Social Gambling in the UK: How It Works
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Social Gambling in the UK: How It Works

Social Gambling in the UK: How It Works

Most people think of social gambling as playing with family, friends, neighbors, or coworkers, primarily to socialize and have fun. This sort of social gambling takes place on private property, such as at someone's house. That could also include a private club to which the participants belong, but only if the club is not involved in gambling.

However, the UK Gambling Commission has more defined criteria for what social gambling is, and is not. Today, social gambling has a different definition and mostly takes place online, often as a solitary game. Online social gambling games do not directly award prize money to players, rather, they award points. These games can be found on social media sites like Facebook, and as phone apps. Some resemble traditional casino games like roulette or blackjack, and others are virtual slot machines.

The convergence of social gambling and online gaming is nearly the norm within the gambling industry. Because of this, the Commission has examined the current regulatory framework to ensure clarity when referring to different forms of ‘social gambling’. 

 

The Gambling Act of 2005 Defines Social Gambling

The Gambling Act of 2005 defines gaming as "playing a game of chance for a prize". With that in mind, social gaming websites can legally offer real money prizes, as long as the games are purely skill-based. For example, social gaming websites offering casino games and poker can avoid the law by not offering prizes that can be cashed in for real money.

However, things become more complicated if social games of chance offer virtual money as a prize. The virtual money can not be cashed out for real money, and the prizes must have no real monetary value. In this case, social gambling will not attract the law, since virtual money has no real-world value.

Also, any virtual prizes can not be exchangeable for any real goods or services, such as merchandise or free holidays. To remain within the law, social gambling prizes cannot be exchanged for anything other than free play.

 

The Gambling Commission's 2017 Position Paper

In 2017, the UK Gambling Commission issued a position paper entitled, “Virtual currencies, eSports and social casino gaming”. The paper concluded that the interpretation of the gambling laws was a matter for the courts.

However, there is a very limited amount of contemporary case law, so the position paper drew the following conclusions:

  • The existing regulatory framework is applicable for applying proportional control over the associated risks posed by betting on eSports.
  • Public confidence in the integrity of eSports betting can be maintained by the operators applying the best betting practices used by other sports.
  • In-game currencies and prizes that can be sold, traded, or converted into cash, or exchanged for something of value, are considered the same as real money.
  • Whether or not a gambling license is necessary for a facility hosting video games for prizes will be determined by several factors. This includes how the outcome is determined and the arrangement of the facility.

The Gambling Commission will focus its enforcement efforts on activities that blur the lines between gambling and video/social gaming. In particular, the Gambling Commission will scrutinize and prioritize enforcement on gaming made available to children. Also, those presented to the public as real gambling or associated with traditional gambling.

 

The Freemium Business Model

Many social games operate on the Freemium model, in which most of the content is free to play, but players must pay for, or win, premium features and content. Free-to-play games are an important way for gambling companies to generate revenue in the social gambling market.

Popular social media games such as Candy Crush Saga operate on the Freemium business model. Numerous social casino games, featuring gambling themes, are also free to download and play. While few players spend money on optional in-game purchases, enough do make money for game developers. It's estimated that three times as many players are attracted to social gambling compared to real-money as online gambling.

The motivation and demographic profile of paying players compared to free players was the subject of an Australian study.

Paying players are more likely to be:

  • Young males
  • Non-English speaking
  • University educated

Also, paying players are more likely to be more deeply involved in social casino games in terms of engagement with games and the frequency of play. Paying players were also more involved in the social interaction and as a motivation to keep paying and playing.

Paying players include moderate spenders who make in-game purchases to avoid waiting to win credits. Also, they make purchases to give as gifts to friends. But, those who spend a lot are attempting to increase the entertainment value of play.

The Australian study also found that these young men were also more likely to smoke daily, use illegal drugs and have more psychological problems. 

While Freemium casino games are not technically gambling, they can be just as addictive, causing some players to spend much more than they can afford. In the end, the result can be nearly as devastating as a full-blown gambling disorder.

 

Social Gambling on Facebook

Some of the popular social gambling games available on Facebook include Slotomania, Zynga, Double Down Casino, and Big Fish Casino. You can play these free games with your friends on Facebook, along with millions of other users.

Facebook only allows real money gambling in specific countries, but free games are readily available. Some of the most popular games on Facebook include free video slot games, roulette, poker, and blackjack.

Facebook estimates a monthly average of 375 million people playing games like Candy Crush Saga. Millions play casino games on the site every day. While most of the casino games available on Facebook are free, the game developers make money by offering in-game purchases. And many players do spend money; social gambling is a $2.7 billion business. Around 20% of Facebook users do spend real money on in-game purchases. That's hundreds of thousands of players every day.

While these social casino games can provide hours of fun, proceed cautiously, if you have an addictive personality. While real money is not necessarily involved, many people do get hooked on social gambling. Remember, any type of addiction can become harmful. Obsessively playing games on Facebook can alienate your employer, friends, and family.

 

Facebook Social Gaming Can Be Addictive

Some people can easily play Facebook games for hours, ignoring their real lives for a fantasy world. A survey found that approximately 65% of Facebook gamers play one or two games five days a week. One-third play every day. The survey also found that older people, aged 55 to 64 are more likely to play on Facebook than younger people. Also, unlike other online gaming, most Facebook gamers are female.

Facebook gamers often play to escape stress and boredom, and this can quickly turn into an entire evening. However, once some people begin playing, they become addicted. Social gaming addiction is a real combination of gambling addiction and internet addiction.

One study found that cross-platform opportunities to play a game created even more addiction. Also, it was found that cross-platform players spent more on in-app purchases than desktop-only players. Facebook game requests tend to follow people around on desktop, mobile apps, and website ads.

The fact is, it's not just the games that are addicting, Facebook itself has been designed to be addicting. In fact, Facebook co-founder, Sean Parker has publicly stated that Facebook was designed to “exploit a human vulnerability”. The Facebook team consciously uses psychological techniques to keep its users hooked.

Just like gambling, many Facebook users use social media to escape their problems and boost their mood. Facebook can become a way to cope with negative emotions, in the same way as alcohol and drugs. If you find yourself obsessively scrolling through your feed, looking for something, you could be addicted.

Ironically, spending too much time on Facebook often makes people feel worse, not better. The same can be said for substance abuse or gambling. If you already have an addiction, avoiding both Facebook and invitations to play Farmville could be the smart thing to do.

 

Facebook Fined Over Social Gambling Ads

A few years ago, Facebook received a $5 billion fine for mishandling user information from the US Federal Trade Commission. The mishandling of user data included Facebook sharing that information with social casino game developers to analyze and monitor the behaviour of susceptible players. That data was fed into AI software to predict who would spend huge amounts of money on casino games. Then those Facebook users were targeted with aggressive ads. 

For a few vulnerable people, those ads led to games resulting in financial ruin. For example, a grandmother from Texas spent $400,000 playing slots on the Big Fish Casino app. She ultimately spent her family's inheritance, took two home equity loans, and borrowed money from her husband’s retirement fund to pay for it all. The most ironic part of the story was that she could never win any real money, since it was social gambling. 

 

Social casino gambling, such as poker and virtual slot machines on Facebook and mobile devices, are big business. Those seemingly harmless apps rake in more than $5 billion-a-year; that's nearly as much as all the casinos lining the Las Vegas Strip combined. 

However, since the games are categorised as entertainment, they're not regulated. Moreover, social media and tech companies are free to monitor, analyze and target with ads, people with addictive tendencies. 

Facebook has put advertising guidelines in place for social gambling apps; these include only targeting users who are 18 and older. Also, advertisers must disclose whether there are in-app purchases, and clarify that success at the games does not mean success at real gambling.

 

Facebook Accuses Advertiser of “Brainwashing” Users to Gamble

In 2019, Facebook considered taking legal action against a shadowy London-based company called The Spinner. The Spinner provided targeted social media ads to individual users; it actually bragged that it was using Facebook to help gambling operators manipulate users to spend more at online casinos.

The Spinner provided social media “sniper targeting,” to online casinos and others. Sniper targets individual users and targets them with a steady stream of posts focused on the advertiser's subject.

On a more sinister note, The Spinner even offered its services to men who wanted to “brainwash” their wives into having sex. This was accomplished by sending cookies to the targeted individuals, which ensured they would see the posts on their Facebook feed. The wife to be brainwashed would see posts with titles like, "10 reasons why you should have sex with your husband".

When it came to gambling, online casinos engaged The Spinner to target their existing players. Those players would see hundreds of posts with titles like ‘London lad hits £ 1.2 million jackpot online’.

However, the posts were major news articles, not paid-for ads, so it seemed natural, not obvious. The Spinner claimed that online casinos saw that those players became significantly more engaged compared to players who weren't targeted.

Ultimately, The Spinner was booted from Facebook for violating the advertising policies and terms of use. But, the tale of The Spinner serves as a cautionary tale, not to trust everything you see on the internet.

 

Social Media Influencers

The job of an influencer is to influence; in the case of a gambling influencer, their job is to influence people to gamble. These charming and engaging influencers have followings in the millions, which advertisers can also engage.

Gambling companies often sign these influencers as “brand ambassadors”, to promote their products. There are also advertising companies that identify the top gambling influencers on Facebook, Instagram, Youtube, Twitter, and elsewhere. Once identified, ads can be sent to their followers.

Influencers can be especially persuasive when it comes to children and teens; while social media companies can set advertising rules, there is nothing to stop kids from following an influencer. For example, top Youtube influencers, RiceGum Jake Paul and Morgz who's combined 36 million followers of mostly 8-16 year-olds were promoting paid content for MysteryBrand; Mystery Brand was in the business of selling loot boxes. Loot boxes are outlawed in some countries as a form of gambling or unfair business practice.

Also in 2019, the Committees of Advertising Practice prohibited online ads for gambling targeted at kids under the age of 18. The standards include social networks. Unacceptable gambling ads include animated characters, licensed TV or film characters, and celebrities and sportspeople who appeal to children. Also, ads that refer to ‘youth culture’ are prohibited.

Those rules came about after a BBC investigation into a 13-year-old child who played a social gambling game promoted by a 17-year-old YouTube influencer. The 13-year-old lost money, prompting The Children’s Commissioner for England, to call on social media companies to fine or shut down influencers engaged in irresponsible advertising.

It's the individual's responsibility to use their common sense and best judgment, both for themselves and their children. Just because an influencer tells you to do something, doesn't mean you have to.

 

The Gambling Commission Says Loot Boxes are Not Gambling. The House of Lords Disagrees.

Loot boxes are a popular, and controversial, in-purchase item for many social games, including those aimed at children. For the money spent, you may receive a nearly worthless item or something of great value. Needless to say, most who purchase loot boxes receive something that's nearly worthless.

During the summer of 2020, the House of Lords published a report on the dangers of gambling, which also recommended immediate action to bring loot boxes under the auspices of gambling regulation. The House of Lords raised the point, that if something looks like gambling and feels like gambling, it should be regulated as gambling. The report recommended loot boxes be identified as a game of chance.

However, the UK Gambling Commission does not believe that the2005 Gambling Act should include loot boxes. However, some countries, including The Netherlands and Belgium, have agreed that loot boxes are a form of gambling; these countries have outlawed them. In Italy, loot boxes have been deemed an unfair commercial practice. Misleading advertising of loot boxes in Italy can incur fines up to € 5 million.

Reputable video game developers strive to provide transparency to players on in-game purchases, and it's hoped that regulators and publishers will find a decent compromise. However, both adult players and parents of online gamers should be aware of the risks related to loot boxes.

 

Social Gambling to Real Money Gambling

A 2016 study of adult social casino game players showed that 71.2% of social casino game players reported that the games had no influence on how much they gambled with real money.

However, 9.6% of social casino gamers reported that their overall real-money gambling had increased. Finally, 19.4% reported that they had begun to gamble for real money as a direct result of playing social gambling games.

Players who began gambling as a direct result of social casino games were mostly young males. Also, those who were more involved playing social casino games; these players engaged with the games more frequently, and made more in-game purchases. Finally, players with a higher propensity to develop a severe gambling problem also began playing more for real money.

The most common reason for real gambling due to playing social casino games was to win real money. This indicates that simulated gambling may lead to real gambling amongst those already affected by or vulnerable to developing a gambling problem.

A US study of social casino game players found that 36% went to a land-based casino more than twice a year. Moreover, 68% expressed interest in gambling on the real money version of their favourite social casino game.

A similar survey found that online gamblers reported that the more they participated in social casino games, the more they gambled. Yet another US study of social casino gamers who had never gambled online before, about 25% reported having begun gambling online within six months. Once again, the players willing to make in-game purchases were the most likely to go from social casino gaming to real gambling.

The statistics show that a significant proportion of social gamers eventually start gambling online with real money.

 

Responsible Social Gambling

Social gambling games can be a fun way to pass the time, as long as it's done responsibly. If you feel that you are becoming addicted to social gambling games, seek help. While social gambling isn't real gambling, since technically it doesn't involve money, it is addictive, all the same.

To play responsibly, keep the following guidelines in mind:

  • Keep track of the time you spend playing. If you're ignoring your real life to play games online, something is wrong. The UK Gambling Commission has resources and tools to help you manage the amount of time you spend gaming.

 

  • Online casino games should be fun. If you find yourself stressing over whether or not you'll win, it could be time to quit. If the games create more stress than they relieve, it's time to take a time out.

 

  • Avoid spending real money on in-game purchases. Once some people begin spending money on casino games, it can spiral quickly out of control. Keep free games free. Even though social gambling is not real gambling, you can still lose a lot of money.

 

Social gambling in the UK can be a fun way to spend time with friends and family online. It can also help you to pass the time while commuting on the tube or ferry.

Most people who play social games do so safely. But even social gambling can be dangerous for some people. Playing too much, too often, or binge play can sometimes lead to more serious gambling addiction. Moreover, the damage is not limited to the player but extends to friends, family, and employers.

Early, proactive intervention can help maintain control of social gambling. If you, or someone you know, are spending too much time playing free casino games, seek help.


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