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Should Social Casinos Be Regulated Like Real Money Online Casinos?

December 19, 2016 — by Industry Contributions

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ContributionsIndustry

Should Social Casinos Be Regulated Like Real Money Online Casinos?

December 19, 2016 — by Industry Contributions

By partycasino

Social gaming has been an interesting innovation for the gambling industry, with many gambling operators finding profitable sidelines in social games. Operating in a similar way to real money online casinos, they offer a variety of games for players to participate in, generally with some social reward or points tally in return for successful gameplay.




mobile-casinoUnlike online casinos, social games differ in a number of key ways. They don’t tend to offer a straight financial reward, like you’d expect from winning a blackjack hand. But they do still often accept deposits from players, and use this to fund play which translates into social awards. These games are money spinners for social casino operators, and are proving increasingly popular with certain player demographics.

As an innovative twist on the established online gambling model, there are invariably questions about how this should be interpreted legally. Should these social games, which still take payment from players, be considered as gambling, and regulated accordingly? Or are they better regulated as non-gambling games?

With the rise of social gaming, the Gambling Commission looked into this issue, publishing a white paper on social gaming in 2015. It identified three potential risks from social gaming - Problem Gambling (i.e. individuals spending too much money on these games), Transitional Risks (i.e. increased likelihood of participation by young people in real money gambling) and Consumer Risks (i.e. scams through social gaming platforms). Let’s tackle each of these in turn, and see whether the same regulation as applies to gambling may be required for social gaming.

Problem Gambling

The Gambling Commission is tasked with regulating gambling activity in the UK. In some respects, games that accept deposits are open to some of the same risks as gambling games, as far as problem gaming is concerned. But there are fundamental differences. When people are gambling, they consciously do so to win money. Nobody hopes to gamble to lose money, and when gambling becomes compulsive, it’s usually as a result of the emotional highs and lows that come from playing for money.

With social gaming, the financial element isn’t so much of a motivation for the player. Instead, it’s more about winning more points, scaling the leaderboard, or earning levels of recognition, with money being a tool to help them along their way. This isn’t as strong a draw as for gamblers, where the size of the deposit potentially determines the scale of any winnings or losses. While there are no doubt risks to some players from over-spending on these games, they seem less potent than in pure gambling products.

While there are no doubt risks to some players from over-spending on these games, they seem less potent than in pure gambling products.

It’s also worth considering whether social gaming is actually gambling at all, and consequently whether there should be any regulation on these grounds. Because there is no money to be won, and often player deposits are used to unlock game features or make it easier to progress, social gaming as a genre seems to even lack the basic ingredients of a gambling product, which would suggest it’s a step too far for gambling industry regulation.

Transitional Risks

phone-online-casinoTransitional risks are generally framed around young players, who take part in social gaming as a gateway to real money gambling games. Again, this seems to be a stretch, in terms of whether there are any transitional risks at all, and whether those risks should in any way be seen as a cause for regulation. Players who engage in social gaming are in a different mindset from players who enjoy casino gaming, and the demographics are often pretty different, so it doesn’t seem intuitive that players would transition from social gaming to real money gambling if they didn’t want to.

That’s not to suggest there should be no regulation - but rather, there are fundamental differences between the types of games, and the types of rewards in social gaming vs. online gambling that just don’t tally.

Consumer Risks

Consumer risks is one area where there seems to be common ground. As with any online transaction, there is always the potential for scamming, or for individuals to misrepresent at the expense of innocent players. Transactions should be fair and secure, and it’s important to enforce this to protect consumers’ interests. On this basis, it would seem like some consumer regulation and protection may be useful, but this should be distinct from regulation focusing explicitly on the gambling sector.

Social game operators should of course be held to the highest consumer standards, and regulation may be necessary to prevent rogue elements from capitalising on social gamers. But it is hard to link this to gambling, when the player intention and gameplay are so different. There are foreseeable consumer risks posed by social gaming, but they are different to the consumer risks facing those playing real money casinos online.




There are foreseeable consumer risks posed by social gaming, but they are different to the consumer risks facing those playing real money casinos online.

It’s important to ensure the games are fair and transparent, and not in any way misleading players as they deposit. As long as players understand that they are trading real money for virtual or social credit, and they do so on a fair basis with a legitimate game provider, these consumer risks can be effectively managed without the need for a heavy handed regulatory framework.

So Should Social Gaming Be Regulated?

So it seems like social gaming is pretty different to casino gambling online. But there are compelling arguments for a similar system of regulation, if not a distinct framework, to protect consumer interests and ensure the games are as fair as possible. Look at games like the Candy Crush series for example. Finding a distinction between these games and slot games is not obvious, in terms of the gameplay, the visuals and the mechanisms that drive game rewards. And while the risks are different to those faced by some online gamblers, they are not trivial.

The best approach would seem to be a halfway house. If further regulation is required at all, it would have to be separate from online gambling regulation, in recognition of the considerable differences between these two types of online gaming.







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