Pennsylvania is one of the bigger gambling markets in the US. The Pennsylvania Gaming Control Board recently reported record revenues of $6.8 billion in 2025. That was the fifth year in a row of record revenues, and it resulted in just shy of $3 billion in taxes for the Keystone State’s coffers. That continued growth has been driven primarily by the state’s online casino market, but sports betting and land-based casinos also contributed significantly. However, this growth has not gone unnoticed by politicians and lobby groups.
Now into 2026, Pennsylvania’s regulators and lawmakers are considering several big changes to the market. As this year’s legislative session continues, issues such as sports betting tax rates, the spread of “skill gaming” machines, and the growth of prediction markets are all subjects of discussion and potential action from lawmakers in Harrisburg.
Authorities Still Aren’t Happy with So-Called “Skill Game” Machines
Any PA local will have seen these slot-like machines in gas stations, bars, and convenience stores across the state. They look like slots, but players have to take the (not difficult) extra step of correctly identifying a winning line after the payout. This, the makers have argued, makes them legal. And for a long time, that argument has held up in courts, and these unregulated machines have been widely seen around the state.
Players who want to ensure they only use casino platforms regulated and licensed in Pennsylvania can browse online resources listing and reviewing all state-approved online casino operators. Expert opinion and reviews can also help players find the casinos with top-tier reputations, as well as game collections from globally respected providers.
Governor Josh Shapiro tried to include provisions for regulating and taxing these competing “skill games” in his 2025/2026 budget, but it fell to the side during the long negotiation process on the final package.
On the other side, the final appeal court case of the state against Pace-O-Matic – the largest developer of such skill games – could see a decision from the Pennsylvania Supreme Court. If it denies the appeal and continues to certify them as not breaking the law, the Governor’s path to regulating and taxing them could be clearer.
Lawmakers Could Look to Increase Sports Betting Taxes Again
In late 2025, there swirled many rumors that – after a months-long impasse on the 2025/26 budget – legislators could be looking to get in last-minute provisions for extra taxes on sports betting. That move didn’t materialise in the end, but several politicians have confirmed they’re still interested in the idea.
Other states have increased betting taxes in recent years. That included a doubling of the initial sports betting market tax in Ohio and a unique per-bet tax introduced in Illinois.
On the flipside, there is opposition to any tax increases from sports betting operators. Pennsylvania has some of the highest taxes and licensing fees for gambling operators of any US state, with sportsbooks paying 36% of revenue. The only state with higher sportsbook taxes is the nation’s largest market, New York.
When the rumors reached peak before the November 2025 budget sign-off, industry groups reportedly readied $10 million to spend on a PR and lobbying campaign against the move. But in the end, it wasn’t needed. Although it remains a distinct possibility, no mention of sports betting taxes was found in Governor Shapiro’s recent press release regarding the proposed 2026/27 budget.
Sportsbooks point out that the sector is uniquely volatile, depending on sporting results, and margins can be tight, and they wouldn’t rule out passing the cost of tax increases onto customers.
State Regulators May Have Challenges for Prediction Markets
The rise of prediction markets – a hybrid financial trading platform that essentially lets customers put money down on the results of almost anything (including sports) has been much documented across the US in the past two years.
Platforms like Kalshi and Polymarket claim they’re not sports betting. Yet sports “contracts” are a key part of their revenue drivers, and prediction markets have gone from niche academic interest to millions of customers and revenues in the billions per month.
This is a national point of debate, but Pennsylvania’s authorities seem to feel they should stand on it. Or at least, the Pennsylvania Gaming Control Board does.
Control Board Executive Director Kevin F. O’Toole said he believes they fall under sports betting regulation and that the Commodity Futures and Trading Commission cannot regulate the platforms to the same standards as state-based regulators with years of experience.
In October 2025, the regulator sent a letter to Pennsylvania’s federal representatives asking them to urge the CTFC to look into allowing states to individually decide the legality of prediction markets.
Some states have gone as far as to legally challenge or send cease and desist letters to prediction market operators. But most of these moves have proved ineffectual, as they’re currently considered federally regulated under the CFTC, putting off other states from joining in.
O’Toole also warned the state’s licensed sportsbooks that he would take a dim view of companies that launched prediction markets in PA when it comes to renewing licenses. Both leading US sportsbooks, FanDuel and DraftKings, have scrambled to launch their own prediction markets in half a dozen states over the past year, but not in Pennsylvania.
