They are at the convenience store. And, in the corner at the loved-by-locals breakfast spot. At the bowling alley. They are in 21-to-enter dives and bars with family-friendly menus. At each of these places, there are Pennsylvania Skill machines. The games can be played by 18-year-olds, whereas slot machines on casino gaming floors are strictly 21 years or older.

Pace-O-Matic (POM) designs Pennsylvania Skill games, which are distributed by Williamsport, PA,-based-Miele Manufacturing.

It offers several games including:

  • A tic-tac-toe-style puzzle
  • A potentially unlockable bonus session
  • A “follow me” colored dot-matching second phase of gameplay.

If a player successfully plays the Pace-O-Matic game, he or she wins a total of 105% of the original amount spent to play.

Pennsylvania Skill games

Pennsylvania Skill’s homepage touts the legality.

The “legal updates” page on the site has monthly updates from Matt Haverstick of the Philadelphia-based law firm Kleinbard.

An October 2019 update says:

“We are taking additional measures to end harassment by the Pennsylvania State Police, Lottery and Liquor Control Board of Pennsylvania Skill Operators. If any law enforcement of regulatory agency takes action against you, or otherwise tries to tell you that a Pennsylvania Skill device is illegal, please let the Pennsylvania Skill Compliance Team know immediately.”

Skill games legislation draws doubters

In late October, the House Gaming Oversight Committee heard testimony on Rep. Dan Moul’s House bill, which seeks to legalize, regulate, and tax the games.

The PA Lottery and the PA Gaming Control Board (PGCB) expressed serious reservations about Moul’s current version of the bill. Gaming Committee Chairman Jim Marshall, a Republican from Beaver County, said the hearing would hopefully start a dialogue.

PGCB Executive Director Kevin O’Toole testified overseeing skills games is not among the duties of the gaming board as the law is now written. He also said the proposed legislation does not provide a stream of new revenue to fund investigations and licensing in a new area of responsibility. O’Toole also noted the difficulty in assessing the fairness of a skill-based game.

The PA State Police Bureau of Liquor Control Enforcement’s leader, Major Scott Miller, said skills games are seen as illegal gambling within his organization.

He called the current unregulated play “ripe for corruption” because the machines generate millions with no public accounting and no public benefit for the machines in bars. Each machine can generate $500 per week. Miller said he is also concerned about under the table side-deals and loansharking.

Going back in time with skill machines

A 2014 Beaver County case ruled Pennsylvania Skill games legal in 2014. In November 2013, agents of the Pennsylvania Bureau of Liquor Control Enforcement seized a Pace-O-Matic video game device from an Italian-American club in Beaver County. However, the device was returned after a court ruling deemed “the evidence fails to demonstrate that the machine is a gambling device.”

A 2015 House Gaming Oversight Committee Public Hearing addressing the seizure of illegal gambling devices cited two forfeiture cases, including the Beaver County case. At the hearing, Rep. Kill Kortz (D- Allegheny) noted six years ago that the PSP commissioner testified there were 40 to 60,000 machines. This represents a vast difference from the 15,000 machines Butler estimated in his testimony. However, Butler did say it was “very difficult” to come up with the estimate and it “could certainly be more.”

At a June 2019 House Gaming Oversight hearing, lawmakers heard various sides of the debate if skill games threaten the Pennsylvania Lottery and Pennsylvania casinos.

POM Vice President of Government Affairs/Public Relations and Counsel Tom Marino said the company is eager to work on sensible legislation and touted the investments POM made in the community and producing the machines in PA. According to Penn Live, Miele Manufacturing pays taxes on the machines it sells and tries to self-regulate through contracts with its host establishments that require, for example, removal of any illegal machines before the POM games can be placed.

The state taxes casino-based slots at a rate of 54%.

Marino said to Penn Live:

“Our machines are not fixed to win for the House, like the casinos… So a 54% tax would practically wipe out the industry.”

PA Skill games and the PA Lottery

In June 2019, Sen. Tommy Tomlinson (R-Bucks County) introduced Senate Bill 710 to address the “illegal machines” and protect funding for senior programs. Tomlinson, Pennsylvania Lottery officials, Pennsylvania State Police, and senior groups partnered to announce the legislation to combat “illegal Pennsylvania Skill games.”

They said it cost the Pennsylvania Lottery an estimated $138 million in taxes over the past year and put funding for senior programs at risk. The PA Lottery estimates that for every games-of-skill machine placed in a lottery retailer, the PA Lottery loses approximately $2,284 per machine per month.

Pennsylvania Lottery Executive Director Drew Svitko said:

“These illegal machines are creating a huge risk for the older Pennsylvanians who rely upon the programs the Lottery funds. The Games of Skill machines are appearing across the state and we are deeply concerned the harm will only increase. Senator Tomlinson’s legislation will crackdown on the machines and preserve hundreds of millions of dollars that help seniors afford prescriptions, transportation, meals and more.”

The 2017-18 fiscal year was a record-breaker for the Pennsylvania Lottery. They sold more than $4.2 billion in games and paid more than $2.7 billion in prizes to winners generating more than $1 billion to benefit older Pennsylvanians. Two new products, keno and iLottery, contributed to the success.

The most recent ruling on games of skill

On Nov. 20, the  Pennsylvania Commonwealth Court confirmed in a ruling that video game machines manufactured and distributed by the POM under the name “Pennsylvania Skill” are considered slot machines under Pennsylvania law. However, Judge Patricia McCullough did not state that POM was in violation of the Gaming Act.

Haverstick replied to PlayPennsylvania‘s request for comment. He said POM expects to have a trial where they demonstrate they are predominately skill.

POM knows the market they can operate within. Haverstick commented:

“There are a lot of competitors and there is a gray market and bad actors.  POM isn’t one of them. They take care of all the legal fees for every one of their business partners down to the location level. If you are a POM customer, we are out there fighting for you. We have a legal machine and at least one court has upheld we are a legal machine. We expect soon we’re going get a bigger broader ruling that we are a legal machine.”