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

Social Gambling in the US: How It Works

To put it simply, social gambling is a game played to socialize and to have fun. It could be something like the weekly poker game, played with family, friends, neighbors, or co-workers.

Also, social gambling plays out in a private place, such as in someone's home. Social gambling does not take place in a business or other type of public place. However, a private place could include a private club, but only if the club doesn't run or sponsor the gambling. However, although it's private, players must be at least 18 old, or in some states, 21.

Is social gambling legal? The answer is yes, no, and maybe. In some states, social gambling is completely legal, and in other states, it's not. The laws in some states are vague or impose restrictions. In 27 states, social gambling is legal, but some states limit the size of the pot. Social gambling laws in two states are ambiguous, that could be interpreted as either legal or not legal.

Considering all of this, before you get together with your friends for a friendly game of poker, let's delve deeper into social gaming.


What is social gambling?

There are usually two criteria that will decide whether an event is considered social gambling:

  1. One person, or a group of people, can not profit by staging or running the event. The “house” can not take a cut. Also, there can not be a buy-in paid to whoever organizes the event.
  2. All players are on an equal footing. No player or the “house” has the odds slanted in their favor. Every player has an equal chance.

However, not every state sees social gambling like this. If a state does address social gambling, it sometimes adds its own criteria. For example, the state of Colorado requires a “genuine” social relationship between the players; that means, you are actually friends or co-workers. In Iowa, anyone organizing a social gambling event needs a gambling license.


Why it's important to know whether your game or event qualifies as social gambling

If you cross a certain line, you risk facing prosecution under federal or state gambling laws, if your event is deemed illegal. Fortunately, arresting people over a home poker game among friends is rare. The police simply have better things to do. However, to avoid crossing the line, understand the gambling laws in your area.

Every state has its own gambling laws, and the difference can be dramatic, especially when it comes to whether or not social gambling is legal. For example, neighboring New Jersey and New York have social gambling laws that are quite similar.

In New Jersey, social gambling is not legal, but it is not criminal either. N.J.S.A. 2C:37-1 exempts a “player” from prosecution for illegal gambling.

This New Jersey law defines a “player” as someone who engages in any type of gambling only as a bettor or a contestant, without receiving or entitlement to any profit other than personal earnings. Also, a player can not conduct the gambling activity, or render material assistance to the place where the gambling is taking place.

Someone gambling at a social game of chance is on equal footing with the other participants. Thus, they are not rendering material assistance, conducting or operating the game. If a participant performs acts, without fee or compensation, to help arrange or facilitate the game, such as inviting people to play, et, etc.

This means that in New Jersey, if you’re not at an advantage or receiving any compensation for arranging or hosting the game, and you're playing on the same terms as other players, you won't face criminal charges for illegal gambling.

In New York, Article 225 takes a similar approach to New Jersey, in that “players” are not subject to criminal prosecution. As in New Jersey, players in a social game who do not profit by operating, have done nothing criminal.

This “decriminalization” is a common approach to social gambling. Many states don't specifically say social gambling is legal, but they also don’t make it criminal. If you are simply playing, and not running the game for profit, you should be OK.

However, blackjack, craps, and roulette are off the table, since these games are built to favor the “house”. Thus, gambling on those games is not on equal footing. You can play poker, bridge, or gin rummy with your friends, but don’t play blackjack, or you could be breaking the law.


States have different legal opinions on social gambling

While New Jersey and New York present a common approach, some states more tightly define what legal social gambling is.

For example, Florida state law states that games in which $10 or less could be won at a time are legal. The law in Connecticut says that social gambling is legal if the participants really are family or friends outside of gambling. It is vital to check your state’s specific laws on the subject.

We urge you to check the laws in your state, but to quickly sum up social gambling by state:

Overall, these states allow social gambling, but with some restrictions, such as limits on prizes: AL, AK, AZ, CA, CO, CT, DE, FL, HI, IO, KY, LA, ME, MN, MT, NV, NJ, NM, NY, ND, OH, OR, SC, TX, VA, WA, and WY.

Some states have rather vague gaming laws, making it unclear whether social gambling is legal or not. However, the prosecution is unlikely, especially for small stakes personal games. MA, PA, and the District of Columbia.

Finally, some states have criminalized social gambling; or, to be more specific, they haven’t carved out any exceptions related to unlicensed gambling. GA, ID, IL, IN, KA, MD, MI, MS, MO, NB, NH, NC, OK, RI, SD, TN, UT and WV.

Of course, busting up a $10 per hand poker game in someone’s “man cave” is never really a priority for law enforcement. In this way, social gambling in states where it is illegal could be viewed the same as speeding. While many people do it, only a small percentage of the worst offenders are caught or prosecuted.

Poker may not be considered gambling

Hands down, the most common and popular social gambling is a friendly game of poker. While the laws concerning social gambling apply to poker, there is a caveat; due to the high degree of skill required to win at poker, it's not considered gambling in a few states. In some states, a game doesn't qualify as gambling if there is more than a 50% chance of winning or losing.


What can the law do if you're caught in social gambling?

If social gambling is technically illegal in your state, you're taking a risk. As with anything else related to gambling, you need to know your state’s laws. These can vary widely whether or not they'll punish players, and what the penalties might be.

Penalties can sometimes include forfeiture of gambling proceeds, hefty fines, or even jail time; that's especially true if the authorities determine you were involved in organized gambling. If you are ever arrested with charges of illegal gambling, get a good criminal lawyer.

Also keep in mind, if you try to collect a gambling debt through the court system in a state where social gambling is illegal, your chances of collecting on the debt are nil since gambling was illegal in the first place. In fact, even trying to present such a case in a state where social gambling is illegal could get you into trouble.

Finally, never gamble on IOUs; if you or your friends don't have the money, don't gamble with real money.


Social Gambling Online

Nowadays, more people are gambling with their friends, or, against the “house”, online. These “social casinos” are very popular all over the world. In fact, social casinos see 20 times the traffic as real-money online casinos.

At a social casino, players don't play with real money, but rather, credits. Also, rather than playing with their friends, most social casino games are slot games. Players play by themselves, against the “house”. So, while the games are called “social”, they are mostly solitary.

Players sign up for the game and receive daily credits, or coins, to use for play. But, to go to the next level of the game during play, often a player will run out of daily credits. This is where the real money gets spent. Players can purchase additional credits. Also, depending on the game, players can purchase things like new costumes or weapons for their characters.

These games can be very engaging, drawing players in. As a result, they can spend a lot of money, if they keep buying coins to keep advancing in the game. While they are not technically gambling, they can be just as addicting, and costly, as playing slot games at a real-money casino.


Where can you find social casinos?

These free-to-play games are all over social media, including sites like Facebook. You can also download the games onto your iPhone or Android phone as an app, from the app stores. The social casinos feature hundreds of different high-quality, visually stunning games.

A big draw for free-play social casinos is that they’re legal in places where online gambling isn't. While local laws still apply, playing free slots and table games is possible in places where real money online gambling is illegal. That’s good if you live in a state that has yet to legalize online casinos.

Most of the social casino websites and apps are created and operated by the same companies as real money online casinos. In fact, many social casinos feature the same games, except that you play with virtual money, rather than real money. Slot games rule in the social realm, outpacing other games by a wide margin.

One thing that’s unique about social casinos is that they occasionally feature locked games. Upon first logging in, you’ll see a selection of games. However, as the player hits certain targets, new games become available. This creates a sense of achievement which, in turn, motivates the player to keep progressing up the ladder.

Hitting a jackpot can mean winning more coins or credits to play with. While some players can be drawn into spending too much money buying coins and credits, the vast majority continue to play for free. If you love going to Vegas or Atlantic City to play the slots but live in a state where that's illegal, social gambling might fulfill that need.


Social gambling can cost a player big, but there is no winning it back

Free-to-play social gaming is not gambling, and thus, there is no way to win back any money spent buying credits. Also, unlike online casinos, there is little to no oversight into the industry. The effect of playing these seemingly harmless games can be just as devastating as real gambling.

Aristocrat Gaming and Churchill Downs settled two class-action lawsuits, in early 2021, regarding the Big Fish social gaming platform. The settlement amounted to $155 million, sending a strong message to the social gaming industry.

The US Federal District Court for the Western District of Washington decided that playing for coins was indeed playing for something of value, and thus, constituted gambling.

The ruling has widespread ramifications for the social gaming industry, in that any game of chance with in-game microtransactions could now be considered gambling.

It all began in 2015 when Cheryl Kater took legal action against Big Fish’s then-parent company, Churchill Downs. Keter's lawsuit charged that the company violated Washington state's online gambling regulations since the coins used in the Big Fish Casino were“something of value.” 

Initially, a U.S. District Court in Seattle refused to hear the complaint. But a few years later, a federal appeals court ruled that, according to Washington state law, Big Fish Casino was engaged in illegal online gambling.

The individual payouts of the settlement are to be based on how much each player lost while playing at Big Fish Casino, Epic Diamond Slots, and Jackpot Magic Slots. 

Big Fish also agreed to create a self-exclusion mechanism, allowing players to exclude themselves from playing. Also, the company agreed to provide video game behavior disorder resources. Finally, they agreed to change the games so that players who are out of virtual coins can keep playing, without buying more.


Big Fish social gambling addicts

One couple from Houston spent at least two hours every day together, playing Jackpot Magic, produced by Big Fish, on their smartphones. In just two years, the Houston couple had spent a mind-blowing $150,000 on coins, playing the “free” game.

One woman spent a whopping $40,000 on Big Fish Casino while ironically, working as an addiction counselor.

Like many players, they felt helpless and wanted to quit but they had become addicted to the games. Also, Big Fish's aggressive marketing hooked them into spending more and more money.

Another woman in Florida spent $100,000 over the course of eight years, buying coins to play Big Fish Casino. "It's like a cult, they suck you in, and once you're in you can't get out," she said.

One of the plaintiffs in the Big Fish settlement said in a sworn declaration that she was addicted to Big Fish Casino, playing nearly 24 hours a day. She had spent $500,000 on coins.

Another former Big Fish player spent $400,000 on the game. She even spent her inheritance and took out a home equity loan to fund her gaming addiction. When she did try to quit and cancel her Big Fish account a "VIP representative" would offer her free coins so she would keep playing.

One feature that helped to hook these players is the “clubs”, groups in which players can interact with each other. For some isolated and lonely people, they kept spending money to keep playing, so that they would not lose these virtual friends.

The recently settled class action will only refund these people 10% of their losses; however, it will do little to repair the mental and emotional damage caused by their addictive behavior.


The mental and physical consequences of too much gaming

While playing any type of video game can be a fun way to pass the time. It's also a way to interact with others in a virtual community.

Video games can also help to train people suffering from degenerative diseases to improve their coordination and balance. Also, it can help teens with ADHD improve their cognitive skills. Finally, special videogames can help train surgeons on how to perform technically complicated surgeries.

However, there are clear risks connected to too much gaming. What are these risks, and what can be done to avoid them?


Gaming addiction

According to the American Psychological Association, internet gaming disorder is diagnosed if a person experiences at least five out of nine criteria over 12 months:

  • preoccupation with gaming
  • experiencing withdrawal symptoms
  • building up a tolerance for gaming
  • losing interest in other activities
  • denial concerning the amount of play
  • losing relationships, career or educational opportunities
  • gaming as a means of escape
  • playing to relieve feelings of anxiety, depression, guilt, or other negative emotions
  • failure to control the amount of gaming
  • continuing to play despite growing psychosocial problems

Excessive gaming has also been associated with insomnia, sleep deprivation, depression, anxiety, and even increased levels of aggression; exposure to extremely violent video games can desensitize teens and young adults to violence in general, even leading some to commit acts of violence.

A six-year study concluded that 90% of gamers do not play in a harmful way that causes long-term negative consequences. However, a significant 10% minority can truly become addicted to social gambling games, suffer socially, mentally, and behaviorally. 

Like any addiction, gaming addiction can lead to financial problems. Some of the people suing Big Fish lost hundreds of thousands of dollars. Job loss due to excessive gaming can also lead to financial hardship.

While online and mobile social gambling is allegedly social, it also steals valuable time away from real-life family and friends. A spouse, or even the gamer's children, can feel rejected and abandoned by the gaming addict. 

According to one study, between 0.3% and 1.0% of Americans could suffer from an internet gaming disorder. Groups like Computer Gaming Addicts Anonymous can be helpful in the treatment of gaming addiction.


Physical problems caused by too much social gambling

Gamers are susceptible to repetitive stress injuries; these involve excessive use of certain muscles and tendons resulting in pain and inflammation. As these injuries progress, permanent damage can result. Repetitive stress injuries of the hands, such as carpal tunnel syndrome, are common among social gamers.

Backaches are also common among social gamers because most remain sitting in the same position for many hours. This causes stiffness but could degenerate into a chronic back problem. 

Obesity is also associated with excessive social gaming. People who spend hours every day playing social casino games do not get much physical exercise. Also, snacking often goes along with social gaming, causing the gamer to consume too many calories. The possible mechanisms involve either the fullness signals to the brain are impaired, or the mental focus involved with social gaming activates the reward centers, leads to over-eating.

Vision problems, such as eye strain, are common among gamers. This can lead to poor concentration and headaches. Someone playing mobile gambling games for many hours is prone to migraines due to the strain on their eyes, as well as their intense concentration on the game. 

In very few people, gaming has resulted in seizures. This could be due to the strobe-like flashing of some games. However, this only applies to people predisposed to epilepsy. 

Finally, extreme gaming addicts can begin to neglect their personal hygiene; they fail to take the time to bathe or brush their teeth or hair.

Playing social gambling games can be fun and social, but only as a minor part of an overall healthy lifestyle. Don't let the game become your life. Be sure to get plenty of exercise, sleep, exercise, and good nutrition.

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