Pennsylvania Supreme Court Rules ‘Games of Skill’ Machines Are Illegal Slot Machines, Boosting State Racinos

Pennsylvania’s Supreme Court has settled a years-long legal fight over so-called “games of skill,” ruling in a 4-2 decision that the slot-machine-style devices found in bars, gas stations, and corner stores across the state are, in fact, illegal slot machines. The ruling is expected to boost the state’s licensed casinos, including racinos tied to Thoroughbred racing, once enforcement begins Oct. 15 following a 120-day safe harbor period.

The devices, estimated at somewhere between 70,000 and 100,000 statewide, have operated for years in a legal gray area after a 2023 Commonwealth Court ruling found they weren’t legally slot machines. That gray zone let the machines spread well beyond casinos into taverns, social clubs, laundromats, pizza shops, and gas stations, cutting into revenue for state-regulated gaming operators, including tracks that rely on casino revenue to fund purses and breeding programs.

What the Court Decided

The state’s highest court rejected arguments that the machines’ skill-based elements set them apart from traditional slots, concluding instead that Pennsylvania’s Act 42 of 2017 eliminated any such distinction. “No amount of skill, chance, or any combination thereof will remove a device from the ambit of a ‘slot machine’ after Act 42 of 2017,” the court wrote. The ruling gives operators and lawmakers a 120-day window, running out Oct. 15, before enforcement can begin — leaving the door open for the General Assembly to instead pass legislation to tax and regulate the machines rather than eliminate them outright.

The financial stakes for licensed gaming are significant. In the fiscal year that ended in June, casinos tied to Pennsylvania casino apps and physical properties at Hollywood Casino at Penn National Race Course, Parx Racing, and Presque Isle Downs generated roughly $51.9 million for the Pennsylvania Race Horse Development Fund — money split between purses, breeding funds, and backstretch worker benefits and pensions.

Racing and Casino Industry Reaction

Churchill Downs Inc. CEO Bill Carstanjen, whose company operates Presque Isle Downs, welcomed the ruling during a July 30 call with analysts and investors. He pointed to similar crackdowns in Kentucky and Virginia, where lawmakers and courts respectively moved against unregulated “gray games,” as evidence that removing illegal machines drives bettors back toward licensed operators.

“What you have there is a market that gray game illegal operators came in and cannibalized very quickly,” Carstanjen said of Pennsylvania’s skill-game boom. “Now it’s been made clear that these machines are illegal, and as a legal gaming operator in jurisdictions like Kentucky, Pennsylvania, and Virginia, that’s good for our business.”

Carstanjen also argued the ruling reinforces a basic fairness principle for licensed casino operators who already pay taxes and follow strict regulatory requirements. “We play by the rules. We’re licensed. We pay taxes,” he said. “It’s not fair if it’s not regulated. It’s not right when folks just come in and open up illegal gaming operations.” He added that the outcome would benefit Presque Isle whether the machines are removed entirely in October or lawmakers instead choose to legalize and tax them under stricter oversight.

Why the 120-Day Window Matters

The safe harbor period is designed to give both operators and the General Assembly time to adjust before enforcement kicks in, rather than triggering an immediate statewide crackdown. During that stretch, no law enforcement agency is expected to act against machine owners or operators, giving lawmakers a real chance to pass legislation that would instead tax and regulate the devices similarly to licensed slot machines, confining them to specific approved locations. If no such law passes by Oct. 15, the machines revert to the same restrictions as traditional slots — meaning most of the businesses currently hosting them, from convenience stores to social clubs, would no longer be allowed to keep them.

That distinction matters enormously for casinos and racinos competing for the same discretionary gambling dollars. Unlicensed machines have offered essentially the same slot-style experience with none of the tax burden, licensing costs, or compliance overhead carried by properties like Presque Isle Downs, Parx Racing, and Hollywood Casino at Penn National Race Course. Removing that competitive imbalance, even temporarily, is exactly the kind of shift Carstanjen and other operators have pointed to as a catalyst for renewed growth at licensed properties.

What Comes Next for Presque Isle

The ruling arrives at a notable moment for Presque Isle Downs, which is among nine casino properties Churchill Downs Inc. is looking to sell as the company narrows its focus toward historical horse racing, the Kentucky Derby, and its TwinSpires advance-deposit wagering platform. Carstanjen said the company isn’t interested in selling off real estate piecemeal and is working with potential buyers on the full package of properties.

Separately, Churchill Downs Inc. and the New York Racing Association also announced plans this week for a six-race series for top 3-year-olds, spanning Churchill Downs, Belmont Park, and Saratoga Race Course, with a new championship race set for September at Churchill — a sign the company remains focused on expanding its marquee racing product even as it looks to offload casino assets like Presque Isle.