In the Keystone state’s gaming world, former Pennsylvania Governor Ed Rendell has suggested that lawmakers cast their gaze on the controversial grey gaming machines, pushing for them to cultivate a regulatory environment and implement tax measures akin to what traditional casinos pay on their slot machines.
Governor Rendell, a Democrat who held the office from 2003 to 2011, was no stranger to the gamble of the gaming industry. Luminary in his efforts to legalize casino gambling, especially slot machines, Rendell’s tenure saw the heralding of progressive changes to the state’s gambling landscape.
Sitting recently behind a columnist’s desk, Rendell penned an op-ed for the Erie-Times News, urging lawmakers not to be tempted by the allure of out-of-state gaming manufacturers and distributors seeking a lower tax rate. As the chief architect of the state’s Gaming Act passed in 2004, Rendell has an acute understanding of the stakes and scale of the gaming industry.
He recalled in his piece how the casino industry lobbied vehemently during the inception of the Gaming Act. Their gripe? The 52% tax on gross revenue from slots – deemed by many as punitive and a deterrent to investments in the Keystone state’s promising gaming prospects.
Fast forward two decades, Pennsylvania has become one of the most prosperous gaming states in the country, boasting 17 traditional casinos and a thriving industry that raked in a staggering $5.7 billion in revenue just last year.
Meanwhile, “skill games” have established a strong footing across the commonwealth, proliferating in restaurants, bars, gas stations, convenience stores, and other small businesses. These games, dubbed “skill games” due to their requirement for the player to identify a winning payline by touching corresponding symbols, have become a significant revenue stream for businesses, often offsetting inflationary pressures.
However, these skill games presently exist in a latticework of grey legislation, with proceeds split among the game’s software developer, machine manufacturer, distributor, and hosting business. State courts have so far ruled that skill games do not fall within the purview of the Gaming Act due to their dependence on skill rather than pure luck.
This grey area is in the process of being challenged by Pennsylvania Attorney General Michelle Henry, who seeks to elevate the issue to the state Supreme Court. Concurrently, state lawmakers are working towards legislating and taxing grey games, proposing a 16% tax on skill games via the bipartisan House Bill 2075.
Governor Josh Shapiro has suggested a more ambitious tax rate of about 42%, however, Rendell firmly believes both figures fall short.
Rendell has expressed deep concern regarding current members of the General Assembly who propose what he describes as a ruinous tax handout that would reward out-of-state gaming interests at the state’s expense. The former governor is resolute that the often criticized 52% tax rate has served Pennsylvania well for almost two decades and any attempt to cut tax rates for these interests would amount to “killing the golden goose”.
Currently, revenues from Video Gaming Terminals (VGTs), usually found in diesel truck stops, rest at $41.2 million.
Yet despite Rendell’s call to action, the proposed House Bill 2075, introduced in February and assigned to the House Gaming Oversight Committee, remains idle. And with the closure of the Pennsylvania General Assembly’s session on November 30, 2024, and no meetings scheduled, the future of grey gaming machines hangs in the balance.