Jun 28, 2024 By Josh Kail 4 min read

Small businesses are struggling in Pennsylvania.

Just ask any restaurant or retail business owner, and they will rattle off the financial challenges they face every day.

Labor, food and energy costs, as well as operational expenses, never decrease; instead, they keep going up. In many ways, they are still feeling the effects of the pandemic.

I know how hard these owners and their staff work. For years, I was an attorney representing small businesses. I saw firsthand how vulnerable they are, trying to just break even, let alone thrive and turn a profit, in these volatile economic times.

Local small businesses are always looking for ways to earn additional income to offer their workers higher wages, pay the rent or mortgage or make necessary building improvements while also providing support for the community.

Fortunately, one product is helping them: skill games. Many places operate the games, and they have made a huge difference.

These games aren’t gambling machines and, in fact, have no connection to casinos. That has been determined by more than one Pennsylvania court, most importantly, the Commonwealth Court, which last year unanimously ruled that skill games are legal and are not gambling devices as covered under the state’s Gaming Act. This was an affirmation of several county courts that found the same.

Instead, skill games are what you find in neighborhood bars and restaurants. They are in VFWs, American Legions, volunteer fire companies, Moose Lodges and other fraternal clubs. They require players to think strategically and use patience to win. Legal skill games provide a unique form of entertainment for patrons and provide small business owners additional income that can be spent on maintenance and operating expenses.

Skill games could be a game changer for many struggling small businesses in Pennsylvania seeking new ways to fill in budgetary gaps as inflation persists. I believe if legislators are going to regulate the legal skill games industry, we should support legislation put forward by state Sen. Gene Yaw, a Republican from Montoursville.

Business owners are not asking us for a government handout; they are asking us to regulate skill games. Rather than costing the state money, this measure would provide Pennsylvania with new, annual tax revenue.

If passed, Yaw’s legislation would tax and regulate skill games, placing guardrails around the games, shutting down illegal gambling machines and providing the state with a steady stream of annual revenue.

Yaw’s bill, and a separate House bill sponsored by Rep. Danilo Burgos, a Philadelphia Democrat, has received bipartisan support in rural and urban areas. Estimates show that taxes generated from a 16% skill game tax will generate over $250 million in revenue in just the first year – with that number increasing as illegal games are driven out of the market.

While some people may call for a much higher tax on the games, we need to be reasonable if we want to support small businesses and see significant state revenue. If the government imposes a high tax, small businesses and fraternal clubs won’t be able to afford it. Four things will then happen. First, many places will give up their games and risk closing their doors. Second, the state will not see nearly as much tax revenue, which is part of the reason to regulate the games in the first place. Third, important community programs will see far less financial support. Fourth, we won’t rid our downtowns of illegal mini-casinos.

Operating a small business that employs local people provides a service in our cities, suburbs and towns. Owners want to do their part to be good neighbors. The healthier their business is, the more they can give back to their communities. Businesses and fraternal clubs with skill games regularly help finance youth sports teams, food banks, animal shelters and other important causes.

As for the tax revenue from regulation, a portion of it will be earmarked for law enforcement efforts to target illegal gambling. This means law-abiding business owners won’t have to compete with bad individuals who refuse to follow the law. The bill also contains restrictions on the number of games per establishment (five for locations that have a liquor license and/or lottery machine and 10 for fraternal clubs), meaning an end to nuisance locations that create neighborhood discord.

One of the best things about skill games is that over 90% of the money generated by the games stays right here in Pennsylvania and is mostly spent locally.

As legislators, we must move forward with this commonsense skill game legislation. I urge my colleagues to regulate skill games. It is a critical way of helping small businesses fight for survival in Pennsylvania.

State Rep. Josh Kail is chair of the House Republican Policy Committee and represents Beaver and Washington counties.