Category Archives: Social Costs

Florida Appeals Court to Rule on New “Pre-reveal” Slot Machines

Casino Watch Focus has reported on a new form of slot machine termed pre-reveal machines. These machines have the ability to drastically expand gambling in the state should the be viewed as anything other than a slot machine. Slot machines would be heavily regulated as a game of chance and face numerous restrictions. They work slightly different that a typical slot machine in that the reveal what the next spin will be. The creators and those that believe they shouldn’t be regulated as slot machines claim that because you see what the next spin will be, it can’t be gambling. The judge originally agreed with the creators and said they were legal machines. The judge was urged to reexamine how the machines actually work and it was explained to him that event though the next pull was revealed, it was the spin after that would be revealed that gamblers were chasing. It’s exactly like a slot machine except the gambler is one play behind. They basically pay for the spin they know is coming, but its really the next spin that will be revealed that they gamble on being a winner. Now the case has reached the Appellate level and its outcome could have a huge impact if these machines are deemed legal. An online source explains: 

In a legal dispute that’s dragged on for more than three years and has eluded a legislative remedy, an appellate court is grappling with whether popular tabletop games are illegal slot machines or more-benign entertainment options for customers of bars and restaurants.

The 1st District Court of Appeal heard arguments Tuesday in the case centered on games produced by Blue Sky Games and leased by Jacksonville-based Gator Coin II Inc., after a Tallahassee judge last year sided with gambling regulators who maintain that the games violate a Florida law banning slot machines in most parts of the state.

Proponents of the devices, known as “pre-reveal games,” contend that the machines are legal because the computer games include a “preview” feature that advises players of the outcome of the games.

But critics, including the Department of Business and Professional Regulation, say that doesn’t matter because the “random number generator” used to create the games equates to the definition of slot machines, which are games of “chance,” under state law.

There’s nothing players can do to affect the outcome of the game, which fits the definition of slots, department attorney Daniel McGinn told a three-judge panel Tuesday.

The only other argument that they are advancing is that because the first game is known, and only the games after are not known, then a ruling requires looking at all the games played and not simply a single game. The state believes its irrelevant if one game is played or many games are played. The online source continues:

A key issue in the case involves whether the slot-machine law applies to playing a single game or a series of games. While the outcome of the first game is revealed in advance, a player at the outset does not know the results of subsequent games.

Judge James Wolf repeatedly asked lawyers on both sides whether the court should consider whether a single game or a series of games violates the law.

“I’m a simple kind of guy. It comes down to whether we can consider the entire course of the play or one particular game. Their argument is one particular game is not a game of chance because you know the outcome. … What in the statute allows us to consider the entire course of play?” he asked, pointing out that the state law defines slot machines, in part, as a device whose outcome is “unpredictable by the user.”

The answer rests in the way the machines generate the games, which the state believes violates the law, said McGinn, whose department regulates gambling. “From our perspective, it doesn’t matter whether it’s one game. It doesn’t matter whether it’s multiple games,” he said.

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MGM does the Unthinkable and Sues the Victims of the Las Vegas Mass Shooting

Casino Watch Focus has reported on the worst mass shooting in modern American history as it took place in Las Vegas on the Mandalay Bay casino-resort, and an MGM property. Understanding its impact to gambling industry was noteworthy, so it was discussed, but not at all on the same level of impact that tragic event had on the American people. None understand that more that the surviving victims and their families. Many have sought legal measures against MGM and given the shear scope of the operation Steven Paddock ran out of their hotel, with the unimaginable fire power he unleashed, the families actions seem understandable. In what can only be described as an absolutely unprecedented move, MGM has decided to sue the victims and their families in an effort to not have to deal with the lawsuits that have followed. An online source explains: 

MGM Resorts International has sued hundreds of victims of the deadliest mass shooting in modern U.S. history in a bid to avoid liability for the gunfire that rained down from its Mandalay Bay casino-resort in Las Vegas.

The company argues in lawsuits filed Friday in Nevada and California that it has “no liability of any kind” to survivors or families of slain victims under a federal law enacted after the Sept. 11 terrorist attacks.

The lawsuits target victims who have sued the company and voluntarily dismissed their claims or have threatened to sue after a gunman shattered the windows of his Mandalay Bay suite and fired on a crowd gathered below for a country music festival. 

Attorney Robert Eglet, who represents victims in a lawsuit pending in federal court in Nevada, decried the casino-operator’s move. “MGM has done something that in over 30 years of practice is the most outrageous thing I have ever seen,” Eglet said. “They have sued the families of victims while they’re still grieving over their loved ones.”

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UPDATE: Former Florida Supreme Court Justice Joins Legal Battle to Prevent Dangerously Deceptive Decoupling Greyhound Bill from Appearing on the Florida Ballot

Casino Watch Focus has reported on the recent attempts to completely remove the gambling associated with greyhound racing from Florida. This was not something that passed in the legislature this year, so the idea was to propose the idea through the constitutional amendment committee. It started a as a full removal, but it didn’t have the votes to pass as is, so it quickly morphed into a very dangerous and quite frankly deceptive decoupling bill. If you remove the greyhound racing, but allow slot machines and other types of gambling, all that you have done is created a network of mini-casinos.

Many don’t like the idea of the dog races, so they wouldn’t ordinarily stop at those places to gamble, but if no races exist, then its simply a convenient place to stop and gamble, and that can lead to all kinds of negative effects for Florida families. Many see this new amendment as simply eliminating the greyhound racing and gambling all together, so it’s a very deceptive bill. Beyond those reasons, there is also the problems with using the Florida constitution to be the legal space to enact such a change, especially when such a change should be done through normal legislation. The desire to solve this problem the proper way, has generated a lawsuit, and now some major support and legitimacy to the position has been established with a new addition to the legal team. Florida Politics explains:

Retired Florida Supreme Court Justice Major B. Harding has joined the Florida Greyhound Association (FGA) legal team. The addition of Harding, a high court appointee of the late Democratic Gov. Lawton Chiles, was announced Wednesday by association general counsel Jeff Kottkamp. Harding served on the Florida Supreme Court 1991-2002; Kottkamp was Florida’s lieutenant governor from 2007-11 under Gov. Charlie Crist.

“The suit requests that the court strike Amendment 13 from the general election ballot,” Harding said in a statement. “The basis for our challenge is that the ballot title and summary do not fairly inform the voters of what they are being asked to vote on … In order to maintain the integrity of both the election process and our Constitution, we believe the amendment should be struck.”

Among other claims, the suit says the ballot title and summary “… fail to inform voters that its passage would essentially expand gambling by allowing pari-mutuel facilities in Florida to convert to mini-casinos.” The amendment would allow other gambling activities such as card games to continue at tracks after dog racing ends.

Kottkamp and Paul Hawkes, a former appellate judge and now also on the FGA legal team, have previously opined against the measure, saying the CRC “was never intended to be a ‘super-Legislature’ or a vehicle to propose putting issues in the constitution that ‘can’t get through the Legislature.’

“And, it was certainly never intended they would place proposals on the ballot merely because they were thought to be a ‘good idea,’ ” they said.

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New Wave of Sports Gambling Brings Real Gambling Addiction Fears & Consequences

Casino Watch Focus has reported on the recent Supreme Court decision which legalized sports betting outside of the limited venues like Las Vegas. Many states have already legalized this gambling in their states, including the state responsible for taking the case to the Supreme Court, New Jersey. With this new and immediate access to gambling, many are worried about a crop of new gamblers falling pray its harmful addiction. An online source explains:

Much of the apprehension relates to the prospect of myriad forms of online sports betting — accessible to gamblers at any time and location via their mobile phones. There‘s particular alarm over the anticipated explosion of so-called “in-game wagering” in which gamblers bet, often at a rapid pace, on play-by-play developments — for example, will the next football play be a run or a pass. “You lose track of time,” said Les Bernal, national director of Stop Predatory Gambling. “The goal of the operators is to get you into a zone where you lose your financial reasoning and think of nothing except betting.”

“We think this is the biggest expansion of gambling in our nation‘s history, in one fell swoop,” said Keith Whyte, executive director of the National Council on Problem Gambling. “Absolutely, categorically, there will be more risk factors for addiction — we‘ve never had that much high-speed, high-stakes interactive access to any sort of betting.”

The dangers associated with problem gambling are numerous and not only will this radical expansion of gambling create new addicted gamblers, its going to have a very negative effect for those patients who are already addicted. An online medical source explains:

Legalizing sports betting may have grave consequences for individuals with gambling addiction. Healio Internal Medicine spoke with Mark A. Celio, PhD, assistant professor at the Center for Alcohol and Addiction Studies at Brown University School of Public Health.

“Gambling can impact health in many ways. For example, gambling can directly or indirectly increase stress. It could be financial stress or it could be interpersonal in nature. Either way, long-term exposure to stress has very real consequences for physical and mental health. Ironically, problem gamblers may believe that gambling provides relief from stress. These people can easily find themselves stuck in a cyclical pattern where their gambling produces stress that they then try to alleviate with more gambling, only to be left with more stress.”

The National Council on Problem Gambling provides resources for screening, as well as services that are available in each state: https://www.ncpgambling.org/

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UPDATE: Supreme Court Strikes down Federal Sports Betting Ban, Creates ‘Wild West’ for Sports Gambling and Potential Devastation for Problem Gamblers

Casino Watch Focus has reported on the ongoing efforts lead by New Jersey to reverse federal bans of sports betting. After many failed attempts, New Jersey has finally succeeded in opening the door for them to regulate sports gambling. This obviously opens the door for every state as well, and the ramifications will be serious. In an op-ed piece published by the Hill, John W. Kindt, a professor of business and legal policy in the Department of Business Administration at the University of Illinois’ Gies College of Business, who for 20 years has focused his specialty research on the societal, business and economic impacts of decriminalizing gambling activities, outlines how such a reversal of policy creates a Wild West: 

On Monday, the Supreme Court issued its decision in Murphy v. NCAA, a case brought by the State of New Jersey to overturn the 1992 Professional and Amateur Sports Protection Act (PASPA), which was sponsored, ironically enough, by former Sen. Bill Bradley (D-N.J.), a professional basketball legend, to protect the integrity of U.S. sports. Trying to legalize sports gambling, New Jersey lost twice in U.S. district court and twice in the Third Circuit U.S. Court of Appeals between 2012-2014. In a perplexing move, however, the Supreme Court accepted New Jersey’s appeal and heard the case on Dec. 4, despite the recommendation of the Office of the Solicitor General advising the court to reject New Jersey’s appeal.

Generally ignoring the practical economic and social effects of enabling unregulated “real time” sports gambling, for example by kids on cell phones, a divided court decided “to destroy PASPA rather than salvage the statute” complained Justice Ruth Bader Ginsburg in her dissent.

The majority decision focused almost exclusively on New Jersey’s myopic arguments invoking the “anti-commandeering” principle of a 1992 case New York v. United States, while ignoring the obvious interstate impacts and the well-established Commerce Clause empowering congressional action on interstate sports.

While appearing innocuous to the uninitiated, the Murphy case will quickly generate ubiquitous and unregulated “Wild West” sports gambling. It is academically well-documented that this type of gambling is poised to explode with local and strategic economic impacts negatively affecting the U.S. economy.

While unlikely, immediate congressional actions regulating the practical impacts of the Murphy case are necessary.

While the Supreme Court cited the U.S. Gambling Commission’s 1999 Final Report, the court missed the Final Report’s numerous recommendations against gambling in cyberspace — particularly sports gambling.

Sports gambling in real time on cell phones and computers was highlighted as an example of the “crack cocaine” for hooking college students, teens and kids into addicted gambling. The Supreme Court also missed a wide spectrum of negative economic and financial issues associated with widespread sports gambling.

The complete editorial can be read HEREAdditionally, its important to understand this move might be the single greatest expansion of gambling seen by a single court case. The ramification of such explosive legalized gambling cant be overstated. A Press Release by the National Council on Problem Gambling explains their position: 

“Today’s ruling by the Supreme Court is the largest potential expansion of gambling in our nation’s history now that an additional 49 states have the opportunity to legalize sports betting. NCPG believes the expansion of legalized sports gambling in the United States will likely increase gambling participation and gambling problems unless steps are taken to minimize harm,” says Marlene Warner, President of the NCPG Board of Directors.

NCPG’s wide-ranging and deep experience in these fields since 1972 allows the organization to provide a clear-eyed perspective on both the benefits and pitfalls of legalized gambling, and to find a middle way that addresses concerns on all sides. Revenues from legalized sports betting must be viewed in the context of social costs. Research has shown that current gambling activity generates over $115 billion in overall revenue to local, state and federal government, but also results in $6.5 billion in associated costs, including criminal justice and healthcare costs. These costs are often hidden and difficult to see. Approximately 2% of adults experience gambling problems, or approximately 5 million people. These social and economic impacts must not be ignored.

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New Loot Box Legislation Proposed Domestically as Foreign Governments Ban them in Video Games: Publishers State they Wont Stop Exposing Children & Gamers to Such Practices

Casino Watch Focus has reported on the ongoing realization that loot boxes are simply a sophisticated form of gambling in video games. More and more jurisdictions are becoming aware of loot box and skin gambling as they are expected to reach revenue over $50 billion dollars by 2020. Many domestic jurisdictions have already proposed regulations, studies or called for the industry to self-regulate. Minnesota is the most recent to propose legislation. An online source explains: 

[N]ew loot box bill was introduced in Minnesota this week. The bill joins other state level legislative efforts in the USA, which were introduced since the global loot box debate peaked in the second half of 2017. State Rep. Rick Hansen (DFL-South Saint Paul) introduced the bill H.F. 4460, which “would regulate ‘loot box’ gambling in video games”. The matter was discussed and both parties spoke in favor of the bill. According to Rep. Hansen “People are spending real money on random drawings in video games. Minnesota regulates gambling and when loot boxes meet the threshold to be considered gambling, then we need to treat it as such and regulate it too.”

The bill prohibits the sale of a “video game containing a system that permits the in-game purchase of (1) a randomized reward or rewards, or (2) a virtual item that can be redeemed to directly or indirectly receive a randomized reward or rewards to a person under 18 years of age” [sic].

Additionally, no video game may be sold or provided unless accompanied by a warning stating: “Warning: This game contains a gambling-like mechanism that may promote the development of a gaming disorder that increases the risk of harmful mental or physical health effects, and may expose the user to significant financial risk.” For games sold through electronic means, the warning must be acknowledged by the purchaser.

The Minnesota bill has a long way to go before it becomes binding legislation, as do most of the domestic bills discussed recently. However, several foreign government have passed and implement regulations including outright banning loot boxes from video games. The online European source The Verdict explains: 

Belgium has followed the Netherlands in banning the sale of loot boxes in video games, as Europe begins to crack down on what it deems to be illegal gambling operations run by major game publishers. Speaking to /Verdict/, a Belgian Gaming Commission spokesperson said: “The Belgian Gaming Commission has come to the conclusion thatreal-money loot boxes are gambling. This means that in Belgium, these types of games are prohibited unless licensed.”

If they do not adapt their games, they all potentially face criminal prosecution. Punishments would include up to five years in prison and fines of up to €800,000, which could be doubled if it is found that minors were involved.

It is highly likely that this would be the case. Approximately 22% of video gamers are aged between ten and 20 years old according to Statista, which is largely the cause of the Belgian Gaming Commission’s concerns. The Belgian Gaming Commission added:

“Real-money loot boxes are not innocent. Especially because the video games that they appear in are often played by children. “The Gaming Commission wants to protect the players in general and vulnerable groups (e.g. minors) in particular.”

Despite all these bans and all the discussion of how loot boxes are gambling and harmful to children, publishers don’t seem to willing to stop such predatory practices. EA, the publisher whose Star Wars video game Battlefront started this backlash, has been the most vocal about their inability to part from this gaming mechanic. The Verdict continues:

The loot box debate has been going for some time, but the bans issued by the Netherlands and Belgium are the first sign that governments are beginning to take notice. However, at least for the time being, publishers are unlikely to be too concerned.

Tom Wijman, market consultant at video game research company Newzoo, told Verdict: “I don’t expect publishers to be too worried, it should be quite simple to turn the option for loot boxes off for Belgian and Dutch bank accounts, and those markets are pretty small compared to the United States or UK.”

EA stated that it disagrees with Belgium’s ruling. A company spokesperson told /Verdict/ that the company welcomes discussions with Belgian authorities, but did not confirm whether it intends to comply with the request to remove these items from its games. EA CEO Andrew Wilson has since told industry analysts that the company plans to continue pushing forward with services such as Fifa Ultimate Team, which generates vast revenues through the sale of loot box items known as player packs.

For now, the issue is more of a nuisance than a problem for game publishers, but it could get worse if other regulators decide to follow Belgium’s lead. “I think the significant part about these bans isn’t so much theNetherlands and Belgium banning loot boxes, but rather the messagethis sends to regulatory institutions for gambling worldwide,”Wijman added. Should other countries issue similar bans, the attack on loot boxes could prove costly for developers.

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Hawaii Proposes 4 New Anti-Gambling Bills against Video Game Loot Boxes and US Senator Pressures ESRB for Industry Ratings and Regulation

Casino Watch Focus has reported on the discovery and evolution of gambling-esque loot boxes in video games and the legislative response to such predatory practices. Loot boxes are a type of micro-transaction where a video game player spends real money to open a box or chest in a video game, and hopefully win a valuable prize. If this sounds an awful lot like slot machines, then you’re thinking the same as countless fans, journalists and now legislators that are worried about he addictive and predatory nature of such a mechanic, especially when kids freely play these games. Hawaii legislator Chris Lee has lead the charge to hold the video game accountable and many others have taken note. As promised, Hawaii has now released 4 new bills that seek to regulate these predatory micro-transactions. An online source reports: 

Four new bills have been introduced in the past month that target the sale of games that sell loot boxes for real money. Two of the bills would prohibit developers from selling games with randomized loot box reward systems to anyone under the age of 21. The other two would require developers to label games that use randomized loot box systems /and/ to disclose loot box drop rates.

Developers would be forced to label games should they include “in-game purchases and gambling-like mechanisms which may be harmful or addictive,” according to the bill. A game purchased online would have to include this information on the game’s art. 

“Whistle-blowers have revealed that psychologists are employed to create these mechanisms,” Lee told the Hawaii Tribune. “If enough of the market reacts, the industry would have to respond and change its practices.” Lee said that more than half of the states in the United States are looking intro legislation regarding the sale of loot boxes in video games. Loot box regulation has already begun overseas as well. In 2016, China passed legislation that requires all developers to publish its loot box odds. Likewise, the Belgium Gaming Commission has deemed loot boxes “dangerous.”

Lee has been pushing the industry to impose its own common sense legislation. The ESRB is the rating system used within the industry and as of now, they are unwilling to view loot boxes as gambling and thus, they haven’t been willing to take the matter seriously or regulate from within. During a normal public meeting about the bills, lobbyist from the Entertainment Software Association, the industries trade group and regulators of the ESRB rating system, flew out to participate in the Q&A. They were unable to answer, justify or address some of the most basic concerns raised by Lee. It was objectively a very terrible showing for the industry. You can find the full video and update on Lee’s direct YouTube channel HERE (Loot box update begins at 2:37 and the questioning begins at 7:00).

Moreover, in addition to large number of states that are looking into similar legislation, these predatory gambling practices have now caught the attention of the US Senate, specifically Senator Maggie Hassan. She has questioned the FTC and wrote a letter directly to the ESRB. Forbes reports: 

This week, Hassan asked four FTC nominees the question: “That children being addicted to gaming — and activities like loot boxes that might make them more susceptible to addiction — is a problem that merits attention?” To which all four responded yes, it was something they would look into. But past that, Hassan wrote a lengthy letter to Patricia Vance, president of the ESRB citing that the issue of loot boxes was brought to her attention by a constituent. 

“While there is robust debate over whether loot boxes should be considered gambling, the fact that they are both expensive habits and use similar psychological principles suggest loot boxes should be treated with extra scrutiny,” Hassan’s letter says. “At minimum, the rating system should denote when loot boxes are utilized in physical copies of electronic games.”

The fact that Hassan is a US Senator, not a state senator, is important, as this could end up leading to her proposing federal legislation about this issue, rather than individual states doing it.

The powerful letter can be read in its entirety at Forbes HERE 

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