Gaming Act Licensing and Slot-Tax Limits: Title 4 Authorizes Only Board-Licensed Slot Operations; Illicit Machines Are Governed by 18 Pa.C.S. § 5513

1. Introduction

This consolidated Pennsylvania Supreme Court matter concerns the statutory boundary between (i) lawful, regulated slot-machine gambling under the Pennsylvania Race Horse Development and Gaming Act (“Gaming Act”), 4 Pa. C.S. §§ 1101–1904, and (ii) unlawful gambling devices prohibited by Section 5513 of the Crimes Code, 18 Pa. C.S. § 5513.

The Court addressed two related controversies:

  • Three Devices (forfeiture context): whether certain “Pennsylvania skill amusement devices” qualify as unlawful “slot machines” under 18 Pa. C.S. § 5513(a)(1), and whether the Commonwealth Court erred by refusing to consult the Gaming Act’s “slot machine” definition when interpreting the same term in the Crimes Code.
  • POM (regulatory/tax counterclaim context): whether the Department of Revenue (“Revenue”) can treat the Gaming Act as a comprehensive regulatory/tax scheme reaching slot machines placed in unlicensed venues, requiring the operator to obtain Gaming Act manufacturer/supplier licensure and to pay the Gaming Act’s 34% gross terminal revenue tax.

Justice Brobson filed a concurring and dissenting opinion. He agreed with the Majority’s approach to the interplay between the Gaming Act and 18 Pa. C.S. § 5513 and joined the Majority in reversing the Commonwealth Court in Three Devices. He diverged as to POM, concluding that Revenue’s requested relief improperly attempted to extend Title 4’s licensing and taxation beyond the Gaming Act’s lawful, Board-licensed ecosystem.

2. Summary of the Opinion

2.1 Points of agreement with the Majority

  • The Gaming Act and 18 Pa. C.S. § 5513 “work in tandem” to define lawful versus unlawful gambling activities, “particularly as it concerns the lawful operation of slot machines.”
  • Activities “lawfully conducted” under the Gaming Act are not prohibited by the Crimes Code, but if an activity is not lawful under the Gaming Act, it remains subject to 18 Pa. C.S. § 5513(a), consistent with the carve-out in 18 Pa. C.S. § 5513(e.1)(4).
  • In In re: Three Pennsylvania Skill Amusement Devices, One Green Bank Bag Containing $525.00 in U.S. Currency, and Seven Receipts, 306 A.3d 432 (Pa. Cmwlth. 2023) (en banc) (Three Devices), the Commonwealth Court erred by refusing to use the Gaming Act definition of “slot machine” to inform the Crimes Code’s use of the same term—an error that led to its mistaken conclusion that the machines were not unlawful “slot machines” under 18 Pa. C.S. § 5513(a)(1).

2.2 Point of disagreement (POM)

Justice Brobson would affirm the Commonwealth Court’s denial of Revenue’s application for summary relief and dismissal of Revenue’s counterclaim in POM of Pennsylvania, LLC v. Department of Revenue, 221 A.3d 717 (Pa. Cmwlth. 2019) (en banc) (POM). In his view, Revenue’s counterclaim mischaracterized the Gaming Act as a mechanism to impose licensure duties and the 34% slot tax on machines deployed in unlicensed establishments. The Gaming Act, he reasoned, provides limited authorization for gambling only within the Pennsylvania Gaming Control Board’s (“Board”) licensed framework; it does not offer (and cannot be used as) a licensing/tax regime for illegal slot operations outside that framework.

3. Analysis

3.1 Precedents Cited

a. In re: Three Pennsylvania Skill Amusement Devices, One Green Bank Bag Containing $525.00 in U.S. Currency, and Seven Receipts, 306 A.3d 432 (Pa. Cmwlth. 2023) (en banc) (Three Devices)

Three Devices is treated as the key Commonwealth Court decision whose interpretive method the Majority (and Justice Brobson) rejected. The Commonwealth Court’s refusal to consult the Gaming Act’s definition of “slot machine” when construing 18 Pa. C.S. § 5513(a)(1) created an interpretive disconnect: the same phrase (“slot machine”) would carry different meanings in the statutory scheme that, per the Majority and Justice Brobson, is intended to operate “in tandem.”

Justice Brobson’s agreement underscores a harmonization principle: when two statutes are designed to allocate lawful versus unlawful activity in a shared domain, courts should avoid interpretations that allow a regulated category in one statute to be redefined out of existence (or substantially narrowed) in the companion criminal prohibition.

b. POM of Pennsylvania, LLC v. Department of Revenue, 221 A.3d 717 (Pa. Cmwlth. 2019) (en banc) (POM)

POM is the procedural vehicle for Revenue’s attempt to obtain declaratory and coercive relief—effectively treating Title 4 as a comprehensive regime to (i) classify POM’s machines as “slot machines” under 4 Pa. C.S. § 1103, (ii) impose a 34% daily tax under 4 Pa. C.S. § 1403(b), and (iii) require POM to hold manufacturer/supplier licensure under 4 Pa. C.S. §§ 1317 and/or 1317.1, even though the machines were placed in non-casino venues.

Justice Brobson’s discussion uses POM to articulate a limiting principle: the Gaming Act’s definitions cannot be read in isolation to create statewide licensing and taxation obligations for machines that are not—and cannot be—lawfully deployed within the Act’s licensed casino/certificate-holder framework.

3.2 Legal Reasoning

a. “Tandem” construction: Title 4 authorizes; Title 18 prohibits

Justice Brobson adopts the Majority’s foundational structure: the Gaming Act supplies a narrow zone of lawful gambling conduct, while 18 Pa. C.S. § 5513 supplies the baseline prohibition. The statutory carve-out in 18 Pa. C.S. § 5513(e.1)(4) confirms that when gambling is “lawfully conducted” under the Gaming Act it is not criminalized by § 5513; conversely, conduct that falls outside Title 4’s authorization remains prosecutable under § 5513(a).

b. Using Title 4’s “slot machine” definition for Title 18’s “slot machine” term

In the forfeiture/criminal-prohibition setting of Three Devices, Justice Brobson agrees that the Commonwealth Court’s refusal to consult the Gaming Act’s “slot machine” definition was error. His analysis supports interpretive consistency where the statutory scheme links lawful slot play to Board-licensed venues and criminalizes unauthorized slot-machine gambling elsewhere.

c. The key dissenting move: definitions vs. operative provisions in the Gaming Act

Justice Brobson’s principal disagreement is methodological and structural: he distinguishes between (i) defined terms in 4 Pa. C.S. § 1103 and (ii) the operative licensing and authorization provisions that determine when those terms generate legal duties.

He reasons that Title 4’s licensing/tax provisions are triggered only within the Act’s “for use in this Commonwealth” framework—i.e., for slot machines used in Board-licensed or certificated facilities:

  • Slot machine licensees and venue limits: The Gaming Act permits slot gambling only in Board-licensed facilities (“slot machine licensees”) and caps the number of licenses. (See 4 Pa. C.S. §§ 1103, 1301–1305.1, 1307.)
  • Manufacturer licensure (4 Pa. C.S. § 1317.1(a)): A person must be licensed to manufacture slot machines “for use in this Commonwealth.” Justice Brobson reads “for use” as “for lawful use within the Act’s licensed facilities,” because those are the only places slot machines are lawful “for use” under the Gaming Act. Thus, a manufacturer license is required when manufacturing is directed to Board-licensed venues—not when the machines are destined for unlicensed establishments.
  • Supplier licensure (4 Pa. C.S. § 1317(a)): Supplier licensure applies when providing slot machines to a slot machine licensee, interactive gaming certificate holder, or operator “through a contract with a licensed manufacturer.” Justice Brobson reads this as another internal gatekeeping mechanism for the lawful, regulated channel—again not a tool for licensing those supplying unlicensed venues.
  • 34% tax (4 Pa. C.S. § 1403(b)): The daily gross terminal revenue tax is described as a burden borne by slot machine licensees. Justice Brobson rejects extending this tax to illegal machines in unlicensed locations, because those locations are outside the Gaming Act’s authorized field of operation.

d. The practical conclusion: Title 4 does not “license” illegal gambling; Title 18 addresses it

Justice Brobson’s dissent rests on an institutional-competence and statutory-design point: the Board’s licenses are not “available” to facilitate illegal gambling, and Revenue cannot use Title 4 as if it were a statewide slot-machine registration and excise-tax system for illicit devices. Instead, illegal slot-machine activity remains within the Crimes Code’s prohibition and the associated enforcement mechanisms (e.g., seizure/forfeiture and criminal prosecution).

3.3 Impact

a. Clarifying the enforcement lanes (criminal vs. regulatory/tax)

Justice Brobson’s approach would sharpen a division of labor:

  • For illegal machines in unlicensed venues: enforcement should proceed under 18 Pa. C.S. § 5513 (and related criminal/forfeiture pathways), not via Title 4 licensure demands or the Title 4 slot tax.
  • For machines in the lawful casino/certificated ecosystem: Title 4 licensing, suitability, and tax provisions govern.

b. Litigation posture in future “skill device” and gray-market slot disputes

Even as he agrees that Title 4’s “slot machine” definition should inform § 5513, Justice Brobson resists using Title 4 as a catch-all regulatory hook against non-casino machine operators. If adopted broadly, this reasoning would likely:

  • limit attempts by taxing authorities to recast alleged illegal gambling as taxable “gross terminal revenue” under the Gaming Act; and
  • force the Commonwealth to litigate illegality primarily under § 5513’s elements (and any defenses), rather than through Title 4 administrative/tax theories.

c. Doctrinal significance: statutory “definitions” do not automatically expand “coverage”

The dissent highlights a recurring interpretive lesson: statutory definitions can inform meaning, but legal obligations typically arise from the statute’s operative provisions. Here, Justice Brobson would prevent Title 4’s definitional breadth from being used to expand Title 4’s regulatory/tax reach beyond the Act’s expressly authorized, licensed domain.

4. Complex Concepts Simplified

  • “Work in tandem”: The two statutes fit together—Title 4 creates a narrow permission structure; Title 18 supplies the default criminal ban outside that permission.
  • “Lawfully conducted” (18 Pa. C.S. § 5513(e.1)(4)): If gambling conduct is authorized under the Gaming Act, § 5513 does not criminalize it; if not authorized, § 5513 still applies.
  • “Summary relief”: A procedural request for a prompt ruling because (the movant asserts) the law is clear and no material facts need development.
  • “Counterclaim”: A claim brought by a defendant against a plaintiff within the same case; here, Revenue used it to seek declarations and injunction-like orders against POM.
  • “For use in this Commonwealth” (4 Pa. C.S. § 1317.1): Justice Brobson interprets this phrase as “for lawful use in the Board-licensed system,” not “for any physical placement anywhere in Pennsylvania.”
  • “Gross terminal revenue tax” (4 Pa. C.S. § 1403(b)): A casino-oriented slot revenue tax that Justice Brobson would confine to slot machine licensees, not illegal-market operators.

5. Conclusion

Justice Brobson’s concurrence/dissent endorses a unified statutory framework in which the Gaming Act delineates lawful slot-machine gambling and 18 Pa. C.S. § 5513 polices the remainder. He agrees that courts should consult the Gaming Act’s “slot machine” definition when interpreting the same term in § 5513—supporting reversal in Three Devices. But he would reject Revenue’s effort in POM to deploy Title 4 as a comprehensive licensing and taxation regime for machines operating in unlicensed venues. The dissent’s central contribution is a limiting rule: Title 4’s licensing and tax provisions attach to the Gaming Act’s licensed channel and do not transform illegal slot operations into licensable/taxable activity under the Gaming Act; those remain governed by the Crimes Code.