GOP committees are at odds over skill game contributions

'Pennsylvania Skill' skill games

'Pennsylvania Skill' skill games Pace-O-Matic

Two political committees dedicated to electing Republican state lawmakers are split over what to do with campaign contributions from a political action committee connected to manufacturers of so-called “skill games.” 

As members of GOP leadership from both the Senate and House Republican caucuses return donations from the Operators for Skill PAC, their respective campaign committees have taken different stances on what to do with them. The PAC advocates in support for games of skill, which are unregulated gaming machines in the Commonwealth, similar to a regular slot machine in that the player inserts money into a terminal and plays a game. 

The machines mirror video gaming terminals, or VGTs, that were legalized by state lawmakers in 2017 and are allowed to be placed at truck stops. Like VGTs, players can pay money to use the machines and win a reward based on the outcome. But they differ from VGTs in that they are not games of “chance,” but rather games of “skill” – in which success relies on a player’s skill at a particular game. That distinction led to a 2014 Beaver County Court of Common Pleas decision that effectively exempted games under the “Pennsylvania Skill” brand from the state’s gaming laws. A 2019 decision from the Commonwealth Court also found that the skill game machines fall outside of the Gaming Act. 

Skill game machines have proliferated in bars, convenience stores and fraternal clubs. Opponents have contended that the machines are illegal, noting that they are not regulated under state law like other digital gaming machines. Skill games have also worried Gov. Tom Wolf’s administration, which has argued that the machines circumvent state law, aren’t subject to certain gaming taxes and pull proceeds away from casinos and Pennsylvania Lottery products.

In recent weeks, Senate President Pro Tempore Jake Corman, Senate Majority Leader Kim Ward and House Speaker Bryan Cutler have indicated their intent to return campaign contributions from the Operators for Skill PAC, according to GoErie. The PAC frequently receives contributions from those in the amusement and gaming industries, including employees of Pace-O-Matic, the company that manufactures the “Pennsylvania Skill” machines.

Mike Barley, a spokesman for Pace-O-Matic, said the Operators for Skill PAC “is proud to support Pennsylvania elected officials who, like us, are committed to supporting small businesses and our fraternal clubs, particularly our VFWs and American Legions.”

Since 2019, Corman has received $7,000 from the PAC; Ward has received $1,500 and Cutler has received more than $35,000. Senate Democratic Leader Jay Costa also received a $10,000 contribution in 2019, which he also returned. 

Corman, in a letter sent to the PAC earlier this month, said skill game companies are “engaging in, at best, unregulated or, at worst, illegal gaming in PA.”

“Pennsylvania has a healthy gaming environment because we have a heavy regulated gaming industry. Your efforts to prevent the same type of regulation is not in the best interest of the citizens of Pennsylvania, so I do not feel comfortable accepting your contributions,” Corman wrote.

The Pennsylvania Senate Republican Campaign Committee has since made a similar decision. The SRCC has received more than $30,000 from the Operators for Skill PAC since 2019, according to a review of campaign finance records. A spokesperson for the committee told City & State that the SRCC will no longer accept contributions from the Operators for Skill PAC. 

“SRCC has chosen to return the contribution we received from Operators for Skill PAC,” Cody Harbaugh, an SRCC spokesperson, told City & State. “We will also not be accepting those contributions in the future. SRCC supports Senator Jake Corman, Senator Kim Ward, and all our members in ensuring that our gaming industry in Pennsylvania is legal, regulated, and taxed.”

Cutler, the top-ranking Republican in the House, told LNP that he typically returns campaign contributions from the traditional gambling industry, as well. But while Cutler has returned more than $38,000 tied to skill games advocates, the Pennsylvania House Republican Campaign Committee won’t be doing the same.

Since 2017, the HRCC has received more than $80,000 from the Operators for Skill PAC. In an email, a spokesperson for the HRCC said that the committee “does not intend to return legal contributions.” 

It’s also unclear whether House Majority Leader Kerry Benninghoff will return contributions received from the Operators for Skill PAC. According to campaign finance reports, he has received at least $12,500 from the PAC since 2019. A spokesperson for Benninghoff did not respond to requests for comment about whether or not the House GOP leader intends to return the contributions.

House Minority Leader Joanna McClinton, who was elected the House Democratic Leader last year, also received a $5,000 contribution from the Operators for Skill PAC in February. A spokesperson for McClinton said she also intends to return the contribution.

The skill games have prompted considerable controversy in Pennsylvania for a variety of reasons. In an informational hearing last October, Major Jeffrey A. Fisher, director of the Pennsylvania State Police Bureau of Liquor Control Enforcement, argued that skill game manufacturers also avoid paying taxes that VGT manufacturers do. 

“Unlike licensed casinos and operators of lawful gambling terminals, operators of these so-called ‘skill games’ do not pay a specifically enacted tax on proceeds derived from them,” Fisher said. “As a result, profit margins for operating these illegal devices are extremely attractive to their manufacturers, distributors and to the licensees and businesses that house them and allow patrons to play them.”

Meanwhile, skill game machines have concerned officials at the Pennsylvania Lottery, who fear that the machines, if regulated, will result in a decreased use of lottery products. 

“Now about 30% of Pennsylvania lottery retailers have at least one [skill] machine, and these machines are – mathematically, we can prove it – absolutely hurting our ability to generate more funds for older Pennsylvanians,” Pennsylvania Lottery Executive Director Drew Svitko said of skill machines at a recent hearing on gaming. “We are very concerned about any additional gaming options being added to the market.”

Proponents of skill games, such as Pace-O-Matic, the company that manufactures games under the “Pennsylvania Skill” brand, argue that the machines are legal thanks to the Commonwealth Court decision.

“‘Pennsylvania Skill’ games, powered by Pace-O-Matic, have been ruled legal and remain so, pending a change to the law or a decision in the case we brought to solidify our legal standing before the Commonwealth Court,” said Barley, the spokesman for Pace-O-Matic. “There is no question that our skill games are legal, and anyone saying otherwise is – at best misunderstanding the law and – at worst – intentionally misrepresenting our games.”

Pace-O-Matic also welcomes taxation that will come with any legislative effort to regulate the machines, and argues that skill games help bring an influx of revenue to small businesses like bars, restaurants and clubs.

“We remain committed to working with the legislature on putting in place regulations and additional taxes on the skill game industry. We welcome that oversight and believe it to be necessary to cleaning up the explosion of illegal VGTs masquerading as skill games in the market,” Barley added.