“They help us with our payroll and to pay our bills,” said Terri Jacobs, manager at the VFW, acknowledging she is concerned with whether six of the machines would continue to be feasible should Gov. Josh Shapiro’s proposed 52 % tax on gross receipts be imposed, as he indicated in his Feb. 4 budget address to the legislature and public.

“We get a percentage of the profits from the machines,” she said.

The veterans – who’ve served the nation in war and peace, in far away places and on the homefront – play these games – as do guests of the post – in a hope that their combination of skill, gained by learning by playing, results in payouts.

The reality is the more the games are played, the better it is for each VFW, Jacobs said.

A cabinet of a Pennsylvania Skill Games in moved around the facility at Miele Manufacturing in Muncy Township. KAREN VIBERT-KENNEDY/Sun-Gazette

“They calculate it all and give us the slip with the percentage of the gross profits,” Jacobs said.

As for the tax rate that went up by 10% from Shapiro’s last budget proposal, “the 52% is not a rate to allow us to sustain our model because we share our revenue,” said Mike Barley, chief public affairs officer with Pace-O-Matic, which has about 21,000 of the games distributed throughout the Commonwealth.

“We prefer 16% or close to it, but that is a negotiation process in the legislature,” he said.

He also explained what Jacobs referred to as the distribution model for the company, which is 40% of the gross receipts goes to coin operated businesses, 40% to the establishment and 20% to the manufacturer.

The terminal revenues under Shapiro’s plan would be taxed at a rate of 52%, with 47% going to the general fund to strengthen the state, and 5% to the Lottery Fund to fill the funding gap for older adults that critics say skill games caused in the first place, according to the proposed budget.

Stephanie Dempsey works on Skills Games at Miele Manufacturing in Muncy Township. KAREN VIBERT-KENNEDY/Sun-Gazette

Shapiro also estimated that there are up to 70,000 skill game terminals in use across Pennsylvania. Barley said there may be that many or more.

Shapiro has argued that unregulated skill games are punishing seniors by undermining the state Lottery and the critical services it funds.

“That means less money for property tax rent rebates, less money to help seniors afford prescriptions, and less money to deliver meals to seniors who have trouble getting around,” Shapiro said.

Shapiro’s budget proposal also will charge the Gaming Control Board — which already regulates other video gaming terminals — with regulating skill games, just like any other video gaming terminal.

In all, the governor’s proposal, by the numbers, also will allow 30,000 total combined video gaming terminals and skill game machines in establishments in 2025-26, increasing incrementally to 40,000 machines by 2029-30.

In his budget address he proposed that each establishment will be permitted to have a maximum of five machines. The proposal is projected to generate $8 billion in new revenue for the commonwealth over five years.

What does the local manufacturer of the games think of the proposal?

Nicole Miele, Chief Administrative Officer, Miele Manufacturing, Muncy Township, has both hopes and concerns.

“As a manufacturer, distributor, and operator of Pennsylvania Skill games, our company has helped to lead the charge in Harrisburg to pass additional regulations and taxes in Harrisburg for the skill game industry,” Miele said in a statement requested from her by the Sun-Gazette.

“While we are encouraged the governor and general assembly have a desire to pass skill game legislation, we are concerned that the proposed 52 % tax rate will kill the industry and harm small businesses and fraternal clubs our games support,” she said.

“We remain hopeful that a deal to implement a fair regulatory and tax structure can be reached,” she said.

Unplugged

State Rep. Joe Hamm, R-Hepburn Township, a veteran, told the Sun-Gazette staff he went out and spoke to places where skill games are located, one of them a local business store owner in Muncy who said that high of a tax on gross receipts of the games at his business might mean having to not only turn the machines off, but he may also have to close the doors of the store for good.

The fact is the machines bring in a flow of customers who also buy cold and hot beverages, food and snacks, tobacco products and other forms of merchandise, Hamm said.

He said if there are trends where stores would close because they can’t afford the high tax on the gaming machines, that means local economies suffer.