Pennsylvania skill game operators now face a major legal setback after the state Supreme Court ruled that the machines are unlawful under existing gambling laws.
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The Pennsylvania Supreme Court ruled Monday that so called skill games cannot avoid gambling law just because they include a small skill based feature.
The cases centered on machines that largely play like slot machines but include a memory element known as “follow me.” Operators argued that the added skill component placed the devices outside Pennsylvania gambling rules.
A majority of the court disagreed. In a 5-2 decision, the justices overturned two Commonwealth Court outcomes. One lower court had found that unlicensed skill games did not fall under the Pennsylvania Gaming Act. Another had found that the games did not count as illegal gambling under the Crimes Code because skill played a role.
The Supreme Court rejected both conclusions and ruled that the devices remain illegal gambling machines under state law.
Pennsylvania Attorney General James Sunday welcomed the decision.
“Today’s ruling is a significant victory for consumers, taxpayers and the rule of law in Pennsylvania,” Sunday said.
“The Supreme Court recognized what our office has argued from the beginning – these machines operate as gambling devices and cannot legally exist without the same oversight, regulation and accountability as other forms of legalized gaming in the Commonwealth. Pennsylvanians deserve protections that ensure games are fair, transparent and operated within the bounds of the law.”
The ruling does not allow immediate enforcement against every operator. The court gave businesses a 120 day grace period because many relied on earlier Commonwealth Court decisions that supported the legality of skill games.
The court stated, “We recognize, as we have in the past, that many throughout Pennsylvania have placed reasonable reliance upon the Commonwealth Court’s decisions on the lawfulness of the subject devices. We are further mindful of the potential disturbance that our correction of the prevailing case law may cause to business owners and other good-faith participants in the industry. We thus stay our order for a period of 120 days. During this 120-day period of safe harbor, no law enforcement agency is to take adverse action against owners or operators of “skill game” devices in reliance upon this opinion.”
The decision lands while lawmakers already weigh tighter rules for skill games. House Bill 2557 was introduced earlier this month and seeks stricter limits on the use and operation of the machines.
About 70,000 skill game machines operate across Pennsylvania, with many manufactured by Pace-O-Matic. The Georgia based company pushed back after the ruling.
“We are disappointed with the decision by the Pennsylvania Supreme Court and strongly believe it does not accurately reflect the facts presented – notably, the same facts that led to a string of lower court rulings affirming the legality of our skill games, including a unanimous Commonwealth Court ruling.”
Pace-O-Matic said it will work with state lawmakers while following the court decision.
“Our number one priority continues to be supporting our small business and nonprofit partners across the commonwealth. Pace-O-Matic will always abide by the rule of law.”
The Pennsylvania Supreme Court ruled that skill games are illegal under current state law, even when the machines include a skill based feature.
The court found that a memory based feature did not change the gambling nature of machines that otherwise work much like slot machines.
Operators have a 120 day safe harbor period. During that time, law enforcement cannot act against owners or operators based on the ruling.
An estimated 70,000 machines currently operate across the state.
Pace-O-Matic, based in Georgia, manufactures many of the machines operating in Pennsylvania.