Social Casino Apps Draw Scrutiny as Apple Targeted by Groups and Regulators
The subject of social casino apps is a contentious one. Many argue that a social casino app is nothing more than a gambling app in disguise, whereas other maintain that the whole point of a social casino app is to remove the gambling element from casino games. This argument has now been handed over to the courts to decide via several lawsuits filed against Apple and Google. In Alabama, for example, two plaintiffs are seeking refunds for the money lost while playing social casino apps that were purchased from the defendants. And in California, a lawsuit against Apple claims that Apple is facilitating and benefiting financially from illegal gambling.
What is a Social Casino App?
A social casino app is an app that provides a social environment where players can play casino-style games online with their friends. These games can be played competitively, but winners are not paid out in real money. The fact that no real money winnings are available to players is the only specific element that keeps a social casino app from being considered as a gambling app. However, there is a catch. Social casino games, such as roulette, blackjack, and slots, are played with virtual coins. When players download the app, they are given a finite number of coins to begin play. If they win, they win more virtual coins. If they lose, the virtual coins are lost forever and the only way to keep playing is to buy more virtual coins with real money. And it is here where things start to get sticky.
The Money Involved
In 2020, it is estimated that social casino players spent approximately $6 billion on social casino virtual coins. Those who support social casino gameplay argue that a virtual coin is an in-app purchase and not a gamble. Players who buy virtual coins are fully aware that there is no chance for them to receive a real money reward – they are simply paying money in exchange for being able to continue playing the games. It should be noted here that Apple takes a 30% cut of all in-app purchases. However, Alabama’s lawsuits contend that the act of paying real money in exchange to ‘win’ the opportunity to keep playing a game is considered illegal gambling. In other words, if you have to pay for coins in the hope that those coins will enable you to win more coins, you are, in fact, gambling.
The Problem of Problem Gambling
Consumer groups and regulators have long raised concerns that social casino apps are normalising gambling, especially among young people. This normalization can lead to problem gambling behaviors and result in vulnerable players losing tens of thousands of dollars. In fact, this is already happening. Many players simply don’t realize that they have become addicted to the chase until it’s too late. The social atmosphere and the fact they have been assured that they are not playing real gambling games has led many to a false sense of security. Spending a few dollars on coins can easily snowball. To be fair, there are social casino apps that can genuinely be played for free, and many former gamblers use these social games as a way to enjoy risk-free gameplay. But ultimately, the negative aspects of these apps shout too loudly to be ignored.
The Lack of Regulation
One of the biggest issues is that unlike regular casinos, social casino apps are not strictly regulated. An online casino, by comparison, is required to obtain a gambling license from an official government entity. A gambling license is not an easy thing to come by. As respected casino comparison site in Germany notes – gambling establishments have to abide by a strict set of rules and regulations that are put in place to protect consumers. Underage players, for example, are forbidden from opening a real money casino account. All players are required to verify their identity prior to being able to withdraw any real money winnings. All games must be independently audited to ensure fair play. And all licensed casinos are held to account should a player feel that they have been treated unfairly. Problem gamblers are monitored closely thanks to the concept of ‘Responsible Gambling’, and addicts are offered the help that they need to stop gambling.
What Does the Future Hold?
While social casino apps may have so far managed to avoid any form of regulation, the lawsuits filed against Apple and Google are set to change the status quo. Undoubtedly, governments around the world will begin to crack down on these apps in the same way that we have seen them do with loot boxes. We expect to see much tighter controls in the way these games are set up and marketed. One possible solution for app stores is to separate these apps from the general market, making it more difficult for consumers, especially young people, to find them and access them. However, the most likely scenario going forward will be that social casino apps will require a legitimate gambling license.
This article has been scheduled in accordance with Socialnomics’ disclosure policy.
