If you have been to any gas stations or diners in the Keystone State, there’s a fair chance you might have come across Pennsylvania Skill Games. These are physical machines that look a lot like slot machines. In fact, they are almost identical to slot machines in every way.
Except one thing: After the initial round of slot play has ceased, you get a chance to win your money back, usually through a memory game. Overall, you can win your stake back +5%, making the legal argument that they are more skill than luck. In PA, there are around 70,000 of these machines.
Games were in legal limbo for years
Critics, however, wanted to bring them under the legal definition of gambling, and that set up a series of court battles since 2019. For seven years, the machines remained in the bracket of skill games, until the Pennsylvania Supreme Court stepped in just over a week ago, deeming that they are gambling machines and should be treated as slot machines.
The legal battle caused a bit of a stir, not least because it brings about that age-old question of what constitutes skill and what constitutes luck. Sometimes the question is clear-cut. For example, if you buy a scratchcard from a store or online lottery platform, you are well aware that there is no skill element to the game – you can’t influence the outcome by your actions.
But games like, for example, blackjack operate in a gray area. There is undeniably skill involved – it’s for that reason you have both skilled blackjack players and poor ones, and your actions certainly can impact the outcome of the game, as you must choose when to double down, split, take insurance, fold, and so on. Of course, some element of luck is required too.
PA Supreme Court ripped into previous judgments
The PA Supreme Court’s ruling broadly poured scorn on previous legal judgment, claiming that the machines were slots “several times over.” There was a lot of legalese, but you can basically sum up the legal interpretation as “if it looks like a slot machine, plays like a slot machine, and you pay money to play like a slot machine, then it is, indeed, a slot machine”.
These decisions are not without importance in wider areas. For a start, it basically shows that the courts – and lawmakers – are not too interested in seeing pseudo-gambling machines try to escape regulation. Those lawmakers, in particular, want to tax gambling activity and revenues, and that was one of the reasons for such a clamor to get the courts to recognize the skill machines as such.
It should also act as a warning for sweepstakes casinos online, which operate on a basis of non-direct real-money wagering. There’s no skill involved on these sites, of course, but they have worked around the direct gambling aspect of playing slots and other casino games.
The lesson should be clear: workarounds are going to be scrutinized. However, the judgment did not declare that skill-based gambling products can never be legal. Nor did it prevent the legislature from creating a separate regulated category for them. Indeed, the court expressly stated that lawmakers remain free to adopt whatever policy they consider appropriate.
And that last bit might be important going forward, with so much new technology, including blockchain and AI, going into the creation of gaming products, might need a new set of laws to cover skill gaming? We are only starting to see what is possible with this type of gaming – or gambling – experience, but it might be time for the law to regulate it proactively instead of, as is so often the case, retroactively.