The alternative to slot machines has had a controversial past in the state
Pennsylvania lawmakers are exploring a plan to regulate and tax skill-based gaming machines that currently operate in a legal gray area, aiming to generate new revenue as the state faces a multibillion-dollar budget deficit. The proposal, still in early discussion stages, would allow around 40,000 of these slot-like machines to continue operating under state oversight while removing tens of thousands of others. The move would bring the machines in line with casino slots in terms of taxation and regulation.
Under the plan, skill-based games located in bars, restaurants, and social clubs would be taxed similarly to casino slot machines, which pay a 52% state tax and a 2% local tax on revenue. Lawmakers are debating whether to keep that same rate or create a new structure for the reclassified machines. Casino operators have indicated support for regulation only if the skill games face an equal tax burden, seeing the measure as a way to level the playing field.
Bringing the games under state regulation could generate hundreds of millions in annual revenue, helping to close a budget gap that exceeds $3 billion. The proposal is part of a broader effort that includes possible tax increases on online casinos and sports betting. While gaming operators are pushing back against higher online taxes, they argue that taxing skill-based games would provide a more sustainable funding solution.
The plan faces pushback from small business owners and route operators, who say the proposed 52% tax rate is excessive. Companies like Pace-O-Matic, which supplies many of the machines, have long resisted regulation and are lobbying for a lower 16% rate. Lawmakers also remain divided over how new funds should be spent, with Democrats favoring infrastructure in urban areas and Republicans seeking improvements to rural roads and bridges.
With pressure mounting to finalize the state budget, Pennsylvania’s debate over skill-based gaming could reshape its gambling landscape, potentially turning unregulated machines into a major source of public funding.
