Pa. lawmakers ask for investigations after gaming regulators met privately with casino lobbyists

This story originally appeared on Spotlight PA.

Two Pennsylvania lawmakers have requested investigations into the state Gaming Control Board following a Spotlight PA story that detailed how top officials met privately with casino lobbyists about a major competitor and failed to disclose the meeting on public logs required by the regulatory agency’s ethics rules.

State Sen. Gene Yaw (R., Lycoming) and state Rep. Jared Solomon (D., Philadelphia) have asked the state attorney general’s office and the state Ethics Commission respectively to review the gaming board’s actions for compliance with the law, and review internal rules established to ensure the agency remains impervious to outside influence.

“The people of Pennsylvania must have confidence that the regulatory bodies established by the Legislature are acting in good faith and following the law,” Solomon wrote in his letter, obtained by Spotlight PA, to the state Ethics Commission.

Gaming Control Board spokesperson Richard McGarvey said the agency has not seen the letters and thus had no comment. In the past, another spokesperson told Spotlight PA the agency acted properly in its dealings with the lobbyists.

It is not clear whether the lawmakers’ requests for an inquiry will be heeded. A spokesperson for the state attorney general’s office said he could not comment, noting that skill games are “the subject of a multitude of litigation.”

Mary Fox, the state Ethics Commission’s executive director, said the agency does not confirm or deny the existence of its investigations. The agency is tasked with reviewing alleged violations of the state’s Ethics Act, which governs behavior by public officials and employees.

Earlier this year, Spotlight PA reported that lobbyists for the state’s largest casino, Parx Casino in Bucks County, embarked on an intense, behind-the-scenes effort to get the Gaming Control Board to abandon its hands-off stance toward skill games.

Skill games resemble slot machines and have proliferated over the past decade in convenience stores, gas stations, restaurants, social clubs, and other locations statewide.

Unlike slot machines and other casino gambling, skill games are not regulated by the Gaming Control Board. Nor are they taxed at the high rate that casino slots are.

As a result, the skill games industry has become a prime target for some casino executives and their array of lobbyists, who argue the machines are illegal and should be banned in the state.

Those executives have mounted a fierce campaign away from public view to convince officials to help them rid the state’s gambling landscape of skill games, according to emails and other documents obtained by Spotlight PA.

The news organization previously revealed that top officials at the Gaming Control Board decided to join a lawsuit seeking to declare skill games illegal following a private meeting in early 2019 with Parx’s lobbyists.

Agency officials did not report the meeting on publicly available logs. The logs are required by the board’s code of ethics, which sharply restricts when and how companies regulated by the agency can communicate with its board members, as well as certain staff that advise the board.

The Gaming Control Board publicizes two logs on its website. The first tracks ex parte communications, which are defined as off-the-record conversations on matters that could “reasonably come before the Board in a contested, on the record proceeding.” The second log lists discussions that were held between board members and people representing gambling companies licensed by or applying to the board.

The latest entry on the ex parte log dates back a decade, to March 2013. On the second log, the latest entry dates back seven years, to May 2016.

For the initial story, the Gaming Control Board’s lawyers told Spotlight PA that the meeting with Parx did not meet the definition of a meeting that required public disclosure and thus was not required to be listed on either log.

In his letter to the state ethics board, Solomon wrote that it “defies credibility” that the logs have remained stagnant for so many years.

In his letter to the state attorney general’s office, Yaw wrote that the gaming board, as well as Pennsylvania State Police, have taken an increasingly aggressive stance against skill games in the past five years. State Police’s Bureau of Liquor Control Enforcement, he said, has increased its seizure of skill games from establishments across the state.

As it stands, skill games operate in a legal gray area. The games are not specifically authorized by the state’s gambling law, and there have been multiple lawsuits — including one pending in Commonwealth Court — over their legality.

Pace-O-Matic, the company that makes the software for the majority of skill games in Pennsylvania, argues their products require a level of human skill, rather than pure chance, to achieve a payout. Though its officials say they are open to being licensed and taxed, the company believes it should not be subject to the same 54% tax on revenues that is paid by casino slots.

Pace-O-Matic is suing the Gaming Control Board and others for targeting its industry.

Yaw, whose district houses a manufacturer of skill games, has introduced a bill that would tax and regulate the games. Similar legislation was introduced in the last legislative session but was not voted on, in part because proposals to tweak or update Pennsylvania’s gambling law have triggered a frenzy of lobbying from competing interests, making it difficult to reach a consensus.

In an interview last week, Yaw said he received a response from the attorney general that seemed to indicate a hesitation to delve into the skill games issue, given the ongoing litigation over the legality of the games.

Yaw said he responded that the legal fight should not preclude a review by law enforcement. He said the board, under the gambling law, has jurisdiction only over entities it licenses. Deciding on gambling policy, he added, is the legislature’s job.

“No way they should have been involved in discussions on skill games,” he said.