Senate Committee Begins Hearing About Skill Games Before Deciding What To Do About Them

A Pennsylvania Senate committee began examining whether to adopt legislation addressing proliferation of so-called “skill games” by hearing the position of the state’s gaming regulator that current law does not permit the machines, but the agency is powerless to stop them.

Doug Sherman, chief counsel of the Pennsylvania Gaming Control Board, on Monday outlined for the Senate Community, Economic and Recreational Development Committee the hazy situation that pertains to tens of thousands of unregulated devices said to be operating in bars, clubs, gas stations, convenience stores, and other outlets across the commonwealth.

The Senate committee held the first of multiple public hearings anticipated on what lawmakers should do, if anything, about the skill game machines. Both the casino industry and Pennsylvania Lottery have deemed them an illegal threat, and the devices have occasionally been seized by law enforcement authorities, but they are also the subject of Commonwealth Court litigation on which a ruling is awaited to offer new clarity.

Sen. John Yudichak of Luzerne County, chairman of the committee, noted bills have been introduced with opposite intentions of specifically banning skill games or regulating and taxing them. Before the committee takes any action, he wants members to hear from all the various stakeholders involved, a process that began with the gaming board’s presentation.

“I envision today’s conversation as the first step in a thoughtful and comprehensive conversation about our statewide gaming industry and the potential of legislation that will assist the sustainability of our 14 land-based casinos in years to come, while also recognizing the potential market needs for our clubs, bars, and taverns — who have struggled mightily through the pandemic — to be part of Pennsylvania’s gaming industry,” Yudichak said.

Gaming board has no authority over skill games

Sherman told the committee that through its various actions — most notably the 2017 gaming expansion that added gambling devices resembling slot machines to certain truck stop locations in addition to providing for online gaming — the legislature has expressed its intent that machine gambling should only be permitted at licensed establishments that have gaming board oversight.

A state court ruling has held that the gaming board has no authority over gambling taking place outside of licensed venues such as casinos, however, and the producers of skill games contend they are not illegal because they involve more than random chance. Pennsylvania courts have determined illegal gambling takes place when more chance than skill is involved in a wager, Sherman noted, and the extent to which that applies to machines that involve a certain amount of memory ability by players in pushing buttons is part of the pending litigation.

The gaming board has sought to intervene as a party in the Commonwealth Court case, Sherman said, because it believes lawmakers only want gambling taking place on machines that are regulated and taxed, with various surveillance, consumer protections, and steps to address compulsive gambling.

The legislature has the right to authorize the machines and designate the gaming board to regulate them in the manner that it oversees truck stop VGTs, Sherman said. Without that taking place, however, he suggested the skill game industry and the many locations profiting from hosting the machines are operating outside the law.

The number of slot machines at Pennsylvania casinos has never reached 30,000, which is less than some of the estimates of how many unregulated gaming devices exist in the commonwealth. Because of their underground nature, however, no one is sure how many actually are in operation.

“Our view is this General Assembly, in enacting the gaming act so comprehensively, has filled that field of who can have slot machines — there’s no room for anybody else,” Sherman said.

Hard to rein in the number that exist

Sen. Robert Tomlinson of Bucks County, a committee member who was involved in development of Pennsylvania’s original 2004 law authorizing casinos, was adamant that the machines outside the casinos should be banned. He is the sponsor of legislation to do exactly that.

“I don’t know how you even control all these locations,” he said in contrasting the careful monitoring the gaming board and state police provide at casinos compared to what would be possible in thousands of small establishments.

When authorizing casinos originally in the face of some public criticism, Tomlinson said legislators were careful in outlining where they could be placed and establishing various precautions surrounding their operations. “We wanted to protect our communities, and now I’ve got more of these illegal games in my district than I do in the casinos,” he said. “I don’t know how you can even rein all this in with all those machines out there — unless you stop it.”

At Monday’s hearing, no one offered a case for authorizing the skill games, although that is expected to occur at subsequent hearings. Some senators noted they have heard from constituents how valuable the revenue is to the venues in their community.

Sen. Amanda Cappelletti contended, however, that with Pennsylvania having spent recent years struggling to fight the opioid epidemic, it could be “opening the floodgates” to another addiction overload if it sanctions tens of thousands of additional machines at locations so convenient for gamblers who may be unable to control themselves.

“The access and density of gaming opportunities are one of the largest drivers of increases in compulsive and problem gambling,” said Cappelletti, a Montgomery County Democrat who is minority chair of the committee. “As we think about what expansion looks like, it’s really important we look at that public health aspect.”

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