Philadelphia City Council faces lawsuit over casino-style ‘skill game’ regulations

PHILADELPHIA (CN) — A yearslong legal battle between Philadelphia leaders and gaming companies reached has reached a fever pitch after a bill to dramatically limit installations of casino-style "skill games" passed the City Council and was immediately challenged in state court.

Over several years, skill games have proliferated Pennsylvania's bars, restaurants and gas stations, operating in a legal gray area — untaxed, unregulated, and occasionally seized by police.

However, a state court judge held this past November that the digital games do not qualify as slot machines, and thus cannot be regulated under existing gaming regulations.

Frustrated with the state government's slow movement toward regulating the machines, the Philadelphia City Council has attempted to ban skill games from most city businesses. One bill passed 14-to-1 in December but was not signed by then-Mayor Jim Kenney before his term expired.

The council's second effort — Bill No. 240010 — passed unanimously March 21 . If signed into law by Mayor Cherelle Parker, the bill would limit skill games to businesses that have a casino or liquor license and an area for at least 30 customers to eat or drink.

Shortly after the council vote, G&B Amusements, a Pennsylvania distributor for skill game manufacturer Pace-O-Matic, and Tariq Jahlil, a 7-Eleven franchisee in South Philadelphia, filed a lawsuit claiming decisions on gaming regulations are limited to the state legislature. Pace-O-Matic has also expressed support for the suit.

"Pennsylvania Skill and skill game software company Pace-O-Matic are alarmed that City Council would pass a measure that will hurt small family-owned businesses," Pennsylvania Skill spokesman Mike Barley said in a statement.

"We take the welfare of the city seriously and agree with council members that the number of illegal gambling machines cropping up in Philadelphia locations is a problem. A ban that includes legal skill games, however, is not the answer. It will only jeopardize the livelihoods of many city small businesses."

Andy, a sales manager at Shell gas station in the city's Callowhill neighborhood, works at one of those businesses. The store's skill games vary in payout, he said, but can make the gas station as much as $2,000 to $3,000 per day in additional income.

However, he also noted a significant downside of the machines — they've attracted an unruly and unpredictable clientele.
"In the daytime, it's fine," he said. "They don't do anything. But in the night, what might they do? We don't know, sometimes it's risky. It's Center City — all the people coming and drinking … they all mess things [up]."

Andy explained that patrons who lose money at the games often shout at employees and cause a mess out of anger. Despite an uptick in profits, Andy told Courthouse News that the machines' impact on employee safety has meant that the games cause him more harm than good.

"My concern is to remove them because it is not safe for us, especially in the city," he said. "If it is in the suburbs or some safe areas where there is a community, then we can put it in and there's no problem…. It depends on the area and all the people who come, but here, I don't prefer this."

Several prominent Pennsylvania officials have expressed similar sentiments. In February, the Pennsylvania District Attorney's Association penned a letter to Governor Josh Shapiro, listing the unregulated skill games as one of the Keystone state's three "major public safety concerns."

Pennsylvania law enforcement agencies have seen an increase in crime surrounding these machines, the association said. Unlike casinos, small businesses that install skill games typically have minimal security, making them easy targets for criminals and thieves.

"These unlicensed and unregulated skill games have put a strain on law enforcement in many communities," the letter reads. "We sympathize with the owners of the establishments that rely on these machines for extra income, but we must recognize that there are societal costs with their operation."

However, the letter stopped short of calling for an outright ban on skill games, instead arguing their legality should be determined by state lawmakers.

G&B Amusements could not be reached for comment.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit