Dave & Buster’s plan to allow gambling on arcade games raises questions about its legality

Arcade and restaurant chain Dave & Buster’s has revealed a plan to allow customers to bet on some of its games. Instead of playing its arcade games for tickets that can be redeemed for prizes, people potentially could raise the stakes of a round of Skee-Ball or a game of billiards by putting real money on the line.

The Dallas-based company, which has about 160 U.S. locations, is partnering with software company Lucra to create a digital wagering platform that would be available through the app used by Dave & Buster’s loyalty club members, according to an announcement by the tech company last week. Lucra creates what it calls real-money, “gamification” software that allows peer-to-peer betting. The company’s investors include former Philadelphia Eagle Zach Ertz and his wife, former U.S. Women’s soccer player Julie Ertz.

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Dave & Busters hasn’t said how and where the restaurant plans to roll out gambling or on what games customers could place bets. A Lucra executive told the New York Times that the company’s technology would be connected to “skill-based” games where the outcomes are determined by the participants’ “knowledge, ability, strength, speed, endurance (and) intelligence.” Betting also would be restricted to customers 18 and older.

Some on social media reacted to the news with skepticism.

Dave & Buster’s has two locations in Philadelphia — on Columbus Boulevard and at Philadelphia Mills Mall — and another in Plymouth Meeting. The chain also has its restaurants and arcades in Blackwood, Camden County, and Atlantic City. The general manager at the location on Columbus Boulevard referred questions to the company’s corporate office, which did not respond to a request for comment.

A spokesperson for the Pennsylvania Gaming Control Board, which regulates the state’s casino and online gambling operations, said the agency is aware of Dave & Buster’s announcement and it is awaiting more information about the plan.

“It’s certainly something we’re going to look into, just to learn more about it,” the gaming control board’s Richard McGarvey said Friday. “We’re always watching for new things that are coming around — lots of fantasy sports and those kinds of things. From this angle — this is new.”

The New Jersey Division of Gaming Enforcement, part of the state’s attorney general’s office, declined to comment Friday on Dave & Buster’s plan.

The gambling industry in Pennsylvania has exploded in popularity since online gambling and sports betting were legalized in 2017, though sports wagering didn’t become operational until after the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act in May 2018. Last year, online gambling generated more than $2.1 billion in revenue for the state, according to Penn State University’s Criminal Justice Center, which has studied how people are impacted by online betting.

Among 1,800 people surveyed by Penn State who said they placed bets online, half reported they had problems with gambling, such as betting with increasing frequency, higher spending and the urge to release stress by placing bets.

“Gambling is ever-changing. It’s not this static thing,” said Gillian Russell, an assistant research professor at Penn State Abington who worked on the study. “It’s not like alcohol, which doesn’t change a ton and has the same basic features.”

Some of Russell’s research focuses on the merging worlds of gambling and interactive gaming. She said it’s not surprising that Pennsylvania Gaming Control Board doesn’t have clarity on how Dave & Buster’s wagering would fit into the state’s regulations.

“We don’t have the legislation that accounts for newly emerging forms of gambling,” she said.

CNBC reported Dave & Buster’s hopes to roll out its betting platform within the next few months. Michael Madding, Lucra’s chief operating officer, told the cable network that the company believes the restaurant chain’s skill-based games are not subject to the same regulations as casino games of chance, like roulette and blackjack.

It’s expected there will be a limit to the size of the bets allowed on games, but those details have not been released. On apps where Lucra’s software is already in use, the company said the average bet is around $10. 

Dave & Buster’s restaurants and arcades are open all ages with some restrictions. The Columbus Boulevard location requires minors to be accompanied by someone at least 25 years old. Some Dave & Buster’s have policies that prohibit customers under 21 after 11 p.m. on weekends.

Russell said the legal questions around allowing gambling in spaces with children can be murky and contentious.

“The lottery is in view of children. We’ve got these games of skill that are so hotly contested, and those are very much in public view of children. If you walk into a convenience store, there’s no age limit,” Russell said. “The popularity of online gambling is everywhere. (Children are) not allowed on casino floors, but they are still able to go to a lot of places where gambling is.”

In Illinois, one lawmaker reacted to Dave & Buster’s announcement by quickly proposing a bill that would prohibit wagering at “family amusement” establishments.

Russell questioned how Dave & Buster’s aims to market its betting platform.

“It’s really interesting because the premise is, ‘You can bet with your peers,'” she said. ” … (W)hy would anybody use a third party just for betting against their friends? If you’re with your friends, you’re just going to do it in cash with each other.”

The professor speculated the platform might end up being geared toward forming communities that specifically gather to bet on arcade games. Even if children and teens cannot use Dave & Buster’s app to place bets, she said, that this exists entices them to try gambling.

“One thing that’s very clear in the data and all the research is that the younger you are, the less interested you are in traditional forms of gambling,” Russell said. “If I’m talking to Gen Z, they are not your casino gamblers. They are not doing the things my parents do when it comes to gambling. Bringing gambling elements into video gaming — that’s what kind of catches their eye.”

Russell hopes lawmakers will adapt how they define gambling to create more flexibility to respond to innovation and the risks it may carry. “Maybe our policy needs to start shaping and fitting an ever-changing market,” she said.