Philadelphia City Council bans skill game machines within city businesses, giving exceptions to bars and restaurants

A special set of skill games will soon be prohibited in Philadelphia. 

Philadelphia City Council unanimously approved legislation Thursday banning businesses from having so-called “skill games” unless they also have a casino or liquor license and an area for at least 30 patrons to eat or drink. 

Skill games, sometimes referred to as “gray games” by critics, are digital gaming machines that have popped up in gas stations, convenience stores, fraternal clubs and organizations, bars and taverns, as well as mini-casinos. Courts have ruled that the machines fall outside of the state’s gaming law because winnings are based on skill – not on chance, like traditional gambling machines.

Amid inaction in Harrisburg, Philadelphia lawmakers sought to address the unregulated machines not only because they are untaxed but because, some councilmembers said, they attract crime. 

Council’s Public Safety Committee held a public hearing on the legislation in February, with police and community advocates calling for regulation, while game manufacturers and business owners pushed back against what they say is a prohibition that picks winners and losers. 

Councilmember Curtis Jones, Public Safety Committee Chair, commended his colleagues for their favorable vote. 

“I know people told you the sky was gonna fall. But I appreciate you guys standing up to the bully (and) I appreciate you doing the David and Goliath thing for the neighborhoods of the city of Philadelphia,” Jones said following the vote Thursday. “It is not a perfect bill, and we are hoping to continue the conversation with people to figure out how to make it a better bill.”

Mike Barley, spokesman for Pennsylvania Skill powered by Pace-O-Matic, said the company is disappointed in the decision to “ban legal skill games from small family-run stores.” 

“We take the welfare of the city seriously and agree with council members that the number of illegal gambling machines cropping up in locations is a problem. However, a ban that also includes legal skill games is not the answer. It will only jeopardize the livelihoods of many local small businesses,” Barley said in a statement. 

Barley also said the game manufacturer, which is supportive of regulation at the state level, is taking legal action against the city’s legislation. 

“Gov. Josh Shapiro and both Democratic and Republican members of the General Assembly support legislation that will regulate and tax legal skill games,” Barley said. “Because of the ruling, we now are forced to take legal action against the city, which we have done today, to protect the interests of hardworking Philadelphia business owners.”

Akash Patel, whose family operates a shop in Roxborough, said that increased police presence and accountability are a greater issue than the skill game machines, stating that crime existed in their neighborhood before the machines were in place. 

“To outright ban them is pretty disrespectful and callous,” Patel testified in February. “Why are you punishing honest, working, taxpaying constituents?”

Gov. Josh Shapiro’s budget proposal, unveiled last month, factors in estimated revenue from the potential legalization of such skill games. Revenue estimates from the Shapiro administration suggest that a 42% tax on daily revenue from skill games could generate $150 million in revenue in the 2024-25 fiscal year. The estimate assumes the new framework and tax would begin on July 1, 2024.

Jones said he hopes the council’s actions Thursday will prompt the state legislature to address skill games across the commonwealth. 

“We've been waiting for help from Harrisburg, and I believe by passing this bill, it will incentivize our colleagues at the state level to finally take this on and do something on behalf of Philadelphia,” Jones said. 

The legalization of skill games has generated bipartisan support in the General Assembly, with Republican leadership hinting that there could be an appetite in the legislature for regulating the games in the future. 

The Pennsylvania District Attorneys Association sent a letter to Shapiro earlier this year saying both the machines and some winners have been targets of theft, putting “a strain on law enforcement.”

The association asked Shapiro to help shape policy that regulates the machines and provides clear guidance to law enforcement, saying that “the legislative process should include consumer protection measures, security requirements, and mechanisms to prevent underage use.”