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Precision deemed crucial for skill game taxes

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(The Center Square) — Skill games have been restricted in Philadelphia and statewide regulation still hasn’t solidified in the General Assembly.

Although collecting tax revenue is the driving force behind the legalization push, lawmakers must tread lightly.

Advocates of the games, which differ from traditional gambling by letting users influence the outcome, warn that setting a tax rate too high could undermine their local benefits.

The games face opposition from the casino industry and district attorneys warn that their presence can attract criminals. But skill game proponents argue that they could bring in $300 million in state tax revenue as well as support gas stations, bars, and veterans’ halls that need the income.

“I have been anxious to have this conversation for a very, very long time,” said Rep. Russ Diamond, R-Jonestown, during a House GOP Policy Committee meeting on Tuesday. “It is not a matter of if we’re going to regulate and tax skill games — it’s a matter of how and when. I think the time is now.”

Arguments over the games, which are manufactured in Williamsport by Pace-O-Matic, don’t follow a neat partisan divide.

“There’s a lot of difference of opinion based off regions,” said Rep. Josh Kail, R-Beaver. “It’s about regional focus and really what’s happening in our districts.”

For its part, Pace-O-Matic has supported the legislative push for regulation.

“We’re the first to say regulation is necessary. We can all agree that a standard system and guardrails should be in place for operating skill games,” said Michael Barley, chief public affairs officer for Pace-O-Matic. “The state is littered with illegal slot machines that require no skill, yet they masquerade as skill games.”

Experts estimate that Pennsylvania has about 70,000 game machines (though Barley said it’s probably higher due to unregulated and illegal ones) scattered across the commonwealth; Pace-O-Matic has 18,000 on the market.

Other supporters argued that the games helped businesses stave off the economic downturn from COVID-era shutdown orders and changes in state law.

“Based upon conversations I’ve had with colleagues at other establishments across the state, skill games filled at least part of the void,” Jim DeLisio, owner of the Race Horse Tavern in York County, said. “Those skill games are being used to pay bills, upgrade establishments, complete new licensing types, or other benefits to employees.”

Stephen Holmes, commander of a VFW post in Harrisburg, said they would have had to scale back programs if not for skill games revenue.

“I don’t know what we would’ve done without skill games,” he said.

DeLisio also warned about setting too high a tax rate on the games.

“Reasonably, we should be right in around the 18%-22% would be something that should be comfortable for the government to do what they need to do and leave something on the table for the businesses,” he said. “You really need to be careful if this thing comes to fruition, how we tax this — or you’re gonna kill it.”