As lawmakers consider Gov. Josh Shapiro’s timely proposal to tax and regulate skill games, they would be wise to follow the blueprint of one the nation’s most successful state gaming industries — and they won’t have to travel far to find it. Over the last 20 years, Pennsylvania has emerged as a national leader in developing its gaming industry. Starting with the introduction of slot machines at existing racetracks in 2004, the casino industry and the Commonwealth have worked together to introduce gaming responsibly in a strategic and measured approach.

Today, the casino industry consists of 17 land-based casinos, and two more casinos are expected to open in the next few years. The results speak for themselves. The Pennsylvania Gaming Control Board (PGCB) reports that casinos generated a record $2.34 billion in state tax revenue in 2023. In addition, the industry:

• Employs 15,000 Pennsylvania workers directly and supports a total of 33,000 Pennsylvania jobs
• Invests $500 million annually with in-state businesses
• Provides $110 million in Local Share contributions to nonprofits, first responder groups, and other organizations in host communities

It is critical that lawmakers protect these jobs, ongoing investments and tax revenues as this debate intensifies. Gov. Shapiro’s proposal recognizes the need for both tax and regulatory parity among slot machine and skill games operations. He has proposed a 42 percent tax rate on skill games revenue. This is far closer to the 54 percent tax casinos pay on slot machine revenues than the absurdly low 16 percent tax that State Sen. Gene Yaw, a leading skill games proponent, has proposed. Tax parity is common sense and a matter of simple fairness: slot machines, skill games, and VGTs should pay comparable rates.

The Governor has also proposed that the Pennsylvania Gaming Control Board regulate skill games. This provision is a necessity — and plain common sense. The PCGB was created to regulate and supervise gaming. Sen. Yaw has proposed that the Department of Revenue regulate skill games. Lawmakers are not likely to ask the Department of Banking to inspect PennDOT bridges or task the Department of Agriculture with managing PennDOT’s licensing centers. Why assign this critical role to any other agency than the PGCB?

Tight regulation and oversight are a mandatory first step to remedy the current situation. Today, there are zero supports to address problem gambling or safeguards to prevent underage gambling. There are no background checks required of those who operate these machines and there are no anti-money laundering measures in place. There is no testing of the machines to ensure fairness to the player. Law enforcement officials, including our Attorney General and the Pennsylvania State Police, have repeatedly raised public safety concerns regarding these machines.

Most recently, in a letter to Gov. Shapiro, the Pennsylvania District Attorneys Association (PDAA) raised skill games as one of three major concerns, writing that, “Thousands of skill game machines are found in pizza shops, convenience stores, gas stations, and taverns across Pennsylvania. Law enforcement has seen an increase in crime related to the proliferation of the machines.” The letter adds, “Unlike the highly regulated casinos in our state, the local establishments with skill game machines generally have minimum security and are easily observed by and accessible to children.”

It is important to note that voters support equal treatment for casino slot machines and skill games. A recent statewide poll conducted by Franklin & Marshall found that, “Most (60 percent) voters believe skill games should be regulated and taxed in the same way that casino-based games are regulated and taxed in the state.” (Emphasis added.) In addition to these two fundamental provisions, at a bare minimum, it is imperative that any skill game legislation include:

• A limit on the total number of machines allowed and the total number of establishments that can host skill games
• Strict limits on the types of business establishments that can host these machines
• Meaningful law enforcement provisions to ensure that illegal machines will be confiscated

These provisions will lead to a dramatic reduction of the tens of thousands of skill games now in operation across the state. Lawmakers and Gov. Shapiro have an opportunity and an obligation to hold skill games to the same standards that the state’s casino industry is held to today.

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Pete Shelly is a spokesperson for Pennsylvanians Against Gaming Expansion.