Thus far, it appears that such games are permitted to operate in Ontario by virtue of the fact that the “casino” does not occupy a geographic location (2), and more importantly, the fact that “winnings” cannot be officially cashed out (3). Though this may satisfy current legislation in jurisdictions such as Ontario, game developers need to be aware of their liabilities in any jurisdiction where a resident may play the game. It is clear that the virtual chips have value, both for the game developer selling them as well as the gamers selling on the black market. Considering the substantially fewer restrictions and liabilities regarding age of users, limits on spending, and the fairness of the games themselves in the social media gaming industry, it may only be a matter of time before legislators closes the gap on what kinds of game activities should and should not receive regulatory scrutiny. Though such casino-genre social media games may have found sufficient breathing room to operate outside of gaming regulations in their current form, that has not stopped game developers from treading into formal online gaming as an alternative business model, including Zynga (4). Given this trend, it would not be surprising to see many more social media game developers seep into the online gaming world.
Online gaming is clearly here to stay, and social media continues to grow online. The combination of the two is a unique development that is blurring the lines of what gaming is, and legislators and industry professionals will need to pay particular attention to the market and the regulations surrounding this growing industry.
By Javad Heydary is Managing Director of Heydary Hamilton PC. He regularly advises clients on online gaming issues
1. http://www.gamasutra.com/view/news/28097/Zynga_Suing_Site_For_Unauthorized_Virtual_Currency_Sales.php 2. Where “casino” is defined as “a place that is kept for the purpose of playing a prescribed lottery scheme”. It is not clear whether a virtual game platform constitutes a “casino” under these regulations.
3. Under s. 1 of the Ontario Gaming Act Regulations, a “chip” is a symbol of value issued by the casino and redeemable for cash at the casino. Though social media poker games satisfy the first half, they may escape these provisions under the second half of the definition.