Unregulated and Illegal Gambling in America: How New Game Designs are Eroding State and Tribal Public Policy
Insight provided by Kevin Mullally, Vice President of Government Relations and General Counsel, GLI

Every state in the union makes gambling a crime. Enacting exceptions to that rule is difficult and taken with great care. Regulatory structures are well-crafted and well-funded, designed to prevent criminal activity, ensure transparency in the legal gambling operations, dedicate funds from gambling to worthy causes, and to create protections for the vulnerable.

Illegal gambling in the United States has expanded to the point that it might be considered a rampant issue with violators being reported regularly across the country. Violent and other types of crime tend to be present around illegal gaming establishments. The rising occurrence of unregulated and illegal gambling operations is weakening state policy objectives. This phenomenon is being fueled by increasingly sophisticated technology designed to take advantage of archaic, often vague, criminal gambling statutes that never envisioned modern game designs. This allows for the creation of devices that present themselves as slot machines while allowing operators to argue the machines escape the definition of illegal gambling. They operate without any supervision and do not adhere to any reviewable set of operational guidelines designed to prevent fraud, theft, money laundering and a variety of other criminal behaviors. There are no protections for consumers and no protection for problem gambling.

There is a desire among policymakers to distinguish between what they perceive to be harmless family entertainment games found in high-end, multipurpose entertainment centers/arcades, and strip-mall slot parlors/mini-casinos most view as problematic. Frequently, policymakers and regulators seek to create an exception for “skill-based amusement devices” or “amusement games” to resolve this dilemma. The problem is that technology always wins. Because of the inherent conflict in these two goals, developers can circumvent the definition of an illegal gambling device by creating “something that isn’t that”. States are losing revenue, economic development opportunities and financial support for important causes, and individuals are placed at increased risk. Litigation has proven to be a costly and repetitive attempt at damage control that is failing.

Our studied view is that the only effective way to protect the fidelity of a jurisdiction’s purposeful gambling policy is to require regulatory review of every type of gambling device. A suggested regulatory framework, adjustable to the spectrum of jurisdictions, is contained in a white paper we just released. To download a copy, click here.