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Pennsylvania Governor Proposes 52% Tax on Skill Gaming Devices

Skill gaming machines resembling arcade devices in Pennsylvania.

News Summary

Governor Josh Shapiro of Pennsylvania has introduced a 52% tax on skill gaming devices, expected to raise around $360 million. This proposal is part of ongoing discussions on regulating approximately 70,000 unregulated gaming terminals in the state. The measure has sparked debate, with opposition from some lawmakers who argue the rate is excessively high and could discourage investment. Concerns over user safety and quality control are also at the forefront, as stakeholders push for stronger regulations in light of crime associated with these devices.

Pennsylvania Governor Josh Shapiro has proposed a substantial 52% tax on skill gaming devices in the state, aiming to generate approximately $360 million in revenue. The initiative comes amid ongoing discussions concerning the regulation of skill games, which include around 70,000 unregulated gaming terminals across Pennsylvania.

Skill games, which resemble arcade-style video devices and involve a minimal level of skill, do not currently fall under the category of gambling according to Pennsylvania law. This has allowed their proliferation without strict oversight, raising concerns regarding user safety and the quality of these machines.

The proposed tax has sparked debate among state lawmakers. State Senator Gene Yaw has opposed the 52% rate, arguing it is excessively burdensome and suggesting a more reasonable rate of 16%. Yaw contends that a tax this high could dissuade operators from investing in such devices, ultimately hindering their profit-making potential. He has emphasized that while both regulation and taxation of skill games are necessary, they should not mirror the tax levies on casino slot machines.

The issue of quality control and user safety associated with skill games is a pressing one. Public safety advocates have warned that these machines could both heighten criminal activity and contribute to gambling addiction. This concern is echoed by reports from the Pennsylvania District Attorneys Association, which has noted an uptick in crime connected to unregulated skill game machines.

Amid these discussions, oversight for skill games remains contentious. Governor Shapiro proposes that regulation be managed by the Pennsylvania Gaming Control Board, recognizing their expertise in overseeing slot machine activities. Conversely, Senator Yaw suggests delegating this regulatory responsibility to the state’s Department of Revenue, highlighting differing opinions on who should facilitate the oversight of skill gaming operations.

Recent legal developments have classified certain skill games as legal, enabling their continued operation beyond Pennsylvania’s gaming regulations. This situation has prompted concerns among stakeholders about the lack of appropriate regulations and the subsequent risks posed to both players and small businesses that house these games.

Significantly, the Pennsylvania Independent Fiscal Office has warned of an imminent budget deficit. This has intensified the urgency for new revenue sources, including skill gaming and potential cannabis legalization. State Senate Majority Leader Joe Pittman has indicated support for utilizing any tax revenue generated from skill games to improve mass transit and bolster infrastructure in the state.

Beyond taxation, there are growing calls for stronger regulations surrounding skill games, particularly in light of crime associated with mini-casino parlors housing these machines. Legislative discussions are ongoing, with uncertainties surrounding the timing and potential impacts of various court cases affecting proposed regulations.

Stakeholders in this dynamic landscape include small business owners who may benefit from additional revenues from skill games, game manufacturers who stand to profit from increased sales, and public safety advocates concerned about the implications of unregulated gaming activities. Each group has differing priorities and visions regarding the future of skill games and their regulation in Pennsylvania.

As discussions continue, the future of skill gaming in Pennsylvania will hinge on finding a balance between fostering an environment conducive to revenue generation and prioritizing the safety and welfare of the state’s residents.