The legal battle over the controversial skill games that are found in many bars, restaurants, and clubs in Pennsylvania is not over yet. On Thursday, the Commonwealth Court of Pennsylvania upheld a lower court’s ruling that declared the skill games to be legal and not gambling devices. However, the state’s Attorney General’s office announced that it will appeal the decision to the Supreme Court of Pennsylvania.
What are skill games and why are they controversial?
Skill games are electronic machines that look and sound like slot machines, but require the player to use some degree of hand-eye coordination to win. The most popular skill game in Pennsylvania is called Pennsylvania Skill, powered by Pace-O-Matic (POM), a Georgia-based company that develops the software and partners with a Pennsylvania-based company, Miele Manufacturing, to distribute the machines.
The skill games industry claims that the machines are not gambling devices, because the outcome is determined by the player’s skill, not by chance. The industry also argues that the machines provide a valuable source of revenue for small businesses, charities, and clubs that host them.
However, the state’s Department of Revenue, the Pennsylvania Gaming Control Board (PGCB), and the casino industry contend that the skill games are illegal and unregulated gambling devices that compete unfairly with the licensed and taxed casinos and lottery. They also allege that the skill games are prone to fraud, money laundering, and underage gambling.
What did the court decide and why?
The Commonwealth Court’s decision was based on a case that originated in Dauphin County, where the state police seized several skill machines and cash from various locations in 2019. The owners of the machines filed a lawsuit against the state, seeking the return of their property and a declaration that the machines are legal.
In March 2023, Dauphin County Judge Andrew Dowling ruled in favor of the skill games owners, finding that the machines are not slot machines or gambling devices, because skill predominates over chance in the games. He also ordered the state to return the seized machines and cash to the owners.
The state appealed the ruling to the Commonwealth Court, which affirmed Judge Dowling’s decision in a 7-0 vote on Thursday. The Commonwealth Court agreed that the skill games are not slot machines, as they do not meet the definition of a slot machine under the state’s Gaming Act or the Crimes Code. The court also rejected the state’s argument that the skill games are gambling devices, as they do not involve wagering anything of value on the outcome of a game.
The court concluded that “these electronic games are not illegal” and that the state had no authority to seize them.
What are the implications and reactions of the decision?
The Commonwealth Court’s decision is a major victory for the skill games industry, which has been operating in a legal limbo for years. The decision validates the industry’s position that the skill games are legal and not gambling, and protects the industry from further enforcement actions by the state.
The decision also benefits the thousands of small businesses, charities, and clubs that host the skill games and rely on the revenue they generate. According to the skill games industry, the machines generate more than $200 million in annual revenue for these entities.
However, the decision is not the final word on the legality of the skill games, as the state plans to appeal the decision to the Supreme Court of Pennsylvania. The state’s Attorney General’s office issued a statement on Thursday, saying that it will “continue to pursue this matter to protect the public interest and the integrity of gaming in Pennsylvania.”
The state’s appeal will likely prolong the legal uncertainty and the conflict between the skill games industry and the casino industry, which has been lobbying for the skill games to be banned or regulated. The casino industry argues that the skill games pose a threat to their business and to the state’s gaming revenue, which supports various public programs and services.
The casino industry also claims that the skill games are not truly skill-based, but rather involve a large element of chance that can be manipulated by the software. The industry cites a recent report by a gaming testing laboratory that found that the skill games can be programmed to adjust the difficulty level and the payout percentage of the games.
The skill games industry disputes the report’s findings and maintains that the games are fair and transparent. The industry also points out that the games are subject to audits and inspections by independent third parties.
What are the next steps and the future of skill games in Pennsylvania?
The state’s appeal of the Commonwealth Court’s decision will likely take several months or even years to be resolved by the Supreme Court of Pennsylvania. In the meantime, the skill games industry will continue to operate in the state, unless the state seeks and obtains a stay of the lower court’s decision.
The skill games industry will also continue to face opposition and challenges from the casino industry and other stakeholders, who may seek legislative or regulatory solutions to address the skill games issue. The skill games industry has expressed its willingness to work with the state and the casino industry to find a compromise that would allow the skill games to coexist with the licensed and regulated gaming market.
The skill games issue is not unique to Pennsylvania, as similar machines and legal disputes have emerged in other states, such as Virginia, Ohio, and Nebraska. The outcome of the Pennsylvania case may have an impact on the future of skill games in other jurisdictions, as well as on the broader debate over the definition and regulation of gambling in the digital age.