The Commonwealth Court of Pennsylvania recently issued a decision that has sparked debate in Philadelphia. At the centre of the issue are skill game machines, which resemble slot machines and have drawn attention from small businesses, large casinos, legislators, and civil society groups. The key question is whether these devices are gambling games, which would require regulation and taxation, or legitimate skill-based games reliant on player abilities. 

The suspension of the ban 

In December 2024, the state court temporarily suspended a ban approved earlier by the Philadelphia City Council and signed into law by Mayor Cherelle Parker in April. The ban restricted skill machines in establishments lacking specific licences, such as casinos or venues selling alcohol. Proponents of the ban argued that these machines could negatively impact public safety and vulnerable communities. Mayor Parker highlighted concerns that the machines might increase crime, promote gambling addiction, and financially harm families. 

Despite these concerns, the court determined that enforcing the ban could irreparably harm businesses relying on these games as a crucial source of income. G&B Amusement and Harry Sandhu, who filed the appeal, argued that the ban would damage the economy and hinder a legal and profitable activity. Small business owners claimed the measure unfairly favoured large, regulated casinos over smaller establishments. 

The nature of skill games 

The core of the debate lies in the nature of these devices. Manufacturers like Pace-O-Matic assert that skill games are not reliant on chance but on the player’s talent and ability. Conversely, critics from the casino industry and other sectors argue that these machines are no different from slot machines, exploiting regulatory loopholes to avoid taxation and oversight. 

The controversy deepens with the existence of hybrid machines, which combine elements of skill and chance, further complicating their classification. Previous legal disputes, such as a 2022 case in Luzerne County, resulted in the court ruling that Banilla Games’ devices were not gambling machines, leading to their return after being confiscated. However, these decisions often vary depending on judicial interpretation. 

Economic and regulatory consequences 

The regulated casino industry has pushed for the elimination or strict regulation of skill machines. Leaders like Eric Hausler of Parx Casino argue that these devices divert revenue from casinos and create unfair competition by operating outside the established tax system. Meanwhile, legislators such as John Adams, District Attorney of Berks County, advocate for a regulatory framework that includes taxation and geographic limitations rather than a total ban. Adams noted that the state loses millions in potential tax revenue every day without regulation. 

Small business owners, however, contend that skill games provide a critical source of supplemental income, particularly in challenging economic times. They argue that these machines are essential for their financial survival. 

The case is now under review by the Pennsylvania Supreme Court, which will determine whether these devices constitute illegal gambling machines. If deemed illegal, the machines could face a statewide ban, benefiting regulated casinos. Conversely, if found lawful, the devices are likely to be regulated and taxed, potentially generating significant new revenue for the state. 

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