Pete Shelly: It's time to rein in the skill games industry

Pennsylvania lawmakers have an opportunity to finally address a critical need and pass common-sense legislation to regulate and tax skill games in the coming days as they work to finalize the fiscal year 2025-26 state budget.

This challenge is about much more than generating new tax revenues. It’s about public safety, protecting seniors, safeguarding children, supporting community organizations and restoring order to a situation that has spiraled out of control. These machines are everywhere: gas stations, pizza shops, strip malls, convenience stores, corner markets, dog groomers, tattoo parlors, laundromats, auto repair garages and mini skill-game parlors.

In a 2022 report, the American Gaming Association estimated that our state has 67,000 skill games in operation. The number is undoubtedly higher today, as your readers know just by walking into any of these locations. By comparison, there are roughly 25,000 legal slot machines in Pennsylvania’s licensed, regulated and supervised casinos, which generated a total of $2.6 billion in state gaming tax revenues last year.

If we don’t step in and establish firm rules and limits, coupled with strong enforcement, we will find ourselves buried by an industry that answers to no one. Lawmakers are considering legislation that would give the Pennsylvania Gaming Control Board the authority to license, regulate, and tax these machines. This isn’t good policy — it’s an urgent necessity.

The safety concerns alone should compel action. Skill games and other illegal gambling devices are prime targets for robberies, mainly because there are no security measures in place at most locations and significant cash is readily available – both in the machines and behind the counter. A van carrying skill game cash was robbed in broad daylight by armed assailants in Chambersburg. Criminals have used sledgehammers and crowbars to break open machines — not in the dead of night, but while stores were open and customers and employees were inside.

This is not anecdotal — a quick search of “skill games” and “robbery” will show just how widespread the problem has become. The Pennsylvania District Attorneys Association has already raised red flags, alerting Gov. Josh Shapiro and lawmakers that, “Law enforcement has seen an increase in crime related to the proliferation of the machines.”

Meanwhile, children are exposed to gambling every day. These machines are in businesses where minors are allowed — and in far too many cases, they are playing them. There are photos of children sitting at these terminals. That’s not just inappropriate — it’s dangerous and unacceptable. Skill games have drained at least $200 million from our state lottery in recent years. That lost revenue should be supporting older Pennsylvanians who rely on lottery-funded programs for food and affordable prescriptions, among other critical services.

There is a clear distinction between those operating recklessly and those who deserve our support such as fraternal organizations such as the American Legion, VFWs and fire hall social clubs and other legitimate fraternal clubs that do play by the rules. These establishments serve adult populations. They are trusted community institutions that have experience managing games of chance responsibly. They deserve a chance to thrive in a fair, regulated system. Any compromise legislation must support these organizations.

The bottom line is this: the largest player in skill game industry has made it clear that they have no real interest in any compromise legislation. In fact, they have already threatened to sue the state if legislation includes a skill game tax that does not suit their business model.

It’s time for Pennsylvania to clean up this mess. It’s time to prioritize public safety, and ensure that gaming in this state is transparent, fair, and accountable.

The Wild West days of unregulated skill games must end.

Pete Shelly is a Harrisburg-based consultant to Parx Casino