Before beginning, I realized I had to enlarge my object of study. I had to research not only Real Money and Social Casinos but, deeper than this, Fantasy Games, e-Sports, Skill Games, Gamification, Arcade, Games etc. I see a huge convergence between all verticals of “electronic leisure.” In my opinion, we are moving in a direction where all these activities deserve equal consideration.
One of the reasons is that games are not being enforced as they should. That day, I gave two examples of the indispensable need for a more comprehensive regulation of all verticals. My 5-year-old son likes Minecraft. One day, he was flying high in his game and lost his city. This young child became absolutely crazy, desperate. From the perspective of a father, it was a heartbreaking experience. I had to intervene, study Minecraft, learn how to build a compass and bring him back “home”. Then, another strange reaction.
Am I crazy or did he just ask for “self-exclusion”?
Self-exclusion, unfortunately, is not a feature of “games”. They are highly addictive, made for children and teens without any kind of enforcement, without self-exclusion (by the way, it would be too much ask this kind of discernment from them) or any other protection method. Government doesn’t care about it. It is just a game. It is the responsibility of parents taking care of their children. But I don’t entirely agree.
The second example I gave is his cousin, another 5-year-old boy who loves Minecraft too. His father registered the boy’s fingerprint on the iPad so he could play without typing the password. As a side and unpredictable effect (at least for normal users), it also unblocked the credit card associated to his Apple Account. So… 2.5K BRL on the credit card bill to buy game inventory -- swords, costumes and some other stuff freely advertised on the game, without any kind of enforcement in terms advertising aimed at children.
Can you imagine what would happen to a gambling company if a 5-year-old child used someone else’s account and spent thousands on slot machines?
With that said, I see two major reasons to start considering all verticals of electronic entertainment as a special industry type.
Critically, there is real money transating in all of them. Games are probably even more profitable than gambling, as there are NO REAL MONEY PAYOUTS! While gambling companies are fighting for better odds, to increase GGR, NGR… reduce costs and so on, all inbound revenues for games companies can contribute to margin. There is no GGR to worry about, as they never give real money back.
Secondly, the level of regulation, compliance, AML, UBO, KYC and enforcement of Gambling is radically more stringent than what we see with Games. Anyone can create a simple entertainment game, involve dirty money and say to authorities that his game is a success. No AML, my friends. Maybe on known platforms, but on the web? Nothing!
With that said, I return to my panel subject:
Who should have leverage over whom?
My guess is that the gambling industry should go to the game industry, not the other way around. Gambling operators and providers need to apply all consensus compliance, regulation and enforcement practices developed until now. Apart from the obvious profit margin, children and parents will be thankful…
* Witoldo Henrich Junior
Witoldo Henrich Junior: Lawyer. Master in Business Administration (IBMEC). Postgraduate in Tax Law. Professor of postgraduate courses at PUC-Rio. Founding partner of Online IPS Brazil, a global payment solutions company, and Hendrich Advogados. Former Consultant Member of the National Commission for Access to Justice of the OAB. Former Chief Advisor of the Legal Directorate of COMLURB. Former Legal Advisor of the National School of Training and Improvement of Magistrates (STJ). Businessman in Brazil, USA and Colombia. Published articles in the areas of Real Estate Law, Tax, Criminal Procedure, Tax and Regulatory Process.
Source: GMB
