A new report from Pennsylvania's Independent Fiscal Office (IFO) suggests that regulating and taxing electronic skill games could significantly boost the state's revenue. The report estimates that tax revenues could exceed $400 million within five years if Governor Shapiro's proposed 42 percent tax on these games is implemented.
Skill games, which require player interaction and skill to play, are currently unregulated and untaxed in Pennsylvania. They can be found in bars, restaurants, and convenience stores across the state, with conservative estimates placing the number of such machines in the tens of thousands. The Georgia-based company Pace-O-Matic dominates the industry in Pennsylvania.
Governor Shapiro's proposal to regulate and tax skill games is part of his budget pitch for the year. He estimates that a 42% tax on daily gross revenue from skill games would yield about $150.4 million for the state in the next fiscal year, and grow thereafter.
The IFO report suggests that this new form of gaming won't likely impact current gaming revenues, as its forecast only applies to new forms of gaming. This could potentially garner bipartisan support, as more lawmakers are warming up to the idea of regulating and taxing skill games.
However, the proposal is not without controversy. Pace-O-Matic has conditions for its embrace of regulation. The company doesn’t want skill games to be overseen by the Gaming Control Board, as Shapiro has proposed. Pace-O-Matic lobbyist Mike Barley argued in a statement earlier this month that the panel won’t be a “fair and impartial regulator.”
Despite the challenges, proponents of the tax believe it's a step in the right direction. The commonwealth is leaving tax dollars on the table by not regulating these games, they argue, and this proposal could help rectify that.