Eric Johnson

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Don’t Regulate Me, Bro! Social Casino Companies Band Together to “Inform” Lawmakers.

myvegas-slots-on-facebookFree-to-play games are unregulated, and some of the companies that make them would like to keep it that way.

For most game developers, governmental regulation is a non-issue.* But the studios behind social casino games claim they’re under pressure from foreign policymakers and are going on the offensive.

Their games, it’s worth pointing out, are not the same thing as real-money gaming/gambling, which is tightly regulated in many of the places where it is not banned. Rather than betting and then losing or winning money, social casino players instead use that money to buy virtual currency. Winnings only come in that currency, although many studios have branding/advertising partnerships with or are owned by the real casino corporations.

To preempt regulation of the games, more than a dozen social casino companies** banded together in the ISGA, a trade group resulting from the merger of the Social Gaming Association and the International Social Games Coalition in September. This week, the ISGA announced that it had developed a list of “best practice principles” for social gaming and commissioned research into the games’ usage and impact to “inform public policy.”

Spoiler alert for policymakers, but odds are the conclusion of that research will be, “We’re responsible, and our players are doing just fine, thank you very much.”

The ISGA’s newly issued principles are either crystal clear or a little too vague, depending on your point of view:

  • Adhere to necessary laws and regulations
  • Are transparent in their functionality
  • Treat purchases and payments responsibly
  • Manage player privacy appropriately
  • Use appropriate advertising models

PlayStudios COO Paul Matthews said all the members of the ISGA already adhere to the “meaningful but not super-specific” principles. He and his co-founders all have a history in real-money casino play, but PlayStudios focuses only on the free-to-play business, albeit with partnerships that award Las Vegas show tickets, hotel rooms, food coupons and the like to loyal players of its Facebook game myVegas Slots.

Matthews said those wary of social casino games believe the odds are rigged to encourage players to come to Vegas and try gambling for real, but that the payout odds for all ISGA members’ games “are the same ones you’ll find online or in the casino.”

A panel of casino gaming companies — some ISGA members, some not — at the GamesBeat conference this week echoed similar notions when they got off on a tense tangent about regulation. The panel’s moderator, Playsino CEO Alex Kelly, said the lack of regulation makes casino games more innovative, while Big Fish Games CEO Paul Thelen picked up a popular industry talking point: We get unfairly singled out.

“This is a social game, and it’s no more gambling than Candy Crush or FarmVille,” Thelen said, alleging that “whaling” — getting a lot of in-game purchases out of a small number of players — is most common in turn-based strategy games. “Do those need to be regulated?”

Thelen added that the unfamiliarity of other games’ mechanics, relative to bingo or slots, makes the latter a much more appealing target.

But if, as Matthews said, the companies within the ISGA are already behaving responsibly, why say anything at all? They say they’re afraid that policymakers seeking to regulate videogames will go after them first because of that association with real gambling.

The power of this supposed enemy is a bit hazy, though. Matthews said the ISGA was encouraged by a handful of “flashpoints” around the world: Belgium and France, whose legislators are reportedly mulling tighter regulation of virtual currency games, and Australia, where anti-gambling Sen. Nick Xenophon has repeatedly spoken out against social casinos as beneficiaries of legal loopholes that may ensnare children.

Most of the discussion about Belgian and French regulation seems to be limited at this time to social casino and real-money gaming trade magazines, however. And legislation amending Australia’s ban on online gambling to include virtual credits was introduced in May of this year, but so far has gone nowhere.

In other words, the stakes for the social casino industry are softer than its rhetoric. For now, at least, the ISGA seems to be a preemptive coalition, rather than an indicator that free-to-play is really under fire.

* Although you may hear some anti-regulation-esque language when you talk to them about Apple’s App Store review process. That sometimes gets people angry.
** The members of the International Social Games Association, according to an Oct. 30 press release: Zynga, Slingo, RocketPlay, Plumbee, Playtika, PlayStudios, MGM, IGT, High 5 Games, Gamesys, Big Fish Games, Bally Technologies, Aristocrat, Abzorba Games and Akamon Entertainment.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik