The legality of skill games in Pennsylvania has been a point of contention for years, with supporters touting its difference from gambling and its positive impact on local businesses, while opponents warn about its impact on traditional casinos. However, this may soon change with the newly proposed budget by Pennsylvania Governor Josh Shapiro.
In the proposed budget for FY 2024/2025, Gov. Shapiro included estimates for proceeds from skill games tax, with a proposed tax rate of 42% on gross gaming revenue. The regulation of skill games would fall under the Pennsylvania Gaming Control Board (PGCB), and the collected tax would be deposited into an administrative account before being moved to the state’s General Fund.
Assuming the necessary legislation and rules are in place, an estimated $150.4 million in proceeds from skill games taxes are expected for FY 2024/2025, increasing to $313.4 million for FY 2025/2026. The budget outlines these estimates as a tax on the daily gross gaming revenue from electronic gaming machines that involve an element of skill and are regulated by the PGCB, with an effective date of July 1, 2024.
Including tax revenue from skill games in the proposed budget is a significant milestone after years of dispute over its legality. While the budget is subject to change, the Governor’s intention to include skill games in the budget sends a clear signal to lawmakers about the future of skill games in Pennsylvania.
This recent development follows a court decision last year that designated skill games as not illegal, paving the way for their regulation. The Commonwealth Court approved a lower court’s decision that recognized winnings from skill games as legal.
Overall, the proposed budget signals a potential shift in the regulation and taxation of skill games in Pennsylvania, potentially providing a new source of revenue for the state while addressing the legal ambiguity surrounding these games.