Shapiro Proposes Regulation on Skill Games to Support Pennsylvania’s Budget

Governor Shapiro’s Call for Regulation of Skill Games

Pennsylvania’s Governor Josh Shapiro is once again urging state lawmakers to regulate electronic skill games. He believes that by overseeing these widely used machines, Pennsylvania could unlock a significant new revenue stream, helping to alleviate ongoing budgetary challenges.

Addressing the Funding Shortfall Through Skill Game Reform

In his recent budget proposal for the 2026–27 fiscal year, Governor Shapiro outlined a $53.2 billion spending plan focused on generating new sources of income without raising broad taxes. Central to this plan is the legalization and taxation of skill games—machines resembling slot machines that are increasingly found in bars, convenience stores, gas stations, and small retailers across the state.

Official estimates suggest that as many as 70,000 of these devices operate without clear regulatory oversight. Although these skill games look like traditional slot machines, they differ because players must engage with interactive tasks that influence the game’s outcome. Industry operators claim this feature places these games outside existing gambling laws.

Shapiro highlights the confusion caused by the current lack of regulation, which complicates enforcement for law officials, local governments, and consumers alike. Prosecutors throughout Pennsylvania have repeatedly requested a clear legal framework. Meanwhile, the unregulated market poses risks to communities and results in vast sums of untapped tax revenue for the state.

Using Skill Game Revenue to Boost Education and Support Communities

The governor’s proposal includes legalizing skill games under strict operational rules and imposing substantial taxes on their total revenue. The plan envisions the state collecting slightly more than half of the income generated by these machines, with funds also allocated to support problem gambling programs. Local municipalities hosting the games would receive a portion of the revenue, while the majority would be directed into Pennsylvania’s General Fund.

Shapiro’s administration projects that regulating skill games alongside potential cannabis legalization could collectively raise approximately $2 billion annually. This additional funding aims to support expanded budget priorities, including an over 8% increase in funding for K–12 education.

However, despite persistent advocacy by the governor, lawmakers remain divided. Previous efforts to pass skill game legislation have stalled due to disagreements over tax rates and governance. Industry stakeholders, including manufacturers and representatives of bars and small businesses, generally support regulation but warn that excessively high taxes might undermine the income these machines provide to local businesses.

Some influential Republican legislators remain skeptical about relying on revenues from policies not yet approved. Yet, there appears to be cautious openness toward revising gaming laws, with skill games possibly representing a less contentious area for compromise compared to other budget issues. As budget negotiations continue, skill games have emerged as a key topic. For Governor Shapiro, the focus is less about if these machines require regulation but rather how long Pennsylvania can continue to ignore a growing industry that currently contributes no income to state funds.