A 7-Eleven franchise owner is suing Philly City Council over a bill to ban casino-style ‘skill games’

Stores with casino-style “skill games” may not have to get rid of the popular machines after all.

City Council last week approved legislation to ban casino-style “skill games” that have been proliferating in Philly convenience stores. But the bill is now being challenged in court.

Tariq Jalil, the owner of a 7-Eleven franchise in South Philly that hosts a gaming machine, and G&B Amusements, a skill game operator, filed a lawsuit last week in the Philadelphia Court of Common Pleas seeking to have the bill ruled unconstitutional. The litigation effort was organized by Pace-O-Matic, a Georgia-based manufacturer of the games, although the company is not a direct party to the lawsuit.

Councilmember Curtis Jones Jr., who authored the bill, said that the games, which are unregulated, attract crime and have become nuisances for many neighborhoods.

Matthew Haverstick, a lawyer for Pace-O-Matic, said the games are an important revenue source for the stores, which receive a percentage of the revenue they produce.

“They’re not crime magnets,” Haverstick said. “These are typically small businesses that survive on really thin profit margins.”

Courts have ruled that gaming machines with cash payouts are legal if users win primarily through skill, as opposed to chance. There are estimated to be tens of thousands across the state.

Jones’ bill, which is awaiting Mayor Cherelle L. Parker’s signature, would ban businesses from having them. It exempts businesses with casino licenses, private membership clubs, and bars or restaurants with at least 30 seats.

“The gaming industry has powerful lobbyists with deep pockets,” Jones said Thursday. “We’ll be sued by the industry, but we will not accept the status quo. Not anymore.”

Democratic Gov. Josh Shapiro recently proposed taxing and regulating the industry on the state level. If approved, that would likely supersede Jones’ measure.

Pace-O-Matic is seen as the dominant manufacturer of skill games in Pennsylvania. The company does not disclose how many of its machines are in the city and where they are, Haverstick said.

Pace-O-Matic wants to differentiate its products, which have been declared legal by Pennsylvania courts and which he says are not gambling devices, from those of other makers, some of which are potentially illegal because they are effectively gambling devices.

“We take the welfare of the city seriously and agree with Council members that the number of illegal gambling machines cropping up in Philadelphia locations is a problem,” Pace-O-Matic spokesperson Mike Barley said. “A ban that includes legal skill games, however, is not the answer. It will only jeopardize the livelihoods of many city small businesses.”

The lawsuit followed a breakdown in negotiations with Jones, Haverstick said. The Council member had given the company a list of 10 locations in his district where he said games were causing issues. Haverstick suspected they were illegal games made by other companies.

“We thought we were engaging in some progress. We had plans to visit some of these locations,” he said.

Then Jones unexpectedly called his bill up for a vote, Haverstick said.

Jones said he’s hopeful that the state will step in sooner than later.

“We hope that what comes out of this is that Shapiro will take our lead and actually do something at the state level,” he sad.

Staff writer Anna Orso contributed to this article.