For years, a battle has been raging over the legality of skill games in Pennsylvania. While supporters of such form of entertainment said that it provides a different experience than gambling and helps local businesses, opponents warned about the impact of skill games on the brick-and-mortar casino sector. Currently, skill games operate within a grey area across Pennsylvania, but that may soon change with the state’s newly proposed budget.
Pennsylvania Gov. Josh Shapiro recently released his proposed budget for FY 2024/2025, which included estimates for proceeds from skill games tax. Per the proposed budget, the tax rate for such games would be 42% on gross gaming revenue. The Governor’s budget reveals that the regulation of skill games would be in the hands of the state’s gambling regulator, the Pennsylvania Gaming Control Board (PGCB).
The collected tax on gross gaming revenue from such machines would be deposited into an administrative account. Subsequently, the collected taxes from skill games would be relocated to the state’s General Fund, under the proposed budget.
Assuming that the required legislation and rules would be in place with the budget’s effective date, July 1, 2024, an estimated $150.4 million in proceeds from skill games taxes are expected to be generated for FY 2024/2025. Gov. Shapiro’s proposed budget estimated the proceeds from skill games taxes to increase to $313.4 million for FY 2025/2026 and remain in a similar ballpark through FY 2028/2029.
“This budget proposes a tax to be levied on the daily gross gaming revenue from electronic gaming machines that involve an element of skill and are regulated by the Pennsylvania Gaming Control Board. Estimates assume an effective date of July 1, 2024. This budget deposits tax revenues into a restricted account for administration, transferring the balance to the General Fund,“
reads Gov. Josh Shapiro’s proposed FY 2024/2025 budget
A Major Milestone for Skill Games
Undoubtedly, including tax revenue from skill games within the proposed budget marks an important milestone after years of dispute over the legality of such games. Yet, it is important to mention that the proposed budget may undergo changes. Still, the Governor’s intention to include skill games in the budget marks a clear signal for lawmakers about the future of skill games in Pennsylvania.
The recent development follows a court decision from late last year. At the time, skill games were designated as not illegal, a move that paved the way for the regulation of such games. The judgment came from the Commonwealth Court, approving a lower court’s decision that recognized winnings from skill games as legal.