Inside the growing clash between Pa. Senate GOP and a skill games firm

The Struggle Over Skill Games in Pennsylvania

For over a decade, Pennsylvania lawmakers have been debating the regulation of so-called skill games—slot machine-like devices that have become common in convenience stores, bars, and gas stations across the state. These machines are not taxed and have sparked significant controversy among lawmakers, industry players, and the public.

The Republican-led state Senate has traditionally been a strong supporter of the industry, resisting new taxes in a state they claim is already unfriendly to businesses. However, this stance has recently shifted as a renewed push for taxation emerges.

A Feud Between Industry and Legislators

A recent feud between Georgia-based Pace-O-Matic, the leading provider of skill games, and Senate Republicans has brought the issue into the spotlight. Last month, the company accused the Senate leadership of pressuring its lobbyists to drop the firm as a client. In response, GOP leaders claimed that Pace-O-Matic was engaging in an intimidation campaign against vulnerable members of the chamber.

The situation escalated when Pace-O-Matic discovered that its emails to Republican senators were not being delivered. The company claims that the Senate intentionally blocked its email domain, citing an internal IT analysis. However, Senate leadership denied these allegations, stating that no proactive actions were taken to prevent the emails from being received.

According to the Senate, the emails may have bounced back due to user error or an increase in email volume triggering security protocols. Despite these explanations, the issue continues to create tension between the industry and lawmakers.

Taxation and Regulation Debate

As the debate over taxation intensifies, operators for Skill, a political action committee affiliated with Pace-O-Matic, has donated hundreds of thousands of dollars to Pennsylvania Republicans in recent years. The group also supports some Democrats, highlighting the complex political landscape surrounding the issue.

Pace-O-Matic has hired seasoned Pennsylvania GOP political figures, including Mike Barley, a former executive director of the state party, and former U.S. Rep. Tom Marino. However, the company’s influence appears to be waning as Senate leaders introduce legislation that would impose a 35% tax rate on skill games revenue and authorize limited machines at businesses with liquor licenses or lottery participation.

Senate Majority Leader Joe Pittman views the issue as one of public safety, citing the proliferation of unregulated machines and their association with crime. The proposed tax aims to help balance the state budget, which has been delayed past the constitutional deadline.

Industry Concerns and Casino Interests

Pace-O-Matic argues that the bill would harm small businesses that rely on skill games for supplemental income, such as fraternal organizations and clubs. The company claims the proposal would make skill games the most regulated product in Pennsylvania and give too much power to a regulator aligned with casino interests.

Casinos have long opposed skill games, fearing they could impact their $6 billion gaming market. When attempts to ban the games failed, the industry pushed for limits and higher taxes. Casino interests contributed $550,000 to top lawmakers and Gov. Josh Shapiro in the 2024 cycle, according to a Spotlight PA analysis.

Lobbying Firms Withdraw Support

As Pace-O-Matic raised concerns with lawmakers, the company saw its standing decline among Republican lawmakers. Three lobbying firms suddenly dropped Pace-O-Matic as a client, reportedly at the behest of Senate leaders who warned the firms of potential loss of business if they continued working with the company.

This development led to accusations of hypocrisy from GOP leaders, who dismissed the allegations as embarrassing. The situation further intensified with the email flap, raising questions about communication and transparency between the industry and lawmakers.

Public Perception and Political Strategy

Some political observers believe the skill games industry has overplayed its hand by publicly criticizing Republicans. Chris Borick, a professor of political science at Muhlenberg College, noted that while it's common for industries to shift strategies when inside lobbying fails, the current approach may not be effective.

Despite the challenges, the debate over skill games in Pennsylvania highlights the complex interplay between industry interests, legislative agendas, and public opinion. As the battle for regulation continues, the outcome will have significant implications for the state's economy and the future of skill games.