Pennsylvania state Senator Gene Yaw announced the introduction of legislation to establish a regulatory framework and taxing structure on currently unregulated “skill” video games in the state.
The games, mostly manufactured by Georgia-based Pace-O-Matic, have been the subject of much controversy in the state, as casino licensees note they are not subject to the vetting that casino slot machines are, and many lawmakers and law enforcement officials consider them illegal slot machines.
“Many skill game terminals are manufactured in Pennsylvania and 90 percent of the revenue they generate stays here, mainly in the communities where the games are located,” Yaw said in a statement (overlooking the fact that while some may be assembled in the state, they are manufactured in Georgia).
“Thousands of skill games exist throughout the state, and they cannot and should not be ignored,” Yaw continued. “Skill video games are meeting a growing demand for this type of entertainment and with each passing day, Pennsylvania is missing out on the opportunity for significant additional revenue. It’s time we recognize the benefits of this emerging industry and offer regulatory support.”
Senate Bill 706 would establish the Skill Video Gaming Act, which would direct sole regulatory authority over the sale, distribution and use of a skill video game system to the Pennsylvania Department of Revenue. Enforcement would be carried out by the Bureau of Liquor Control Enforcement (LCE).
The proposal includes an initial license application fee of $1 million for skill video game distributors, $25,000 for operators and $250 for establishments, followed by a yearly renewal fee structure.
According to Yaw, this structure could generate an estimated $300 million in immediate annual tax revenue. The bill includes a 16 percent tax on legal skill video games. From that tax, 50 percent would be deposited into the General Fund, while 22 percent would be proportionally distributed to both individual counties and municipalities based on their respective gross profit.
The remaining revenue would be directed to LCE for enforcement purposes.
Yaw also noted that the measure includes a valid ID requirement to play and a limit on the number of machines per establishment. This would address a persistent complaint that the slot-like games are accessible to children at many locations.
All games would be required to be connected to a terminal collection and control system that allows the commonwealth to monitor all transactions and ensure that all taxes are accrued and paid.
Additionally, the legislation would strengthen penalties for those who operate unlicensed and illegal games and gambling devices.
