Inside Pace-O-Matic’s Place In The Developing, Divisive ‘Skill Games’ Industry

The brainchild of one of the gambling industry’s top inventors is now the most recognizable company at the forefront of the blossoming — and controversial — “skill games” industry.

Pace-O-Matic is named after its founder, Michael Pace. He created the company in 2000 after 20-plus years pushing the U.S. gambling market forward with innovations, which included Little Casino, the world’s first electronic countertop casino game, in 1980; Turbo 340, a controller board that became the world’s most widely used game creation platform, in 1989; and Pot of Gold, the world’s first electronic pull tab game, in 1990.

Today, Pace’s 24-year-old Pace-O-Matic is widely thought of as the leading skill games developer. Some of its notable games are Amigos Locos, Bandito Brothers, Big Cheese, Bombs and Bombshells, Fishy Loot, Gem Master, Graveyard Gold, House of Voodoo, Icy Hot, and Kickers.

As a privately owned company, Pace-O-Matic does not release much information about itself. It doesn’t reveal how many games it has in operation in the U.S. And it doesn’t share any financial figures either.

However, Rachel Albritton, Pace-O-Matic’s senior communications director, did share with Casino Reports a bit of information on the impact of its games’ revenue.

“We can tell you,” Albritton said, “that over 80 percent of the revenue our games generate flows directly to our small business operators and the small businesses and fraternal clubs/non-profits that host our games.”

Albritton said most Pace-O-Matic games are at establishments like “restaurants, bars, and convenience stores, and in some states, non-profit organizations such as VFW halls, American Legion posts, volunteer fire companies, and others.

“Our games offer a supplemental, sustainable revenue source for small businesses, and that income is used to make location updates, pay competitive wages, combat rising costs, and donate to charitable causes. In some cases, the revenue has made the difference between staying open or closing in a tough economy.”

$85 billion worldwide industry by 2030?

Skill games are gaming devices that look and feel similar to traditional slot machines. However, whereas those casino games rely purely on chance, manufacturers like Pace-O-Matic say their games rely on the player’s skill.

According to Fortune Business Insights, the global skill game industry was valued at nearly $31 billion in 2022 and it’s expected to swell to $85.34 billion by 2030.

And, in the U.S., it’s all unregulated.

And … there’s the source of the controversy. Well, at least part of it.

Why are skill games controversial?

In Pennsylvania, for example, which is the state Albritton called Pace-O-Matic’s “largest market,” the state’s retail casinos have been strongly opposed to regulating skill games — and actually have wanted them ruled illegal — for years.

In a different tact this summer, many of Pennsylvania’s casinos filed a joint lawsuit asking the state’s Supreme Court to tax skill games at 54% — the same rate as casino slot machines — or to remove the tax from casino slot machine revenue. This came after a proposed 42% tax on skill games didn’t wind up in Gov. Josh Shapiro’s final 2024-25 budget.

There are other issues at hand, too.

Safety is a concern for some opponents. These games are often in establishments with children and plenty of customers 18 and younger. And there is anecdotal evidence that the presence of skill games can increase the likelihood of crime.

“The parlors that we see opening up are essentially mini-casinos that are unregulated, untaxed, not secure,” Pennsylvania Senate Majority Leader Joe Pittman said in June. “I think that we’re sitting on a public safety powder keg if we don’t address them.”

In a 2023 survey conducted by the American Gaming Association, 71% of respondents familiar with skill games said they lacked the protections available to players in casinos, 64% said skill games were too accessible to children, and 56% said the presence of skill games increased the likelihood of crimes in businesses where the games were located.

There are also those who believe skill games aren’t really based on skill and, thus, don’t circumnavigate laws banning slot machines. That same AGA survey found 65% of respondents familiar with skill games believed they are no different from slots.

Kentucky lawmakers passed legislation last year banning skill games, forcing their removal from thousands of establishments across the state. (And the state’s attorney general is now cracking down on new “risk-free” skill games, too.)

Skill games are also illegal in Virginia. (Although Pace-O-Matic still has games in operation there because, per The Richmonder, it believes it has created a game that gets around Virginia’s law.)

Pace-O-Matic: Regulate us, please

For their part, Pace-O-Matic “absolutely supports the regulation and taxation of skill games and has advocated for the passage of skill game legislation in multiple states for many years,” Albritton said, before adding that the main obstacle has been opposition from the retail casino sector.

In fact, Pace-O-Matic has become well-known for releasing sarcastic press releases congratulating casinos in Pennsylvania after record months of revenue — despite the presence of skill games in the state.

“There is no evidence to suggest that skill games have any negative impact on land-based or online casino profits,” Albritton said. “In fact, studies have shown that in states where skill games are operating, casino revenue growth far exceeds the national average. Therefore, we do not consider casinos competition for us because they simply are not.

“Casinos oppose skill games because they perceive them as competition, even though there is no evidence to support that this is the case. We have no issue with casinos outside of their attempts to impede on the growth of the skill game market and the passage of common-sense skill game legislation.”

Evidence to back Pace-O-Matic up

There is anecdotal evidence that the small businesses using skill game devices are happy with their results.

In May, for instance, Allied News talked with Ken Gibson, the owner of Pennsylvania supermarket chain Miele and Ken’s BiLo, which has skill games in its stores.

“As far as sales per square foot, we haven’t had anything in the grocery store that did that well,” Gibson told Allied News, adding that revenue from the games has been “a savior for a lot of small businesses.

“It’s brought us extra income. People don’t have to go to a casino. We’ve got a nice, clean, safe, secure location for people to come and play these without having to drive to Pittsburgh or wherever. Then you think of the money in the local economy.”

In 2020, a survey conducted by Harper Polling found 91% of Pennsylvania small businesses with Pace-O-Matic games in them said the games were beneficial to their businesses, and 64% said customers stayed longer because of the games.

Casino CEO: But wait, look at these numbers

Eric Hausler, president and CEO of Greenwood Racing Inc., the parent company of the two Parx Casinos in Pennsylvania, testified to the contrary in front of the Pennsylvania House GOP policy committee in May.

He presented a table showing that, since 2018, Pennsylvania casinos have seen their slot revenue only grow a combined total of 4%. Meanwhile, surrounding states without skill games have seen slot revenue increase an average of 21% since 2018.

“New Jersey slot revenues have grown 16% over that time, and it has online slots and tables just like Pennsylavnia, but no skill games,” Hausler said.

He added: “Pennsylvania is the only state in the region with skill games and the impact is clear. Slot revenues at Pennsylvania retail casinos are growing well below slot revenues in surrounding states because of unregulated and untaxed skill games.”

Expert: Skill games are here to stay

Dustin Gouker, a U.S. gambling consultant who represents a wide range of clients, including skill games manufacturers, believes skill games “are part of the wave of the present and future,” he told Casino Reports, and that these games are on the path toward regulation.

And he believes other companies outside the current skill game space may try to get involved.

“Online casino and sports betting expansion has fallen off,” Gouker said. “We have seen fantasy sports and sweepstakes rise up as legal/quasi-legal/gray market options for users in a large portion of the country that don’t have access to regulated options. And I think everyone is eventually going to be looking for ways to operate in these other states, including California and Texas, [in ways that they can’t] other than perhaps with a social casino. Skill games are a lot like these other verticals, in that they are legal at least until someone says they aren’t.

“Peer-to-peer games in all of the verticals — see FanDuel Faceoff, and the re-regulation of fantasy pick’em to allow for peer-to-peer instead of against the house — seem to be something regulators are OK with. So I think online gaming companies will be looking closely at skill games alongside the other products to see what they feel like they can offer without raising the ire of regulators.”

Other notable skill game manufacturers include Prominent Games, Skillco Gaming, Banilla Games, and Primero Games.

None of those companies responded to Casino Reports’ requests for comment.