Social gaming is regulated, but some adjustment may be necessary

Social gaming is regulated, but some adjustment may be necessary

Thursday, December 6, 2012 Totally Gaming

According to Philippe Vlaemminck, Head of the EU regulatory, Lotteries and Gambling law team at ALTIUS, one of Belgium’s leading independent law firms, it would be wrong to say that social gaming is not properly regulated. The confusion about the rules that apply to social gaming is often the result of the incorrect view that social gaming is a gambling service.

While gambling activities are also offered on social media platforms, it does not mean that all forms of social gaming qualify as (social) gambling. To be so qualified, three conditions need to be simultaneously fulfilled: there must be a stake with monetary value , there must be an element of chance (predominant or not depending upon the local definition) and there must be a potential for players to win monetary value.

To the extent that virtual currency is involved and not commercially monetized, or that there is no “real money” stake, or no element of chance, social gaming remains outside the scope of gambling.

Notwithstanding this, Philippe Vlaemminck has said that it is wrong to believe that social gaming is not regulated. As a service available on social network sites, thus on the Internet, social gaming operated in the EU  is subject to the country-of-origin rule in the European E-commerce Directive.

SNS service suppliers, such as Facebook, are most likely only “intermediaries providing hosting services” as defined in Article 14 of the E-commerce Directive, with limited liability. Indeed they are only obliged  to act quickly as soon as they become aware of illegal activity. Of course, they can also be ordered to act by the courts against social gambling operators hosted by them who do not comply with national law in the country where their services are consumed.
Consumers who believe that they have been deceived into spending too much money on social gaming can rely upon the national legislation implementing various EU Directives as a.o. the European Unfair Commercial Practices Directive, the Unfair Contract Terms Directive , the Distance Selling Directive and the Consumer Rights Directive.

However, according to Philippe Vlaemminck some additional rules are required:

The risks of addiction, the easy accessibility to children need to be looked into , even outside the scope of the gambling regulations. Self regulation and regulation must be complementary. The PEGI standard used by the video gaming industry may well be a useful element to look into. But further study within the context of the EU co-funded ALICE RAP project may be equally useful. THIs project tries to reframe the understanding of addiction and redesign addiction policy based on objective scientific evidence.

Other problems occur when social games mimic “real money” gambling  without applying all features & conditions (i.e. not random, etc.) or when free social games are used by real-money online gambling operators to bring new players to their “gambling tables” and enlarge their databases. Facebook opposes to such use.

Philippe Vlaemminck believes that these elements need to be regulated by new gambling legislation just like the advertising or affiliate gambling services provided on or by SNS.

Finally the monetizing social gaming needs to be investigated. If it happens accidentally by the player as a private individual on sites such as Ebay, this is not much of an issue. However, when it is organized as a business, the situation is clearly different and gambling regulators should become involved, to the extent that the other conditions to make it a gambling service are fulfilled.

Philippe Vlaemminck and his team are exploring how to design a new regulatory framework for social gaming at the EU level.

Philippe has been a leading contributor to the EU Regulatory debate on gambling for more than 25 years. He has been directly involved in every gambling case heard by the Court of Justice of the EU since the Schindler case in 1992.


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