Philadelphia officials are waging war on unlicensed slot parlors in corner stores

For the thrill of the casino these days, many Philadelphians can simply head to the corner store.

Thousands of electronic gambling terminals have cropped up across the city in recent years, wedged next to ATM machines at bodegas, laundromats, and other small businesses that offer little else. The slots-like devices, which are often marketed as “skill games,” are six-foot machines featuring flashy LED screens that promise fast cash payoffs for as little as a $1 buy-in, branded with names like “Kiss Me I’m Irish,” “Piggy’s Big Break,” and “Luck or Luxury.”

Although these games are supposed to be legally distinct from tightly-regulated slot machines, it’s not always obvious how: Put a dollar in, press a button or two and watch the digitally animated slots spin.

“I won $300 once,” a man who identified himself as “Fire” said one recent weekday morning as he fed bill after bill into one of 10 machines that dominate the interior of Accesorios San Expedicto on Kensington Avenue. He pointed to a dead screen. “I do think they turn off the machines that start hitting. But it gives you someplace safe to go sometimes.”

Machines like these have spread across bars and gas stations throughout Pennsylvania because lawmakers in Harrisburg haven’t passed laws regulating virtual gambling devices. Companies that make the machines have waged a decadelong legal battle, successfully arguing that their equipment is distinct from traditional slots because they are “skill games” — simple puzzles requiring the players’ input. A proposal from Gov. Josh Shapiro would regulate the machines — and tax the revenue at a hefty 42%.

Meanwhile, unregulated corner-store gambling machines have proliferated over the last year in Philadelphia’s poorest neighborhoods. This rise was fueled, in part, by a long-running failure by the city to enforce its own business regulations, with many of the same neighborhoods already battling waves of “nuisance businesses” that trafficked in drug paraphernalia — or worse.

“They’re selling items that are complementary to individuals that are also engaged in purchasing things on the black market,” said at-large Councilmember Katherine Gilmore Richardson. “The gambling machines on top of all that is a recipe for disaster. … and it’s happening predominantly in Black and brown communities.”

The spread of tens of thousands of machines across Pennsylvania has been driven in part by successful court appeals from game manufacturers like Pace-O-Matic.

The Georgia-based company won an appeal in Pennsylvania’s Commonwealth Court last fall, giving the company — and competitors, like Banilla Games of North Carolina — more legal standing to expand their reach. Some Philadelphia store owners say they were first solicited by manufacturers as long as five years ago, but only agreed to install the machines after the recent court decision.

Pace-O-Matic has heavily lobbied to regulate “skill games,” positioning themselves in opposition to a wave of generic machines from lesser-known manufacturers that have also flooded Pennsylvania. Lawsuits filed by Banilla Games have also accused Chinese-made copycats of horning in on the market, with devices sometimes barely distinguished from traditional slots machines. Owners can purchase these outright — and keep 100% of the proceeds.

One store owner in North Philadelphia, who agreed to speak on the condition of anonymity, said a sales rep from one manufacturer offered to install slots-like machines for no up-front cost, in exchange for around half the proceeds.

“I wanted to wait until I knew it was aboveboard,” the owner said. “It’s free money.”

Pulling in a few hundred dollars a week in extra revenue at most, according to store owners, they create income that can be essential in stores with small profit margins.

» READ MORE: Philly City Council looks to ban some businesses from having casino-style skill games

Rafael Uceta, who has operated R & O Grocery on Kensington Avenue for a year and a half, said his small grocery recently added four machines and splits the proceeds with a gambling machine company. He said the machines are a key source of revenue because he was denied access to EBT and a tobacco sales license, as the city’s Health Department has barred new points of sale for nicotine products in many parts of Philadelphia.

“For the small businesses in this area, the majority of sales are from tobacco,” Uceta said. “But the city won’t give us a license. So right now these machines are what are sustaining the businesses. … If they get rid of the machines, these small businesses will definitely close.”

But civic leaders complain that some stores in high-crime areas in Kensington or West Philadelphia have turned into all-hours gaming halls, sometimes with a dozen terminals packed into a narrow corner shop. The city’s police department supports the efforts in City Council to ban the machines from most businesses, saying they are a vector for illicit activity.

A recent shooting by police of an armed man playing a machine at a Fairhill beer store, and a subsequent manhunt, brought the spread of corner-store gambling into the news. The Philadelphia Police Department also pointed to statistics showing that, between 2021 and 2023, five homicides, 20 shootings, and 43 drug arrests had occurred within 800 feet of the entrances to three “nuisance businesses” it had identified along a single block of Frankford Avenue.

“These devices are a magnet for nuisance and criminal activity,” Deputy Police Commissioner Francis Healy told City Council in November.

During the pandemic, the city saw an explosion of convenience-store licensing, with hundreds of businesses getting permits to operate as corner grocery stores. Instead, city violation data shows well over 100 such stores began trafficking almost solely in drug paraphernalia or vaped nicotine products, in violation of city licensing or health code rules.

A single license expediter, Tina Accounting & Tax Services, applied for more than 170 convenience store permits since 2020 on behalf of would-be owners, far more than any other applicant. At least 70 of those businesses were later cited for permit violations, while 25 others have wound up on a city nuisance business watch list.

A representative from the Frankford Avenue firm, who declined to give his name, said L&I is responsible for following up to inspect the operations and that the city rarely objects to the change-of-use applications: “If the city allows me to give them the permits, I do it.”

This trend led Council to author at least nine pieces of legislation since 2021 aimed at cracking down on nuisance business, most aimed at curbing corner store licensing or limiting drug paraphernalia sales. Both the Philadelphia Police Department and L&I have launched task forces to step up enforcement.

The city officially tracks about 130 “nuisance businesses” citywide, a list that includes nightclubs, bars, or others linked to chronic civil or criminal complaints. Police notify the owners that their establishments are being monitored and push them to resolve these issues.

Ralph DiPietro, commissioner of L&I, said that sometimes store owners simply don’t understand the city’s rules, and that his department’s goal generally is not to shut down businesses.

“Last year we issued 119 drug paraphernalia citations,” he said. “But in most of those cases, they complied, meaning that they removed the paraphernalia. … More often than not, we get compliance.”

» READ MORE: A multimillion dollar fight will determine whether Pa. taxes ‘skill games’ in bars and stores

Despite these efforts, some neighbors, like Crystal Morris, president of the Wynnefield Residents Association, say they’ve noticed little change.

“L&I will come and shut them down,” she said, “Folks will wait two days, and open back up again.”

Records show the city has struggled to shutter repeat offenders.

One nuisance business, on Snyder Avenue in South Philadelphia, had been hit with multiple cease-operation orders over unlicensed drug paraphernalia sales or related violations since opening in 2021. An L&I spokesperson said the business was permanently closed last September for this reason.

Yet one recent evening, the store was back in business. Inspectors went out yet again, to issue another shutdown order in February. But the store reopened again almost immediately, with the candy-striped notice still plastered on its front door.

DiPietro said the next step in enforcement is license revocation. But he said his department has not taken a single such business to court over these zoning violations. His agency has battled with staff shortages for years, and struggled to respond to reports of critically dangerous buildings, let alone nuisance operators.

“It’s very, very labor intensive, when you’re taking away a license … It’s a court process,” he said. “It would put a real strain on our operations.”

Some, like Morris, said keeping the businesses in line is a game of cat and mouse, with stores openly flouting cease-and-desist orders.

“There are a lot of reasons why communities aren’t getting relief. But the reality is, communities just need relief — so figure it out,” she said.

Mayor Cherelle L. Parker, who as a Council member successfully passed a bill requiring new convenience stores in her district to obtain special zoning approvals, has signaled she would support the department tightening enforcement. She has moved to split L&I into two agencies, with one solely focused on quality-of-life issues, which she said would help enforcement.

New legislation in Council could also potentially give the city and police more power over small stores.

One proposal, part of the city’s strategy to shut down open-air drug sales in Kensington, would require all commercial establishments along Kensington Avenue to shutter by 11 p.m. Councilmember Curtis Jones Jr. introduced a bill last month that would ban “skill games” except in casinos or bars. He likened their proliferation to an invasion.

For Councilmember Gilmore Richardson, the overall goal is to get tougher.

“We want things to come into compliance,” she said. “But if they won’t, they should be shut down.”

At the hearing last month on Jones’ bill, some convenience store owners said the regulation would harm predominantly family- and immigrant-run businesses, which were being scapegoated.

“Robbery and violence were there after the machines, but they were there before, too,” said Akash Patel, whose family has run a Roxborough corner store since the 1990s. “The police aren’t doing their job. We call the cops and they don’t do anything. It’s a policing issue.”

Inquirer staff writer Ximena Conde contributed to this article.