Pa. high court rules Pace-O-Matic skill machines are slots

The Pennsylvania Supreme Court ruled that Pace-O-Matic’s Pennsylvania Skill machines qualify as slot machines under the state Gaming Act and fall under the state’s criminal gambling laws. The decision reverses a 2023 Dauphin County ruling and a subsequent Commonwealth Court opinion that had allowed the devices to operate outside those laws.

Justice David Wecht wrote the majority opinion, concluding that recent changes to the Gaming Act render the long-standing ‘‘predominant factor’’ test — which asks whether skill or chance mainly determines outcomes — irrelevant for classifying these devices. Wecht noted that Act 42 of 2017 added definitions for ‘‘skill slot machine’’ and ‘‘hybrid slot machine,’’ and he wrote that ‘‘in any event, both variants of devices constitute ‘slot machines’’’ under the statute. The majority described prior court reasoning as ‘‘deeply flawed.’’

To limit disruption for operators and businesses that relied on earlier rulings, the court provided a 120-day safe-harbor period. During that interval, law enforcement may not bring enforcement actions against owners or operators under the court’s interpretation. The opinion also pointed out that the General Assembly may enact legislation addressing skill games before the safe-harbor ends.

Justice Christine Donohue issued a concurring opinion, focusing on the role of chance. Donohue wrote that ‘‘chance predominates both the player’s eligibility for winnings and the magnitude of those winnings,’’ and concluded the devices are gambling devices under the law.

Justices Kevin Brobson and Sallie Mundy agreed that the Commonwealth Court erred but dissented in part. Brobson, joined by Mundy, agreed the machines violate criminal gambling statutes but argued that many licensing and tax provisions in the Gaming Act are aimed at regulated facilities and should not automatically apply to unlicensed operators such as Pace-O-Matic.

Pennsylvania is estimated to host about 70,000 of these skill game machines, the largest such market in the United States. Lawmakers have repeatedly debated how to regulate or tax the devices. Governor Josh Shapiro has proposed subjecting the machines to the same 52% tax rate applied to slot machines. Other proposals carried from 2025 include tax rates ranging from 0% to 35% of revenue, and a bipartisan bill backed by the operator suggested a flat $500 monthly fee per terminal. A bill introduced earlier this month did not include a proposed rate.

The opinion cited decisions in other states where courts have reached similar conclusions, including Tennessee, North Carolina and Missouri. The court also noted a recent Texas attorney general opinion finding that machines remain illegal if chance contributes to outcomes.

The ruling takes effect after the 120-day pause unless the General Assembly adopts new legislation during that period. If lawmakers do not act, enforcement under the Gaming Act and criminal statutes could proceed under the court’s interpretation across Pennsylvania.