Casinos in Pennsylvania filed a lawsuit to try to get the state Supreme Court to rule that taxes on slot machine revenue are unconstitutional as skill games don’t have to make any such contribution. [Image: Shutterstock.com]

A contentious matter

Commercial casinos in Pennsylvania are continuing their efforts to level the playing field between their licensed slot machines and unregulated skill games found at many bars and restaurants in the state.

unconstitutional as the state government doesn’t levy the same toll on skill games

The operators of a dozen land-based casinos are calling on the Pennsylvania Supreme Court to rule that taxing the revenue they make from slot machines is unconstitutional as the state government doesn’t levy the same toll on skill games.

This legal action could jeopardize the $1bn in tax revenue these casinos pay each year through the 54% tax on slot machine revenue.

Differences in opinion

If the court doesn’t decide to take such a stance, the complaint says it should enforce the collection of the same tax rate on skill games to create a level playing field. The Pennsylvania Gaming Control Board has not yet commented on the lawsuit, saying it is currently evaluating the complaint.

a lower court says that these games don’t entirely rely on chance

A decision last year from a lower court concluded that these games don’t entirely rely on chance, unlike typical slot machines, as players have to identify the winning pay line rather than the machine doing it automatically. The American Gaming Association (AGA) estimates that more than 67,000 skill game machines can be found around Pennsylvania, versus about 25,000 licensed slot machines.

Another major case

The topic of skill games is a long-running issue, with the matter seemingly coming to a head in the near future. A key legal case filed on Monday that could impact the lawsuit is one between the skill game developer Pace-O-Matic and the Pennsylvania Attorney General’s Office. The latter contends that skill games are unlicensed gambling machines and as a result, should not be allowed to continue operating.

Casino companies filing the latest lawsuit include Caesars Entertainment, Penn Entertainment, and The Cordish Companies.

Pace-O-Matic claims its games don’t cannibalize any revenue from traditional casinos and says they help small businesses and certain non-profit groups survive. It would be happy to become part of a regulated market once the tax rate is at a level that ensures the machines remain profitable for small business owners. Pennsylvania Governor Josh Shapiro proposed in his February budget address a 42% tax rate on skill games, while others suggested a 16% rate.