Poll: Does the social gaming sector need to be regulated?
Is social gaming regulation likely to be introduced and is it necessary?
Despite rumours that the UK Gambling Commission is considering regulating the social gaming market in the same way as real-money gambling being quashed by the authority last week, there have been suggestions that stricter controls are both necessary and inevitable.
Last week the Commission’s corporate affairs officer James Cook told eGaming Review: The key question for the Commission is whether or not a gambling-style product on a social gaming website is gambling as defined under the Gambling Act 2005 “ more often than not it isn’t,” suggesting that there are no current plans to introduce legislation.
The official justification for the Commission’s stance is that the 2005 UK Gambling Act denotes “gambling” or “games of chance” as games played in order to win a “prize,” which is in turn defined as “money or money’s worth, and includes both a prize provided by a person organising gaming and winnings of money staked.” Currently social games do not offer the option to cash out, despite players depositing real money in order to buy virtual goods and chips.
The key issue is whether these virtual goods or chips can be considered to have monetary value, something which Ivor Jones of Numis Securities believes is open to interpretation: “When to comes to virtual currency, if I want to buy more of can I do so? Yes. Is there a direct conversion rate between real money and virtual currency? Yes. Is virtual currency denominated in a real-world currency? Yes. The only thing that makes it not money is the inability to cash out.”
This is supported by media law firm Wiggin’s head of computer games Nav Sunner, who explained that the current interpretation favours social gaming operators: “”Currently the law is falling on the side that playing a virtual poker game on Facebook for Facebook Credits is not gaming for the purposes of the Act.
“The other element is that the ‘virtual coins’ that are won in the game are not transferable outside the game or games from the same producer,” he said.
One of the key aims of real-money gambling regulation is to monitor and fight problem gambling and addiction, and last week UK newspaper The Daily Mail highlighted two instances of people over spending on social gaming sites, with one individual said to have spent US$13,500 (£8,500) playing on an unnamed site, and a 12 year-old schoolboy losing £7,000 on real-money poker, having been introduced to the game on freeplay sites.
Currently it is unclear whether the Gambling Commission is responsible for cases of problem gambling linked to social gaming sites, but founder and CEO of social operator Plumbee Raf Keustermans explained that the inability to cash out effectively helps prevent gambling addiction from developing:
“There are different phases to gambling addiction problems developing. The biggest trigger for gambling addiction, the point where it becomes a major issue, is when people start chasing their losses. People start putting in more money to try and cover their losses, wasting savings, stealing from employers.
“Obviously that vicious cycle is broken if you have no cash-out. I’m not saying there is no potential issue where people overspend, but people do the same in Farmville, or even for hobbies like golfing,” he explained.
So while the danger of players overspending in social games is very much present, there seem to be no plans to introduce regulation as yet. But with the sector’s growth continuing, and more and more players spending money on the games, it seems that with changes in the tax rate on gambling operators coming in the next few years changes to the Gambling Act may well be introduced, bringing social gaming under its control.
It is already on the Commission’s radar, with corporate affairs manager John Travers telling The Mail on Sunday: “We are monitoring developments and assessing any wider implications for licensing objectives,” before going on to say that social gaming was “at the perimeter” of current legislation.
What do you think? Is social gaming legislation likely to be introduced, and should the sector be regulated? Have your say by voting on the right hand side of the page, or visiting the eGaming Review Linkedin group.