Category Archives: Illegal Gambling

Tribal Casino Sues Video Gaming Company over Illegal Loot Box Gambling

Casino Watch Focus has reported on the ongoing saga of the new gambling mechanic in video games know as loot boxes. This mechanic works by having players purchase boxes full of mystery items in video games. These boxes often cost real world money and the items coming out of the box can be garden variety or fairly useless in game items all the way to very powerful weapons or items that give players a leg up. There have been may instances where these items hold real world value and some examples exist of those items being sold for real money. So the player puts money in the game, pulls the box open lever, gets a random prize of various value and then the player trades those in for real world money, very possibly at a financial gain. Many would argue that the mechanic described is the same as gambling on a slot machine, and that’s the very foundation of for a tribal casino’s lawsuit is video game manufacture.   An online source explains how such a lawsuit could be brought forth: 

The Quinault Indian Nation has filed a lawsuit against Valve, the makers of Steam, claiming that it is running an unlicensed gambling operation and demanding payment for damages.

Okay, this gets a little complicated so settle in. The Quinault Indian Nation owns and operates a licensed casino in the state of Washington, one that is regulated by the Washington Gaming Commission. Valve is also based in Washington.

In its suit against Valve (via Geekwire), the Quinault Nation alleges that “Valve facilitated illegal, unregulated and unlicensed online gambling” when it launched skins for /Counter-Strike: Global Offensive /(/CS:GO/).

Back in 2013, Valve started releasing skins for weapons in /CS:GO/, these upgrades are purely cosmetic. Players would earn crates by playing /CS:GO /and these crates could then be opened with keys which Valve sold in its store. The keys were the only way to open the crates, and it made Valve a tidy bit of cash.

The Quinault Nation says that “the look, feel, sound and experience [of opening a crate] was basically an online slot machine”, providing YouTube footage of players opening crates to back up its claim.

What’s particularly striking in this case, is that seemingly at every level of the transaction, Value, the company being sued by Quinault Indian Nation, had their hand in guiding the process. An online source explains:

It points to the skin gambling sites that were launching and says Valve did nothing to stop them. “Valve had actual knowledge of the identity of the Valve accounts that gambling websites used to effectuate gambling transactions, and chose not to take any action against them,” the court documents state.

It goes on to claim that “Valve allowed gambling websites to use Valve accounts on Valve’s servers and Valve’s computers to effectuate gambling transactions” and that “Valve also provided technical support to gambling websites and real-money cash out websites, despite those websites violating Valve’s Steam Subscriber Agreement, and would return control of gambling websites’ Valve accounts back to the gambling website after being hijacked or hacked by other third parties.”

Despite simply providing an incredibly clear picture for those legislative and consumer protection bodies looking to best understand just how much these loot boxes are no different from gambling, the tribe also outlines exactly how it hurts not only their business with the State, but how doing so illegally without following state regulation further harms those involved. They conclude: 

The Nation has a contract with the State of Washington that means it must remain compliant with the state’s laws if it wants to operate casinos, and that compliance costs money. It has to “engage in responsible gaming, prevent fraud, prevent illegal gaming, and prevent underage gambling”. The Nation also pays 2% of its earnings in Impact Mitigation Funds, which go to paying support services in area around the casino.

If Valve is a gambling operation, like the Nation claims, then it is an unlicensed one and doesn’t incur any of the costs or the risks that come with a gambling license. The Nation is suing for damages, but also the money Valve obtained through gambling transactions.

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

Advertisements

Despite Recent Supreme Court Ruling, most NCAA March Madness Gambling will be Illegal and Cost Employers Millions in Lost Productivity

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 despite the recent legalization of sports betting by the Supreme Court, that trend will continue. An online source explains:

America has seen a boom in legalized sports betting over the past year, and March Madness betting will highlight that. Nevada certainly remains the top dog, but New Jersey has come on strong. Yet illegal offshore sportsbooks continue to thrive. The American Gaming Association (AGA) set out to determine how much legal versus illegal wagering will take place with *March Madness *betting.

Over the first week of March, the AGA utilized Morning Consult to conduct an online survey among more than 11,000 adults. The study found that some 47 million people will wager on the NCAA men’s basketball tournament, which began Tuesday with the First Four. The AGA found that $8.5 billion will be bet during the tourney, shared by legal and illegal sportsbooks. Legal sports betting continues to expand, but this report found that offshore operations and local bookies will still attract more action than regulated sportsbooks. 

The general legality of such gambling continues to be a prominent issue this time of year as many people view office pools as harmless fun. Unfortunately, it’s 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.

In terms of cost to employers, the Charlotte Observer points to a Chicago-based study which says as much as $1.7 billion will be lost by employers in productivity, which breaks down to $109 million lost for every 10 minutes spent following the tournament. They believe there will be over 37 million workers participating in pools with 1.5 million watching games and results online from their desks. ESPN recently quantify the financial impact of just the gambling:

 On the low end, the FBI estimated in 2013 that $2.6 billion was bet illegally on the tournament. On the high end, veteran bookmakers estimate the number to be anywhere from $12 billion to $26 billion. Friendly bracket pools are everywhere, with most everyone betting on the NCAA tournament in some form. But there are bets, and then there are bets. You don’t get to $26 billion with $20-per-sheet office pools.

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

 

 


UPDATE: Court upholds that Florida’s Pre-reveal games are slot machines and illegal gambling

Casino Watch Focus has reported on a new type of slot machine that initial confused many as to whether it was a slot machine or a harmless entertainment machine. First and foremost, these devices look and function 100% like a slot machine. So why the confusion? These machines actually reveal the results of the next spin before you pay. This lead some, including the manufactures and those who operated the machines, that its not a game of chance, because you know the result, so it cant be gambling. These machines were quickly shut down, but a judge originally ruled that because you know the result, it’s not chance, so they were allowed.

The judge reconsidered the decision after further explanation that you are not paying to see the next spin, but rather you are paying to see the result of the next spin. Its absolutely no different than a slot machine, except the first time you put money in, you know the result. Past that, its always putting money in, spinning, letting chance take over, and seeing if you win. No one would likely leave a spin showing where the next pull would be a winner. So any new player would in all reality be starting the slot machine knowing they are paying to see what the next outcome will be.   That decision was appealed, and the new Florida court has unsurprisingly upheld the lower courts ruling, preventing what would be an unimaginable expansion of gambling at every corner should such machines not be considered slot machines that require regulation. The Orlando Weekly reports:

Siding with state regulators, an appeals court Thursday ruled that controversial electronic games played in bars and other establishments are illegal slot machines. A three-judge panel of the 1st District Court of Appeal upheld a circuit judge’s decision that what are known as “pre-reveal” games violate laws preventing slot machines in most of Florida. The panel’s 10-page ruling found, in part, that the games meet the definition of slot machines because they include an element of chance.

The ruling Thursday, quoting a section of state law, said the determination of whether the games are illegal slot machines “turns on whether the user may receive something of value ‘by reason of any element of chance or any other outcome unpredictable by the user.’ The element of chance or unpredictability must be inherent in the machine itself.”

“We hold that the trial court was correct in determining that Version 67 is a slot machine because the element of chance is inherent in it given that it has a preset win/loss ratio … and that the game outcomes are determined by the machine by chance, via an RNG (random number generator), and there is nothing the user can do to affect the outcomes,” said the ruling, written by appeals-court Judge Joseph Lewis and joined by judges James Wolf and Stephanie Ray. “Furthermore, Version 67 is a slot machine for the additional and independent reason that also inherent in it is an outcome unpredictable by the user. While it is true that the user is advised of the outcome of the game at hand ahead of time through the preview feature, the user cannot predict that outcome until it is randomly generated and then displayed by the machine. Nor can the user predict the outcome of Game 2 while playing Game 1.”

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


March Madness Betting Leads to Billions in Illegal Gambling, Poses risks for Problem Gamblers, and Costs Billions in Lost Work Place Productivity

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

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.

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, it’s 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.

Past the issues of legality, it’s especially problematic for those with gambling addiction. The NCAA tournament structure is particularly unique, as the gambling isn’t set on one game, as is the case with the Super Bowl. For a problem gambler, regardless of today’s outcome, there is another game coming up next, and a new chance to chase the action. Michael Rosen, counselor and VP of Clinical Services with the Center for Addiction Treatment explains:

For the person with a gambling problem, there’s literally always another tomorrow. “The problem gambler’s brain is producing ‘feel-good’ chemicals at each bet, even if he’s not winning,” Rosen said.

Why then do people who struggle with compulsive gambling keep trying to recapture their losses? For example, two of the top four-seeded teams in the tournament, Xavier and Virginia, were upset during the first two rounds. Virginia’s loss to the University of Maryland Baltimore County marked the first time in tournament history that a No. 16 seeded-team defeated a No. 1 seed.

“He has become conditioned to (gamble),” is how Rosen explained chronic betting even after losses. “It is simply the next part of the sequence that occurs without much conscious thought. A bet is made, and then another and then another.”

While most people cut their losses in the office pool, problem gamblers often aren’t aware of the dangers they face. Rosen advises to keep an eye on friends and family members who have a history of problems with sports betting. And, yes, he said, it can be an addiction that’s as dangerous as one to drugs and alcohol.

“You might not see physical symptoms,” said Rosen, who then ticked off a list of what to look for: Physical health may begin to deteriorate with increased hypertension, lack of sleep, less eating.

Psychological issues may include increased anxiety, depression, irritability, ruminating obsessive thoughts, and thoughts of suicide. Changes in behavior may include an increased use of alcohol or other drugs, tendencies to isolate, lying to others, experiencing angry outbursts, and reckless driving.

Clearly, March Madness has a dark side. And the gambling temptations keep on coming.

In terms of cost to employers, the Charlotte Observer points to a Chicago-based study which says as much as $1.7 billion will be lost by employers in productivity, which breaks down to $109 million lost for every 10 minutes spent following the tournament. They believe there will be over 37 million workers participating in pools with 1.5 million watching games and results online from their desks. ESPN recently quantify the financial impact of just the gambling:

On the low end, the FBI estimated in 2013 that $2.6 billion was bet illegally on the tournament. On the high end, veteran bookmakers estimate the number to be anywhere from $12 billion to $26 billion. Friendly bracket pools are everywhere, with most everyone betting on the NCAA tournament in some form. But there are bets, and then there are bets. You don’t get to $26 billion with $20-per-sheet office pools.

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


UPDATE: Washington State joins Hawaii in pushing investigation and legislation around gambling-esque loot boxes in video games.

Casino Watch Focus has reported on the ongoing revelation that video game publishers are pushing what many have called predatory gambling mechanics into recent video games. These loot boxes that are purchased by a gamer dispense in-game items by chance. The players don’t know what items they are actually purchasing and thus they chase after the change of getting the good loot much like a gambler chases after the right combination in a slot machine. What’s worse, publisher EA used these gambling boxes as the primary way to advance through their latest Star Wars video game, Battlefront 2. Naturally, this not only caught the eye of the media, but Disney themselves had to step in. Then governmental agencies started investigating and expressing concern for such psychologically manipulative mechanisms in video games that are available to children. Chris Lee, a Hawaiian legislature pulled no punches when he categorized the game and loot boxes as simply an Star Wars themed online casino aimed at taking kids money. Apple called for companies to disclose the odds of obtaining various loot in any games sold in there app store, but the industry as a whole decided not to regulate loot boxes through the ESRB system. Given the lack of sell governance, yet another state has pushed forward to investigate the issue. The Rolling Stone reports:

As the debate surrounding loot boxes and microtransactions as a form of gambling targeted at children continues, a new bill proposed in Washington is looking to force the game industry to regulate these mechanics, The News Tribune reports.

Washington State Senator Kevin Ranker introduced a bill this month asking state officials, as well as game developers, to determine once and for all if loot boxes and similar mechanics are specifically designed to prey on children.

“What the bill says is, ‘Industry, state: sit down to figure out the best way to regulate this,’” Ranker told the outlet. “It is unacceptable to be targeting our children with predatory gambling masked in a game with dancing bunnies or something.”

Despite the controversies, the game industry seems to be fully-committed to loot boxes and microtransactions. In a recent industry survey, the Game Developer’s Conference found one in 10 developers plan to implement the mechanics in their next game.

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


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


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