Paul's Blog May 14, 2018 'Change won't kill you. But why take a chance?'

Change won’t kill you.  But why take a chance? 
Brick-And-Mortar’s Next Big Challenge

We’ve already been bombarded with all the stats regarding the increase in purchases being made on Mobile.  What this means is that digital assistants, virtual and augmented reality (enhancing the Mobile shopping experience to replicate the physical attributes of in-store shopping), AI and IoT shopping assistance, and the increased smart-phone power enabled by 5G, will transform the shopping and selection process.   The end-game:  “The overarching challenge for the retail industry is that the real customer will become an AI rather than a human, forcing a revaluation of everything from advertising and services to after-sales support, and the role of the consumer in transactions”.  read Brick-And-Mortar’s Next Big Challenge

Draft Kings running ads on Adweek trying to get more advertisers:  This is an interesting addition to the traditional games-of-chance operator business model.  In addition to the margin or rake percentage that goes to the House or the Lottery, Draft Kings is monetizing its online audience of consumers by selling advertising to consumer products and services companies.  Could Lottery monetize its massive online audience in a similar way, maybe selling advertising to its retailers? 

Should Loot Boxes be regulated as “gambling”.  Gaming commissions in the United Kingdom and New Zealand have said loot boxes are not gambling. They are, however, regulated as gambling in the Netherlands, Belgium, Australia, China and other jurisdictions.  The status of loot Boxes as gambling or not is determined at the state level in the U.S. and is being debated now.   

Loot Boxes are a package of virtual items that can be purchased by players of digital games.  The players purchase these packages in the hopes of acquiring a desirable outcome like, for instance, a key to getting to the “next level” without spending as many hours playing the game to get there.  The thing is, the player does not know the contents of the Loot Box when she purchases the Loot Box.  The Loot Box could contain virtual items that the player values much more than the price she pays for the Loot Box.  Or the box could contain virtual items that are worth much less than the price paid for the Box.  Chance (Don’t know what the Loot Box contains) + Consideration (price paid for the Loot Box) + Variable and Unpredictable Outcome (“prize” if the value exceeds the price paid for the Loot Box.  A loss if it doesn’t.). 

But by this reasoning, Collectible Card Games (like Magic: the Gathering) should be regulated as gambling.  And they are not.  Now there are Digital Collectible Card Games which are also not regulated as gambling.  The buying and selling of these card games includes those features (Chance+Consideration+Prize) that constitute gambling.  But so does buying a box of cracker jacks if you are trying to complete your collection of cracker jacks prizes.  The case could be made that Collectible Card Games, Pokémon, and buying a box of caramel coated popcorn fit the conventional definition of “gambling”.   Add to this the contention on the part of some legislators that “The entire setup of digital gaming, the entire visual of it, the entire sensory load of it, is rapid and is immediate.”  These arguments are stretching to redefine “gambling” to enable the regulation of digital games (and accessories like Loot Boxes) that some people contend are replicating the “addictive” aspect of gambling that make them harmful to consumers, and so should be regulated as gambling.  

This lack of clarity as regards to regulatory definitions and structures is not a good thing for government-sponsored gaming.  Our sector is not only required to comply with all laws, we embrace the role as standard-bearer, setting the highest standards of integrity and hope that the games-of-chance industry (and the lawmakers who determine regulatory policy) will also try to act in the best interests of society.  Others, like digital games that promote Loot Boxes and “Secondary” lotteries that redirect lottery revenues away from Good Causes and into the pockets of private shareholders, operate in the gray areas where regulatory restrictions have not caught up with changes in the games-of-chance market-place.  That gives these gray area operators a competitive advantage in the market-place that government-sponsored gaming operators and stakeholders (like PGRI) want to see eliminated with logical and enforceable regulations.