Recently, Josh Shapiro, Governor of Pennsylvania, gave his budget speech for FY 2024/2025 at the decorated Capitol Rotunda in Harrisburg. During his speech, he revealed that he intends to regulate games of skill in Pennsylvania during July of this year.
Skill games to be legally implemented as a taxed type of gambling:
The discussion about skill games has been lasting for few years. There seems to be more clarity then ever before. Additionally, skill games will become legally enforced as a taxed type of gambling, rather than being prohibited.
However, nothing is certain yet, because the mentioned budget represents the proposed budget developed by Shapiro. Also, the news greatly upset PA online and retail casinos, which tried to officially forbid skill games completely.
Relatedly, the aforementioned state is almost within reach of ending the discussion on skill games completely. But, if Gov. Shapiro has anything to say about it, it seems that aforementioned games won’t be operating in the “grey area” for long.
Only 2 months following the decision of the Commonwealth Court that skill games were legitimate, Gov. Shapiro involved skill machines in the aforementioned budget with the suggested tax structure.
In this regard, we offer an explanation about the regulation of skill games, based on the budget: “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). This budget assumes the board collects the tax and deposits the money into a restricted account, which is then transferred to the General Fund. Estimates assume an effective date of July 1, 2024, with initial revenue collections realized in 2024-25.”
However, there is a possibility that it will be months prior to the official finalization of the budget. Still, there is an additional incentive for said games to be formally regulated as soon as possible.
PA skill games’d fall under the authority of the Pennsylvania Gaming Control Board (PGCB), which sought the authority to regulate the machines throughout a policy hearing held in August 2023.
Creating fresh gambling vertical:
The incorporation of regulating skill games produces a fresh gambling vertical. In this sense, skill games are envisioned to exist alongside online and retail casinos.
That’s what happened to the skill games manufacturer based in Georgia, Pace-O-Matic (POM). On that note, following the breaking of yet another yearly record by the legal industry, Mike Barley, Chief Public Affairs Officer at POM, requested regulation of skill games and wanted PA out of the way.
Commenting on that, he commented in January, according to Play Pennsylvania: “It’s time for casinos to stop lobbing attacks against skill games. These revenue numbers are the latest proof that skill games have no impact on casinos’ bottom line. … How often do industries come to the legislature asking to be regulated? We want lawmakers to look past this harmful narrative spun by the casinos – that is not backed by facts – and support small businesses by passing commonsense regulation of skill games.”
If the said games get regulated, Gov. Shapiro predicts they will collect over $150m in tax income in the coming FY. Also, skill games could generate over $313m in tax profits by 2025-2026.
The online casino and retail industry won’t be significantly affected by the aforementioned regulation. The games are there as they are, with retail casinos generating $2.5bln in slot income in 2023, the highest ever since the PGCB began following results back in 2013. As for PA online casinos, they also managed to establish an annual record, collecting $2.1bln in the previous year.
Furthermore, the tax dollars collected from skill games will provide the most benefits to the residents of PA. Every gambling vertical seems to be thriving in the said state.
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