Josh Shapiro, Governor of Pennsylvania, recently announced during his budget speech for FY 2024/2025 that he intends to regulate games of skill in Pennsylvania starting in July of this year. This comes after years of debate and uncertainty surrounding the legality of such games, which were previously banned in the state. The news has been met with mixed reactions, particularly from the state’s online and retail casinos, which have been vocal in their opposition to the regulation of skill games.
The proposed budget includes a tax of 42 percent on the daily gross gaming revenue from electronic gaming machines that involve an element of skill and are regulated by the Pennsylvania Gaming Control Board (PGCB). It is estimated that this tax will generate over $150 million in tax revenue in the upcoming fiscal year, and over $313 million by 2025-2026. The regulation of skill games is expected to create a new gambling vertical in the state, alongside online and retail casinos.
The decision to regulate skill games has been welcomed by some, including Mike Barley, Chief Public Affairs Officer at POM, a skill games manufacturer based in Georgia. Barley has called for regulation of skill games and pushed back against the idea that they have a negative impact on casinos’ bottom line. He believes that the regulation of skill games will benefit small businesses and generate much-needed tax revenue for the state.
Despite the opposition from the casino industry, the regulation of skill games is expected to have a minimal impact on their revenue. Retail casinos in Pennsylvania generated $2.5 billion in slot revenue in 2023, the highest since the PGCB began recording results in 2013. Online casinos in the state also saw a record year, collecting $2.1 billion in revenue.
Ultimately, the regulation of skill games is seen as a positive development for Pennsylvania, as it is expected to benefit residents and provide a substantial source of tax revenue for the state. The decision to regulate skill games represents a significant shift in the gambling landscape in Pennsylvania, and it remains to be seen how this new vertical will be integrated into the existing industry.