Fight over cash-paying video games hits crucial stretch

In this photo from Jan. 10, 2020, a Pennsylvania Skill brand game terminal is open for play in Monaca, Pa. A hearing is scheduled before the state's Commonwealth Court for Jan. 15, 2020, on whether Pennsylvania law prohibits the machines as unlicensed slot machines, even if a player's success is supposedly based on skill, rather than chance.

HARRISBURG — A legal showdown played out in state court Wednesday on whether state police should be barred from seizing Pennsylvania Skill machines, slot-machine-style games that are unregulated, untaxed versions of “games of skill” proliferating across the state and within Lancaster County.

Capt. James Jones of the Pennsylvania State Police Bureau of Liquor Control Enforcement testified in Commonwealth Court that a decision in the case could prevent his unit from raiding illegal establishments that have a Pennsylvania Skill machine present.

Jones testified before Judge Ellen Ceisler in an emergency injunction petition filed in December by Pennsylvania Skill operator Pace-O-Matic, a company based out of Georgia.  The company asked the court for relief after state police in December seized “suspected illegal gambling” devices from five bars in Dauphin and Cumberland counties.

The requested injunction, if awarded, would prohibit state police from seizing any Pennsylvania Skill machines. Pennsylvania Skill games are not video gaming terminals or slot machines, although the functionalities are similar. The machines, located throughout Lancaster County, can be found in bars, convenience stores and fraternal organization posts.

Ceisler, the sole jurist hearing the case Wednesday, did not issue a ruling on whether state police will continue to be blocked from seizing Pace-O-Matic’s machines. Ceisler said she would rule soon and wants the court to move quickly.

The Commonwealth Court already ruled in November that “games of skill” can’t be regulated under state game code. This current court case is to decide whether the machines can be regulated, and thus prosecuted, under state criminal code as illegal gambling devices.

Lottery and casino criticism

The Pennsylvania Lottery has criticized the so-called skill machines, estimating the agency lost $138 million in sales in 2019 to these games (although the Lottery still had a record-breaking year of $4.5 billion in sales in the 2018-19 year).

The casino industry also opposes the machines because casinos are required to pay effectively 52% tax on slot machines, which is not required of the Pace-O-Matic games.

“I understand why casinos don’t like it, or the Lottery and Pennsylvania State Police don’t like it; it makes their jobs harder,” said Matt Haverstick, an attorney representing Pace-O-Matic. “That they don’t like it doesn’t make it illegal. You don’t assume conduct is illegal.”

Haverstick also argued that keeping the machines up and running is beneficial for small businesses in Pennsylvania like fraternal organizations.

In response, Pennsylvania State Police attorney Karen Romano said these businesses “aren’t rubbing pennies together.”

“They're getting a cut of the money,” she said, arguing that’s why these businesses want to keep them up and running.

Legislative action

Ceisler said several times during the hearing she believed the Legislature, not the courts, should decide the legality of skill games.

That could soon be on the horizon, with Senate Majority Leader Jake Corman, R-Centre County, just last week issuing a co-sponsorship memorandum about legislation he will introduce to align games of skill regulation with that of video gaming terminals, moving them under the oversight of the state Gaming Control Board.

Lancaster’s Republican Sens. Ryan Aument and Scott Martin are co-sponsors of legislation pending in the Senate Judiciary Committee that would ban skill games.

“It seems like they’re spreading like wildfire,” Martin said in June about the skill games.