Individualized Character Assessment Required for Video Gaming Licenses Under Pennsylvania Video Gaming Act

Introduction

This commentary addresses the Pennsylvania Supreme Court’s decision in Teitelbaum, R. v. Pennsylvania Gaming Control Board (2025). The case arose from five consolidated appeals in which the Pennsylvania Gaming Control Board (“Board”) denied video gaming licenses to applicants who had participated—believing it lawful—in the “skill games” industry. Better Bets Ventures LLC, Michael and Frank Brozzetti, Lendell Gaming LLC, and Richard Teitelbaum appealed after the Commonwealth Court reversed the Board’s denials and ordered issuance of licenses. The Supreme Court granted allocatur to resolve whether the Board’s wholesale rejection of license applicants based solely on their association with skill-game operations violated the Video Gaming Act’s requirement that each applicant demonstrate “good character, honesty and integrity.”

Key issues:

Does the Video Gaming Act authorize the Board to deny a license based on broad policy objections to an entire unregulated industry?
What is the proper standard of judicial review of the Board’s discretionary licensing decisions?
Must the Board perform an individualized character inquiry, or may it “paint with too broad a brush”?

Parties involved:

Appellees/Petitioners: Better Bets Ventures LLC, Michael and Frank Brozzetti, Lendell Gaming LLC, Richard Teitelbaum.
Appellant/Respondent: Pennsylvania Gaming Control Board.

Summary of the Judgment

On March 20, 2025, Justice Wecht delivered the unanimous opinion of the Supreme Court. The Court agreed with the Commonwealth Court that the Board had abused its licensing discretion under the Video Gaming Act (4 Pa.C.S. §§ 3101–4506) by denying every applicant’s license application based solely on their past association with skill-game operations. The Court held that:

The Video Gaming Act requires an applicant for a principal or terminal operator license to prove by clear and convincing evidence that he or she is of “good character, honesty and integrity.”
The Board’s discretion to grant or deny licenses is not unbounded; under 2 Pa.C.S. § 704, appellate courts may reverse agency adjudications that are “not in accordance with law,” including those that constitute a “manifest and flagrant abuse of discretion” or “purely arbitrary execution” of duties.
In denying the applicants’ licenses, the Board relied entirely upon generalized findings about harms posed by unregulated “skill games” (risk of underage or problem gambling, loss of revenue to casinos and the Lottery) rather than any individualized evidence reflecting on the personal character, honesty or integrity of the specific applicants.
Because the Board’s decision was arbitrary and capricious and failed to perform the individual character inquiry required by statute, the Board abused its discretion.
The Commonwealth Court’s remedy—to order issuance of licenses without regard to any other statutory requirements—was overbroad. The case was remanded to the Board for further individualized consideration consistent with this opinion.

Analysis

Precedents Cited

Blumenschein v. Pittsburgh Housing Authority, 109 A.2d 331 (Pa. 1954): Established that courts should not substitute their judgment for that of an administrative agency absent “manifest and flagrant abuse of discretion.”
Slawek v. State Board of Medical Education & Licensing, 586 A.2d 362 (Pa. 1991): Interpreted 2 Pa.C.S. § 704’s “not in accordance with law” standard to include arbitrary or capricious agency decisions.
Fraternal Order of Police v. Pennsylvania Labor Relations Board, 735 A.2d 96 (Pa. 1999): Clarified that appellate review ensures agency conclusions are supported by competent factual findings and free from arbitrary decision-making.
POM of Pennsylvania, LLC v. Department of Revenue, 221 A.3d 717 (Pa. Cmwlth. 2019): Held that unlicensed skill games were not regulated under the Gaming Act—a decision relevant to the applicants’ reasonable belief in legality.
In re Three Pennsylvania Skill Amusement Devices, 306 A.3d 432 (Pa. Cmwlth. 2023): Concluded that the Gaming Act’s definitions of “slot machine” did not apply to criminal provisions in 18 Pa.C.S. § 5513.

Legal Reasoning

The Supreme Court’s legal analysis proceeded in three main steps:

Statutory Requirement. Sections 3502(b) and 3504(c) of the Video Gaming Act demand that an applicant prove by clear and convincing evidence that he or she is of “good character, honesty and integrity.” The Board’s discretion to grant or deny a license under Section 3301(b)(11) is an explicit statutory mandate but must be exercised in accordance with law and the individual-character standard.
Standard of Review. Under 2 Pa.C.S. § 704, appellate courts affirm an agency adjudication unless it is “not in accordance with law,” which for discretionary agency acts means there is a “manifest and flagrant abuse of discretion” or “purely arbitrary execution” of duties (Blumenschein, Slawek). This review precludes courts from substituting their own policy preferences for those of the agency but allows correction of arbitrary or capricious adjudications.
Application to the Board’s Decision. The Board’s denial of the applicants’ licenses turned exclusively on policy objections to the unregulated skill-games industry and its economic impact, rather than any evidence particular to each applicant’s personal conduct, moral turpitude, criminal history or cooperation with investigators. The agency failed to connect generalized industry risks to any shortfall in the individual applicants’ character, honesty or integrity. Consequently, the Board’s decision was arbitrary and an abuse of discretion under Section 704.

Impact

This decision establishes several important precedents:

Individualized Inquiry Required. Regulatory agencies may not deny licenses under broad industry-wide criticism; they must assess each applicant’s personal qualifications under the statutory standard.
Limits on Agency Discretion. Even expressly discretionary licensing powers are subject to the Administrative Agency Law’s mandate that decisions not be arbitrary or capricious.
Future Video Gaming Licenses. The Gaming Control Board must revisit applications that were denied based on skill games association, conducting fact-specific inquiries into each applicant’s character.
Pending Skill-Game Appeals. Although the legality of skill games remains contested in other appeals, this decision does not prejudge their ultimate status. However, license applicants may continue to assert reasonable belief in legality as part of their individual character evidence.
Broader Administrative Law. Reinforces that courts will intervene when an agency conflates policy disapproval of an entire category of conduct with personal disqualification of every participant.

Complex Concepts Simplified

“Not in accordance with law.” A technical phrase in 2 Pa.C.S. § 704 allowing reversal when an agency’s action is arbitrary, capricious or an abuse of discretion.
“Good character, honesty and integrity.” Statutory standard requiring an applicant to demonstrate personal trustworthiness, free from moral reproach or deceit.
“Substantial evidence.” Evidence that a reasonable mind might accept as adequate to support a conclusion—a lower threshold than “clear and convincing” but requiring more than a scintilla.
“Skill games.” Devices that rely primarily on player skill; legally contested as to whether they constitute unlicensed gambling under the Gaming Act or Criminal Code.
“Capricious or arbitrary agency decision.” A decision lacking any rational basis, made without regard to relevant facts or statutory criteria.
2 Pa.C.S. § 704 review. Governs appeals from agency adjudications, permitting reversal for statutory or constitutional errors, violations of procedure, unsupported findings, or decisions “not in accordance with law.”

Conclusion

The Pennsylvania Supreme Court in Teitelbaum v. PGCB reaffirmed that, even where a statute confers broad licensing discretion, agencies must ground denials in the specific statutory criteria. Here, the Board’s wholesale rejection of all applicants who had ever operated skill games—based on industry-wide policy objections—failed to satisfy the Video Gaming Act’s requirement of individualized proof of “good character, honesty and integrity.” By reversing the Board’s decision and remanding for a fact-specific inquiry, the Court established a clear precedent: regulatory bodies may not substitute broad policy judgments for the personal-character analysis mandated by law. Going forward, applicants for video gaming licenses must receive an individual assessment, and the Board must reliably connect any disqualifying factors to each applicant’s own conduct and reputation.