EDITORIAL: Pennsylvania court will decide, but banning gambling devices seems wrongheaded
- The state Commonwealth Court will hear arguments in a gambling case Wednesday.
- The case involves the cash-paying electronic devices that have popped up recently.
- The court will likely decide the legal fate of the machines.
- The case's outcome may come down to whether the devices reward skill or chance.
The gambling genie has long been out of the bottle in Pennsylvania.
There are myriad ways to legally make a wager, including horse races, casino games, lottery tickets, games of chance and sports wagering.
So, the debate over whether gambling should be permitted in the state is long over.
Now, the only remaining discussions focus on what types of gambling should be permitted, how they should be regulated, and probably most importantly, how they should be taxed.
Court case: That’s why the case coming before the state’s Commonwealth Court this week is so important to the various stakeholders in the gambling industry, including the state itself.
The court is scheduled to hear arguments in a case involving the cash-paying electronic devices that have popped up all over Pennsylvania in recent years.
Recently, there were some police seizures of the machines that led to the court case. The court, on Dec. 13, ordered a halt to police seizures of the Pennsylvania Skill brand of game terminals and it will decide whether to maintain that injunction while it considers the legal fate of the machines.
State, casinos vs. bars, clubs: The state attorney general’s office is representing Gov. Tom Wolf's administration, which alleges the proliferating machines are siphoning more than $200 million in revenue last year from the Pennsylvania Lottery.
The Wolf administration has an ally is state casino industry in the nation's No. 2 commercial casino state. Obviously, the casinos don’t want any competitors cutting into their profits.
On the other side of the argument are local bars and clubs, who see the machines as desperately needed revenue streams. Clubs contend the machines will allow them to donate more money to community charities.
Bar owners claim the devices will help make up for revenue lost when the state allowed six-pack sales by beer distributors, grocery stories and convenience stores under a 2016 law.
The folks who make the machines, obviously, are siding with the bars and clubs.
There’s also a new player involved. Storefronts have popped up with nothing but machines inside, sometimes 10 or more.
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Skill vs. chance: At the crux of the court case is this: Does Pennsylvania law prohibit the machines as unlicensed slot machines, even if a player's success is supposedly based on skill, rather than chance.
The folks selling the machines, obviously believe there is some skill involved. The attorney general’s office feels differently.
The distinction between pure games of chance and games of skill seems a little silly at this point. It’s all gambling, and gambling is obviously legal in the state. In fact, in Pennsylvania, the lottery and casinos are big revenue producers, at more than $2.5 billion a year.
So, there’s obviously big money at stake.
Ban seems wrongheaded: It’s notoriously difficult to predict how a court case will turn out, but completely banning the machines would seem wrongheaded, considering the proliferation of gambling options that already exist in the state.
If the courts don't ban the devices, it will likely lead to a fight over taxation in the state legislature.
In recent days, Senate Majority Leader Jake Corman, R-Centre, said he will introduce legislation to tax skill games like the gambling terminals that a 2017 law allowed in truck stops — a 52% tax rate — and allow both skill games and the gambling terminals in bars and nonprofit clubs.
For its part, Miele Manufacturing, which produces the devices, has encouraged lawmakers to regulate and tax the games at a reasonable rate, say, 10%, a spokesman said.
Somewhere in between, there would appear to be a compromise solution.
Whether the court will see it that way remains to be seen.
But, as always, you should follow the money.