KEY TAKEAWAYS
- PENN Entertainment CEO Jay Snowden says his company is already benefiting from skill gaming machines being ruled illegal in Pennsylvania.
- The state’s Supreme Court banned skill games in June and statewide enforcement began in mid-October.
- Analysts suggest PENN will be the biggest beneficiary of the new law, as Snowden said the company will target customers who used to play the gray-market machines.
PENN Entertainment believes Pennsylvania‘s Supreme Court ruling on skill gaming machines is already tangibly benefiting its brick-and-mortar casinos.
The state’s highest court ruled on June 15 that skill gaming terminals are equivalent to illegal slot machines when they are offered without a license from the state gaming regulator. The court’s 120-day safe harbor period expired Oct. 13, and state police began enforcement action the following day to shut down remaining skill gaming machines.
“I don’t think it’s a coincidence that October represents the strongest year-over-year gaming revenue growth that we’ve seen in Pennsylvania in all of 2026, and it was largely fueled by the back half of the month,” PENN CEO Jay Snowden said on the company’s third-quarter earnings call on Nov. 5. “To me, [that] tells you exactly what is happening here.”
PENN CEO links more casino visitors to skill games shutdown
PENN operates four Hollywood casinos in its home state:
- Meadows
- Morgantown
- Penn National Race Course
- York
It also runs facilities in other states close to the Pennsylvania border, including:
- Hollywood Gaming at Mahoning Valley Race Course in Youngstown, Ohio
- Hollywood Casino Perryville in Maryland
Pennsylvania casino operators such as Wyomissing-headquartered PENN contend that skill gaming machines effectively constitute an unlicensed equivalent of slot machines that cannibalize their brick-and-mortar revenues and undermine state gaming laws. Since the games were ruled illegal and began to disappear from the state, Snowden said PENN’s casinos have seen a notable uptick in visitors to gaming floors.
“Customers that were engaging with these machines are now going to your regulated and highly taxed business,” he added. “… A lot of these guests are guests that maybe used to be in our database, are no longer in our database, or were never in our database, but these are customers that do like to play on machines. They may not know the difference between skill illegal [games] and going to a casino and playing a real slot machine. That is by design by these skill-based operators. We are seeing some nice growth there.”
Snowden said that PENN will ratchet up its marketing and outreach in a bid to capture customers whose skill gaming machine options disappeared as a result of the court ruling.
“There are going to be more customers out in the market, so we’re making sure we’re speaking to those customers through social media, other marketing channels, and maybe advertising,” he added. “There is definitely an opportunity during this period of time when skill games have been shut down and customers do like to engage in slot machine-like devices.”
Citizens: PENN the biggest beneficiary
In an analysts’ note issued Nov. 6, Citizens’ Jordan Bender and Isabelle Slavin cited the skill gaming prohibition as one reason for their confident outlook for PENN’s business.
“We are encouraged by commentary that the shutdown of gray-market machines in Pennsylvania is already demonstrating immediate benefits for the company and the broader market,” they wrote. “We believe PENN is the largest beneficiary of the removal of gray-market machines.”
In a previous note issued after the court ruling, Bender and Slavin suggested that operators including Boyd Gaming and Churchill Downs will see uplift from the removal of skill gaming machines, and that the tailwind effect could extend to online casino operators.
Pennsylvania police claim 99% compliance
At the time of the Supreme Court ruling, Pennsylvania Attorney General Dave Sunday’s office estimated there were approximately 70,000 skill gaming machines in operation in the state.
On Nov. 10, five days after PENN’s Q3 call, Pennsylvania State Police said that as part of their enforcement crackdown, officers visited 12,202 establishments since Oct. 14. They found that 12,134 “no longer offered skill gaming machines,” which police equated to a 99.4% compliance rate, although the statement did not confirm whether all 12,202 establishments previously offered skill gaming machines.
As of Nov. 10, police had seized just 14 machines during the enforcement period. Officers continue to actively investigate locations that have not voluntarily removed skill gaming terminals.
“That enforcement since Oct. 14 has been real,” added Snowden on PENN’s call. “We’re encouraged by the fact that this is not just a date and words. There has been some force behind that. We’ve seen these games being shut down. I think the AG and others, local law enforcement, are doing a very good job across the state of Pennsylvania …
“I would imagine, if others are feeling what we are feeling, the state of Pennsylvania from a tax generation perspective is going to have a very good month in October. I do not think that is by coincidence. I think that is something that should be eye-opening for everyone here regarding whether you regulate and tax or you just keep these things shut down because they were illegal.”
Bill to hand skill games lifeline died before deadline
After the state Supreme Court ruling, Pennsylvania Rep. Russ Diamond (R) introduced bills in September to regulate skill games. The Chair of the House Gaming Oversight Committee told local media he wanted to modernize Pennsylvania’s gaming law by bringing skill games into a regulatory and taxation framework before the enforcement deadline.
However, the bill did not pass in time, with leaders in the Democratic-controlled House telling media that Senate Republicans were unable to muster the votes needed to pass it before the end of the legislative session.
“The Senate Republicans have created a problem and have killed the solution,” House Appropriations Committee chair Jordan Harris (D) told the Pennsylvania Capital-Star.
In the midterm elections this month, the Democratic Party increased its hold on the state, and will hold a majority in both the Senate and the House. Speaking days after the election, Snowden argued those results were actually “a great day overall” for the casino industry and PENN.
“I would say, most of the pro-skill-based gaming advocates at the state lawmaker level either lost outright or lost a lot of influence and power in those elections,” he said on PENN’s call. “That’s good for the industry, and it is really good for PENN.”
Pennsylvania isn’t the only state where Snowden sees good prospects for PENN after midterm shifts. The CEO vowed to “play offense” in Texas, where PENN runs two Class 1 thoroughbred racetracks, after anti-gambling Republican Dan Patrick lost the lieutenant governor race to Democratic Rep. Vikki Goodwin.
Goodwin expressed openness this week to allowing Texas voters to decide on whether to legalize commercial casinos and sports betting.
