Law360 (June 18, 2026, 6:41 PM EDT) — The Pennsylvania Supreme Court‘s recent ruling that skill games are subject to the same oversight as slot machines is a catalyst for lawmakers to craft a taxation and regulation framework and fuel a revenue boost Gov. Josh Shapiro has envisioned for years, experts tell Law360.

That legislative energy is likely to spur involvement by stakeholders — including the game makers and the bars, clubs and convenience stores where 70,000 skill game terminals operate — hoping to have a hand in steering the new rules. The court’s June 15 opiniondelayed implementation for 120 days, giving the General Assembly a few months to decide its next move.

A proposal to tax and regulate skill games was already partof Shapiro’s proposed budget for 2027, said Sam Denisco, a senior principal at Cozen O’Connor Public Strategies.

“Everybody was just waiting for the Supreme Court to rule on skill games,” Denisco told Law360, later adding, “The ruling certainly gives the legislature a charge and some food for thought going into budget negotiations.”

Various experts consulted by Law360 said the ruling gives a sudden, urgent direction to a topic that had languished in a legal gray area even as the machines became more and more visible around the state. Lawmakers now face higher pressure than before to move legislation on skill games, with small businesses, big casinos and the state’s budget all jostling to be considered.

“Prior to the court’s ruling, none of the parties on the skill game side were incentivized to get behind any legislative initiative since they had multiple statewide judicial opinions confirming the legality of skill machines and the skill game industry was not subject to any gaming regulation or to any specific gaming tax,” said Susan Hensel of Hensel Grad Gaming Counsel, a former director of licensing for the Pennsylvania Gaming Control Board. “The court’s ruling fundamentally changes this dynamic.”

A Boon for the Budget

At a news conference on a separate topic Tuesday, Shapiro answered a reporter’s request to react to the ruling by emphasizing that he has sought skill game regulation and taxation as part of his budget proposals for years, but to no avail as backers of competing proposals couldn’t agree on where to set the tax rate.

“I think we all knew that we needed to do something to both regulate and tax skill games. I’ve been calling for this for three straight years,” he said. “I was encouraged when the leadership in the Senate yesterday said that they want to get it done now, and so what I’d encourage the Republican leadership of the Senate to do is to work with the Democratic leadership in the Senate and see what kind of package can get 26 votes in their chamber and get that bill to my desk.”

Shapiro was referring to a statement from Senate President Pro Tempore Kim Ward and Senate Majority Leader Joe Pittman that acknowledged the ruling and the “clarity” it now provided. The leaders of the state Senate’s Republican majority seemed to indicate they were willing to include skill game revenue as part of the upcoming budget in the general fund, rather than dedicated to a single program like education, transportation or public safety.

“The proliferation of skill games is a matter of public safety which must be addressed, and given the timing of this decision, we believe gaming reform is a critical piece of resolving this year’s budget,” the statement said. “In addition, with the fiscal realities facing our commonwealth, it stands to reason that new revenue from gaming reform should be directed to the general fund, as the governor proposed in his 2026-27 budget.”

Pennsylvania’s Independent Fiscal Office released an analysis in February that estimated taxing skill games at 52% — slightly less than the 55% levy on slot machines — would bring in about $487 million in the proposed 2026-27 budget, increasing to $1.2 billion by 2031. That proposal assumes a cap of 40,000 skill game terminals around the state, although Attorney General Dave Sunday had estimated there were already about 70,000. Other proposals being considered by the legislature would tax the terminals less, as low as 16% or a flat $500 per machine.

Lobbying Likely To Surge

Lobbying is likely to come from all sides, Hensel predicted, though Cozen O’Connor’s Denisco said that Pace-O-Matic Inc., one of the biggest makers of skill games, might have less direct influence after it unsuccessfully backed several candidates who lost their primary elections against incumbents.

“Given the widespread presence of these games, there are few if any legislative districts that won’t have businesses impacted, and those businesses are contacting their state representatives for a legislative fix to keep the money flowing,” Hensel said. “On the other hand, licensed casino operators have long wanted to see an end to the games, so there will be horse trading over an end result. The bottom line is that one way or the other, the gravy days of skill games operating without some form of gaming taxation and oversight are over.”

In a statement following the ruling, Pace-O-Matic called the businesses running the skill games the “real victims,” arguing that limitations and taxation would reduce vital revenue. The company threw its support behind one particular proposal: Senate Bill 1079 and its counterpart, House Bill 2213, which would cap the number of skill games at 50,000 and charge a flat fee of $500 per terminal.

Chuck Moran is the executive director of the Pennsylvania Licensed Beverage and Tavern Association, which he said represents about 350 “mom and pop” bars, taverns and restaurants around the state. He said many establishments began turning to skill games to supplement their income after 2016, when a change in state law allowed beer distributors to begin selling beverages in any quantity. That had undermined bars’ revenue by taking away their previously exclusive right to sell six-packs to go.

Skill games allowed some bars to fill the revenue gap, and that reliance only grew stronger after the “second gut-punch” of the COVID-19 pandemic, Moran said.

But even as the Tavern Association tried to lobby lawmakers to legalize skill games and keep their taxes low, it cautioned the businesses hosting them that the games were not guaranteed to stay unregulated and untaxed, he said.

“We’ve been telling our members for a very long time that this was a gray matter,” Moran said. “Now that the Supreme Court has ruled, it’s black and white.”

He said the association would keep lobbying for legalizing skill games, and the ruling adds a sense of urgency.

“It’s really vital that the legislature finds a way to let bars and clubs have these machines, regulated and at a reasonable tax rate for everybody,” Moran said.

Moran said the association would also push for regulation to let them undo their existing contracts with game vendors and write new ones. It would also press game vendors to help establishments meet any new physical requirements that the legislature might impose, such as separate rooms or areas for game machines, or assistance with setting up additional security measures.

Philadelphia Mayor Cherelle Parker, however, pressed for tighter restrictions and removing the games from many of the places where they have already spread, casting them as a public safety problem and “predatory” by encouraging gambling.

“I’m going to be watching this issue very carefully. In no way, shape or form do I think these slot machines should be in our neighborhoods already struggling from socio-economic and public safety issues,” Parker said in a statement following the court ruling. “If they are going to go anywhere, they should be in private clubs and casinos.”

Is Chuck E. Cheese Up Next?

The Supreme Court’s ruling may have implications for gambling terminals beyond the skill games that spurred the appeals, Hensel said. She said the majority opinion took care to note Pace-O-Matic’s argument that the state’s definition of slot machines and gambling devices could also encompass games in arcades and establishments that have games where players pay in hope of winning a prize.

“By applying the broad definition of slot machine in the Gaming Act to the relevant provisions of the Crimes Code, not only are skill machines affected, but also virtually any amusement device that a customer pays to play. There is no question that this will have far-reaching consequences for the bars, taverns, VFWs, and convenience stores that rely on revenue from skill machines to, in some cases, survive,” Hensel said. “But beyond that, it could also reach to businesses like Dave & Busters and Chuck E. Cheese, fairs and festivals, theme parks and any other establishment that offer amusement devices.”

That means the ruling “all but affirmatively invites raids of Chuck E. Cheese’s and Dave & Buster’s premises,” said Alexander Denton, a partner at Robbins Alloy Belinfante Littlefield LLC representing clients in Georgia’s established skill games industry.

If state enforcers do decide to interpret the law as barring machines from dispensing arcade tickets and prizes, the court said that was also up to the legislature or future litigation to fix.

“In any event, should the appellees’ warning actually come to fruition as a consequence of the General Assembly’s words, then so be it. We cannot shy away from the language of a statute merely because its application may have undesirable consequences in some hypothetical future context,” Justice David Wecht for the majority. “Should law enforcement officers begin conducting raids of children’s amusement establishments and seizing Skee-Ball machines and stuffed animals, our courts are equipped to consider legal challenges to such actions at that juncture.”

Hensel said that if the legislature does not come to an agreement within the court’s 120-day timeline, it could clear the way for raids. While 70,000 machines may be a lot to seize, she said “a few … highly publicized enforcement actions will go a long way toward encouraging the voluntary unplugging and removal of the games.”