This ruling, less than a year after the ban's implementation, represents a pivotal moment for the skill game industry, which has been under increasing regulatory scrutiny in recent years.
The overturned ban, enacted in March 2024, was part of the city's efforts to curb what officials perceived as unregulated gambling activities. The ordinance prohibited the operation of skill games in various establishments, including gas stations and convenience stores, unless they possessed a casino or liquor license and had seating for at least 30 patrons.
The legal challenge leading to the court's decision was spearheaded by G&B Amusements, a skill game distributor, and Harry Sandhu, a Philadelphia gas station owner who operated these machines. Initially, a common pleas court judge upheld the ban and denied an injunction to prevent its enforcement.
However, upon appeal, Commonwealth Court Judge Patricia A. McCullough cited previous rulings indicating that games located outside regulated casinos are neither illegal nor subject to state gaming laws. She stated, "As the law stands today, [Pace-O-Matic] games that are located outside of regulated facilities are neither illegal nor regulated."
- The battle of the machines of skill machines
Pace-O-Matic (POM), the Georgia-based developer of the "Pennsylvania Skill" game series, welcomed the court's decision. Mike Barley, a spokesperson for POM, remarked, "Pace-O-Matic is pleased, and not surprised, that Commonwealth Court agrees the ban passed by Philadelphia city council is unlawful. Lifting it is a victory for Philadelphia small businesses that count on the supplemental income they receive when patrons play the Pennsylvania Skill games they operate in their establishments."
The ruling has significant implications for local businesses that host these machines. Many had reported substantial revenue losses following the ban's enforcement, with some establishments struggling to remain operational. The court's decision allows these businesses to resume offering skill games, providing a much-needed financial boost. Additionally, some business owners have noted that the presence of skill games attracts patrons during late hours, potentially enhancing safety by deterring criminal activity.
Despite this legal victory for skill game operators, the debate over their regulation continues. Critics argue that these machines operate in a legal gray area, often competing with state-regulated casinos without adhering to the same taxation and regulatory standards.
The American Gaming Association (AGA) and the Association of Gaming Equipment Manufacturers (AGEM) have consistently expressed their opposition to the proliferation of unregulated skill games.
Both organizations argue that these machines operate outside the established regulatory framework, creating risks for consumers and undermining the integrity of the gaming industry.
In a statement, the AGA emphasized: “Unregulated skill games undermine consumer protection measures and create an uneven playing field for state-regulated operators. These machines jeopardize the integrity of our industry by avoiding taxation and oversight, while exposing players to potential risks.”
Similarly, the AGEM highlighted concerns about fair competition, noting that these machines often directly compete with state-regulated casinos without adhering to the same rigorous standards. A spokesperson for AGEM stated: “The lack of oversight for skill-based games erodes the credibility of the gaming sector and diverts revenue away from state programs funded by legitimate gaming taxes.”
Moving forward, there is a growing call for the Pennsylvania state legislature to establish clear regulations and taxation policies for skill games. Pace-O-Matic has expressed support for such measures, advocating for a framework that provides "guardrails" and enables small businesses to thrive while ensuring compliance with state laws.
The Commonwealth Court's decision to overturn Philadelphia's ban on skill games marks a significant development in the ongoing debate over the legality and regulation of these machines. While the ruling is a triumph for operators and local businesses, it underscores the pressing need for comprehensive state-level legislation to address the complexities of skill-based gaming and its place within Pennsylvania's broader gaming industry.
