For the fifth year in a row, Pennsylvania signed off on a state budget behind schedule. While lawmakers ultimately agreed on a $50.8 billion spending plan, one lingering issue is still lingering almost unbothered: skill games.
What Could Come
Governor Josh Shapiro inked the 2026-27 budget earlier this month. He was also the one who confirmed the lack of any legislation that would regulate or tax skill games in the final package, despite months of heated debates and the mounting pressure from the industry.
Just one month ago, the Pennsylvania Supreme Court deemed skill games illegal under current state law, giving lawmakers 120 days to set up a suitable legal framework.
The deadline will expire on October 13, and, provided legislators fail to act, establishments that are currently hosting these machines could receive the visits of law enforcement agents ready to seize them.
The list of affected venues would include bars, restaurants, gas stations, convenience stores, and other establishments.
Heated Tax Talk
Skill games, which resemble slot machines but require some level of player interaction, have become increasingly common throughout Pennsylvania over the past decade.
Those who are in favor of skill games say they generate an important source of revenue for small businesses and community organizations. Opponents claim they are just too similar to casino gaming, minus the corresponding taxation and oversight.
In February, Governor Shapiro proposed a 52% tax on these games, estimating the measure would trigger about $8 billion in revenue over the next five years. However, lawmakers remain divided on how the industry should be regulated.
Senator Gene Yaw has backed legislation featuring a 16% tax rate, while Senator Chris Gebhard has proposed a 35% rate.
Representative Kerry Benninghoff, on the other hand, introduced a bill that would impose no additional taxes, while Representative Danilo Burgos has proposed monthly fees and statewide limits on the number of machines.
Meanwhile, Pennsylvania’s casino industry favors taxing skill games at the same 54% rate applied to retail slot machines.
For thousands of small businesses, the uncertainty continues. Many bars, clubs, and convenience stores rely on the supplemental income generated by the machines, while manufacturers such as Pace-O-Matic continue lobbying for a lower tax structure.
“We are focused on supporting legislation that lifts up our small businesses and fraternal clubs with solutions that allow them to continue to operate skill games and earn this important supplemental revenue,” Pace-O-Matic told PlayPennsylvania in June.