Individualized Character Assessment Required in Video Gaming License Decisions

Introduction

Better Bets Ventures, LLC v. Pennsylvania Gaming Control Board (March 20, 2025) is a landmark Supreme Court of Pennsylvania decision clarifying the scope of the Board’s discretion under the Video Gaming Act’s requirement that license applicants demonstrate “good character, honesty and integrity.” The case arose when the Pennsylvania Gaming Control Board (the “Board”) denied video‐gaming terminal licenses to two groups of applicants—Better Bets Ventures and its principals Michael and Frank Brozzetti, and Lendell Gaming, LLC and its principal Richard Teitelbaum—because of their involvement in the unregulated “skill‐games” industry. The Commonwealth Court reversed, concluding that the Board arbitrarily based its denials on broad policy objections to the industry rather than on evidence specific to the applicants. The Supreme Court unanimously affirmed that reversal but remanded for further individualized consideration.

Summary of the Judgment

Chief Justice Wecht, writing for a unanimous Court, held:

• The Board’s denial of licenses was an abuse of discretion because it rested solely on generalized criticisms of the “skill‐games” industry and economic‐competition concerns, without any particular findings about the character, honesty or integrity of the individual applicants.
• Under 4 Pa.C.S. § 3504(c) of the Video Gaming Act, the Board must assess each applicant’s personal suitability by clear and convincing evidence, not by proxy through industry‐wide judgments.
• Review of agency adjudications is governed by Section 704 of the Administrative Agency Law, which requires affirming the Board unless its decision is “not in accordance with law” (that is, manifestly arbitrary, capricious or an abuse of discretion).
• Because the Commonwealth Court remanded with instructions to issue the licenses without regard to any other statutory requirements, the Supreme Court vacated that directive and remanded for further proceedings consistent with proper individualized character review.

Analysis

Precedents Cited

• Blumenschein v. Pittsburgh Housing Authority, 109 A.2d 331 (Pa. 1954): Adopted the principle that a reviewing court may only overturn an agency decision where there is a “manifest and flagrant abuse of discretion or a purely arbitrary execution” of its functions.
• Slawek v. State Board of Medical Education & Licensure, 586 A.2d 362 (Pa. 1991): Confirmed that Section 704’s phrase “not in accordance with law” incorporates review for arbitrary or capricious agency action.
• Fraternal Order of Police v. Pennsylvania Labor Relations Board, 735 A.2d 96 (Pa. 1999): Emphasized that agency conclusions must not be arbitrary or capricious and must rest on adequate factual findings.
• POM of Pennsylvania, LLC v. Department of Revenue, 221 A.3d 717 (Pa. Cmwlth. 2019): Held that unregulated “skill games” are not subject to the Race Horse Development and Gaming Act, a pivotal decision prompting many industry participants to believe their conduct was lawful.
• In re Three Pennsylvania Skill Amusement Devices, 306 A.3d 432 (Pa. Cmwlth. en banc 2023): Decided that statutory slot‐machine definitions do not apply to Section 5513 of the Crimes Code; appeals pending before this Court.

Legal Reasoning

1. Standard of Review (2 Pa.C.S. § 704)
An appellate court must affirm an agency adjudication unless it is:

• In violation of constitutional rights;
• Not in accordance with law (i.e., arbitrary, capricious or abuse of discretion);
• Contrary to required procedures; or
• Unsupported by substantial evidence.

This Court agreed with the Commonwealth Court that the correct frame is review for arbitrary or capricious action under the “not in accordance with law” clause.

2. Video Gaming Act’s Suitability Requirement
Sections 3502(b) and 3504(c) require license applicants and principals to prove by clear and convincing evidence that they possess “good character, honesty and integrity.” The Act entrusts the Board to conduct individualized background inquiries, considering personal reputation, criminal history, business affairs and related factors over a ten‐year period.

3. Board’s Rationale Critiqued
Rather than examine each applicant, the Board:

• Condemned the entire “skill‐games” industry as unregulated competition undermining casinos and lotteries;
• Relied on legislative‐committee testimony about consumer risks (underage play, compulsive gambling, lack of surveillance);
• Found no evidence that any of the individual applicants had criminal records, organized‐crime ties, tax fraud or false statements;
• Contrasted industry‐wide policy objections against each applicant rather than specific indicators of bad character.

These broad policy conclusions have no logical nexus to the personal qualities of Messrs. Brozzetti and Teitelbaum. The Board thus exercised its discretion in an arbitrary and capricious manner, substituting general opposition to an industry for the required individualized character showing.

Impact

This decision clarifies and limits the Gaming Control Board’s licensing discretion:

• Agency must anchor suitability determinations in evidence relating to the applicant, not an entire industry or economic policy.
• Reviewing courts will enforce Section 704’s proscription on arbitrary or capricious agency action.
• Applicants involved in disputed or novel business practices (e.g., skill games) must receive individualized hearings and findings on their personal integrity.
• Future license appeals will likely focus on the sufficiency of personal background evidence rather than policy disagreements.

Complex Concepts Simplified

• Not in accordance with law: Means an agency decision is arbitrary, capricious or an abuse of its lawful discretion—essentially, not grounded in the statute or evidence.
• Manifest and flagrant abuse of discretion: Describes decision‐making that is plainly unreasonable, fanciful or beyond what the law allows.
• Substantial evidence: Evidence relevant to the issue that a reasonable mind might accept as adequate to support a conclusion.
• Clear and convincing proof: A higher standard than “preponderance” but lower than “beyond a reasonable doubt,” requiring that the truth of the allegations be highly probable.

Conclusion

The Supreme Court’s decision in Better Bets Ventures underscores the fundamental principle that administrative licensing decisions—no matter how grounded in policy—must rest on the evidence and statutory criteria applicable to each individual applicant. The Board’s wholesale condemnation of the skill‐games industry, untethered to personal misconduct by Messrs. Brozzetti and Teitelbaum, was arbitrary and an abuse of discretion. The matter is remanded for further individualized consideration of applicants’ character, honesty and integrity, in compliance with both the Video Gaming Act’s procedural demands and long‐standing principles of administrative law.