Story by Spotlight PA’s Stephen Caruso and Angela Couloumbis
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HARRISBURG The most powerful Republican politicians and a wealthy corporation that has completely changed Pennsylvania’s gambling scene are engaged in a full-scale political battle in the state capitol.
As the June 30 deadline draws near and no agreement is in sight, hundreds of millions of dollars in possible state tax revenue—a crucial component of the secret budget negotiations—are on the line.
Over the past week, the dispute has abruptly and vehemently intensified, with Pace-O-Matic, a distributor and creator of skill games, now charging the top two GOP senators in the state Senate of threatening its hired gunmen in the Capitol corridors.
Michael Barley, the chief public affairs officer for Pace-O-Matic, stated in an interview on Monday that Republican leaders in the state Senate threatened to take retaliatory action against the company’s lobbying firms unless they stopped doing business with Pace-O-Matic.
According to him, three firms, including the influential Harrisburg lobbying firm Long Nyquist, informed Pace-O-Matic that they could no longer represent company in a matter of days.
According to Barley, the lobbyists informed the business that the offices of President Pro Tempore Kim Ward and Majority Leader Joe Pittman had cautioned them that if they continued to do business with Pace-O-Matic, their other clients’ interests or other contracts with the caucus might be at risk.
According to Barley, such intimidation at the very least creates ethical questions. “We are very sorry we have to do this, here is why,” he said.
“This one is ugly,” he continued.
Pittman’s spokesman, Kate Flessner, summed up Barley’s comments in an email: “Senator Pittman has never heard a more hypocritical statement.”
Ward’s spokesperson, Erica Clayton Wright, went on to say that it’s challenging to react to such an odd comment. “As caucus leaders have worked on legislation to tax and regulate the machines, Pace-O-Matic has been included in meetings,” she continued.
Wright claimed that Pace-O-Matic is in a bad and embarrassing situation right now since they are handling a major issue in an unpredictable manner.
Even in the high-stress setting of budget talks in the Capitol this month, the dispute’s severity is out of the ordinary. Even while lawmakers are rushing to meet the deadline, it has momentarily diverted Harrisburg insiders’ attention from the policy discussion.
It might get worse.
Legislators searching for methods to generate much-needed income are focusing on figuring out how to tax and regulate skill games that resemble slot machines in bars, taverns, social halls, and other venues.
Manufacturers and owners of skill games have demonstrated that they have substantial financial resources, the resolve to battle, and the ear of powerful national conservative groups. To increase pressure on MPs to enact a version of a bill they support, they are anticipated to conduct a press conference inside the Capitol on Tuesday.
For years, the GOP-controlled state Senate’s leaders avoided the discussion. They now maintain that skill games should be regulated and taxed at greater rates than Pace-O-Matic supports because they believe it to be a public safety problem. Pittman mentioned two robberies that had place at skill gaming parlors in his neighborhood.
In my view, Pittman stated last week that since this is gambling, it must be controlled and age-restricted. Pittman responded, “We’re open to everything and anything at this point,” when asked if he would reinstate a complete ban on the machines.
Pace-O-Matic s pressure campaign
Leading Republicans have been more irate in recent months over Pace-O-Matic’s insistence on sticking to its backing of a plan that would impose a 16% tax on the gross revenue of skill games. That is very different from the 52% tax rate that Democratic Governor Josh Shapiro has suggested and the 35% compromise tax rate that top Senate Republicans favor.
However, the tipping point was when, in May, after state Senate Republicans formally presented regulation legislation, an Ohio-based Super PAC delivered attack flyers to door knockers, specifically targeting at least two GOP senators, Frank Farry and Chris Gebhard.
According to the flyers seen by Spotlight PA, the senators are supporting lobbyists and Harrisburg insiders in an effort to prevent small town organizations like our volunteer firefighters and VFWs from being able to generate more money.
Defeating Communism, a super PAC based in Ohio, paid for the flyers. There are other interest groups involved in this matter, according to Barley, who also stated that Pace-O-Matic did not collaborate with the organization that promoted that advertising effort.
In turn, the national group Citizens Alliance, which has supported multiple successful primaries of prominent Pennsylvania Republicans, provides funding for Defeating Communism.
But for a number of years, Pace-O-Matic has worked to persuade legislators to back the regulatory plans it prefers.
More recently, the firm has sponsored print, radio, and television advertisements to promote its cause and hosted town halls akin to pep rallies in Republican senatorial districts throughout the state. Legislative attempts to control skill games have been depicted in many of the advertisements as assaults on the little companies that own the machines and depend on their profits.
Because Farry’s suburban Philadelphia seat has been a major target for Democrats hoping to take the upper chamber in 2026, the attack on him in particular raised suspicions among insiders.
The attacks struck Farry, who has attempted to mediate a compromise bill, as uncommon in the haste of budget crunch policymaking.
Farry told Spotlight PA, “They’re saying I’m trying to close firehouses.” For thirty years, I have volunteered as a firefighter. Do you mean me?
Ward has openly accused proponents of skill games of harassing lawmakers and expressed dissatisfaction about the difficulty in obtaining basic information from operators, such as the number of machines they own in Pennsylvania.
A failed truce
Two people involved with the discussion told Spotlight PA that Long Nyquist set up a meeting between Pace-O-Matic executives and Pittman’s top aides earlier this month in an attempt to promote a truce. Since the sources were not permitted to discuss it in public, they asked to remain anonymous.
It was hoped that Pace-O-Matic would rescind its pressure campaign if they could agree on revisions to the plan that state Senate GOP leaders supported, which included a 35% tax rate and regulation by the Pennsylvania Gaming Control Board, which regulates casinos.
According to the sources, the conversation was fruitless and both parties left feeling let down.
Then, late this week, Long Nyquist, which has been Pace-O-Matic’s attorney for almost ten years, suddenly changed the list of clients it had on the state’s website for lobbying disclosure. The fact that the firm no longer represented the gaming company was reflected.
Two days later, Pace-O-Matic was abruptly dismissed as a client by K&L Gates, another firm. Another company, GSL Public Strategies, followed suit on Monday.
Mike Long, the founder and partner of Long Nyquist, said, “We don’t comment on lobbying clients,” in response to the question.
Requests for comment were not answered by K&L Gates or GSL representatives.
Pace-O-Matic hasspent big buckson politics since its machines first made it to Pennsylvania in the mid-2010s, including $2.5 million in campaign contributions from the company s main PAC, Operators for Skill, as well as millions more on some of Harrisburg s best-connected lobbying firms.
Thanks to a court decision that protected their operations, tens of thousands of skill machines have spread throughout the commonwealth. Despite gambling competitors paying hefty taxes on their gains, they have made billions of dollars in revenue, and the legislature has taken no meaningful action to limit them.
But this year, Republicans and Democrats alike were more determined to tax and regulate skill games. In light of the commonwealth’s ongoing structural deficit and numerous costly spending objectives, this is one of the only workable bipartisan solutions for raising funds.
Revenue estimates vary widely depending on a proposal s specifics, but most peg the state s missing share as being hundreds of millions of dollars. While not a massive windfall, such new revenue could help the stateafford boosts to transit or education funding, even as it faces uncertainty over the amount of federal funding it will receive.
The issue has split the state Senate Republican caucus. Lawmakers whose districts include skill games manufacturers back light taxation, while casino-aligned legislators have called for a complete ban. Faced with deep internal divisions, GOP leadership opted to punt on the issue in years past.
What s made this a harder deal to strike is that we ve looked the other way for several years, Pittman told reporters last week, and now we have small businesses that have come to rely on these machines.
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