License to skill: regulatory approaches to skill-gaming machines in Ontario

Gambling and “not-gambling” or why some slot machines are not regulated gambling products in Ontario

The heavy costs associated with licensed gambling operation make it easy to understand why companies would prefer to provide products that resemble gambling but are missing one of the legal elements of gambling over gambling products. But why are some slot machines not regulated gambling products in Ontario when what makes these “not gambling” products engaging is often the gambling mechanics. As a result, “not-gambling” products have the look and feel of gambling products and attempt to come as close to the line between gambling and not-gambling as possible without crossing that line. In other words how can some slots avoid being regulated as gambling products in Ontario.

How do we ensure that the products are “not-gambling”? In Canada, like many other jurisdictions, gambling has three elements: consideration, chance, and prize.^[1] Remove one of those elements, and you’re not providing a gambling product. Or, to continue with the verbiage in this article, you are providing a “not-gambling” product.

Skill-game cabinets in Ontario

One “not-gambling” product (or maybe it is a gambling product) that has made headlines in Ontario lately is skill-gaming machines. These machines have the look and feel of slot machines, but the game-play mechanics are designed such that the games are considered games of skill. Skill-gaming machines are physical cabinets that are placed in locations like bars, restaurants, and convenience stores.

Ontario is the largest province in Canada, hosting nearly 40 percent of Canada’s population. It is also one of two provinces (along with British Columbia) that do not have video lottery terminals in licensed establishments. Therefore, placing a “not-gambling” machine that looks like a slot machine in a licensed establishment is a high-value proposition, due to the lack of competition with slot machines and video lottery terminals.

Ontario is not the only jurisdiction dealing with skill-gaming machines. The U.S. state of Pennsylvania, for example, has been a key battleground state for skill games. Courts in Pennsylvania have determined that skill-gaming machines fall outside of Pennsylvania’s Gaming Act. Therefore, the machines are not subject to the same regulations as slot machines. As with Ontario, these machines are typically found in restaurants, bars, and gas stations. In response to the lack of regulation, a bipartisan bill was introduced in the Pennsylvania Senate in November 2025 that would regulate and tax these machines.^[2]

Back to Ontario, there have been two notable skill-gaming products available in bars and restaurants over the last few years. The Ontario regulator, the Alcohol and Gaming Commission of Ontario (“AGCO”), has taken markedly different approaches to those skill-gaming products.

Gotskill?: celebrating 10 years and counting

The first skill-gaming operator to make headlines was Pong Marketing and Promotions Inc. (“Pong”, and later “Play for Fun” or “SBG”) with its game “GotSkill?”.^[3]  Here is how the game worked at the time that Pong and the AGCO began their dispute:^[4]

Like a slot machine, GotSkill? has reels that spin to reveal prizes. However, unlike a slot machine, a player is given information about the amount of the potential next win of the machine. Using information about the potential next win of the machine, the player chooses whether to play or not. If the player chooses to play, the game proceeds through two stages.

The first stage is known as the “amusement phase” during which reels are presented to a player. If the potential win is not zero, the animation reveals a winning line combination or scatter pay.

The second stage is known as the “skill task” which consists of a cursor moving back and forth at a constant speed across an area with 21 bars. Each bar is assigned a percentage value of between 55 percent and 110 percent. Once the player presses the “stop” button, the cursor stops moving. The challenge is to stop the cursor as close to the middle of the area as possible. The closer the cursor is to the middle when it stops, the greater the percentage. If the player stops the cursor in the middle of the area, the player receives 110 percent of the player’s win during the amusement phase. The outcome of the skill task depends entirely on the player’s hand-eye coordination. Once the game is complete, the player’s “actual win” is the amount won during the amusement phase multiplied by the percentage value obtained on the skill task.

It was not disputed by the parties that the “skill task” component of GotSkill? is dependent solely on skill and not chance.^[5]

On October 20, 2017, the AGCO released Information Bulletin No. 46, which stated that (i) the parties have resolved to ask the Superior Court of Ontario to hear the application as to whether GotSkill? is legal; and (ii) the AGCO will not take regulatory action against a licensee who hosts such a game in their licensed establishment until a decision has been given by the court. If the final decision of the court is that the games cannot be legally hosted and played in a licensed establishment, the AGCO will direct licence holders to remove the machines from their premises and will allow a reasonable period for licence holders to comply. If the final decision is that the hosting and playing of the game is not contrary to the Criminal Code and/or Liquor Licence Act requirements, the AGCO will allow licence holders to host the game, if there are no other unrelated regulatory issues.^[6] GotSkill? machines continued to be available in licensed establishments.

On September 4, 2018, the Ontario Superior Court of Justice determined that GotSkill? was a game of skill, because a player who continuously obtained 110 percent on the skill task, and played through an entire run of tickets (1000 plays), would win more than they lost, and, therefore, the GotSkill? machine cannot defeat the ability of a player to obtain favourable results.^[7]

On October 10, 2018, the AGCO released Information Bulletin No. 87, informing licensees that the AGCO filed a notice of appeal with the Ontario Court of Appeal.^[8] GotSkill? machines continued to be available in licensed establishments.

On February 25, 2019, the AGCO released Information Bulletin No. 92, informing licensees that the appeal date was June 18, 2019.^[9] GotSkill? machines continued to be available in licensed establishments.

On August 8, 2019, the Ontario Court of Appeal overturned the Superior Court of Justice Decision and determined that GotSkill? was a game of mixed chance and skill (and thus not allowed to be provided in licensed establishments without AGCO approval). The Court acknowledged the finding of the Ontario Superior Court of Justice that it was technically possible for a player to consistently win more than they lost, but factors such as (i) a player not knowing when the run of 1000 tickets starts; (ii) a player not knowing that if the player changed game themes a new run of tickets would start, and the player would also not know that a run of 1000 tickets was necessary.^[10] Instead of the unlikely hypothetical accepted by the lower court, the Court of Appeal focused on the normal course of play of an “ordinary player” of the game. The chance present in GotSkill? was that players chose to spend their money for the opportunity of being able to obtain something of greater value the next time. Whether or not players have that opportunity is based on chance.^[11]

On August 9, 2019, the AGCO released Information Bulletin No. 94, notifying licensees of the decision by the Ontario Court of Appeal finding that GotSkill? was gambling, and letting licensees know they would be contacted about removal of the machines.^[12] GotSkill? machines continued to be available in licensed establishments.

On August 20, 2019, the AGCO released Information Bulletin No. 95, notifying licensees that they had until September 3, 2019, to remove GotSkill? from their establishments.^[13] After two years, GotSkill? machines would finally be removed from licensed establishments.

Except they weren’t! Information Bulletin No. 95 also informed licensees that “the developer of the GotSkill? game has made certain modifications to the game following the Court of Appeal’s decision. The Registrar has not yet come to a conclusion about the legality of the modified game. Liquor licence holders who choose to permit the operation of the modified game on their premises do so at the risk that the Registrar may determine that the modified game is unlawful gambling.”^[14] GotSkill? machines continued to be available in licensed establishments.^[15]

Play for Fun, now known as Skill Based Games Inc. (or “SBG”), modified the game to address the concerns raised by the Court of Appeal. The game was changed in the following ways: (i) instead of only the next possible win being viewable, the next five potential wins were now viewable; (ii) the terms and conditions were updated to reference the ability of players to see the next five potential wins; and (iii) players could play the skill-bar task on zero-value tickets (this was done to allow the players to practice the skill task. No tangible value was returned to the player for successfully completing the skill task).^[16]

On April 19, 2023, the AGCO released an information bulletin (by this point the AGCO had stopped numbering its information bulletins) notifying licensees that, following the unanimous decision by the Ontario Court of Appeal and a recent assessment of GotSkill? by an independent testing laboratory, the AGCO is requiring licensees to ensure GotSkill? is not played at a licensee’s establishment. Licensees had until May 15, 2023, to remove GotSkill? from their establishments.^[17] After nearly six years, GotSkill? machines would finally be removed from licensed establishments.

Except (once again) they weren’t! In an unnumbered information bulletin dated May 8, 2023, the AGCO informed licensees that SBG had filed an Application for Judicial Review with the Ontario Superior Court of Justice, and that the AGCO’s requirement that licensed establishments stop offering GotSkill? would be put on hold.^[18] GotSkill? machines continued to be available in licensed establishments.

On August 28, 2025, the Ontario Superior Court of Justice found that GotSkill? is a game of mixed chance and skill. The court was not moved by the three changes made to GotSkill? described above. Of the three changes, the only change with substance, according to the court, was increasing the number of potential next wins from one to five. The court observed that “a systematic resort to chance can exist if a player must play a round, regardless of the prize, to discover the prize in a future round.^[19]

The AGCO has not released any information bulletins related to the decision. SBG applied to the Ontario Court of Appeal for a stay of the declaratory judgment by the Ontario Superior Court of Justice that GotSkill? is a game of mixed chance and skill, including with respect to the April 23, 2023, information bulletin requiring liquor licenses in Ontario to ensure that GotSkill? is not operated in commercial establishments. On October 8, 2025, the court dismissed the appeal but ordered an expedited hearing of the appeal from the Ontario Superior Court of Justice. The current date set for the appeal is January 9, 2026.^[20]

Prime Skill: not given the same (mixed) chance (and skill)

Compare the GotSkill? saga to a more recent approach taken by the AGCO against a different skill-game provider, Prime Skill Games (“Prime Skill”). Prime Skill’s skill-gaming machines look like slot machines, except that the result of each game can be known to a player by successfully solving a mathematical equation. A player can see up to 1000 results in advance by solving equations. Further, there is always a winning play available to players, which is discoverable by solving equations for each game and game play amount. Prime Skill Games were available in bars, restaurants, and convenience stores.

Unlike with GotSkill?, where the AGCO agreed with Pong/Play for Fun/SBG to let the courts decide the legal status of the games (and allow the games to be played in licensed establishments until a decision was reached), the AGCO’s in house testing lab assessed Prime Skill’s games by playing the games, reviewing the gaming system architecture and source code, and examining the game play, flow, logic, and player options. The testing lab, likely in conjunction with the AGCO’s legal team, determined that the game provided by Prime Skill was a game of mixed chance and skill.

The AGCO only has authority over regulated entities and, therefore, does not have authority over Prime Skill, because Prime Skill is not registered with the AGCO. Therefore, the AGCO focused on its licensees (bars and restaurants are liquor licensees, convenience stores may be lottery and potentially liquor licensees) that placed Prime Skill games in their locations. AGCO inspectors were sent to various locations with Prime Skill machines and performed inspections.

On July 17, 2025, the AGCO put out an unnumbered news release (“news release” is the new name for the information bulletin) announcing that it took steps to revoke the lottery seller registrations of retailers in the Greater Toronto Area that were “found to be offering unapproved electronic gaming machines under the Prime Skill brand”.^[21]

The AGCO conducted enforcement actions on locations with Prime Skill’s games, issuing 42 Notices of Non-Compliance and 11 Notices of Proposal to Revoke. A Proposal to Revoke means that the AGCO will no longer allow an establishment to serve alcohol, or, in the case of convenience stores, to sell lottery products and alcohol.

On September 26, 2025, the AGCO put out an unnumbered news release announcing that more than 50 “Prime Slots” machines had been removed from liquor-licensed and lottery retail establishments.^[22] GotSkill? machines were not mentioned in the news release.

Where are they now?

Prime Skill has stated that it intends to provide the legality of its machines and the integrity of its operations “through every available means, whether through legal documentation, expert analysis or, if necessary, before the courts.”^[23] It has filed a Notice of Application with the Ontario Superior Court of Justice, and a case conference is scheduled for May 29, 2026.^[24]

Meanwhile, on GotSkill?’s website, there is a post from April 2025 celebrating 10 years of GotSkill?.^[25] We are not aware of any licensees facing consequences due to hosting GotSkill? Games.

Eleven businesses are facing the removal of alcohol and lottery services due to having Prime Skill games at their location, which are critical to their survival. The AGCO’s decision to issue Notices to Revoke, instead of, for example, providing licensees with an opportunity to remove machines, prioritized deterrence over the commercial well-being of the restaurants, bars, and lottery retailers, who were likely under the impression that the games in their establishments were games of skill and, therefore, legal.

The AGCO’s approach with SBG was collaborative, and it resulted in the availability of GotSkill? Games for approximately eight years after the initial Information Bulletin. The AGCO’s approach with Prime Skill was to sanction licensees who had Prime Skill games in their locations, including by issuing Notices to Revoke. With no official statement on the subject, we can only speculate as to why the AGCO took such radically different approaches in these two cases. Looking at how the GotSkill? matter played out, it’s reasonable to assume that the regulator wanted to avoid another eight-year bout of tangling with skill-gaming operators in the courts. Regardless, it is in all stakeholders’ interests to carry the lessons from GotSkill? and Prime Skill forward to establish a framework for addressing “not-gambling” machines that is collaborative and deterrence-focused.

Jack Tadman is Principal at GME Law in Toronto. You can read his other articles for IMGL here and discover articles on a similar theme here.

[1] See for example R. v. Robinson (1917), 29 C.C.C. 153 (Sask. C.A.).

[2] Pennsylvania Senate Bill 1079, An Act providing for skill video gaming; imposing duties on the Department of Revenue; providing for issuance of licenses for skill video gaming; imposing a fee and criminal and civil penalties; and providing for zoning, retrieved from https://www.palegis.us/legislation/bills/text/PDF/2025/0/SB1079/PN1301, November 14, 2025.

[3] The AGCO Information Bulletin describes the game as being provided by Pong. See here: https://www.agco.ca/en/news/info-bulletin-no46-legality-got-skill-game-licensed-establishments  The applicant in the court case was Play for Fun Studios Inc. (“Play for Fun”), and later became Skill Based Games Inc. (“SBG”).

[4] Play For Fun Studios Inc. v. Registrar of Alcohol, Gaming and Racing, 2018 ONSC 5190.

[5] Ibid.

[6] AGCO, Info Bulletin No.46 – Legality of “Got Skill” Game in Licensed Establishments, https://www.agco.ca/en/news/info-bulletin-no46-legality-got-skill-game-licensed-establishments, retrieved November 17, 2025.

[7] Supra note 4.

[8] AGCO, Info Bulletin No. 87 – Got Skill Game in Licensed Establishments: AGCO appeals Superior Court decision, https://www.agco.ca/en/news/info-bulletin-no-87-got-skill-game-licensed-establishments-agco-appeals-superior-court, retrieved November 17, 2025.

[9] AGCO, Info Bulletin No. 92: Got Skill Game in Licensed Establishments: UPDATE – AGCO to Ontario Court of Appeal – June 18, 2019, https://www.agco.ca/en/news/info-bulletin-no-92-got-skill-game-licensed-establishments-update-agco-ontario-court-appeal, retrieved November 17, 2025.

[10] Play for Fun Studios Inc. v. Ontario (Alcohol and Gaming Commission of Ontario) , 2019 ONCA 648 (CanLII), at para 31.

[11] Ibid. at para 26.

[12] AGCO, Information Bulletin 94 : Got Skill Game in Licensed Establishments: UPDATE, https://www.agco.ca/en/news/information-bulletin-94-got-skill-game-licensed-establishments-update, retrieved November 17, 2025.

[13] AGCO, Information Bulletin 95: Removal of Got Skill Game in Licensed Establishments required by September 3, 2019, https://www.agco.ca/en/news/information-bulletin-95-removal-got-skill-game-licensed-establishments-required-september-3, retrieved November 17, 2025.

[14] Ibid.

[15] Play for Fun appealed to the Supreme Court of Canada. On March 5, 2020, the Supreme Court dismissed that appeal.

[16] SBG-Skill v. Registrar, Alcohol and Gaming, 2025 ONSC 4938, at para 11.

[17] AGCO, AGCO requires liquor licensed establishments in Ontario to stop offering GotSkill gambling machines on their premises, https://www.agco.ca/en/news/agco-requires-liquor-licensed-establishments-ontario-stop-offering-gotskill-gambling-machines, retrieved November 17, 2025.

[18] AGCO, Update on GotSkill Machines in Liquor Licensed Establishments, https://www.agco.ca/en/news/update-gotskill-machines-liquor-licensed-establishments, retrieved November 17, 2025.

[19] Supra note 15 at para 21.

[20] SBG-Skill Based Games Inc. v. Ontario (Alcohol and Gaming Commission), 2025 ONCA 692.

[21] AGCO, AGCO takes action to remove unapproved gambling machines from Ontario convenience stores,  https://www.agco.ca/en/news/agco-takes-action-remove-unapproved-gambling-mach,,ines-ontario-convenience-stores, retrieved November 17, 2025.

[22] AGCO, AGCO continues crackdown on illegal gaming machines: over 50 devices removed after province-wide sweep, https://www.agco.ca/en/news/agco-continues-crackdown-illegal-gaming-machines-over-50-devices-removed-after-province-wide, retrieved November 17, 2025.

[23] Canadian Gaming Business, Prime Skill Games challenges AGCO after Toronto-area machines removed, https://www.canadiangamingbusiness.com/2025/07/21/agco-removes-unapproved-gambling-machines/, retrieved November 17, 2025.

[24] Prime Skill Games Inc. V. Alcohol and Gaming Commission Of Ontario, Case Number

Cv-25-00750354-0000

[25] SBG, Canadian skill-based games company celebrating 10 years of business and service within Ontario’s hospitality sector, https://www.gotskill.ca/post/canadian-skill-based-games-company-celebrating-10-years-of-business-and-service-within-ontario-s-hos, retrieved November 17, 2025.