HARRISBURG (TNS) — With 2025-26 budget discussions looming and a sense that the issue has been left unresolved, Pennsylvania lawmakers of both parties plan to seek regulation of so-called “skill games” that could, in the process, generate hundreds of millions of dollars in new revenue.
Rep. Danilo Burgos, a Philadelphia Democrat, and Sen. Gene Yaw, R-Lycoming, are both expected to resubmit bills that would regulate the industry. To this point — even though, according to Mr. Yaw, there are some 20,000 to 70,000 machines operating in the state — the devices are unregulated.
Both Yaw and Burgos have said regulation could lead to roughly $300 million in new revenue for the state. And Burgos, in an interview Monday, said 2025-26 budget discussions will start in an environment of increasing awareness of the need for revenue to equal expenditures.
“Right now, we don’t have that problem, but we will soon. We need to stop kicking the can down the road,” Burgos said. “We need to play the long game.”
When Gov. Josh Shapiro delivered his 2024-25 budget address in February, he described the need to invest some of a large financial surplus that existed in Harrisburg. Since then, though, the Independent Fiscal Office has issued projections for deficits that start at $3.4 billion this year and escalate to $6.7 billion in five years.
Skill games have appeared in recent years in clubs, fire company social halls, convenience stores, and elsewhere. Some level of user skill — including eye-hand coordination — affects the outcome of the game. On slot machines, by contrast, outcomes cannot be affected by the player.
Shapiro included a proposed tax on skill games in his 2024-25 budget proposal, with a yield of more than $150 million in new taxes. The concept did not make the final budget.
Later in the year, Shapiro said there was talk of a “linking” concept: Revenue from a potential skill games tax could be used to fill the unrelated and — to many — pressing need for increased public transit funding. The top Republican in the Senate, Majority Leader Joe Pittman of Indiana County, said money for transportation infrastructure improvements would have to be included.
No deal emerged.
Now, lawmakers are on the brink of starting a new, two-year session, with swearing-in ceremonies slated for early January. Shapiro’s next budget address is due in early February. And even though Shapiro recently announced a one-time infusion of money for the most-strapped transit agency — the Philadelphia region’s SEPTA — that money will cover SEPTA’s needs only through June 30.
Burgos said he favors tapping into new sources of revenue, rather than expanding existing ones. A skill games tax would fit that notion. In a memo to fellow lawmakers, he wrote that his forthcoming bill would put skill games under Department of Revenue oversight and require testing, registration, enforcement and accountability.
“My legislation would levy a 16% tax on skill video game machines, which would bring in close to $300 million in revenue in the first year,” he wrote.
Yaw’s chief of staff, Nick Troutman, said Monday the senator intended to re-introduce legislation on skill games he offered last session, although some details might change.
In a video posted to Yaw’s website, “They are not being taxed. Why not tax them? Even the industry itself — the skill games industry — said that by taxing them, the state can probably generate in excess of $300 million a year in tax revenue.”
Separately, the incoming minority chairman of the House Appropriations Committee, Rep. Jim Struzzi, R-Indiana, said Monday that he has been generally supportive of the concept. He noted, as Yaw did, that the industry itself is open to being regulated.
But Struzzi also pointed to the need to get the state’s expenditures and revenue in line with each other. He said, “People need to be mindful that we cannot continue to spend more than we have.”
