such facilities .”
And in May 2022 and in February 2023 , Pace-O-Matic prevailed once again as Pennsylvania judges in two different counties ruled that the
14 Global Gaming Business APRIL 2023