Westmoreland Review

State Representative George Dunbar (R-Westmoreland) has expressed concerns over Pennsylvania's budget practices, particularly the unregulated "skill" games proliferating across the state. He argues that these machines, similar to slot machines but currently untaxed and unregulated, represent a significant lost revenue opportunity.

Dunbar shared an anecdote about a local pastor who sought nonprofit security grant funding, only to find that despite the budget doubling from $5 million to $10 million, it might still fall short of meeting demands. He questions why potential revenue from skill games is being overlooked.

Skill games are now common in various establishments such as bars, clubs, convenience stores, warehouses, and gas stations. Dunbar refers to them as “unregulated machines” due to their minimal skill requirement and lack of regulation akin to slot machines. Both industry stakeholders and Governor Josh Shapiro have called for legislation to regulate and tax these machines.

Four bills addressing this issue have been introduced in the current legislative term, including House Bill 2047 sponsored by Dunbar. However, the House Gaming Oversight Committee has yet to schedule hearings on any of these bills. The committee's reluctance contrasts with its previous activity; during the 2015-16 session, it held over 40 hearings before considering a bill on mini casinos and online gaming.

A 2022 report by the American Gaming Association (AGA) estimated that there are 67,000 unregulated machines in Pennsylvania handling approximately $188,000 in wagers annually per machine. Regulated slots must return at least 85% of every dollar played under strict monitoring by the Pennsylvania Gaming Control Board (PGCB). Unregulated machines have no such guarantees; however, AGA estimates their payback rate at around 75%.

Tax rate proposals for skill games vary between 16% and 54%. Even at the lowest proposed rate based on AGA’s estimates, this could add approximately $500 million annually to Pennsylvania’s general budget.

Dunbar emphasizes that while estimates can be debated, the current revenue from these machines is zero. Additionally, he highlights consumer protection issues; regulated slots are hardwired into PGCB systems ensuring proper payback percentages and preventing underage gambling.

He notes that a second business based exclusively on unregulated games recently opened in his district but had negligible economic impact compared to Live Casino nearby which created over 500 full-time jobs and provided substantial grants to local governments.

Dunbar calls for discussions on payback percentages, tax rates, machine limits, and location numbers through scheduled hearings by the House Gaming Oversight Committee. He asserts that maintaining the status quo results in lost revenue which other taxes must compensate for.

House Gaming Oversight Committee Republican Chairman Russ Diamond stated in a recent hearing: “it is not a matter of if we’ll regulate and tax skill games but a matter of how and when.”

Dunbar concludes by stressing that finding new revenue sources is essential for fulfilling state government functions like education, public safety, and infrastructure improvement without relying solely on sales or income taxes.

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