Skill Game Compromise Must Include Tax & Regulatory Parity

As the debate over taxing and regulating skill games intensifies, Gov. Josh Shapiro and lawmakers face a stark choice: they can build on the Commonwealth’s 20+ years of experience developing one of the nation’s most successful casino industries in the nation — or they can roll the dice and jeopardize casino workers’ jobs, billions in tax dollars and public safety.

By any measure, the numbers show that Pennsylvania’s casinos, working with lawmakers and successive administrations across party lines, have delivered. The state’s casinos:

• Provide 15,000 direct jobs and support a total of 33,000 jobs across the state
• Generated $2.34 billion in state gaming tax revenues last year – the most in the nation
• Ensure safe gaming by partnering with the PA Gaming Control Board, the PA State Police and local police

These results are no accident. Since 2004, when slot machines were introduced at racetracks and legislation was passed in 2010 and 2017 to allow table games, online gaming, and additional casinos, the Commonwealth has prioritized jobs and investments, taxes, and highly regulated gaming.

Again, the numbers show that the casino industry has emerged as a major economic driver in Pennsylvania. The state’s casinos invest more than $500 million annually in Pennsylvania businesses and provide $110 million in local share contributions to nonprofits, first responder groups and other organizations in host communities.

Unregulated and untaxed skill games provide no tax dollars and do not generate any capital investment in the state. It is unclear how many direct full-time jobs skill games generate. We also do not know how many skill games are operating in the state, where they are operating or how much money they are currently generating. The major operators of these machines should be required to provide this information to lawmakers as we move forward.

We do know, however, that skill games are already draining slot machine revenues from the state’s casinos – along with tax dollars. Some skill games proponents continue to claim that because the casino industry has been generating record revenues due to online gaming, skill games are not affecting the casino’s business, workforce or the tax revenues we generate. They are wrong.

Consider that since 2018, Pennsylvania’s retail slot revenues have grown only 4% in aggregate. The surrounding states, none of which have skill games, have grown an average of 21%. New Jersey’s slot revenues have grown 16% over that time and it has online slots and tables just like Pennsylvania – but no skill games.

Casinos pay a combined 54% tax on slot machine revenues, the majority of which goes to reduce property taxes. That means the state and every taxpayer are the majority owners in every casino’s slot machine business. Skill games take slot players away from legal, regulated, and taxed online and retail casinos and take tax dollars away from the state.

It is time for a compromise. We welcome Gov. Shapiro’s proposal to tax and regulate skill games in the same fashion that slot machines are taxed and regulated. A separate and lower tax rate for skill games is unfair and anti-competitive. Skill games should be subject to oversight by the Pennsylvania Gaming Control Board, and they should follow the same rules and regulations that have helped Pennsylvania emerge as a national leader in gaming.

The stakes are very high for lawmakers and Gov. Shapiro. We look forward to collaborating with all parties to forge a compromise that works for all Pennsylvanians.