As Pa. gets closer to regulating skill games, these lawmakers say they’re being subjected to an intimidation campaign

HARRISBURG — Two days after a Minnesota state representative and her husband were gunned down at their home in a politically motivated assassination, State Sen. Rosemary Brown found a flier in her door.

Brown, a Republican who lives in a private community in the Pocono Mountains, was startled to find the flier with her face on it. She looked at her neighbors’ doors, and checked with her homeowner association, which prohibits soliciting. No one else had received it.

She now believes the flier, which was not directly threatening in itself, was an attempt to intimidate her into supporting lower taxes for the skill game industry.

“I was very disturbed,” Brown said. “You’re really trying to help and do a good job. No matter what party you are, you’re trying. And shouldn’t have to deal with this.”

The fliers — and an all-out pressure campaign on GOP state senators — are the latest escalation by supporters of the powerful skill game industry, which has operated by its own rules in Pennsylvania for more than a decade, allowing the slot-machine look-alikes to proliferate by the tens of thousands around the state.

The debate around skill games has been largely led by one company: Pace-O-Matic, the Georgia-based operator of the “Pennsylvania Skill” machines now found in every corner of the state. The company has claimed for years that its machines are the only “legal” skill games, citing a 2014 Beaver County ruling that has held up in appellate courts since and found they differ from slot machines because of a so-called skill component — most notably in a pattern memory minigame embedded in the gameplay — that has allowed them to continue operating in a legal “gray” area for the last decade. A case about the legality of the machines is before the state Supreme Court.

Gov. Josh Shapiro, a Democrat, proposed taxing the machines at 52% like Pennsylvania’s games of chance, a move that would bring in an estimated $369 million in its first year, which the industry quickly rejected. It is among the key issues on the negotiating table this year, as top lawmakers in the state House and Senate work toward a budget deal, now several days past its deadline.

Now a dark money group, the Defeating Communism PAC — which Pace-O-Matic maintains it is not responsible for — has upped the ante in its canvassing campaign, including the flier in Brown’s door, further souring many GOP senators’ view of the industry that has been financially supportive of them over the last eight years.

And the industry’s aggressive campaign has had some bad consequences for Pace-O-Matic. In recent weeks, Pace-O-Matic has been dropped by two of the top lobbying firms in the state after pressure from Senate leaders. The two top Senate GOP leaders, President Pro Tempore Kim Ward (R., Westmoreland) and Majority Leader Joe Pittman (R., Indiana), have called Pace-O-Matic “bullies,” as they decide with their caucus how much they should tax the machines in what Pittman now describes as a public safety issue if they continue operating without any state oversight.

Pace-O-Matic has said, for years, that it wants to be regulated by the state at a much lesser rate than slot machines in casinos or video gaming terminals in gas stations, which both pay 52% in taxes. Yet they have remained unregulated and untaxed, with players supposed to self-report their winnings on their income tax forms. It’s unclear how much money Pace-O-Matic — and the other copycats around the state — makes off the games.

The cabinets that house the “Pennsylvania Skill” machines are manufactured in Williamsport, and bring in an unknown amount of money for small businesses and fraternal organizations that have the machines in their facilities. If the machines are taxed at the same rate as slot machines, small businesses will be the ones to suffer, Pace-O-Matic and other proponents claim. And unlike with slot machines, the player has the opportunity to win 100% of the time, they say, meaning they should not have to pay the same high tax as slots.

However, there is a laundry list of issues with skill games, according to opponents. For one, they attract crime — a main concern cited by Pittman, the majority leader, who noted to reporters last month that a skill game operation was robbed in his district. There is also the issue of access for gambling addicts, who can put themselves on self-exclusion lists at casinos but not at their local gas station where skill games are available. There are also consumer protection concerns, with a number of copycat skill machines on the market that are true games of chance, among other potential issues.

Some lawmakers, including State Rep. Amen Brown (D., Philadelphia), want to ban them altogether, as he said he has seen them become hubs for crime — robberies and even shootings — around his district, and said he helped author the city’s legislation to ban the machines. The casino industry for a long time advocated for their outright ban, but has changed its strategy in recent years to seek limits on the number of machines allowed, and to tax them at the same rate as slots, as the skill games continued to pop up everywhere in the state.

The Operators for Skill PAC, which is directly funded by people involved with Pace-O-Matic and other amusement companies, has spent nearly $2.2 million in Pennsylvania, most of it going to GOP lawmakers, though the PAC makes campaign contributions to members of both parties. But now, with the increased campaign, more lawmakers have soured on them.

“I’ve never, in all these years, come across any kind of a group that has done what these groups have been doing, which is, I find, unprofessional, heavy-handed, threatening, and menacing,” said Sen. Camera Bartolotta (R., Greene). “You don’t win people over by doing that.”

Pace-O-Matic maintains that it is not behind the PAC responsible for the advertisements, and that small businesses are “far more concerned” about the potential tax hike they would face under current proposals.

“Skill games provide essential support to many Pennsylvanians across rural, suburban, and urban communities — including thousands of individuals employed in bars, clubs, restaurants, and other small businesses,” said Mike Barley, Pace-O-Matic’s chief public affairs officer, in a statement.

Rosemary Brown is not the only state senator currently being targeted by Defeating Communism, a dark money political action committee whose backers are largely unclear.

The PAC is loosely supported by Citizens Alliance Pennsylvania (CAP), a conservative group responsible for mounting primary challenges against moderate GOP incumbents, according to campaign finance filings.

State Sen. Frank Farry (R., Bucks), who introduced legislation last session to regulate skill games at the same rate as slot machines and restrict them to places with liquor licenses, is a special target for the dark money group.

Flyers began appearing around Farry’s politically purple district in Lower Bucks County that claimed he was trying to close volunteer fire departments and local fraternal clubs, like Veterans of Foreign Wars posts.

“Tell Senator Farry to stop targeting PA Firefighters + Veterans!” the flier read. “Once a respected member of the PA State Senate, Farry has turned on us and you won’t believe who he is targeting now …” before listing fire departments, fraternal clubs, and small businesses.

One problem: Farry is a longtime volunteer firefighter, and has been fire chief of the Langhorne-Middletown Fire Department for 24 years. He is well known in the Capitol for his advocacy for first responders, authoring many bills in his time in the state House and Senate to support them.

Last month, Farry was driving around Middletown Township when he spotted a canvasser knocking on doors in his district about him. He stopped to talk to her.

In a recording of the interaction reviewed by The Inquirer, the canvasser says she is from Texas, and does not realize she is talking to Farry, whom she is handing out fliers about.

She eventually calls her field director, who says their company, Motivate the Movement, is canvassing on behalf of CAP. CAP did not respond to requests for comment.

In the interaction, Farry asks (in the third person, not revealing his identity) whether the field director knows they are handing out misinformation about him, since he is a volunteer firefighter. The man on the phone says his canvassers have learned while knocking doors that he is well-liked in his district, according to the recording. But if he doesn’t support the skill game industry, they will primary him.

The recent escalation in tactics is likely because the skill game industry is aware the state is getting closer than it ever has to regulating the machines, Farry said.

“They’re trying to intimidate us to either cave to what they want or to back off the issue,” Farry said in an interview. “My mom, the way she raised me, didn’t raise me to treat people this way. And I’m also very confident the voters that voted for me did not send me out here for me to get bullied and pull off a policy stance for my own self-interest.”