Inside the escalating feud between the Pa. Senate GOP and a skill games company

For a decade, Pennsylvania lawmakers have been weighing whether to regulate so-called skill games, the untaxed slot machine-like devices that have proliferated in convenience stores, bars, and gas stations across the state.

And for most of that time, the industry has had an ally in the Republican-led state Senate, which has long resisted new taxes in a state it says is already hostile to business.

Until now.

Amid a renewed effort to tax the games, a feud between Georgia-based Pace-O-Matic, the biggest player in the market for skill games, and Senate Republicans erupted last month when the company accused the chamber’s leadership of pressuring Pace-O-Matic’s lobbyists to drop the firm as a client.

GOP leaders claimed company officials were acting as “bullies” running an intimidation campaign against its vulnerable members.

The public falling out took a new twist last week, when Pace-O-Matic says it realized that its emails to Republican senators had failed to go through. The company told The Inquirer that it thinks the Senate intentionally blocked its email domain, citing its IT team’s analysis of the issue, which the Senate has rebuffed.

“It’s a dangerous precedent to silence constituents and stakeholders,” Mike Barley, Pace-O-Matic’s chief public affairs officer, said last week. “I’ve never seen it before.”

A spokesperson for Senate President Pro Tempore Kim Ward (R., Westmoreland) denied the claim and said the Senate “takes accusations of blocking constituent communications seriously.”

Ward’s spokesperson, Erica Clayton Wright, said that emails from Pace-O-Matic “have been treated no differently than emails received from other organizations” and that “no proactive actions were taken to prevent their emails from being received by the Senate, and any suggestion of such is untrue.”

The emails may have bounced back due to user error inputting the email addresses or an increased volume of emails to senators that led to the Senate’s internal security system to categorize the sender to be “untrusted” and reject them, according to Senate leadership.

Pace-O-Matic says its emails started to go through again on Thursday after The Inquirer reached out to Ward’s office. However, Ward’s office continued to refute that it ever blocked the senders and said that Senate GOP members received messages from Pace-O-Matic domains during the time period that the company said it had been blocked.

The public back-and-forth underscores the extent to which the industry’s once-friendly relationship with GOP lawmakers in Harrisburg has frayed.

Operators for Skill, a political action committee affiliated with Pace-O-Matic, has donated hundreds of thousands of dollars to Pennsylvania Republicans in recent years, and it has supported some Democrats. In the 2024 election cycle, the group gave more than $140,000 to top Senate Republicans, according to campaign-finance data.

And Pace-O-Matic in 2019 hired seasoned Pennsylvania GOP political hands, including Barley — a former executive director of the state party — and former U.S. Rep. Tom Marino. (The former congressman has since left the firm.)

The spat comes as Republican leaders have sponsored legislation that would impose a 35% tax rate on skill games revenue, authorize a limited number of machines at businesses that have a liquor license or participate in the state lottery, and empower the state Gaming Control Board to regulate the industry — all of which Pace-O-Matic opposes, preferring a much lower tax rate and to be overseen by the Department of Revenue.

Senate Majority Leader Joe Pittman (R., Indiana) has begun to view the skill games issue as a matter of public safety requiring government oversight, as the untaxed and unregulated machines have proliferated around the state in the tens of thousands and have attracted crime.

The revenue would help lawmakers balance the budget for the fiscal year that began July 1. The General Assembly blew past the June 30 budget deadline set by the state constitution. Gov. Josh Shapiro, a Democrat, and leaders of the Senate and Democratic-controlled House say they are continuing to negotiate a deal.

Pace-O-Matic says the bill would harm small businesses that have earned supplemental income from the devices, such as fraternal organizations and clubs. Pace-O-Matic argues that the proposal would make skill games “the most regulated product in the commonwealth” and give too much power to a regulator it says is aligned with casino interests that have opposed the games.

For their part, casinos for years tried to persuade lawmakers to ban the games, which they fear will eat into a $6 billion gaming market. When that strategy failed, the industry called for limiting the number of machines and taxing them at the same rate as slots — roughly 54%.

Casino interests contributed $550,000 to top lawmakers and Shapiro in the 2024 cycle, according to a Spotlight PA analysis.

As Pace-O-Matic has raised concerns with lawmakers — and skill games backers have tried to rally public opposition by distributing fliers in senators’ districts warning the bill could force the closing of volunteer firehouses and VFW halls — Pace-O-Matic has seen its standing decline among Republican lawmakers. (The company says it had nothing to do with the fliers.)

In late June, three lobbying firms suddenly dropped Pace-O-Matic as a client. According to Pace-O-Matic, that came at the behest of Ward and Pittman, the Senate majority leader, who warned the lobbyists that their firms could lose business with or access to the caucus if they didn’t break ties with the skill game developer.

When Spotlight PA reported on that development, spokespeople for the GOP leaders described the allegations as “hypocritical” and “embarrassing.”

Then came the email flap.

Last week, after Barley and another Pace-O-Matic executive’s emails to GOP senators bounced back, the company’s IT team looked into the matter and found that the last successful email to pasen.gov came on July 17.

“It does appear they are blocking us,” Jay Powell, Pace-O-Matic’s senior vice president for IT and production operations, wrote to colleagues on July 23, according to emails shared with The Inquirer.

The Inquirer first contacted Ward’s office later that day.

By the next morning, Barley said, Pace-O-Matic’s emails were going through again. Wright, Ward’s spokesperson, said in a statement Monday that without having seen the emails at issue, “the most likely explanation would be sender error or security triggers in the system applied to all incoming email.”

“Had Pace-O-Matic presented the issue to us, we would have gladly engaged in a solution driven approach with Pace-O-Matic’s IT team to resolve the matter instead of responding to accusations based on assumption,” she said.

Wright added that the Senate “welcomes the input of any organization who wishes to engage in a thoughtful and productive manner including the regulation of skills games in Pennsylvania.”

Barley wasn’t sold on that explanation.

“Arguing they’re not trying to silence us while pressuring our lobbying firms to quit is a bit rich,” he said. “Our emails were not working. The press calls, and now they work. Period.”

Yet some Harrisburg observers say the skill games industry has overplayed its hand by lashing out at Republicans via the news media. “It’s pretty baffling, to be honest,” Chris Borick, professor of political science at Muhlenberg College, said of the strategy.

“I don’t know how that helps,” he said. “Sometimes, if your inside game fails in politics, your lobbying, you try to do an outside game, and that’s change public opinion. I don’t know if the strategy they’ve used to reach out publicly on this is all that impactful.”

This story has been updated to clarify the Senate GOP’s explanation of why Pace-O-Matic’s emails could have been rejected.