Pennsylvania Budget Passed: Skill Games Unregulated, Seizures Loom

Pennsylvania remains in a difficult situation. The U.S. state has approved its 2026 and 2027 budget after lengthy consultations. However, a major issue remains unresolved: the regulation of skill games. Now, thousands of small businesses face potential losses, and their devices could soon be seized.

This is a mess that has been brewing for months. Governor Josh Shapiro signed the $50.8 billion budget, but there is no legislation for the controversial machines included in it. The Pennsylvania Supreme Court recently declared skill games illegal due to a lack of suitable legal framework. Lawmakers now have until October 13 to resolve the issue. Otherwise, bars, restaurants, gas stations, and other establishments could face visits from law enforcement seizing these devices.

Numbers and facts

The budget amounts to $50.8 billion. Governor Shapiro had proposed a 52 percent tax rate on skill games in February. This measure was estimated to generate about $8 billion in revenue over the next five years. However, opinions differ: Senator Gene Yaw suggests a 16 percent tax rate, while Senator Chris Gebhard calls for 35 percent. Representative Kerry Benninghoff, on the other hand, wants no additional taxes at all. Representative Danilo Burgos is considering monthly fees and state-wide limits on the number of machines. The casino industry prefers a 54 percent tax rate, as applied to retail slot machines. The Supreme Court has set a deadline of October 13 for implementing regulation.

Background

Skill games have rapidly grown in popularity across Pennsylvania over the past decade. They resemble slot machines but are said to require some level of player skill. This is precisely where the conflict lies. Proponents view them as a crucial source of revenue for small businesses and community organizations. Opponents argue they are too similar to regular casino games but operate without corresponding taxation and oversight. Manufacturers, such as Pace-O-Matic, are lobbying for a lower tax structure. Many small businesses, from bars to convenience stores, rely on the supplementary income generated by these machines. The current uncertainty is a genuine burden for them. This is also evident in Pace-O-Matic's statement:

"We are focused on supporting legislation that lifts up our small businesses and fraternal clubs with solutions that allow them to continue to operate skill games and earn this important supplemental revenue." - Pace-O-Matic told PlayPennsylvania in June.

Why it matters for German players

This development in Pennsylvania might seem distant at first glance. However, it exemplifies the challenges of regulating new forms of gambling. In Germany, since the State Treaty on Gambling 2021 (GlüStV 2021), we have a clear direction. The Joint Gambling Authority of the Federal States (GGL) licenses and supervises online gambling providers. Players in Germany can rely on a secure framework when playing with a GGL-licensed provider. This includes strict rules such as a 1 Euro per spin limit on online slots, a monthly deposit limit of 1,000 Euros via the LUGAS system, and comprehensive player protection measures. The German market is tightly regulated to protect players from the dangers of excessive gambling. Providers without a German license, for instance from Malta (MGA) or Curaçao, operate outside this framework and cannot offer the same level of security.

What it means for GGL-licensed casinos

For GGL-licensed casinos in Germany, the situation in Pennsylvania primarily confirms their own regulated path. German authorities have deliberately opted for a comprehensive legal framework designed to avoid gray areas like skill games from the outset. This creates planning certainty for operators and trust for players. The debate in the U.S. underscores the need for clear laws to secure state revenues, protect players, and prevent the proliferation of unregulated offerings. Where there is no license, there is no security. This applies even more strongly in Pennsylvania as well as in Germany. While German GGL requirements may seem strict to some players, they serve the overarching goal of a responsible gambling market. Casinos on the GGL whitelist thus offer a clear advantage over providers who do not adhere to these high standards.