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Monday, June 6, 2016

Is It Gambling, Skill Or Play For Fun? "The Confusing Intersection Of Fantasy Sports, Social Casino, Skill Gaming And Traditional Gambling"

I have to believe that at this juncture a person, business or regulator entering the US online gaming space must be totally confused as to what is "real" gambling and what is not and what is regulated and what is not. Even for a veteran of the online gaming space the world has become confusing, if not downright contradictory and perhaps even a bit strange.  The traditional definition of "gambling" has been "an activity that involves three elements; "chance", "consideration" and "prize". In a a game of "chance" a players' knowledge and acumen are not factors in the outcome of a game. However, this definition has been stretched by the advent of virtual currency, skill gaming and fantasy sports creating a bit of confusion over what is or is not gambling.

Even before the advent of the "skill" game category people have argued that poker and blackjack are skill games and not games a chance. The dictionary definition of skill actually identifies poker as a skill game. "poker is a game of luck and skill"!!  Despite this definition  poker and blackjack retain their "gambling" status. Fantasy Sports has further complicated the  gaming universe making for an even more confusing world of conflicting and perhaps misleading notion of what is or is not fun, gambling, skill or "other". Fantasy sports is "categorized" as a skill gaming yet "unregulated".

  Facebook And Social Casino - Confusion over what is or is not gambling intensified with the launch of gambling game content in social networks. The first real challenge to the notion and definition of online gambling started in 2009  when "social" casino entered the scene in the form of Facebook games  leveraging Facebook "credits"  as a wagering currency. These games allowed  game/gambling publishers to launch gambling style games in the Facebook environment without being subject to a "regulatory" process or regime.  Facebook "virtual" currency credits could be purchased but not redeemed allowing game developers. operators  and Facebook to  circumvent the traditional  "prize" element of online gambling law.    The term "social" became attached to any gambling style games that used virtual currency as a transaction currency. The term "social casino" has now extended beyond Facebook  gambling style games and includes all "gambling" style games played on mobile and web that are either freemium(no virtual currency) or virtual currency based. Essentially, no "cash" payout and no social network required.

Fantasy Sports - Coincidentally, and perhaps serendipitously "fantasy sports" entered the scene in 2009 as well with the launch of FanDual and eventually the launch of DraftKings fantasy sport businesses. One of the factors leading to the creation of fantasy sports is the fact that "traditional" online sports wagering is considered illegal in the US.    In  Europe online sportsbook is legal and a very successful business model.    Interesting to note is that wagering in fantasy sports is with "real" money and not with virtual currency. Thus, North American fantasy sports operators are not much different then their European "real" sportsbook cousins.

Legal US Online Gambling - Further complicating the online gaming/gambling world is that  states such as New Jersey, Delaware, Nevada, etc. are offering  regulated  gambling content online. This market is estimated to grow to 5.2 million in 2020!!

Land Based Casino's  - US land based should also get a mention here as it is apparent that the online online gambling has not impinged on their revenue and growth. In 2014 the land based casinos  raked in 34 billion dollars in revenue!!   Players are engaged in both venues.  There are US land based casino operators that still fear the impact of legal online gambling even if there is no proof that online gambling has any negative impact on land based casino businesses. It could be argued that operating a land based and online gaming/gambling business may actually improve revenue and traffic for both forms of gaming/gambling. 

The complex and evolutionary nature of US online gaming  and online gambling regulation has created a confusing, and  complicated collection of laws, regulations, definitions and business models. The most recent ascent  of "fantasy" sports has made the environment even more confusing.

 Despite, the confusing and contradictory nature  of regulations and the lack of regulation gaming and gambling sectors of all kinds continue to grow and thrive.  Consumers continue to seek out   gambling style content no mater what the wager is the payout is. However,  The desire to "gamble accompanied by confusion over what is legal and what is not  has  given rise to very robust and successful "illegal" online gambling business sector  targeting US players. To date these offshore sites have peddled their businesses in a clandestine fashion. Despite this marketing approach they have grown successful offshore businesses targeting US players.

 The complexity of  the  online gambling/gaming  space combined with the continued demand by consumers for gaming/gambling begs the question; Should "gambling/gaming" of any format that involves "wagering" be folded into a singular regulated regime or should all regimes be deregulated with the exception of "problem gambling" legislation?  This is certainly a question that is worth answering yet very challenging from a practical perspective. Certainly the ultimate goal for regulation is the protection of citizens. However, if the laws are contradictory and confusing then the laws themselves lose their value and the respect of the citizens they protect.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.

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