Pennsylvania Senate Weighs 35% Tax on Skill Games

Lawmakers in Pennsylvania are now debating whether to tax and regulate skill games—electronic gaming machines that have operated for years without formal state oversight. A new bill aims to rein in these machines by placing restrictions on where and how they can be used, while also introducing a sizable tax rate.

Good to know

• Senate Bill 756 proposes a 35% tax on skill game revenue.
• Establishments would be limited to seven machines each.
• Players under 21 would be banned from using skill game machines.

Senate Bill 756, currently under review in the Pennsylvania Senate, proposes the first set of formal controls on skill games. These machines, often found in gas stations, bars, laundromats, and veterans’ clubs, have spread rapidly throughout the state. The bill introduces a tax, usage caps, and an age restriction to limit how accessible these games are to the public.

Supporters argue that regulation is long overdue. Senator Dan Laughlin, who backs the bill, said, “These ‘skill games’, they’re literally everywhere now and they’re taking quite a bite out of the pockets of both our consumers and our casino businesses.” He acknowledged that while these machines have become part of the financial model for clubs and small businesses, they still function as “mini-casinos” and need regulation.

Industry groups push back

Not everyone is in favor of the proposal. Pace-O-Matic, one of the main companies behind the development of skill game software, criticized the bill. Mike Barley, the company’s Chief Public Affairs Officer, warned that Senate Bill 756 could cut off a major source of income for local groups.

Barley explained that skill game revenue has helped pay for critical community needs, such as fire department equipment and initiatives run by American Legion and Veterans of Foreign Wars posts. “This was always trying to find a balance between protecting the revenue that small businesses and fraternal clubs make while providing some benefit to the state, and unfortunately, this bill falls woefully short,” he said.

Lawmakers may consider adjustments

While the current bill proposes a 35% tax, some legislators are also looking at alternatives. One option under discussion is aligning the tax rate on skill games with the lower rate applied to casino table games. This could soften the blow for organizations that rely heavily on machine revenue while still generating funds for the state.