Category Archives: Illegal Gambling

UPDATE: Gambling-esque Loot Boxes in Video Games Face Regulatory Measures & Studies from Governments like Hawaii and Private Companies like Apple, but are they Actually Harmful?

Casino Watch Focus has reported on the newly covered, gambling type video game items known as loot boxes. The boxes are purchasable in a video game and they provide random loot, or in game merchandise, much like a slot machine. This system of microtransactions came to light because EA pushed the envelope so far in their new Disney licensed Star Wars video game, that the only way to truly progress in the game or have the tools to win was to buy these loot boxes and gamble on the items you would get. The system is designed for the player to buy boxes, open them and chase after the best loot. Players pushed back, mainstream media picked up the issue, Disney had to get involve and make EA pull the gambling system from the game and legislators started looking into the issue. Hawaii legislators came out very strongly against the idea of exposing children to such psychologically manipulative, gambling type systems and called the game a Star Wars themed online casino. Its no surprise that a few weeks later and Hawaii legislators are now drafting legislation and working with other states and the industry itself to regulate the issue.   Gaming publication Kotaku reports:

A Hawaii in which games with microtransactions are illegal for minors to purchase is one that state legislator Chris Lee is now hoping to realize. He says that prohibiting the sale of games with loot boxes is a “no-brainer,” and along with a dozen other politicians, he says, he’s thinking of how to put legal controls around video game microtransactions. 

Over the course of a few months, Lee had been hearing from local teachers about kids who struggled with the temptation to spend beyond their means in game microtransactions. Lee cited one conversation about a kid who, he heard, had stolen their parents’ credit card to pay for their gaming habit. He says several families reached out about spending thousands of dollars on microtransactions.

“Gambling has been illegal especially for minors and young adults because they are psychologically vulnerable,” he told me, adding that kids “often don’t have the cognitive maturity to make appropriate decisions when exposed to these kinds of exploitative mechanisms.” 

“There’s no transparency at the outset of what they’re getting into,” he said. “That’s something I think is a real concern.” Now, Lee is working to prevent the sale of games containing loot boxes to gamers under 21 in Hawaii. He also wants games to disclose up-front whether they have “gambling-based mechanics” and to publicize the odds of winning various items in loot boxes.

Apple Inc. certainly agrees with Lee that the odds of winning various items need to be disclosed to gamers. Falling in line with what other foreign governments like China Korea, Apple is now requiring game companies to publicize the odds. Venture Beats explains:

Apple quietly updated its rules for developers yesterday with a new version of its App Store Review Guidelines, and it now requires that developers disclose the odds of getting cool loot in the loot boxes for free-to-play games.

Loot boxes have become a big monetization opportunity in free-to-play games, but they’re also controversial, as Electronic Arts’ discovered with tying loot crate purchases to unlocking desirable characters like Darth Vader in Star Wars: Battlefront II. Gamers revolted, and EA backed off. Government officials also started to step in to say that loot crates should be regulated, as they can be perceived as ripping off consumers or even as gambling.

Apple is clearly trying to get ahead of any regulatory problem by requiring that developers now disclose proper information.

But those in the gaming industry don’t believe loot boxes are gambling. Not only have individual companies gone on record to say they are perfectly fine, the ESRB, the self-regulated industry body who labels games by age range, came out and said they didn’t believe they were gambling and they certainly haven’t proposed any regulatory measures to help protect consumers against the predatory nature of microtransactions. Those fighting against loot boxes aren’t simply looking at antidotal evidence either. The UK’s Gambling Commission just released a report with rather shocking evidence of children as young as 11 being preyed upon and possibly lead into gambling addiction. Dr. Mark Griffiths, Professor of Behavioral Addiction at Nottingham Trent University explains:

Last week, the Gambling Commission’s annual report found that children as young as 11 years of age are “skin gambling” online – paying money for the chance to win in-game virtual items. But this, while alarming, is just the tip of the iceberg.

It’s the terrifying phenomenon of “loot boxes” that are the most worrying and potentially dangerous aspect of e-gaming for children right now. “Loot boxes” are everywhere – they are otherwise known as crates, chests, cases, bundles, and card packs.

In FIFA Ultimate Team, for example, players can purchase gold, silver or bronze card packs, either using in-game currency or real money, in the hope of getting their hands on top talent to improve their teams. But there’s no guarantee of landing A-listers like Ronaldo or Messi – the cards won’t all be star players and will more likely be less valuable collectables.

The issue is that the buying of crates or loot boxes is a form of gambling because players, often children, are being asked to buy something of financial value that could end up being of lower financial value than the amount they paid. 

The good thing is parents are now hearing about things like “skin gambling” and “loot boxes” but children also need to be educated about these activities as much as drinking, drugs or the risks of underage sex. Parents need to get to grips with what is going on in their children’s worlds.

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION

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Florida goes after Pari-Mutuels as it Seeks to Enforce Designated-Player Card Games Ruling

Casino Watch Focus has reported on the ongoing and developing situation regarding designated player banked card games. This form of card game was offered for four years before its legality was challenged. Last year, however, the court determined the games to be illegal and a violation of the Seminole Compact which outlined exclusive card games at Seminole casinos. As recently reported by Casino Watch Focus that ruling is being challenged in appeals court and is set to be heard next month. In the mean time, swift enforcement has begun to stop these illegal card games. An online source explains:

Florida gambling chiefs have launched legal action against two pari-mutuel venues, the Sarasota Kennel Club and Pensacola Greyhound Racing, for their alleged failure to remove so-called “designated player games” from their premises.

Meanwhile, many of Florida’s other cardrooms and racetracks are bracing themselves for similar action, as the state moves to crack down on the controversial games.

This action is especially important given litigation was dropped by the Seminole’s in exchange for the state agreeing truly enforce the courts ruling. The online source continues:

The case had initially been brought by the State against the Seminoles for their refusal to stop offering banked games once their initial five-year compact expired in 2015. But the tribe countersued over the exclusivity violation, forcing the state into a humiliating retreat. In July, both parties agreed to an end to litigation and the state vowed it would take “aggressive enforcement action” against pari-mutuels that violated the ban on the games it had previously permitted.

Nick Iarossi, a lobbyist for Jacksonville Greyhound Racing, told Sunshine State News that the state’s actions this week show it intends to live up to its word. “They’re going to come in. They’re going to check tape. They’re going to watch games being played live. And if they see anything out of compliance being done, they’re going to issue administrative complaints and fines,” he said. “So everybody is double- and triple-checking to make sure they’re in compliance.” 

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION


March Madness Brings Illegal Gambling and Hardships for Addicted Gamblers

Casino Watch Focus has reported on the ongoing problems that come with the NCAA March Madness tournament each year. Millions is lost to employers through a decline in work place productivity and people continue to gamble away money at unprecedented rates. Most of this gambling is illegal and this year the trend continues. ESPN provides some analysis: 

Americans are expected to complete 70 million NCAA tournament brackets this year, risking on average $29 per bracket and contributing to the $10.4 billion that will be bet overall on March Madness, according to estimates released Monday by the American Gaming Association.

The $10.4 billion expected to be bet on the tournament includes popular office pools and is up 13 percent from last year’s tournament, the AGA says. Only a small fraction of the money bet on the tournament, around 3 percent, is believed to be wagered legally in the United States. The bulk of the remaining $10.1 billion is placed with offshore sportsbooks and local bookmakers, according to the AGA, which represents the U.S. casino industry.

The NCAA remains steadfast on its objection to gambling on the Tournament. They not only understand the hardships it places on addicted gamblers that cant control the shear volume of risk and loss the can suffer, but they also understand the impact to the integrity of the games at play. ESPN continues:

While gambling on the tournament grows, the NCAA remains opposed to all forms of sports betting — legal and otherwise — and believes it has the potential to undermine the integrity of the games and negatively impact the welfare of student-athletes.

 The legality of such gambling continues to be a prominent issue this time of year as many people view office pools as harmless fun. Unfortunately, its anything but and its almost always illegal gambling. ESPN explains:

“Generally, if the office pool charges a fee for entering the pool and awards prizes to the winner(s), then there is a serious question as to its legality. Some states exempt small pools from their gambling laws and regulations,” said Washington, D.C.-based attorney Steven Eichorn of Ifrah Law.

Sports betting is currently legal in only a handful of states, with Nevada the only state permitted to offer single-game wagering, the most popular form. The Nevada Gaming Control Board does not track the amount bet on the NCAA tournament separately, and combines the NBA and college basketball into one “basketball” category on its monthly revenue reports. The spike in action from March Madness is easy to see, though.

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION


Billions in Illegal Gambling on Super Bowl comes with Serious Consequences for Many

Casino Watch Focus has reported on the significant amount of gambling on the Super Bowl each year, and each year the impact seems to grow. This year the amount of total gambling on the Super Bowl is estimated to be around $4.7 million. An online source breaks that number down:

Americans will bet $4.7 billion on Super Bowl 51 between the New England Patriots and the Atlanta Falcons, according to an estimate released Tuesday by the casino industry’s top lobbying group on Capitol Hill. That would 11 percent more than what was wagered on last year’s Super Bowl.

According to the American Gaming Association, only $132 million of the $4.7 billion will be done legally through Nevada’s casino industry. The 1992 Professional and Amateur Sports Protection Act banned traditional sports betting outside of the Silver State.

Many think gambling on the Super Bowl is harmless fun, and for some, who do it legally, it could be that simple. However, the consequences for others can be extreme.   A Fox News affiliate has reported that Super Bowl night is not only the biggest night for gamblers, but it also sees the most suicides as well.  For those that don’t suffer the ultimate fate, they can still lose enough to cause irreparable harm to their finances and family. Fox Now online explains: 

“Super Bowl is probably one of the biggest gambling days of the year,” said Gambling Addiction Counselor, Jim Harrison [a gambling counselor in Milwaukee.] He says the wagers placed on the Super Bowl are often not taken as seriously and can be seen as harmless and fun. “In reality it is betting, it is gambling,” said Harrison. Those compulsive gamblers see it as a day to make up for other sports losses this season.

Harrison says it’s not harmless at all for those with an addiction — betting is done with bookies and online and it could bring losses. “If it causes family problems, certainly financial problems,” said Harrison. “I’ve had clients who have literally lost over $300,000 gambling,” said Harrison. The Super Bowl can bring losses to those betting on it all, and it can be tempting to those dealing with gambling addition.

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION


Fantasy Football Costs Employers a Shocking $17 Billion and Puts Companies at Legal Risk

As America enters into another year of the National Football League, gambling is set to take center stage yet again. Casino Watch Focus has reported on the emergency of daily fantasy sports as the newest form of sports gambling. Some jurisdictions have appropriately labeled it gambling and either outlawed its practice or regulated it accordingly. Other states have yet to make a formal proclamation about this form of gambling. But as with other forms of sports gambling, like NCAA March Madness  or the Super Bowl, the impact from such gambling will be felt in the workplace at home. Fortune Magazine has reported on the staggering amount of money fantasy football will cost employers, the results are nothing short of shocking:

According to Chicago-based employment research firm Challenger, Gray & Christmas, the sheer number of fully-employed fantasy football freaks could cost U.S. employers close to a whopping $17 billion (with a “b”) in lost productivity. That total eclipses the amount of total revenue the NFL took in last year, which was a mere $13 billion or so.

These numbers are hard to crunch, acknowledges Challenger, which came to this sum using the estimated 57.4 million people in the U.S. and Canada (ground zero for the NFL fandom) who play fantasy football, according to the Fantasy Sports Trade Association. The FTSA also estimates that 67% of those players (38.5 million people), work full time. And using U.S. Bureau of Labor Statistics data, the company estimated those players earn roughly $25.69 per hour, on average.

If you assume that to be the case, each hour spent poring over matchups and obsessing over results costs employers in aggregate $898.1 million in lost or unproductive wages. And assuming each player spends an hour of work time each week fiddling with lineups every week of the regular season, the total would come to $16.8 billion. 

Not all of this lost productivity is without employee consent as some workplaces even allow office pools and fantasy football leagues in which even senior members of leadership participate. However, just because some companies are aware of such activities, it doesn’t lessen the legal consequences when the gambling is deemed illegal. The Miami Herald explains:

Office pools and fantasy leagues remain a great way to bring positivity and fun to the workplace. Used properly, fantasy leagues can be a valuable team-building exercise, similar to an office March Madness pool during the NCAA tournament. Employers must be cognizant of issues related to gambling and increased work distractions, however. By creating an office pool or fantasy league, employers must be aware that creating such a pool or league may inadvertently encourage employees to spend part of their work day focused on their fantasy teams rather than work-related activities.

Employers must always be mindful of the potential impact on productivity in the workplace and ensure that any office pools or fantasy leagues are not out of bounds of the law. In order to ensure that employers are operating within legal boundaries, they should consult with an employment attorney.

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION


Recent Negative Rulings Force Daily Fantasy Sports Companies to Massively Increase Lobbying Efforts

Casino Watch Focus has reported on the ongoing criticism and identification of Daily Fantasy Sports (DFS) as the newest wave of sports gambling. Various states have been investigating DraftKings and FanDuel to determine if they are offering online gambling. Even the FBI and US Attorney General have been investigating. The DFS has tried to take a proactive approach. Recentlythe DFS industry called for government regulations and offered problem gambling safeguards. The industry believes if they can get it regulated, then that will prevent an outright ban, given online sports betting is illegal in almost all jurisdictions outside of Las Vegas. Unfortunately for DFS, more and more states are ruling that they are illegal. Now, they are aggressively changing their strategy and attempting to lobby for each state to exempt DFS from gambling laws so they can stay in business. USA Today reports:

Fighting for its life from coast to coast, the daily fantasy sports industry has dramatically changed its survival strategy since last year.

The industry now has about 75 lobbyists in more than 30 states, up from two lobbyists in two states last February, said Jeremy Kudon, an attorney for the industry. The goal is simple: If existing state laws indicate that your business might be illegal, then hire some professionals to help change those laws.

“This is a battle that’s going to be won in 50 states,” said Paul Charchian, president of the Fantasy Sports Trade Association, which advocates for the industry. “It’s going to be 50 small battles, not one big battle.” 

Its unclear how successful this strategy will be for DFS. They have started lobbying at the Federal level as well, but that could still leave individual states with the ability to clarify that the activity is illegal gambling. In their efforts at both levels, they believe they can prove that their games are games of skill not chance, but the skill level diminishes severely when new teams are drafted each day and not carried out through an entire sports season. Typically however, when a company puts forth enough lobbyist and lobbying dollars, change happens in those companies favor. But as the USA Today article explains, they have lobbied various states in the past to no avail:

The argument over daily fantasy’s legality hinges upon whether it’s considered a game of skill or a game of chance. Generally speaking, games that involve chance are usually considered gambling. But states hold different standards for how much chance is needed for a game to be illegal gambling.

While the industry started lobbying the federal government this year, it can exert more policy influence at the state level, said Marc Edelman, an associate professor of law at Baruch College, who consults in fantasy sports law. If federal lawmakers explicitly decriminalized daily fantasy, state governments could still impose stricter rules, he said.

Attorneys general in New York, Illinois and most recently Texas have argued that paid daily fantasy contests are illegal gambling under state law. Disclosures show the industry lobbied last year not only in those states but also others that could become legal battlegrounds.

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As Daily Fantasy Sports Industry Comes Under Fire, Even Draftkings and FanDuel Acknowledge Dangers as They Call for Gov Regulation and Implement Problem Gambling Safeguards

Casino Watch Focus has reported on the new Daily Fantasy Sports (DFS) industry, including the recent realization that at its core, its gambling, and that when left unregulated or banned, its leading to online scandals and wide spread investigation, including from the FBI and US Attorney General.  Recently, New York investigated the practice of daily fantasy sports and quickly reached a ruling that its illegal, which lead to the attorney general’s office to issue a cease and desist order to DraftKings and FanDuel.  The Washington Post explains:

New York Attorney General Eric Schneiderman found daily fantasy sites DraftKings and FanDuel in violation of the state’s gambling laws and sent both companies cease-and-desist letters to stop accepting payments – “wagers,” in his words – from New York residents.

The leagues that profit from it may be up next. Questioned about the leagues’ responsibility regarding daily fantasy, a spokesman in the New York attorney general’s office declined to comment, but did not rule out that it was an area of focus in the investigation.

The NBA, MLB, NFL and NHL all operate out of Manhattan. Just as MLB owns a little piece of DraftKings, the NBA owns a small percentage of FanDuel. The NHL shares an extensive marketing agreement with DraftKings. The NFL has attempted to keep the companies at arm’s length, but multiple team owners are heavily invested in both companies, and the league’s network partners draw massive advertising dollars from both of the daily fantasy titans.

Beyond just the individual state level, it’s rumored that the Department of Justice will outlaw DFS by the end of the year.  Following the recent insider trading type scandal between FanDuel and Draft Kings, and perhaps seeing the writing on the wall, FanDuel CEO called for government regulation.  The Wall Street Journal explains:

Nigel Eccles, who founded FanDuel in 2009, said Thursday that intervention by state governments is the only way to ensure consumers can trust the fantasy sports industry, which is facing a federal criminal probe and scrutiny by state regulators.

He said a plan announced this week by the industry’s trade group to police itself with an outside control board is positive but doesn’t go far enough. “Consumers want a higher level of protection,” he said in an interview. “They need to know it’s fair, that the information is protected. If the consumer doesn’t trust the industry than the business doesn’t exist.”

The most telling move though, just recently, and somewhat quietly, happened by DraftKings.  They have started a program familiar to problem gamblers that the gambling industy refers to as a self-exclusion list.  It’s a clear sign that they understand the dangers involved and it’s as close to an outright admission that the industry is simply gambling as you might expect.  Self-exclusion lists aren’t always an effective tool, but, but the addition is a clear signal what type of product is being pushed.  A regional online Boston website explains:

As it fends off comparisons to illegal gambling operations, Boston-based daily fantasy sports company DraftKings now offers a system familiar to many legal gambling businesses: a self-exclusion option, which allows users to deactivate their accounts for periods ranging from three months to five years. On a new responsible gaming section of its website, DraftKings presents the self-exclusion policy as a way to prevent addictive gaming.

DraftKings has resisted gambling comparisons in the U.S., arguing its games are valid under federal and most states’ gaming laws. But self-exclusion is common in the gambling industry, and its usage appears to be an acknowledgment by DraftKings that its users could be susceptible to the same kind of addictive play.

Les Bernal, the national director of the Washington, D.C.-based organization Stop Predatory Gambling, dismissed self-exclusion options as a “sham.” “The whole idea of somebody who’s an addict is the absence of free will. How does somebody who’s an addict exercise their free will?” Bernal said. “It’s a gimmick that’s not meant to protect the player. It’s meant to give the appearance of concern by Internet gambling companies like DraftKings.”

Self-exclusion can be helpful to gambling addicts who have already recognized they have a problem, but it does little to help those who have not reached that point of self-awareness, said Krystle Kelly, the director of development and communications at the Massachusetts Council on Compulsive Gambling. “As a standalone, if that’s the only thing they’re doing to acknowledge this could be a gambling problem, I don’t think this is going to be very effective,” Kelly said. “If all of this negative attention did create these controls, I think that’s a good thing. I think that’s a step in the right direction. But I think there probably needs to be more work done to address high-risk populations.”

For more information on the dangers of gambling, please visit CASINO WATCH & CASINO WATCH FOUNDATION