Last updated: August 14, 2024
Twelve Pennsylvania casinos, including Penn Entertainment and Caesars Entertainment, have filed a lawsuit claiming that the state’s 54% tax on slot machines is unconstitutional, as it excludes skill-based game machines. The lawsuit aims to address perceived inequities in gaming tax regulations and challenges the legality of skill-based machines.
It probably did not please land-based casinos when starting with the Pennsylvania Race Horse Development and Gaming Act (Act 71) in 2004; the state was implementing a 54% tax on slot games.
Now, two decades down the line, there is a new case that has been taken to the Supreme Court of Pennsylvania regarding this tax.
The lawsuit says that the tax is unconstitutional in that it targets regular casino businesses but does not include SBGMs, which are not currently considered legal despite their similarities to slots.
The plaintiffs argued that it is unfair for licensed casinos to be taxed approximately fifty per cent of the earnings from the slot machines while unlicensed individuals who engage in operating skill-based machines are exempted from taxes.
The problem with skill-based machines has received a lot of attention, with such gadgets found in bars, gas stations, and stores, and often act as the backbone of income sources for alcove business people.
A group of twelve Pennsylvania casinos, including Penn Entertainment and Caesars Entertainment, accuses the state of inequitable taxing a 54% premium on old slot machines while turning a blind eye to machines that resemble gambling devices but are not taxed skill-based games.
The plaintiffs argue that it is unlawful for the state to allow such high taxation of licensed slot games while at the same time almost ignoring unlicensed gaming machines. The technological dispute centers around a lawsuit regarding recognized skill-based machines.
Another case, still pending in the Supreme Court, essentially targets Pace-O-Matic, a major manufacturer of such machines, seeking declaratory relief to determine whether these machines are considered games of chance under Georgia’s anti-gambling statutes.
Much is at stake regarding the continued discussion of skill-based machines in Pennsylvania. On the one hand, the operations of the casinos located in the state are highly important for the augmentation of the state’s taxes.
Still, on the other hand, such machines are a lifeline for numerous petty companies. These devices, which became popular during the pandemic, have proved essential to small businesses, including bars and gas stations.
The manufacturers of skill-based machines support the current regulatory landscape, which allows their operations to continue unimpeded. However, the exact number of these machines remains unclear, though estimates suggest they outnumber traditional slot machines by nearly three to one.
The American Gaming Association reports approximately 67,000 skill-based machines operating in Pennsylvania, underscoring the substantial impact of this sector on both the gaming industry and local businesses.
