Why not? If my memory serves me correctly the online game Travian was initially made in PHP.
Sure making game in PHP would present some limitations since PHP is more suited for developing dynamic web pages but still it can be done.

Any way if you are interested in making web based games then I suggest you check HTML5. Why? HTML5 is much more powerful than PHP and even allows you to render complex graphics using WebGL.
And if you are versed in Object Pascal you may want to check Smart Mobile Studio (http://smartmobilestudio.com/) which is a specially designed IDE that allows converting/compiling Object Pascal code into HTML5 code.
And yes there have even been some games developed by it. Unfortunately I don't remember their names.