Pennsylvania Casinos Request State Supreme Court Ruling on Legality of Skill-Based Games

Pennsylvania casinos are contending that certain ‘skill games’, which their opponents refer to as ‘gray games’, violate the state’s Race Horse Development and Gaming Act. However, multiple lower courts within the commonwealth have ruled in favor of the skill gaming manufacturers, and the casinos are now hoping to bring the case to the highest court in the Keystone State.

Georgia-based Pace-O-Matic (POM) is the leading producer of skill gaming terminals, which appear and sound similar to Las Vegas-style slot machines, but have a major distinction in how they operate. Instead of an automatic spin determining whether a gambler’s bet has won or lost, these machines require the player to identify a winning payline, which constitutes the ‘skill’ element.

POM officials and advocates of the controversial gaming terminals, which are not subject to state regulations or monitored for fairness, assert that the skill component classifies them as skill games instead of games of chance. Consequently, several judges in the state’s common pleas, commonwealth, and superior courts have come down on the side of POM and other skill industry entities in response to complaints brought against state agencies, including the Pennsylvania Bureau of Liquor Control and Enforcement (BLCE) and the Pennsylvania Department of Revenue, for seizing the company’s assets.

Moreover, court judges in Dauphin County and Monroe County recently found that the state had wrongfully seized equipment, cash, and POM gaming machines from at least four businesses in 2021. However, since the Gaming Act does not regulate skill gaming, these courts determined that state law enforcement had acted wrongly in apprehending the devices.

Supporters of skill games maintain that the gaming machines are advantageous for small businesses, not large multinational casino empires and their investors. Businesses typically divide the skill gaming machine’s profit with the manufacturer and route distributor, with none of the gaming income being taxed.

On the other hand, opponents counter that the machines harm the state lottery and gaming industry, which significantly benefits the state through taxes and various programs. Additionally, since skill games are not regulated, critics contend that the devices offer no consumer protections.

Attorney Joel Frank of the Lamb McErlane law firm recently submitted a notice of appeal following the recent court rulings in POM’s favor, which were on behalf of six Pennsylvania casinos. Frank is now requesting that the Pennsylvania Supreme Court agree to review a 2019 ruling by Commonwealth Court Judge Patricia McCullough, which held that POM machines are not subject to the Gaming Act, and thus cannot be seized by law enforcement in accordance with the legal code.

The Supreme Court will soon announce whether it will take up the long-running dispute in Harrisburg.