Pennsylvania casino owners call on state Supreme Court to rule slot machine tax unconstitutional

Twelve Pennsylvania casino owners filed a lawsuit against the state, claiming that a tax on slot machines is unconstitutional because it is not imposed on cash-paying electronic game terminals, known as skill games, found in bars and stores.

The lawsuit comes a month after the state Supreme Court announced it will rule if these skill games are actually unlicensed gambling machines.

Casino owners argue these skill games, which are not taxed at 54% like slot machines, are cutting into their profits and violate the state’s constitution that taxes are fair.

“There is no basis for requiring licensed entities to pay about half of their slot machine revenue to the Commonwealth while allowing unlicensed entities to pay no tax on such revenue,” they argue in the lawsuit.

The owners are calling on the state to either tax these skill games or not tax slot machines on their revenue. This could cost the state $1 billion in annual tax revenue, which goes toward property tax rebates and economic development projects.

The court has not ruled whether taxes on skill games must be shot down.

Previously, a lower court ruled in favor of a lawsuit filed by Pace-O-Matic, a skill game maker, against the state, finding that skill games are different than gambling machines because they are based on player ability, whereas slot machines and other traditional gambling machines are based on chance.

The state had maintained for years that these devices are illegally operating, unlicensed gambling machines and can be seized by the police. However, retailers, machine makers, and distributors have said that they are legal and are not subject to state gambling control laws.

The American Gaming Association estimates there are at least 67,000 skill games across bars and stores in Pennsylvania.