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September/October 2016 // PUBLIC GAMING INTERNATIONAL //
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pokémon go could
herald a new world of
gambling technology
When the presence of a Pokémon
(an augmented reality) can trigger a
human stampede in New York City’s
Central Park (a “real” reality), you
know the world is in the grip of a
gaming tsunami.
Within two days of its release, the aug-
mented reality gaming app Pokémon
Go had been installed on more than
five percent of all Android smart-
phones in the U.S. Four days later, it
had become the most popular mobile
game of all time in the United States,
with 21 million users, a figure that
surpassed Candy Crush Saga’s high of
20 million.
Game makers Nintendo and publisher
The Pokémon Company are mak-
ing $1.6 million per day from the
US iOS store alone on a game that is
“free.” The moneymaking is generated
by in-app transactions, which enable
the purchase of items that will increase
the efficiency of Pokémon playing.
Advancements in mobile internet con-
nectivity and mobile processor speeds
have made games like Pokémon Go
more viable in recent months. Aug-
mented Reality (AR) is the foundation
of Pokémon Go. And while there has
been industry buzz around virtual real-
ity—AR’s more evolved cousin—as
VR goggles were made commercially
available for the first time this year, the
expense of VR hardware means it is a
market for the future, perhaps a few
years away from mass adoption.
The gambling industry is closely
observing the popularity of AR games
because the millennial generation, the
first truly “gamer” cohort, appears to
be disinterested in traditional ap-
proaches to gambling. Recent actions
have been designed to enable a new
gaming approach. For example, the
states of Nevada and New Jersey have
revised their gaming laws to permit
“variable payouts.” This will allow for
the advent of video-game-slot hy-
brids on the casino floor. Historically,
anybody playing a gambling machine
had to be offered the same chance of
winning. The legalization of variable
payouts means that players who have
mastered a certain video-game-style
bonus round, for example, can earn a
better chance of winning.
Coupled with AR and variable payouts
is the rising popularity of e-sports
betting. Sports-like gambling markets
could emerge around Pokémon GO
games, although it remains to be seen
how much of a “skill” element the
game actually possesses.
One of Pokémon Go’s principal attrac-
tions is the existence of highly coveted
rare creatures. This game feature has
sparked speculation that Nintendo
might launch a trading platform,
where monsters can be bought and
sold or traded like baseball cards. It
is a potentially lucrative, although
risky proposition as Valve recently
discovered. The maker of the game
Counter-Strike: Global Offensive (CS:
GO) and owner of the Steam games
platform, Valve introduced “skins”—
designer weapons of varying degrees of
rarity that could be acquired or sold.
Valve intended to create an in-game
economy, but an unwanted gambling
industry grew up around the skins.
Third-party sites used skins like a
digital currency with which players
could wager on lottery-style games or
esports matches.
The introduction of skins made CS:
GO one of the most popular games of
all time, but because much of CS: GO’s
audience is minors, Valve was sued for
profiting from underage gambling.
Augmented and virtual reality will play
a major role as game developers create
a mix of social, skill-based, and betting
game hybrids. Casinos of the future
may be virtual reality arenas, where
“cyber athletes” compete while audi-
ence members strap themselves into
their VR headsets and place their bets.
what constitutes gambling?
skill games expand the
traditional definition
What is gambling? For decades, gam-
bling has been defined as a game that
requires players to risk something of
value for a prize that is awarded based
on the outcome of an uncertain event.
You place your bets, spin the wheel
(or roll the dice or play the cards) and
hope to be rewarded.
Gambling has been defined as Prize
+ Chance + Consideration and needs
to include all three. This traditional
definition is changing, however, with
the legalization of skill-based gaming
in Nevada and New Jersey. Skill-
based gaming redefines gambling by
eliminating or reducing the amount
of chance involved in a game. Recent
changes have expanded the scope of
gaming laws so that such games may
be authorized, approved, and regulated
on casino floors.
Nevada and New Jersey are the leading
developers of gaming policy. Accord-
ingly, their regulatory models for skill-
based games will become templates
for other jurisdictions that may wish
to authorize such games. However,
expansion may be impeded by differ-
ing state statutes, regulations, and case
law that determine how a state defines
“gambling,” specifically, the compo-
nent of chance.
These changes provide casinos an
opportunity for innovation. Game
developers are confident that new
head-to-head and multiplayer games
INNOVATION
IN GAMES
OF CHANCE