Opinion: The Social Regulation Debate
Stuart Tilly, executive director of the Social Gaming Association, discusses why the body was set up in 2012 and how he views the future of social gaming.
The burgeoning social gaming industry has seen a proliferation of casino-style social games as developers look to these perennial favourites to attract more users and, more importantly, maintain engagement.
Recent figures estimate that 173 million people play gambling-orientated social games (2.6% of the world’s population) putting a price tag of US$1.7bn on the industry, a number that is expected to rise to $2.5bn by 2015.
It is therefore no surprise that this sector has attracted interest from those looking to capitalise on this rapidly growing space, as well as a great deal of scrutiny from those who are concerned about what social harm may be done if this industry continues to operate in an unregulated environment.
The regulation debate is in its infancy but gaining rapid momentum among gambling regulators and other key policy decision makers that are now giving the sector a magnified watching brief as they consider whether or not these types of games “ games that on the face of it look and feel like traditional gambling games “ should come under the scope of their authority.
Protect the vulnerable
One of the common arguments I’ve heard in this regard is that regulation is necessary in order to protect the young and vulnerable in society being lured by the glitz and glamour of a pastime they might not have otherwise been exposed to.
There is, some claim, an inherent risk posed by trivialising gambling within a playful environment and of the young and vulnerable falling victim to addiction.
Firstly, I find it difficult to draw a distinction between a game that allows you to purchase chips with real money to play at a virtual poker table and a game that allows you to purchase livestock to graze on your virtual farm.
There is just as much chance of someone spending beyond his or her means in either scenario. It would, therefore, be wrong to single out gambling-orientated games for special attention just because they look and feel like gambling.
It is important to give some perspective to the argument. Only a small percentage of social gamers actually part with any money and, significantly, the conversion rate among players of gambling-orientated games is lower at 1.7% than the average of 1.8% for the sector as a whole.
If we draw parallels with research done in relation to the gambling industry, of that 1.7%, only 0.5% to 3% are at risk of developing problems associated with their gaming habits.
Regulation could stifle profits
It would, therefore, appear disproportionate to try to apply formal regulation across the entire sector to address the risks of social harm that are only ever likely to affect a minority.
Formal regulation would inevitably squeeze developer margins, restrict operational flexibility and add layers of administrative burden.
The majority of social gamers are going to enjoy their experience without spending a penny, let alone forming a gambling addiction, so why risk undermining the dynamic and innovative nature of this popular form of entertainment?
However, industry detractors will often focus on player protection as a reason for pushing their agenda and the social gaming industry has suffered a degree of negative publicity recently in this regard.
Stories of school children being able to rack up more than $5,000 in debt in less than a month or convictions in relation to the theft of virtual currency to sell on the black market do nothing to help portray the industry as one that operates at high levels of probity.
If social gaming were to confront this issue head on it would undoubtedly help embolden the industry’s image in the eyes of legislators, regulators and other policymakers.
By recognising they have a responsibility to promote and abide by principles of responsible gaming; principles such as transparency, fraud prevention and other consumer protection measures, it will go a long way in tempering any kneejerk calls for formal regulation to be introduced, thus ensuring the industry is able to continue to operate in a dynamic, innovative and non-discriminatory environment.
This article will appear in January’s print edition of eGaming Review. To subscribe click here, and if you would like to contribute opinion pieces to future editions of eGR please email Tom Victor at t.victor@egrmagazine.com.