New Jersey Hopes To Cash In On Real Money Social Gaming

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Monday, October 20th, 2014 | Written by Charles Washington

Social casino games is one of the most lucrative and fast-growing segments of gaming, and unlike online gambling where real money is wagered, social casinos only allow players to spend real money purchasing virtual casino chips which cannot be cashed out but may later, depending on the company, be exchanged for preset prizes.

Nevertheless, the line separating social from real money gaming continues to be increasingly blurred, especially when one considers, for example, that PurePlay’s top customer has spent more than $250,000 on virtual chips which have no redemption value. While a debate is consequently raging as to whether regulators should become involved in the social casino games industry, New Jersey’s gambling regulators have further stirred up the debate by suggesting that they are now considering allowing skill-based social games to be played for real-money in New Jersey.

The next big thing?

New Jersey‘s casino market has seen its revenues fall by 45% since 2006, and the introduction of online gambling in 2013 has done little to stem the decline, with annual internet revenues expected to reach roughly $120 million by the end of 2014. As a result, the Garden State has been seeking further revenue streams to rescue its ailing market, and it would seem the state Division of Gaming Enforcement (DGE) is now looking favourably on tapping into an industry which many analysts have predicted will become the next big thing.

In fact, Eric Meyerhofer, CEO of Gamblit Gaming, has estimated that the potential market for social gaming could be worth up to $10 billion in the US, alone, and commenting on the opportunity monetizing such betting presents, DGE director David Rebuck, explains:

“More and more, we’ve been watching the social gaming arena and hearing about the opportunities it presents. We thought, ‘Wait a minute: Why aren’t these companies coming to us?’ We are ready, willing and able, under existing law, to deal with this. This is not theoretical anymore; this is real.”

A means to help NJ casino industry

Similar to its regulated online gambling model, the New Jersey DGE is mulling the idea of forcing game developers to partner with one of Atlantic City’s land-based casinos in order to offer real-money skill games to residents physically located within the state’s borders. The players would then compete against each other at such games, and while they are competing for a prize the casinos would subsequently take a fixed percentage of the money they have spent.

What regulations govern social games?

Presently, even the experts themselves cannot agree on an standard definition of social casinos, or on how they can be utilized and monetized for the benefit of the industry. Nevertheless, while these topics were debated recently at the Global Gaming Expo (G2E), a panel of experts which included among others, PlayStudios Co-Founder Monty Kerr, and Williams Interactive Head of Marketing Rory Shanahan, did find consensus in their belief social casinos should not be considered a form of gambling.

As a result, the panel seemed to reject the possibility of industry regulation having to be introduced at sometime in the future, which may seem a little self-serving considering there are currently no age requirement for playing at social casinos and the onus is on providers, such as Facebook, to ensure safeguards for minors.

Furthermore, there are presently no regulations in place to ensure the fairness of social casino games, and therefore if such games are not considered gambling, regulations should still be introduced to help protect players who have put their money on the line in order to compete against other players.

A new generation of problem gamblers?

Despite the panel’s consensus on social casino games not being a form of gambling, it is unlikely gambling organizations will agree with their findings, especially considering that of the 3% of players that decide to monetize their social gaming experience, at least 80% still remain active after two years.

Worryingly, the 3% figure closely resembles the addiction rates noted for online gamblers, and highlighting the risks for players going forward, Gizmodo.com staff writer Ashley Feinberg had her own experience to draw upon, having spent $286 over the period of one month purchasing extra play time on Candy Crush Saga. As Feinberg explains:

“It’s all very high-reward; you get sucked in and there’s this big reward and then it goes away and you keep trying to get it back. Unless you actually seek out how much you’re actually spending on this, it goes like nothing. It feels like Monopoly money.”