UK Gambling regulator puts Facebook gaming under scrutiny

SOCIAL MEDIA

The Gambling Commission is investigating the rise of social gaming in a move that could slash the value of online operators.

Companies that make games for social media sites such as Facebook are under scrutiny as fears grow over the increased blurring between social gaming and gambling for money.

‘The key question is, is it gambling or not?’ asked John Travers, the Commission’s corporate affairs manager, who said social gaming was ‘at the perimeter’ of current legislation. ‘We are monitoring developments and assessing any wider implications for licensing objectives,’ he said.

Social gaming has so far avoided the attention of regulators both here and in America as the games are usually played for free and so have not been seen as real gambling.

However, players bet in the hope of winning points or virtual prizes and it is possible to spend vast sums of money buying extra chips and points. 

An executive from one US site was recently reported saying one player spent $13,000 (£8,500) in just three months on ‘free-to-play’ games. 

Some companies already allow customers to cash in their  winnings in the real world and a black market has sprung up in  which people can buy and sell virtual winnings.

If it is decided that social gaming needs to be regulated in the same way as the gambling industry, the business implications could be huge. 

Ivor Jones, leisure analyst at broker Numis Securities, said: ‘If regulators conclude that such games with gambling characteristics should be regulated, it will be difficult for them to continue to be offered in many places, which would financially hurt the games operators and Facebook.’

Social gaming is worth billions of dollars to companies such as Facebook, where users can be as young as 13. 

But there are concerns over the rapid growth of casino games that, because they are not for cash, can be played by children.

Earlier this month London-listed bwin.party, the biggest online gambling company, said it was ploughing £32million into social gaming.

Facebook shares continued to trade under their opening price, closing at $27 on Friday compared with a flotation value of $38.

Meanwhile, casinos are not giving all their market share to online operators. The Aspers Casino in Stratford, east London, is understood to have reached its trading target for the year in its first six months.