Aug. 15, 2024
I have been in Harrisburg for 14 budgets, and each one is the same.
Every want or need has the General Assembly chanting “Come out, come out, wherever you are,” while searching for just a few million more.
Recently, a local pastor looking to tap into a nonprofit security grant stopped by the office. He bemoaned that although the recent budget doubled funding from $5 million to $10 million, chances are it won’t be enough to meet the requests.
So why are we completely ignoring the millions of dollars a day we can collect from the recent proliferation of “skill” games?
In this costly game of hide and seek, it’s like the Pennsylvania taxpayer is the proverbial “It.” We count. We seek. We just haven’t found.
Skill games don’t look too different from slot machines. They are now seen in bars, clubs, convenience stores, warehouses and gas stations. I call them “unregulated machines” because they really do not take a whole lot of skill to play them.
And it is that nuance that keeps them from being regulated and taxed like slot machines. That would take legislation, which both the industry and Gov. Josh Shapiro have sought.
Rest assured, if there is a revenue source out there hiding, there is legislation to seek it. This legislative term, there are four, including mine, House Bill 2047. But the House Gaming Oversight Committee has yet to schedule a hearing on any of these bills. House Democrats, who have enjoyed a one-seat majority during much of the current session, set the agenda.
Comparatively, in 2015-16, the same committee had over 40 hearings before considering a bill to establish mini casinos, online gaming, poker and sports wagering. Why the reticence now to hear from stakeholders and come up with a plan of action?
A 2022 American Gaming Association (AGA) report estimated 67,000 unregulated machines each handle roughly $188,000 in wagers per year in the Commonwealth.
The main factors are payback percentage and tax rate. Currently, Pennsylvania mandates a minimum payback of 85% from approximately 25,000 regulated slots. Meaning that for every dollar played, at least 85 cents gets returned. This is strictly enforced and monitored as all regulated machines are hardwired into the Pennsylvania Gaming Control Board (PGCB).
Unregulated machines have no guaranteed payback percentage. However, the AGA estimates the current rate at 75%.
As for the tax rate, proposals vary from 16% to 54%. Even at the lowest rate, based on the AGA’s estimates (67,000 machines, $188,000 per machine with a payback at 75%), it would mean an additional $500 million to the general budget.
We can debate the estimates, but what cannot be debated is that our current revenue from these machines is ZERO. What also cannot be debated is the need for consumer protections. Hard wiring into the PGCB, similar to slot machines, ensures consumer protections such as proper payback percentages and dissuading underage gamblers.
Earlier this month, the second business based exclusively on unregulated games opened its doors in my district. While their investment to the local economy is negligible, 15 minutes away sits Live Casino, which has created more than 500 full-time jobs and provides millions in grants to local governments.
Payback percentages, tax rates, limits on machines and numbers of locations, these are all up for discussion. This is why the House Gaming Oversight Committee must schedule hearings. Status quo is not acceptable, and every day revenue is lost, other taxes make up the difference.
House Gaming Oversight Committee Republican Chairman Russ Diamond declared in a recent hearing that “it is not a matter of if we’ll regulate and tax skill games, but a matter of how and when.”
State government has its core functions, from education, public safety and infrastructure improvement, and it is the General Assembly’s obligation to find revenue from any source, not just sales or income taxes.
But we can’t be “It” any longer.
Representative George Dunbar
56th District
Pennsylvania House of Representatives
Media Contact: Jordan Frei
724-875-8450
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