GSN's New Real-Money Arcade Gaming App May Invite Regulatory Scrutiny
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GSN Games Announces Launch Of Real-Money Arcade Gaming App

GSN Sparcade mobile app announced
A senior official at GSN Games announced that the company’s new Sparcade app will allow people to play some of the world’s most popular arcade titles against their friends for real-money prizes.

It’s a move that could contribute to the ongoing national debate as to what constitutes skill-based gaming. 

A company vice president wrote in a recent blog post that the app will debut on iOS this summer, while an Android version is set to launch later this year.

How Sparcade works

Sparcade is a new, real-money gaming ecosystem that will allow users to compete against one another in Tetris, Scrabble and Pac-Man, as well as an in-house-developed Solitaire game, for either cash prizes or for free. Players can earn tokens by playing the games, and use those tokens to play for free. According to VentureBeat, GSN will take an undetermined rake on two-player cash games.

“We leverage the huge market for casual and mobile games, tap into the energy and enthusiasm around competitive video gaming, and deliver … a single, free-to-download destination, offering high-quality, skill-adapted versions of the biggest and most popular mobile game franchises of all time,” wrote Greg Canessa, Sparcade’s senior VP and general manager, in the announcement. 

Canessa’s post teased a social component of the app, as well as a larger “meta-game.” He also said games on Sparcade will offer “competitive twists” on these traditional titles while still honoring the “legacy and integrity of each brand.”

The app has been in development for nearly the entire two-and-a-half-year period that Canessa has been at GSN. During that time the company struck licensing deals with its current titles’ owners — Electronic Arts (Tetris), Bandai Namco (Pac-Man) and Hasbro (Scrabble) — to be able to offer the popular titles on its platform.

The post said Sparcade intends to layer in additional titles, as well as additional features within games.

GSN Games is part of the Game Show Network, which itself is co-owned by AT&T Entertainment Group and Sony Pictures Entertainment. It builds social casino games for mobile and desktop. Its website offers both free casino games, such as slots and bingo in which users can play to win tokens, and cash games.

Skill gaming vs. Chance gaming

Even though the words “bet” or “wager” are never used in Canessa’s post about winning money by playing Sparcade games, gambling cannot be far from the mind for GSN.

“The option of putting a little money on the line makes familiar games more interesting and fun. It adds a little bit of excitement to the gameplay that feeds friendly competition and keeps the game fresh,” wrote Canessa, the Blizzard Entertainment veteran and man behind the Microsoft Xbox Live Arcade.

Indeed. The question remains: Will this type of real-money wagering be found legal? And that will likely depend on the proportion of skill found to be involved in the games. GSN obviously believes that Sparcade’s products constitute skill-based gaming as opposed to chance-based gaming. At least with Sparcade’s very first announcement, the company seems to be actively on-message.

“Skill” is a word that’s tactfully used in Canessa’s blog post. Echoing the popular refrain of proponents of the daily fantasy sports industry, Canessa told VentureBeat, “This is about skill, not gambling.”

Approximately 35 to 40 states have legalized real-money, skill-based gaming. No state laws, however, expressly legalize real-money Scrabble playing, for example.

The cautionary DFS tale 

One wouldn’t think the absence of specific laws regulating real-money gambling on arcade games would be an issue for Sparcade, until they consider the cautionary tale of DFS. Operators DraftKings and FanDuel figured through the years that their games were clearly skill-based, and therefore legal in a majority of states. But others didn’t agree.

DFS has come under intense scrutiny in the last nine months, and the operators no longer offer their games in states like Mississippi, Idaho and Hawaii that they traditionally considered safe. Furthermore, extensive lobbying efforts in states like Indiana, Colorado, Mississippi, Tennessee and Virginia have produced laws establishing expressed legal clarity for DFS.

GSN will likely have a head start in determining that its games are skill-based by virtue of gamblers betting only on their own performance in this scenario; it is not offering a marketplace for observers to bet on people playing a two-player Pac-Man contest. Furthermore, it’s hard to argue that said Pac-Man contest involves much chance.

The Nevada Gaming Policy Committee is expected to regulate various forms of esports wagering before the end of the year. According to industry sources, one potential iteration of this wagering could involve actual esports players staking money on themselves to beat their competitors, a form not unlike two opposing Pac-Man players betting on themselves.

Potential for regulatory need

Few may question the skill-based proportion, and thus, the legality of GSN’s games. But that doesn’t mean GSN’s product won’t potentially face regulatory scrutiny.

Sparcade’s release statement mentioned nothing about enforcing age requirements on players, or the use of geolocation services to establish where players are based. It’s unclear what, if any, existing gaming body would be in charge of enforcing any regulations.

The release didn’t even acknowledge that the games would likely not be legal in at least 10 states. 

Canessa did tell GamesIndustryBiz that limits on games would initially be set at just $5, but that Sparcade could support much higher limits in the future.

One promising development, according to CalvinAyre.com, is that players will be matched together in various games by skill level in an effort to discourage bumhunting or “bottom-feeding,” a tactic of which several players in the DFS industry have been accused.

 Image credit: ehrlif / Shutterstock.com

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Will Green
- An analyst at the intersection of gambling, entertainment, and esports, Will worked as a writer and producer at Sports Illustrated, where he covered the sports gambling and daily fantasy sports industries. His work is currently featured at SI, as well as Fortune.com, Legal Sports Report, ESBR, and many other publications.