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Pennsylvania Supreme Court Could Finally Settle Skill Games Issue

Written By Derek Helling on March 29, 2023
pennsylvania skill games supreme court review

The issue of whether Pennsylvania skill games represent illegal gambling in the state has finally arrived at its inevitable destination. The state’s Supreme Court has granted review to an appeal that could have a large impact on whether regulators in the state can shut down the machines.

So far, the company that provides the terminals to Pennsylvania businesses and organizations has had success at lower levels of the state court system. Despite losing battles, the Pennsylvania Dept. of Revenue (DOR) might still win the war.

Pennsylvania skill games lawsuit arrives in Harrisburg

According to Corey Sharp of PlayPennsylvania, the Pennsylvania Supreme Court will consider POM of Pennsylvania v. Department of Revenue. It’s uncertain right now when arguments will happen before the court.

To date, the litigation has not gone well for the state. Just last month, another court in the state once again ruled that the DOR essentially stole cash and property from Pace-o-Matic (the POM in POM of Pennsylvania) and had to give it all back.

POM won similar court proceedings in 2014, 2019, and 2022. In each instance, a state agency had to return the gaming terminals in question along with any cash they secured. In light of the victories, POM representatives have maintained the games are legal and that their partners need the revenue they bring in.

While lower court precedent might be on the side of the plaintiffs, that doesn’t necessarily mean the argument is.

Definition of gambling at heart of the dispute

The battle lines in the dispute over whether skill game machines are gambling devices or not are clear. On one side, you have the state of Pennsylvania. The state’s allies consist of Pennsylvania casinos, as they argue the games are essentially identical to their slot machines.

Pennsylvania law is quite clear that unless you have a casino license, it’s illegal for you to accept real money bets via slot machines. The other side in the dispute, POM and the businesses that contract with it doesn’t dispute that fact.

Rather, they maintain that the games are not slot machines at all. Slot machines, the argument goes, rely on a random number generator to determine the result of a bet. POM states that its devices, however similar they might be to slots in their appearance and user experience, do not use chance to determine whether a player has won.

POM argues that the games require skill to win, hence the name. Thus, playing them is no different than paying to play a pinball machine at a bar. If the businesses that host them want to reward a player for their skill at the games, that isn’t gambling. It’s the just reward of a highly skilled person displaying their talent.

Various state agencies like the DOR and the Bureau of Liquor Control Enforcement (BLCE) haven’t seen things that way. That’s why they have seized the games and attached cash in the past. For that reason, they, along with casinos in Pennsylvania, find themselves as defendants in this case.

POM alleges conspiracy to harm its business

When POM filed its lawsuit in April 2022, it alleged that regulators in the state are in the shadiest of cahoots with each other. In more flowery language, it claimed the BLCE, DOR, and casinos were involved in a conspiracy to defame it.

The seizures are part of its case for substantiating that claim. However, the actions of regulators alone probably won’t be enough to prove to the court that casinos and state agencies were in league with the explicit goal of shutting down POM’s operations in Pennsylvania.

To establish that premise, they’ll likely have to produce correspondence or some other kind of interaction between the parties. Whether POM has any such evidence is unclear currently. Even if the conspiracy claim fails to hold water, though, POM could still get a win.

The Pennsylvania Supreme Court’s decision in this matter will have a lot of influence on the future. That’s why they call it supreme. Even a narrow victory for the plaintiffs could deter state agencies from conducting future seizure raids.

On the other hand, a victory for the defendants could cause several of POM’s partners to pull out of their contracts, fearing legal consequences. The same might embolden regulators to conduct more raids. It’s still entirely possible that the dispute could live on beyond the Supreme Court’s ruling, however.

Why the Supreme Court decision might not be the final word

Over the past decade, Pennsylvania legislators have filed several bills to explicitly ban or define regulations for skill games. To date, none of them have come close to becoming law. After the Supreme Court issues its ruling in this case, such bills could resurface at the capitol.

It’s quite possible that if the Supreme Court rules in POM’s favor, Pennsylvania casinos could use their lobbying might to push a bill banning skill games in the legislature. Again, though, whether such a bill would become law is another matter.

A new law would nullify any effects of the Supreme Court’s ruling, at least in the short term. It could inspire a new round of lawsuits challenging the constitutionality of the law, though. In that event, this matter might go before the Pennsylvania Supreme Court again.

It seems that regardless of how the Court decides in the current case, the other side will employ the options they have remaining. Those options are becoming fewer in number. In that way, this dispute is closer to a final resolution.

Photo by Matt Rourke / AP Photo; illustrated by PlayUSA
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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