Where Does Gambling Fit in Gamification: Legal Issues and a Success Story

Where Does Gambling Fit in Gamification: Legal Issues and a Success Story


Gambling and Gamification = Gamblification?

Gamblification is the intersection of social gaming and gambling. Many casino and card games make use of a human’s gambling instincts to lure people into deep engagement. Although real money is used to purchase chips to be used in these games, the chips are not redeemable for money. However, some social games provide venues where in-system virtual currencies can be exchanged or raffled for virtual goods.

Some systems such as Virgin Gaming allow console players (PS3, XBOX) to wager real money against others for big cash prizes. It doesn’t end there. There are various examples of social games that are using in-game currency or real money to encourage certain behaviors that will have users risk their in-game capital for extrinsic rewards. With the ability to reward users with real and/or virtual prizes, social gaming is incorporating the addictive features of gambling to create a new battlefield of playing. The apparent spectacle of getting lucky and “striking rich” are attracting major companies to focus on gambling.

In 2012, gambling equipment company IGT bought Double Down—a designer for Facebook casino games—for $500 million. Caesars Interactive Entertainment recently acquired Playtika and Buffalo Studios, two interactive social gaming producers. Other companies, including UK’s largest betting site Betfair, are looking to expand its presence in the fast-growing US social gaming industry. However, whenever there is money involved, the playing battlefield is accompanied by the back-office legal field.

With GSummit SF 2013 fast approaching, we found it important to highlight some of the key legal issues facing gamification and game-design in general. As gamblification applications continue to expand into real and virtual reward systems, it is important for managers to understand that fine line between legal and illegal.  To enlighten us on the legality of these issues, we will be having James Gatto, IP and SET (social media, entertainment,technology) legal expert, to talk about some of the key areas of gamification law and how gamblification designers can succeed. Here is a brief overview of his talk:

  1. Various states require different laws related to gambling, contests, and sweepstakes. What’s worse is that there is a great disparity among these states regarding what is legal or not. Online gambling aims to break down physical barriers, so how do online operators mediate legal steps for interstate gambling?
  2. Virtual currency based models are legal, but their specific use can be called into question by gambling law. In the case of Zynga poker, the chips can’t be redeemed for cash. By law, there is no real-value to the in-game chips, so Zygna does no harm. However, some applications are viewing virtual currencies as ways to get users to initially play games with potential cash outs. How can designers legally provide cash rewards in virtual worlds?
  3. Australia is looking to ban online social games because these gamblification apps allow children and teenagers to access “gambling-like” activity at a young age. When dealing with legal issues, the constituents aren’t only those participating but also the surrounding community. How are social games designed to make all constituents happy?

Although the gamification law space is complex and quickly evolving, there has been success. Meet Derby Jackpot, the only legal online gambling site. It allows people to bet on 100s of horse races around the country for as little as a dime. Once a bet has been placed, a social feed serves as a chat room while a live video feed of the race gives players the feeling that they are actually at the race—just without the mud and overpriced beers.

Walter, Tom, and Bill Hessert, founders of Derby Jackpot were overjoyed at the horse track when they realized how an initial $5 bet turned into $25 in winnings. With the help of Freakonomics author and Bill’s former professor Steve Levitt, the Hesserts set out to make the micro-transactions of horse betting more fun and game-like. Dorothy Jean, Derby Jackpot’s spokesperson, said, “Derby Jackpot is designed for the casual user and requires no prior knowledge of horse race jargon or experience.” Also, the cartoon like aspect removes any weirdness associated with betting, and the fun part — you keep your winnings!

What are your thoughts on gamblification? Does it have a place to stay or is the casino industry overstepping its commercial boundaries?

Flickr Image by heath_bar


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  1. Gambling is ingrained in human psyche and it will percolate in one form or another. So there is not denying it. It will be a part of gaming and gamifications big future.