Rejecting Guilt by Association: Individualized "Good Character" Assessments and Limits on PGCB Licensing Discretion in the Skill‑Games Era

I. Introduction

This consolidated appeal from the Supreme Court of Pennsylvania (Middle District), decided on March 20, 2025, arises at the intersection of gaming regulation, administrative law, and the legally unsettled world of so‑called “skill games.” The cases involve several applicants seeking licensure under Pennsylvania’s Video Gaming Act, 4 Pa.C.S. §§ 3101–4506, to operate video gaming terminals (“VGTs”) at qualifying truck stops.

The Pennsylvania Gaming Control Board (“PGCB” or “Board”) denied the license applications of:

• Richard Teitelbaum and his company Lendell Gaming, LLC,
• Michael and Frank Brozzetti and their company Better Bets Ventures, LLC,

while allowing a similarly situated applicant, Brent Mayes (Venture Gaming, LLC), to proceed in the licensing process. The Board’s basis for denial was not any traditional indicia of poor character (such as criminal history or dishonesty), but the applicants’ participation in the “skill games” industry. It characterized that industry as unregulated, socially harmful, and economically damaging to the state’s lawful gaming and lottery systems.

The Commonwealth Court reversed the Board’s adjudication, finding that the Board had abused its discretion by making a sweeping negative character judgment based solely on the applicants’ association with an industry that the Board “simply does not like,” and ordered the Board to issue the requested licenses. The Supreme Court:

• Affirmed the Commonwealth Court’s conclusion that the PGCB’s decision was arbitrary, capricious, and an abuse of discretion, but
• Vacated the portion of the order directing the Board to issue the licenses, instead remanding for further proceedings without mandating a specific outcome.

Central to the Court’s reasoning is a strong reaffirmation that:

• Administrative discretion, even when broad, is not unbounded; it must be exercised on a reasoned, individualized basis and is subject to judicial review for arbitrariness and abuse of discretion.
• Economic and policy objections to a contested industry cannot, by themselves, be bootstrapped into a statutory finding that an individual lacks “good character, honesty and integrity.”
• Participation in an industry whose legality is “debatable,” and which has been judicially treated as lawful or unregulated under the Gaming Act, does not, without more, demonstrate bad character.

At the same time, the Court carefully cordons off the substantive legality of skill games—now pending in other appeals—and confines its decision to the process and reasoning the PGCB must use when applying character standards in licensing.

II. Summary of the Opinion

A. Parties and Procedural Posture

The consolidated appeals involve:

• Applicants / Appellees:
  • Better Bets Ventures, LLC, and its principals Michael and Frank Brozzetti;
  • Lendell Gaming, LLC, and its principal, Richard Teitelbaum;
• Regulator / Appellant: Pennsylvania Gaming Control Board.

All applicants sought:

• Principal licenses under 4 Pa.C.S. § 3504 (for individual owners/principals); and
• Terminal operator licenses under § 3502 (for entities placing and operating VGTs).

The Board denied the applications of Teitelbaum/Lendell and the Brozzettis/Better Bets, but allowed Mayes/Venture Gaming to progress. All decisions turned on the statutory requirement that applicants prove, by clear and convincing evidence, that they are:

“person[s] of good character, honesty and integrity” 4 Pa.C.S. §§ 3502(b), 3504(c), 3301(b)(11).

The Commonwealth Court:

• Held that the Board abused its discretion by basing its character determinations solely on generalized criticisms of the skill games industry.
• Reversed the Board’s adjudication.
• Remanded with instructions that the Board issue the requested licenses.

The Supreme Court granted review on a single question framed by the Board: whether the Commonwealth Court erred, “contrary to previous holdings,” in not deferring to the Board’s determination that the applicants lacked “good character, honesty and integrity.”

B. Supreme Court’s Holdings (in Substance)

1. No statutory-interpretation issue; no deference to agency on clear statutory terms.
   The phrase “good character, honesty and integrity” is not ambiguous. Both sides agree on its ordinary meaning. The case does not involve deference to the Board’s interpretation of a statute (Crown Castle framework); it concerns judicial review of a discretionary agency decision under 2 Pa.C.S. § 704.
2. Standard of review: “not in accordance with law” includes abuse of discretion and arbitrary/capricious decision-making.
   Applying Blumenschein, Slawek, Fraternal Order of Police, and Wintermyer, the Court reiterates that a reviewing court may reverse an agency when its adjudication:
   • represents a “manifest and flagrant abuse of discretion,” or
   • constitutes a “purely arbitrary execution” of its duties, including capricious disregard of material evidence.
3. PGCB’s reliance on generalized industry-wide criticisms and economic impacts was arbitrary and disconnected from the statutory character standard.
   The Board’s findings about:
   • unregulated nature of skill games,
   • risk to minors and problem gamblers,
   • loss of lottery and casino revenues, and
   • erosion of public confidence in regulated gaming
   were based on record evidence (notably testimony from Major Miller and Lottery Director Svitko). But the Board failed to tie those findings to any individualized evidence that these particular applicants lacked “good character, honesty and integrity.”
4. Economic competition and policy objections are irrelevant to personal character.
   Even if skill games siphon revenue from casinos and the lottery, “these facts have nothing whatsoever to do with the character, honesty, or integrity” of the applicants. Economic rivalry does not establish moral unfitness.
5. Participation in a “debatable” but widely believed lawful industry does not, by itself, show bad character.
   Given:
   • prior judicial decisions treating skill games as outside the Gaming Act,
   • industry assurances, and
   • the absence of final appellate rulings to the contrary,
   it was “excessive and unfair” for the Board to deem all participants in this industry to lack good character.
6. The Board’s favorable treatment of Mayes underscores its arbitrariness.
   The Board credited Mayes for withdrawing from the skill games business after realizing it might jeopardize his VGT application—explicitly framing this as a business, not moral, choice. Rewarding this strategic exit while condemning others who reasonably believed their businesses lawful further revealed irrational, outcome-driven decision-making rather than principled character assessment.
7. Commonwealth Court correctly found abuse of discretion, but overstepped by ordering licenses to be issued.
   The Supreme Court:
   • Affirms that the Board’s use of the character standard was an abuse of discretion.
   • Vacates the directive to issue licenses, because the Board may still need to address other statutory requirements (beyond character) and complete investigations.
   • Remands to the Board “without directing any particular result.”

III. Detailed Analysis

A. Statutory Framework and Licensing Structure

1. Video Gaming Act and the PGCB’s Powers

Act 42 of 2017 added Part III to Title 4, creating a regime for licensed video gaming terminals at qualified truck stops. Relevant provisions include:

• 4 Pa.C.S. § 3301(a)(1) – confers on the Board “general and sole regulatory authority” over “every aspect” of video gaming, including integrity of acquisition and operation.
• § 3301(b)(2), (6) – empowers the Board, at its discretion, to issue, revoke, suspend, or condition licenses.
• § 3301(b)(11) – directs the Board to approve licenses only if the applicant has proven, by clear and convincing evidence, that it is of “good character, honesty and integrity” and does not pose a threat to the public interest or effective regulation.
• § 3302(a)(1) – authorizes denial or revocation if the Board finds, in its “sole discretion,” that an applicant has furnished false information or failed to comply with applicable law and that denial is in the public interest.

2. Principal and Terminal Operator Licenses

• Terminal operator license – § 3502 Authorizes an entity to place and operate VGTs in licensed truck stops. The application must, by clear and convincing evidence, establish “suitability, including good character, honesty and integrity,” and include information about the applicant’s “family, habits, character, reputation, criminal history background, business activities, financial affairs, and ... associates” for at least ten years prior to application.
• Principal license – § 3504(c), (f) Principals of a terminal operator (e.g., owners, controlling persons) must themselves obtain a principal license, again proving by clear and convincing evidence they are “of good character, honesty and integrity.” Their licensure is a prerequisite to the operator’s eligibility.

Thus, “good character, honesty and integrity” functions as a core suitability gatekeeper both at the individual and entity levels. But it is only one of several licensing prerequisites; the Board’s investigations encompass a broader suitability determination.

B. Facts: The Applicants and Their Skill Games Involvement

1. Teitelbaum and Lendell Gaming

• Teitelbaum owns Lendell Gaming (applicant for terminal operator license) and Lendell Vending, which has operated amusement equipment and ATMs.
• He is also President of the Pennsylvania Video Gaming Association, a trade group advocating for expanded gaming in non‑casino settings.
• He entered the skill games business in 2015 via Miele Manufacturing’s “Pennsylvania Skill” machines:
  • Relied on the Beaver County Court of Common Pleas decision (the “Beaver County case”) holding that a Pennsylvania Skill device was not an illegal gambling device.
  • Relied on then‑Major Thomas Butler’s testimony that State Police would not act against skill games absent legal change.
  • Operated only “Pennsylvania Skill” devices that had been judicially addressed; by July 2019, he had 211 machines at 125 locations.
• Continued operation even after:
  • The Liquor Control Board issued a 2019 notice stating that skill games were illegal.
  • He received counter‑communications from Miele and counsel (Attorney Haverstick) asserting that the LCB’s position was “false” and “defamatory,” pointing to favorable case law.
• Fully disclosed his skill‑games activities during the PGCB background investigation, asking whether it would pose a licensing problem.

2. The Brozzettis and Better Bets Ventures

• Michael and Frank Brozzetti co‑own Better Bets Ventures and, at the relevant time, each owned 33.33% of Hugo Amusements, LLC (two‑thirds combined; now each holds 50%).
• Hugo supplied:
  • “Pennsylvania Skill” devices, and
  • Other brands, including “Diamond Choice Skill Game 1” and “2.”
• The Luzerne County case (a Court of Common Pleas decision) had held that the Diamond Choice games were illegal gambling devices under 18 Pa.C.S. § 5513.
• The Brozzettis entered the industry based on the Beaver County case but did not obtain independent legal advice and had no early contact with the PGCB about skill games.
• Like Teitelbaum, they obtained conditional VGT licenses in 2019, pending investigation, and later received OEC recommendations for denial based on their skill‑games activities.

3. Mayes and Venture Gaming

• Mayes owns Venture Gaming (terminal operator applicant) and 57% of Pro ATM, LLC (ATM operator).
• He entered the skill games market through Miele in 2016, dealing only in “Pennsylvania Skill” devices:
  • Based on Miele’s assurances and an informal opinion from his own attorney that such operation was lawful.
• Crucially, after PGCB investigators questioned his involvement in skill games, Mayes:
  • Decided to sell his machines;
  • Executed an affidavit affirming his intent not to participate in the industry in the future; and
  • Notified locations that he would terminate their terminal placement agreements.
• OEC still recommended denial, but the Board rejected that recommendation, praising Mayes’ decision to exit the industry and remanding for further investigative work on his application.

C. The Board’s Adjudication: Generalized Industry Condemnation as a Character Proxy

1. OEC’s Legal Position vs. the Board’s Stated Basis

The Board explained that OEC viewed skill games as unregulated “slot machines” or VGTs under the Gaming and Video Gaming Acts and believed that applicants had, for years, violated multiple statutes and regulations. But the Board consciously declined to rest its decision on whether skill games were, in fact, illegal:

• It characterized skill games’ legality as “debatable.”
• It acknowledged the existence of Commonwealth Court decisions (such as POM of Pa., LLC v. Dep’t of Revenue) treating these games as outside the Gaming Act’s regulatory scope for unlicensed locations.
• It explicitly based its decision on a broader, non‑legal assessment of “good character, honesty and integrity” and on a ten‑year review of applicants’ habits, reputation, and business activities (§ 3502(b)).

2. Policy and Harm Narrative About Skill Games

The Board’s findings about the skill games industry included:

• Lack of Regulatory Safeguards
  • Skill games are operated in unlicensed environments (bars, restaurants, convenience stores, etc.) lacking:
    • age‑verification protocols,
    • problem gambling interventions,
    • required minimum payout percentages,
    • surveillance and security standards,
    • approved internal controls, and
    • mandatory signage with problem‑gambling helpline information.
  • The Board deemed “self‑regulation” (e.g., voluntary “18+” stickers) inferior and unreliable, noting that the legal gaming age is 21.
• Economic Cannibalization
  • Skill games purportedly “cannibalize” casino, truck‑stop VGT, and lottery revenues.
  • Lottery Director Svitko estimated a $138 million annual lottery revenue loss, with corresponding harm to senior‑citizen programs funded by lottery proceeds.
  • Casinos had reduced slot numbers, attributing part of the decline to skill‑games competition.
  • The Board asserted that, through marketing and physical proximity to lottery terminals, skill games give the impression of state sanction and erode “public confidence and trust in legalized gaming.”

3. Application to Individual Applicants

From these macro‑level findings, the Board drew micro‑level conclusions about the applicants:

• Teitelbaum and the Brozzettis’ “continued involvement” in skill games, despite “vehement, public opposition by government agencies and public officials,” showed they did not possess the requisite “good character, honesty and integrity.”
• The Board treated their mere participation in an unregulated industry as disqualifying, without finding concrete misconduct.
• For the Brozzettis, the Board further relied on the Luzerne County case concerning Diamond Choice games to conclude that they had operated illegal gambling devices under 18 Pa.C.S. § 5513.
• By contrast, Mayes’ voluntary withdrawal from the industry “rightfully” to avoid jeopardizing his VGT prospects signified that he did have good character, honesty, and integrity.

In short, the Board substituted guilt by association (with a controversial industry) and agreement with the Board’s policy preferences (by exiting that industry) for any evidence‑based, individualized assessment of moral character.

D. Standard of Review: Section 704 and the Abuse-of-Discretion Framework

1. Section 704 of the Administrative Agency Law

Section 704 provides that a reviewing court must affirm an agency adjudication unless it:

• violates constitutional rights,
• is “not in accordance with law,”
• violates procedural requirements in 2 Pa.C.S. Ch. 5, Subch. A, or
• is based on critical factual findings not supported by substantial evidence.

If not affirmed, a court may enter any order authorized by 42 Pa.C.S. § 706.

2. “Not in Accordance with Law”: Blumenschein, Slawek, Fraternal Order of Police, Wintermyer

The Supreme Court traces “not in accordance with law” back to the seminal administrative‑law decision in Blumenschein v. Pittsburgh Housing Authority and its own follow‑up in Slawek v. State Bd. of Med. Educ. & Licensure:

• Blumenschein – judicial review of discretionary administrative action is narrow; courts may not substitute their judgment for that of the agency. However, they may intervene where there is a “manifest and flagrant abuse of discretion” or “purely arbitrary execution” of duties.
• Slawek – Section 704’s “not in accordance with law” incorporates Blumenschein’s standard. Agencies are not immune from review, but courts correct decisions that are arbitrary, capricious, or reflect a manifest abuse of discretion.
• Fraternal Order of Police v. PLRB – refines the standard: Section 704 review ensures that agency conclusions:
  • are supported by competent factual findings,
  • avoid arbitrary or capricious decision-making, and
  • reflect a proper exercise of the agency’s discretion.
• Leon E. Wintermyer, Inc. v. WCAB – holds that “capricious disregard” of material evidence is a legal and structural error encompassed by Section 704’s “not in accordance with law” standard.

The Supreme Court applies this body of law to conclude that the Board’s adjudication—though formally invoking its discretionary, character‑based authority—fell below minimum standards of reasoned decision‑making.

E. No Deference on Statutory Meaning; Deference Only on Reasoned Discretion

1. Ambiguity and Agency Interpretation

The Board tried to transform the case into one about deference to an agency’s interpretation of ambiguous statutory terms, arguing that “good character, honesty and integrity” are inherently subjective, and thus ambiguous. The Court rejects this reframing:

• A statute is ambiguous when it reasonably supports at least two different interpretations.
• Here, the words “character,” “honesty,” and “integrity” are ordinary, non‑technical terms, used in their common sense (1 Pa.C.S. § 1903).
• Crucially, the parties did not disagree on the meaning of those words; they contested only the application of those standards to the facts.

Accordingly:

• The case did not pose a question of statutory interpretation, and
• The usual doctrine that agencies receive no deference when interpreting clear, unambiguous statutory text (e.g., Crown Castle) applies but is essentially beside the point.

2. The Commonwealth Court’s “No Deference” Statement

The Board seized on one sentence where the Commonwealth Court remarked that the Video Gaming Act provisions were “clear and free from ambiguity” and that the Board’s interpretation was “entitled to no deference.” The Supreme Court treats that as an accurate but peripheral observation:

• It does not show that the Commonwealth Court applied the wrong standard of review.
• The lower court, in fact, explicitly applied the Section 704 and Slawek framework, recognizing the limited but real nature of appellate review of agency discretion.

Thus, the Supreme Court rejects the premise of the Board’s appeal—that the Commonwealth Court fundamentally misunderstood or ignored deference—while affirming that the real issue is whether the Board’s decision was a reasoned, lawful exercise of discretion.

F. Why the Board’s Decision Was Arbitrary and an Abuse of Discretion

1. Economic Harms to Casinos and Lottery: Irrelevant to Character

The Court is blunt in its assessment of the Board’s economic‑impact rationale:

• Even assuming the evidence is accurate—that skill games reduce casino slot play and lottery sales, harming state revenue and senior programs—this:
  • may be relevant to legislative or policy debates about skill games, and
  • may justify future legislative or regulatory action,
  • but it is “utterly disconnected” from whether a particular applicant is a person of “good character, honesty and integrity.”
• Economic competition, even if disfavored or disruptive, “does not make one a bad or dishonest person.”

This is a significant doctrinal point: an agency may not convert its broader policy objections toward a controversial industry into a moral condemnation of individual applicants under a character‑based licensing standard.

2. Generalized Harms from Unregulated Gaming: No Individualized Connection

The Board made extensive findings about systemic risks from unregulated gambling:

• Exposure of minors to gambling;
• Lack of tools to address compulsive gambling;
• Absence of payout, surveillance, and internal control standards.

But the Court emphasizes that:

• The Video Gaming Act’s character requirement, by its text, requires a personalized assessment:

  “the applicant is a person of good character, honesty and integrity and is eligible and suitable to be licensed as a principal.” (§ 3504(c), emphasis added)

• The Board’s analysis never connected these systemic concerns to any actual conduct by Teitelbaum or the Brozzettis:
  • No evidence of minors gambling on their machines.
  • No evidence of exploitative payouts at their locations.
  • No evidence of encouragement or concealment of problem gambling.
  • No evidence of criminal convictions, investigations, tax evasion, organized crime ties, dishonesty, or lack of cooperation with investigators.

The Commonwealth Court’s reference to the absence of those traditional red flags was not an improper re‑weighing of evidence; it illuminated that there was no individualized evidence of moral unfitness at all. The Supreme Court endorses that view.

3. The “Guilt by Industry” Problem

The Supreme Court’s language is notably sharp:

• It is “excessive and unfair” to declare that “every individual involved in this industry lacks ‘good character, honesty and integrity’ merely due to their involvement in the industry.”
• Many business owners reasonably believed, based on:
  • trial‑court decisions (e.g., Beaver County) and
  • Commonwealth Court precedent (POM of Pa. and later In re Three Pa. Skill Amusement Devices),
  that they were operating lawfully.
• The Court recognizes that “thousands of Pennsylvanians” are involved in the skill games industry under the impression that their activity is lawful and notes that devices appear on the premises of “many honest business owners, who surely would not operate them if they knew them to be illegal.”

Against that backdrop, the Board’s blanket moral judgment rested on:

• its own contested legal views (that skill games are illegal slot machines), and
• its policy preferences (favoring tightly regulated, casino‑style environments).

Turning those contested policy and legal views into a moral condemnation of entire categories of applicants is exactly the type of arbitrary, policy‑driven misuse of discretionary power that Section 704 review is designed to prevent.

4. The Mayes Comparator: Rewarding Policy Submission

The Court devotes special attention to the Board’s favorable treatment of Mayes:

• Mayes continued in skill games until—during his background investigation—he became “concerned that his involvement therein would jeopardize his ability to obtain a license.”
• He then immediately exited the industry for explicitly economic and strategic reasons (“because he, rightfully, did not want to jeopardize his ability to offer video gaming terminals, which he believed have a brighter future in Pennsylvania”).
• The Board lauded this decision as positive evidence of “good character, honesty and integrity” and contrasted it with the others’ decision to remain in the industry.

The Supreme Court points out the inconsistency:

• By the Board’s own account, Mayes’ exit was a business calculation, not an ethical epiphany;
• Rewarding that tactical conformity to the Board’s position, while punishing others who—relying on legal decisions—remained in the industry, exposes that the Board’s character analysis was really about:
  • submission to the Board’s views, and
  • alignment with its preferred policy path,
  rather than an objective moral assessment.

This internal inconsistency reinforces the conclusion that the Board’s denials were arbitrary and capricious—not the product of a reasoned, principled application of the statutory character standard.

5. The Diamond Choice Devices and the Brozzettis

The Board also relied on the Luzerne County decision that classified Diamond Choice devices as illegal gambling machines, finding “substantial evidence” that the Brozzettis, through Hugo, violated 18 Pa.C.S. § 5513. The Commonwealth Court had downplayed this on the theory that the brothers’ connection to Hugo was “attenuated” because they only owned part of the company.

The Supreme Court offers a nuanced response:

• It rejects the Commonwealth Court’s characterization that the brothers’ connection to Hugo was attenuated—owning two‑thirds (now all) of the company is hardly attenuated.
• However, subsequent Commonwealth Court precedent in In re Three Pa. Skill Amusement Devices (306 A.3d 432) determined that:
  • the Gaming Act’s “slot machine” definition does not control the Crimes Code’s “slot machine” term in § 5513, and
  • the skill games at issue there were not illegal gambling devices for § 5513 purposes.
• Given that en banc ruling (appeal pending in the Supreme Court), it is no longer clear that the Diamond Choice devices in question were illegal under § 5513 during the relevant period.

Thus, even on this potentially stronger factual ground, the Board’s conclusion that the Brozzettis had operated “illegal gambling devices” is undermined by evolving appellate law. The Court therefore remands their applications as well, rather than carving them out as uniquely tainted.

G. The “Elephant in the Room”: Skill Games’ Legality on a Separate Track

The Court is explicit that it is not deciding whether “skill games” are:

• regulated slot machines under the Gaming Act, or
• illegal gambling devices under 18 Pa.C.S. § 5513.

Those questions are before the Court in:

• POM of Pa., LLC v. Dep’t of Revenue (2, 5 & 6 EAP 2024), and
• In re Three Pa. Skill Amusement Devices (50 MAP 2024).

The Court emphasizes:

• Its decision here “does not impact” those appeals.
• Whatever the Court ultimately decides about the legality of skill games will not retroactively change the analysis of whether the PGCB’s 2020–22 licensing adjudications were arbitrary under the standards then governing.

This separation of tracks is important: regulatory and criminal legality of an industry is distinct from whether, at a given point in time, it is lawful and fair for an agency to treat mere participation in that industry as per se evidence of bad character when the legal issue is unsettled and courts have rendered decisions supporting the industry’s lawfulness.

H. Limits on Agency Discretion and the Role of Judicial Review

The Court concludes by reiterating basic but critical principles of administrative law:

• Even with broad statutory discretion (as § 3301 and § 3302 confer), an agency:
  • must root decisions in “reason,” not “prejudice, personal motivations, caprice or arbitrary actions” (citing Commonwealth v. State Conf. of State Police Lodges and Coker v. S.M. Flickinger Co.), and
  • cannot use its discretionary powers to impose its policy preferences in a way disconnected from the statutory standards it is supposed to enforce.
• Section 704 review is modest but real: courts do not re‑weigh evidence or substitute their judgment, but they do correct:
  • manifest and flagrant abuses of discretion,
  • purely arbitrary execution of duties, and
  • capricious disregard of material evidence.

Here, by:

• treating industry participation per se as character disqualifying,
• grounding decisions in economic and policy objections irrelevant to individual moral fitness, and
• rewarding applicants who quickly aligned with the Board’s contested policy position,

the PGCB strayed across these lines. The Commonwealth Court was therefore correct to find an abuse of discretion, and the Supreme Court fully endorses that core conclusion.

I. Remedy: Why the Supreme Court Refused to Order Licenses Issued

Although the Court agrees with the Commonwealth Court that the Board’s character‑based rationale is unlawful, it concludes that the lower court went too far in ordering the Board to issue the licenses.

• Licensing involves multiple statutory requirements beyond “good character, honesty and integrity” (e.g., financial fitness, association review, background checks).
• Even in Mayes’ case, where the Board found him to satisfy the character requirement, it did not grant the license outright; it remanded to complete “outstanding investigative work.”
• Under 2 Pa.C.S. § 704 and 42 Pa.C.S. § 706, when an agency’s adjudication is reversed, courts typically remand for further proceedings, rather than dictating discretionary licensing outcomes, absent extraordinary circumstances.

Therefore, the Supreme Court:

• Vacates the Commonwealth Court’s directive that the Board “issue the requested licenses.”
• Remands all applications to the PGCB with instructions:
  • to reconsider them in light of the Supreme Court’s opinion,
  • without relying on mere participation in the skill games industry as a proxy for bad character, and
  • without any judicial mandate as to the final outcome.

IV. Complex Concepts Simplified

1. “Good Character, Honesty and Integrity”

These are ordinary moral concepts, not terms of art:

• Character: the person’s overall moral and ethical traits, such as reliability, law‑abidingness, and respect for rules.
• Honesty: truthfulness and avoidance of deceit, fraud, or misrepresentation.
• Integrity: consistency between one’s stated principles and conduct; willingness to comply with legal and ethical obligations, even when inconvenient.

In licensing, these concepts usually relate to:

• criminal history,
• true and complete disclosure on applications,
• tax and financial compliance,
• associations with criminal or corrupt actors, and
• professional behavior in regulated industries.

The Court’s point is that these concepts must be assessed on an individualized, evidence‑based basis, not inferred from abstract policy disagreements about an industry.

2. “Clear and Convincing Evidence”

This is a heightened standard of proof—more demanding than “preponderance of the evidence” but less than “beyond a reasonable doubt.” It requires evidence that makes the fact in question “highly probable.”

• Here, applicants bear the burden to prove by clear and convincing evidence that they do have good character, honesty, and integrity.
• The Board may scrutinize their background, but it must base its decision on facts in the record, not unsubstantiated policy judgments.

3. “Abuse of Discretion” and “Arbitrary or Capricious” Decisions

• Abuse of discretion: The agency has discretion to choose among lawful options, but abuses that power when its decision:
  • rests on irrelevant factors,
  • ignores important aspects of the problem,
  • treats similarly situated parties inconsistently without good reason, or
  • cannot be reconciled with the record and governing law.
• Arbitrary or capricious: A decision is arbitrary if it is:
  • unreasoned,
  • based on mere preference or dislike, or
  • so lacking in connection to the evidence or statutory goals that it appears random or driven by bias or personal motivations.

The Court found both: the Board’s decision was not anchored in legally relevant, applicant‑specific facts and instead reflected a broad, policy‑driven condemnation of an entire industry.

4. “Capricious Disregard” of Evidence

This concept (from Wintermyer) captures a situation where an agency:

• has material, competent evidence before it, but
• ignores or fails to address that evidence in its reasoning.

Though the Board did not so much ignore evidence as fail to develop relevant individualized evidence, the Court notes that capricious disregard is one dimension of “not in accordance with law” review that can justify reversal when present.

5. Judicial Deference to Agencies

It is important to distinguish two types of “deference”:

• Deference on statutory interpretation (how to read a statute) – typically limited or absent when the text is clear.
• Deference on discretionary application (how to apply broad standards like “good character”) – courts will not re‑weigh evidence or substitute their judgment for the agency’s but will still ensure decisions are reasoned, lawful, and supported by the record.

This case is mainly about the second type: the Board’s application of an undisputed statutory standard was so disconnected from relevant facts and so infused with policy dislike that it crossed the line into abuse of discretion.

V. Impact and Broader Significance

A. For the PGCB and Gaming License Applicants

• The PGCB retains broad discretion over licensing, but:
  • It may not deny licenses solely because applicants participated in the skill games industry at a time when its legality was unsettled and judicial decisions treated it as lawful/unregulated under the Gaming Act.
  • It must conduct applicant‑specific character assessments—looking to actual conduct, truthfulness, compliance history, associations, and cooperation with regulators.
  • Economic and policy concerns about competition with casinos and the lottery do not, without more, speak to an applicant’s moral or ethical fitness.
• Applicants who were or are involved in skill games:
  • are not automatically disqualified from licensure,
  • but can still be denied if there is concrete evidence of misconduct (e.g., proven operation of illegal devices after a clear legal prohibition, dishonesty, tax violations, etc.).

B. For Other Regulatory Agencies

The reasoning has resonance beyond gaming:

• Agencies relying on “good character,” “fitness,” or “suitability” clauses in professional or business licensing cannot:
  • use those standards to penalize licensees simply for working in industries the agency disapproves of, especially when legality is unsettled, and
  • convert policy disagreements into moral disqualifications without fact‑specific evidence.
• Where an industry occupies a gray area of law, regulators must:
  • avoid presuming bad faith on the part of participants who reasonably rely on judicial decisions or legislative silence, and
  • focus on actual misconduct or dishonesty, not lawful (or reasonably perceived lawful) business choices.

C. For the Ongoing Skill Games Litigation

While this decision does not resolve the legality of skill games, it nonetheless affects the regulatory climate:

• Skill game providers and locations may take some comfort that:
  • their participation, in and of itself, cannot now be used as blanket proof of bad character in gaming licensing decisions,
  • at least for the period when legal uncertainty and supporting judicial precedent persisted.
• However:
  • If the Supreme Court ultimately holds in the pending appeals that skill games are illegal gambling devices,
  • future conduct after such a clear ruling could be treated very differently; continued knowing violation of a definitive legal prohibition may well bear on character and integrity.

D. For Administrative Law Doctrine

This decision reinforces several doctrinal points:

• Section 704’s “not in accordance with law” standard has real teeth: courts will overturn agency decisions where:
  • findings bear no rational connection to the statutory standard applied, or
  • agencies use vague moral standards to entrench their own policy preferences in the guise of character judgments.
• Courts remain wary of “guilt by association” in administrative settings—be it with disfavored industries, political views, or lawful but controversial activities.
• Remedially, courts must remain cautious not to usurp agency functions: even when an abuse of discretion is found, the usual course is remand for further proceedings, not judicial micromanagement of licensing outcomes.

VI. Conclusion: Key Takeaways

The Supreme Court’s decision in these consolidated appeals (including Lendell Gaming, LLC v. PGCB and Better Bets Ventures, LLC v. PGCB) establishes several important principles:

1. Individualized, Evidence‑Based Character Assessment The statutory requirement that VGT applicants show “good character, honesty and integrity” demands a personalized evaluation. Agencies may not treat participation in an entire controversial industry as per se disqualifying.
2. Policy and Economic Concerns ≠ Moral Defect Objections about unregulated gaming harms and lost revenues to casinos and the lottery are policy arguments, not evidence that specific individuals are dishonest or lack integrity.
3. Legal Uncertainty Matters When the law is “debatable” and courts have held or suggested that certain devices or industries are lawful or unregulated, it is “excessive and unfair” to infer bad character merely from participation in those businesses.
4. Agency Discretion Has Boundaries Even with “sole” regulatory authority, an agency cannot:
   • act on prejudice, personal motivations, or mere dislike of an industry, or
   • reward applicants simply because they strategically align with the agency’s contested policy position.
5. Judicial Review Is Limited but Real Courts will not re‑weigh evidence, but under 2 Pa.C.S. § 704, they will reverse decisions that reflect a “manifest and flagrant abuse of discretion” or arbitrary execution of duties.
6. Remand, Not Judicial Licensing After correcting the misuse of the character standard, appellate courts must generally remand to the agency for further proceedings, rather than ordering specific licenses to be issued.

In the broader legal context, this decision stands as a cautionary reminder that “good character” clauses, though broad, cannot be wielded as blunt instruments to enforce regulatory agencies’ policy agendas. Particularly in emerging or contested industries like skill games, regulators must ground adverse licensing decisions in clear, individualized evidence of misconduct or dishonesty—not in generalized disapproval of the industry itself.