In the span of two months at the end of 2019 and beginning of 2020, undercover officers from Pennsylvania Liquor Enforcement played electronic video games at the Swizzle Stick in Luzerne County. Later in January, during an inspection, they seized three machines from the tavern. The Pennsylvania Bureau of Liquor Control Enforcement (PBLCE) removed eight additional games in three different locations
At issue was the status of the games: were they traditional slot machines or games of skill? If slots, they were illegal for a host of reasons, like being unregulated and untaxed at the 54 percent rate casinos pay. If they were games of skill, they were not subject to the same regulatory framework as casino slots.
They are—they or are-they-not—question has gone on for years, with seizures and lawsuits along the way. Skill games are often located at convenience stores, VFWs, and bars. They help these establishments make a few extra dollars. The manufacturers say that players require some skill to win, unlike slots which are all luck.
Thus, game manufacturer Pace-O-Matic (POM) filed a lawsuit against Pennsylvania gaming regulators and law enforcement. In May, a court ruled in favor of the skill games and ordered them returned to their location, along with the cash they generated.
POM then amended its lawsuit in Commonwealth Court against the BLCE on June 9 by adding the Pennsylvania Gaming Control Board (PGCB) as a defendant. The amended suit charged that the various state agencies “engaged in coordinated harassment against Pennsylvania Skill operators and location owners where legal skill games are played at the urging, behest, and direct direction of big casino interests.”
The company is seeking to permanently block BLCE and PGCB from targeting POM games and the veterans’ organizations, fraternal clubs, and small businesses where the games are located.
A Clearfield County Court also ruled in favor of the company.
Pace-O-Matic spokesperson Mike Barley said in a press release:
“This is a tremendous victory and vindication of Pennsylvania Skill games and reaffirms our status as legal games of skill,” said company spokesperson Mike Barley. “This is another step in our effort to have legal games of skill further legitimized. In fact, Pace-O-Matic stands out among our competitors as the active and driving force seeking additional regulation and taxation. It is not often that a company or industry that markets a legal product approaches the state General Assembly asking for additional regulation and taxation.”
Susan Hensel, Esq., a former employee of the PGCB, testified on behalf of another company, Pinnacle. Various player skills, such as pattern recognition, understanding and knowledge of the game, dexterity, and memory determine the outcome of the game, she said.
“Pinnacle, therefore, has met their burden to prove by a preponderance of the evidence that skill predominates over chance,” Hensel said.
POM maintains that the skill games have never been deemed illegal in Pennsylvania, and points to a 2014 Beaver County Court ruling as the basis. The company alleges targeted harassment, collusion, and conspiracy by opponents.
Some of POM’s complaints against the BLCE allege:
The bureau has worked with casino lobbyists and public relations personnel to disparage the skill games, instigate seizure of the machines, and harass POM’s business partners.
The lawsuit states that up until 2019, the PGCB took the position that it did not regulate skill games. After a Commonwealth Court ruling in 2019 which held that the Gaming Act did not apply to skill games, POM alleges that the PGCB began to change its stance on skill games.
“Skill games are a threat to the legal gaming industry and state lottery,” Peter Shelly, a spokesperson for the casino industry group Pennsylvanians Against Illegal Gambling, said to Play Pennsylvania.
“There is no question that skill games are illegal no matter who manufactures them. To suggest the (Pennsylvania) Lottery isn’t losing millions of dollars defies the state’s data and is ludicrous. Skill games are impacting the Lottery and programs the lottery benefits. There is a reason the Office of Attorney General and Pennsylvania State Police keep confiscating these machines; they are illegal.”
“These illegal machines are a direct and growing threat to the legal gaming industry and the state lottery. There is zero capital investment, zero job creation and not a single cent in gaming taxes.
Senator Gene Yaw introduced legislation last November that would tax skill games.
“If you want to know why legal video skill games are important, all you have to do is walk into any market in Western Pennsylvania, family owned restaurant, VFW, or bar,” said Yaw. “They are allowing these businesses to provide health insurance for their workers, increased salaries, and in some cases, keeping the doors open.”
Adrian King, a lawyer at Ballard Spahr representing Penn National Gaming said:
“Penn National contends that skill machines have undoubtedly contributed to slot count reduction being necessary. Skill games are a type of slot machine. This isn’t just a Penn National problem.”
