TECHNOLOGY

This Type of Online Gaming Is Only Legal in 3 States. And It’s Future Is on the Line

Real money gaming is incredibly popular but Apple, Google, and market by market legislation are hurting its growth.

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BY Eliran Sapir - 05 Aug 2017

PHOTO CREDIT: Getty Images

Last week we covered how mobile game developers can plug an eSports SDK into their app and create a new revenue stream without any upfront cost. Today we learn about the other side of competitive gaming which is riddled with controversy. What is often referred to as 'real money gaming' is illegal in every U.S. state with the exceptions of Delaware, Nevada and New Jersey. Real money gaming (RMG) apps often take the shape of casino games such as slots but can come in other forms as well. The big difference between the Skillz SDK we discussed last week and RMG apps is a thin line of interpretation. Is the app a game of skill or is it a game of chance?

Daily fantasy sports (DFS) apps DraftKings and FanDuel have been embroiled in this legal battle for more than a year and there doesn't appear to be any finality in sight. DFS apps claim they are games of skill but many lawmakers beg to differ. In the US, real money gaming is only legal for games of skill which is why casino apps such as SugarHouse Casino from Rush Street Interactive can only take wagers in the U.S. from the three aforementioned states.

A spokesperson from SugarHouse told me that Apple permits regulated online operators in legalized online gaming markets but Google does not. As an example, online gambling is legal in the state of New Jersey and so you can download their app there from the App Store but Android users will not be able to locate the app in Google Play. Instead, players must download their Android app from SugarHouse's website and in the process, temporarily disable security features on their phones. This is obviously a big turn-off for would be gamers. Location services must be enabled for the player to wager. Driving or flying to a legal state will permit the player to win real money.

According to RMG app Lucky Day, real money gaming is a $30 billion industry. While there is no doubt this number sounds promising to mobile developers, the industry is not for the faint of heart. There are many barriers, obstacles and a certain fluidity to legal policies that will make a publisher want to think twice before putting a RMG app into production. Lucky Day CEO Joshua Javaheri says "There is a huge legal cost involved early on and throughout the process in order to remain live on the app stores. It is already hard enough to build a great product that millions of people are going to make a part of their daily routine, and the legal restrictions and restrictions from Apple and Google only add more challenge to the mix. But it feels great to see how we have positively impacted the lives of all our players and thousands of winners."

There are other markets outside the US where real money gaming is legal and popular, such as the United Kingdom. In fact, Google does allow RMG apps on the Play store in the UK. Google recently told developers that beginning this month, it will accept applications for the distribution of gambling apps within the Play store in the UK, France and Ireland. In the future, it may enable other markets to join in the fun as well.

Some developers circumvent rules from Apple and Google by enabling real money gaming through cryptocurrencies. Apple and Google do not view cryptocurrencies the same as their view country currencies and cryptocurrency payments providers are not beholden to the same stringent regulations payments companies like PayPal are.

Developers need to be careful in determining if this market is right for them. News of Google enabling applications for gambling apps has many bullish but there is always the threat of new legislation shutting down or keep certain markets closed. DraftKings and FanDuel both continue to pour money into fighting legislation. Only time will tell if it will pay off for them.