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James Gatto - Gamblification: Legal Concerns
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James Gatto - Gamblification: Legal Concerns

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Gamblification is a term that we have adopted to describe the intersection of social media and gambling. Although it may not seem like it at first, many Gamification systems walk a dangerous line, …

Gamblification is a term that we have adopted to describe the intersection of social media and gambling. Although it may not seem like it at first, many Gamification systems walk a dangerous line, giving users the option to gamble with currency in their system. Given the complexity of the legal issues around this concept, it is not always easy to ensure that one does not cross the line. When is gambling in gamified systems ok, and when isn't it? What are some of the risks you should consider, and what are the basic legal considerations and concerns affecting gamification in general? Join legal expert James Gatto for this fast-paced, crowd-favorite session on some of the key legal issues every gamified system operator needs to know.

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  • 1. Pillsbury Winthrop Shaw Pittman LLPGamblification!Legal Issues relating to the use of gamblingmechanics for non-gambling purposesPresented by:James GattoLeader, Social Media & Games Team
  • 2. GamificationThe use of game mechanics for non-gamepurposes2 | Gamblification!
  • 3. GamificationGam ificationblThe use of gambling mechanics for non-gamblingpurposes
  • 4. Staking or risking any thing of value on the outcome of a futurecontingent event over which the bettor does not have controlwith the understanding that he, or in some states anyone else,will receive something of value upon a specific occurrenceGambling
  • 5. CONTESTSWEEPSTAKESOTHERLOTTERY Consideration Chance PrizeConsideration Chance PrizeConsideration Chance PrizeConsideration Chance PrizeContests, Sweepstakes, Lotteries
  • 6. Skill vs. Chance6 | Gamblification!Sample Issues
  • 7. Virtual Goods and Currency?Bitcoin, too? YES!Value
  • 8. Impact of Virtual Goods/Currency8 | Gamblification! When virtual goods or currencies are used, determining if there is apayment or prize can be more complicated Does virtual good/ currency have value? Some things to consider: How did the player acquired the virtual good/currency? What can the player do with the virtual good/ currency? With whom can the virtual currency be used? Is it a “dual currency” model? Is there a secondary market Check out our paper: Overview of Legal Issues with Virtual Currency(www.virtualworldlaw.com)
  • 9. FINCENApplication of FinCENs Regulations to Persons Administering,Exchanging, or Using Virtual CurrenciesIssued: March 18, 2013
  • 10.  Engage in actions Earn spins Win Real Money LeaderboardsCash Dazzle
  • 11.  Kompu gacha, or "completegacha," is a virtual item salesstrategy whereby users purchasea virtual item that is part of the setof multiple virtual items. Once theentire set is collected, the userreceives a rare item The virtual item that the user getsfor his/her purchase is selected atrandom from among all of theitems in the set, and one of theitems in the set is harder to getthan others Enforcement in JapanKompu Gacha
  • 12.  Gambling analysis: The fact that each player receives something in exchange for the payment of realor virtual currency could provide against a finding of gambling in those states thatdefine gambling as requiring a wager or bet or staking of a thing of value Prize: Could argue that the game feature is simply a consumer transaction and that thereis no prize hereA. The virtual good is a consumer good whose purchase has been bargained for,not a prizeB. In the alternative, it can be argued that there is no prize because the virtualitem has no independent value apart from the game. It is merely one of manyfeatures of the game that cannot be traded for a real world item of value But counter arguments may existKompu Gacha12 | Gamblification!
  • 13.  Buy Virtual Poker Chips Play poker, win chips ….but can not redeem! No Value?Zynga Poker
  • 14.  Consult knowledgeable attorney early! Everyone else is doing it…. doesn’t make it legal There is a lot of gray! How much risk are you willing to take? Most enforcements are triggered by consumer complaintsSome Key Takeaways
  • 15.  Social Platforms and App Stores Intellectual Property Terms of Use Policing Secondary Markets International LawsOther Legal Issues to Consider15 | Gamblification!
  • 16. James GattoPillsbury Winthrop Shaw Pittman LLPSocial Media & Games Team LeaderTel: 703-770-77541650 Tysons Boulevard, McLean, VA 22102-4856Email: james.gatto@pillsburylaw.comwww.socialgameslawyer.comBlog: www.virtualworldlaw.comQuestions?16 | Gamblification!