Pennsylvania Faces October 13 Skill Games Deadline After Rep. Russ Diamond Circulates 20% Tax Proposal

With the court-ordered safe-harbor period set to expire on October 13, Rep. Russ Diamond has circulated a co-sponsorship memo for a two-bill package that would regulate skill games through a 20% tax on gross terminal revenue and make broader changes to Pennsylvania’s gambling tax structure. The move comes after the Pennsylvania Supreme Court ruled that machines such as those offered by Pace-O-Matic are subject to the state’s Gaming Act and criminal gambling laws. The Court stayed enforcement for 120 days to give lawmakers time to act.

Diamond has not yet introduced the legislation and is still seeking co-sponsors. His proposal would permit up to five machines at clubs, liquor-licensed restaurants and bars, and qualified truck stops. It does not include a statewide cap. The plan would also reset the tax rate for casino slots and all online casino games to 49.9%. Casino slots are currently taxed at 48-54% and online slots at 54%.

Gaming tax revenue would be directed to the State Gaming Fund, with 79% allocated to property tax relief, 13.25% to the General Fund, 6.75% to the Race Horse Development Trust Fund, and 1% to the Compulsive and Problem Gambling Treatment Fund. A second bill would establish the distribution mechanism. The Pennsylvania Gaming Control Board has estimated between 70,000 and 100,000 skill game machines currently operating across the state in a range of locations including convenience stores and gas stations.

Diamond’s Two-Bill Package

The proposal seeks to bring skill games into the regulated system while simultaneously overhauling tax rates and revenue flows for other gambling verticals. This marks the latest attempt to resolve an issue that has persisted for years without legislative resolution. Previous efforts include Gov. Josh Shapiro‘s repeated calls for a 52% tax, a statewide cap of 40,000 machines, and a five-machine limit per site. Rep. Ben Waxman introduced HB 2557 in May that focused on consumer protections such as centralized monitoring, player identification, self-exclusion, age verification, and loss limits without establishing a tax rate.

The Narrow Window for Legislative Action

Skill game regulation was left out of the $50.8 billion FY 2026/27 budget signed by Shapiro in July despite the added pressure of the looming deadline. Diamond’s decision to pursue sweeping changes to the broader gaming framework has produced skepticism at the Capitol about reaching agreement in time, as reflected in coverage by Gambling Insider. The narrow window now requires lawmakers to secure co-sponsors and advance legislation before enforcement of the Supreme Court ruling begins. A more focused measure limited to skill games alone could prove more achievable, but the current approach bundles multiple complex issues that have previously stalled progress. Operators and locations reliant on these machines face potential disruption if no framework is enacted by October 13.

Reporting: Gambling Insider

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