Gary Rotstein, Pittsburgh Post-Gazette
Jun 4, 2019, 7:26 AM
In a confusing, complicated coincidence involving some of the billions of dollars state residents devote to gambling every year, unrelated accusations Monday contended either the Pennsylvania Lottery is being cheated out of millions in revenue or is doing big-time cheating itself.
Or both of those are taking place. Or possibly neither.
The uncertainty occurs despite state officials’ high confidence in one fact: The lottery is on track for a record of nearly $1.2 billion in revenue in 2018-19. That’s money that will support senior citizen programs in Pennsylvania, regardless of whether the total is being shrunk by a modern form of video “skill-based” gambling (alleged by lottery officials to be illegal) in bars, clubs and stores or aided by internet-based lottery games (themselves operated illegally by the state, according to casino officials) that resemble casino slot machines.
Lottery officials joined Pennsylvania State Police, a state senator and senior advocacy groups at a Harrisburg news conference calling for a crackdown on thousands of unregulated electronic machines touted as “skill games.” They contended customers playing those machines, which have gained popularity in the past few years, would otherwise be spending those funds on lottery-related chances.
Internet play is helping put the Pennsylvania Lottery on a record pace
That belief comes, in large part, from an estimate that 5,050 of the so-called skill game devices are hosted by some of the 9,000-plus Pennsylvania Lottery retailers. The convenience stores, taverns, fraternal clubs and others enter private agreements with the distributors and manufacturers of the machines to share profits, without the lottery’s involvement.
Lottery Executive Director Drew Svitko said each machine may be directing $2,284 per month away from lottery play, costing it as much as $138 million annually. Part of that, he said, is because retailers are opting for these games over new electronic alternatives the lottery bureau has marketed in the form of keno and simulated sports events.
“The games of skill machines are appearing across the state and we are deeply concerned the harm will only increase,” Mr. Svitko said. “It’s imperative that we take action now to protect the funding that supports the programs that older Pennsylvanians rely upon each year.”
Part of the definition of illegal gambling is that wagering outcomes are dictated by chance rather than skill, and in these new games, a player’s decisions after inserting one or more dollars influence the outcome more than a patron simply pushing a slot machine’s button. Maj. Scott T. Miller of the state police Bureau of Liquor Control Enforcement maintained there’s so little skill involved, however, that the games are clearly illegal, and state police in some cases have confiscated games.
There have been varying opinions on the legality, however, including a Beaver County Commons Pleas Court decision in 2014 upholding the games as legitimate. Sen. Tommy Tomlinson, R-Bucks County, was at the conference to announce he was introducing legislation with wording that would clearly outlaw the machines and increase fines on those distributing and hosting them.
That measure will be fought hard by Lou Miele, whose Miele Manufacturing in Williamsport makes a widely used version of the game, under the Pennsylvania Skill brand name. It was developed by a Georgia firm, Pace-O-Matic, employing decision-making in which Mr. Miele said a player’s overall success is affected by how he interprets payout tables, where and when he makes certain decisions with the machine, and his ability to memorize sequences.
“These aren’t the type of machines you see on the casino floor,” he said, while questioning how lottery officials could be complaining so much about their losses if they’re having a record year. “They don’t want competition for the lottery — that’s what this is all about.”
Mr. Miele said the industry itself worked jointly with state police officials in initiating the Beaver County case, and since winning that favorable ruling — which does not carry statewide impact like a Supreme Court decision — Miele Manufacturing has sold 12,000 Pennsylvania Skill machines through distributors. Thousands more are in the state from other manufacturers.
The lottery’s other form of competition under debate relates to the gambling expansion — approved in October 2017 legislation — that lets both it and casinos begin offering their games online. The lottery began doing so last year, with games bearing similarities to slot machines rather than traditional numbers drawings.
A group of seven casinos filed a Commonwealth Court suit in August contending those iLottery games should be shut down if they weren’t revised, because they resembled the casino slot games more closely than the law permitted. While the case has been going through the legal process for months, the iLottery games have become a pressing concern for casinos because their own internet slots games are to begin in mid-July with Pennsylvania Gaming Control Board approval, said David La Torre, a spokesman for the casinos.
“Casino-style games are clearly reserved for casinos — it’s just that simple,” he said. “Now we’re asking the state court to shut them down,” with action sought before July 15.
Lottery officials have denied the casinos’ accusations in the past, and a spokeswoman said Monday she had no new comment. The iLottery proceeds are small compared to traditional scratch-off tickets, multi-state jackpot games and other traditional lottery play, but the $31 million in profits expected from the internet play this year is part of what’s helping the program’s record pace.
Gary Rotstein: firstname.lastname@example.org or 412-263-1255.