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What Are Unregulated ‘Skill Games’ And Why Should Consumers Be Concerned About Them?

Written By Derek Helling on August 25, 2023
hand presses play button on gaming terminal

Many businesses, even smaller ones, are nearly always interested in ways to capture as much of their customers’ money as possible. In that interest, optimizing the number of ways that people can spend while patronizing those businesses is a goal. Gaming devices, sometimes operating in an illegal or legally grey area, can represent examples of that optimization.

As electronic gaming terminals that are labeled “skill games” in many parts of the United States have spread, so have concerns about their legality in those jurisdictions. Some state governments have worked to regulate them while others have sought to ban them or even somewhat turn blind eyes.

New data from the American Gaming Association (AGA) suggests that for some, differentiating a skill game and a traditional slot machine they might find inside a casino can prove difficult. If that is indeed true, there are some risks to the communities they operate in. Furthermore, those risks also equate to concerns for upholding responsible gambling practices.

What is a skill game and how is it different from a slot machine?

Whether regulated or unregulated, skill game terminals can strongly resemble slots at a casino in regard to their appearance and function. In both cases, the physical terminal includes a display screen with symbol icons that correlate to potential outcomes.

In both cases, there is a requisite real-money cost to playing the games. Moreover, both games begin when players press a button. The difference, at least for regulated skill games and slot machines, is the play of the actual games.

Pace-o-matic National Director of Compliance Rick Goodling explains that regulated skill games “are based predominantly on skill” while the results of slot games are predicated on pure chance. Goodling adds that for skill games operating in regulated markets, “a patient, skillful player can win every time they press the play button.”

Slot machines, on the other hand, use a random number generator assigned by the machine to determine the result of each play. Whether or not a play is a win and to what degree completely depends on the number that comes up in the play.

Goodling compares playing regulated skill games to playing a memory game and emphasizes that in a regulated market, every play is winnable. At the same time, making that statement about skill games operating in unregulated markets could be presumptive.

Why does regulation matter for skill games?

Skill game terminals in unregulated markets could be completely identical to those in regulated markets. They might come from the same distributors. So, if there’s no practical difference in the games in the regulated vs. unregulated markets, why does regulation matter?

To begin with, assuming that the games are identical in unregulated markets is simply that; an assumption. There are no regulators inspecting games to ensure they are actually operating as the manufacturers intended.

Furthermore, the lack of regulation means no one is verifying that the games are operating fairly or even within the strict parameters of a skill game. In addition, there is no governing body to enforce any standards regarding player payouts.

In short, when a person plays a skill game in an unregulated market, they are gambling. They are just betting that the game actually plays by the rules. They are just hoping that if they win, the business offering the games will actually pay them the amount they won.

Should players in such places encounter an issue, they have no recourse to address their grievances. In practical terms, they are very much on their own. There are no penalties for bad actors and no consequences for their poor behavior.

A recent survey from the AGA points to potential bigger concerns. Unregulated skill games could be problematic for communities at large. That especially goes for members of communities who might struggle with behavioral pathologies related to gambling.

Survey points to attitudes about unregulated skill games

According to the AGA, 65% of respondents to a survey about unregulated skill games consider them essentially the same thing as a slot machine in a casino. That isn’t the only attitude about the devices that the data show, though.

Regarding player protections, 71% of people who answered the survey think unregulated skill games lack them. Also, 64% agreed with a statement that unregulated skill games are too easy for people under the age of 18 to play.

Finally, the AGA points out that 56% of respondents stated their belief that the presence of unregulated skill games correlates to an increased risk of crime and poses a danger to businesses offering them. It’s important to look at these results in context, however.

Just over 2,000 people in the United States responded to this survey. While the AGA says the respondents were at least 21 years of age, it includes no other information about the demographic breakdown of the respondents. Furthermore, the exact wording of the questions that the surveyors posed is unavailable.

The AGA is a trade association for casinos and funded this poll. Thus, it’s unclear exactly how that support may have influenced the results. For example, the questions could have deliberately been worded to produce a desired response.

Regardless of that element, the poll brings up valid concerns. For communities, any unregulated gambling can pose serious health and safety risks.

Why unregulated skill games can be dangerous

As the survey suggests, unregulated gaming carries a threat to both entire communities and the people who live therein. For people living in such areas, safety risks can include theft and attempts to launder money through unregulated gambling devices.

Another massive concern is the health risk for people who have issues with gaming-related behavioral pathologies. Businesses that offer unregulated skill games are unlikely to participate in self-exclusion programs or have the knowledge and staff necessary to monitor for problematic behavior.

Furthermore, such businesses could actually contribute to people developing such issues. For example, it’s uncertain how strictly such businesses are monitoring games to ensure that only legal adults are playing them. Younger people are more susceptible to developing gaming-related behavioral pathologies.

Such issues in individuals will undoubtedly affect their communities. There are larger issues for communities as a whole, too. For instance, the games can represent a transfer of the community’s financial resources to entities and people who are not part of those communities and have no interest in their preservation.

On the other hand, businesses that offer regulated devices must meet requirements to invest back into those communities. Whether that be through local jobs or privilege fees, even people who never play the games can benefit from them due to services supported by the revenues they produce.

That’s why leaders in some parts of the US have sought to regulate skill games. Those efforts have met opposition in many places, though.

Governments’ struggles to regulate skill games

Several states have attempted to pass laws specifying exactly what a legal skill game is or outright banning them. In essentially every case, there has been organized resistance to those attempts.

Kentucky passed a law earlier this year that sought to ban skill games altogether. However, companies who distribute such games including Pace-o-Matic have sued to block the enforcement of the law. Even with attempts to regulate skill games instead of outlaw them, there have been disputes.

Several lawsuits have challenged the legal status of skill games in Pennsylvania with one currently outstanding now. To address those issues, lawmakers in Pennsylvania have tried to pass new legislation better clarifying the regulated landscape.

Litigation is also currently pending on the issue of the legality of skill games in Virginia as well. While the status of skill games in these and other places in the US remain for governing bodies to decide, there is little room to debate the dangers of unregulated gaming.

Photo by PlayUSA
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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