Age Verification in Real-Money Games: Hardly Child’s Play

Most US states say gamblers must be 21 to participate in most games (some make it 18 for playing the lottery, bingo daily fantasy sports, and a few other exceptions.) While several states and countries recognize the distinction between gambling and playing skill games for money, many still impose age restrictions on games such as horse race handicapping, poker, sports betting, and fantasy sports in which skill arguably plays an important role in determining the outcome.

As skill-based real-money games become prevalent, both online and in the physical world, game developers, social media platforms, and dedicated outlets rush to cash in. As the trend becomes more mainstream, varied businesses can be expected to seek ways to gamify their customer experiences. While the digital and decentralized nature of Web3 introduces complexities and nuances, companies looking to incorporate real-money gaming into their business models should seek legal advice to ensure they adhere to regulations across all jurisdictions in which they operate.

Regulations governing gambling and skill-based gaming differ from state to state and according to country. Adding to the confusion, several jurisdictions have only recently legalized many forms of gambling, and modern communications and data technologies make it easier than ever to place a wager. For example, before 2018 only Nevada allowed betting on professional and college sports. Now, it is legal in approximately three-dozen states. Among these, at least 27 permit sports betting online.

The age of compliance

When operating real-money gaming sites, ensuring all players are of legal age is crucial for complying with gaming laws and protecting minors. Companies have a responsibility and vested interest in keeping underage individuals off wagering platforms. Robust age verification is the primary tool companies have at their disposal to enforce underage gaming laws.

• Don’t trust; verify ─ Asking users to self-report their age does little to discourage minors from participating in skill-based games. Instead, sites must implement robust document-based age verification. To create an account, a player should be required to upload images of their driver’s license, passport, or other government-issued identification. Sites should follow through by cross-checking names, photos, and dates of birth against public records.
• Scan and deliver ─ Biometric scans add an extra layer of verification by linking identity to distinct physical characteristics. Though far from foolproof, this technique requires a player to project a live presentation of themself for facial recognition, iris scanning, or fingerprint comparison. These images would be compared to the identification cards previously submitted before the player is allowed to log into real-money gaming sites. However, the collection and use of such sensitive data brings up significant privacy concerns that companies must address transparently, as well as data security issues.
• Location limits ─ Geofencing, IP mapping, and other location identification technologies can be used to prevent people in locations where activities are prohibited from accessing sites and to spotlight behaviors that point to possible underage access. For instance, sites could determine that a user often logs in from a library or other public space, indicating an attempt to escape parental supervision. Sophisticated geofencing can block logins from these locations. Or gaming sessions may take place from 3 p.m. to 6 p.m. ─ the time between school being let out and teens needing to be home for dinner.
• Friction ─ Sites can protect themselves further by introducing additional levels and instances of age verification. “Friction” during login and gameplay can detect and eliminate attempts by minors to access these platforms. Pop-up confirmation messages introduce friction by appearing randomly throughout a gaming session to catch underage players who circumvented the login process with fake credentials.

Warnings and blocking mechanisms

Gaming elements like flashy graphics, cartoony music, and fast-paced features may attract underage audiences by design. Responsible operators should implement policies to avoid enticing kids while enabling adult entertainment.

Historically, many popular gaming sites lacked sufficient age protections. In 2002, the Federal Trade Commission (FTC) found that many websites lacked adequate safeguards and warnings to prevent children and teenagers from placing illegal bets. In a survey of 100 popular online gambling platforms, the FTC found that one in five had no warnings for minors and most had disclaimers that were hard to find. The sites also lacked screening mechanisms to keep children out or had blocks that kids could easily get around.

More than 20 years later, not much has improved. Today’s realistic images, videos, and embedded promotions still blur the lines between gaming content and advertising. So, opportunities persist for minors to get hooked by the hype without understanding the financial risks involved. Failure to establish rigorous age barriers threatens user safety and industry survival.

Instead, several proactive controls can help sites demonstrate compliance. First, requiring robust age verification via government-issued IDs should front-load account security. Additionally, prominent warnings and gaming resources should populate across sites. Limiting promotional visibility without reconfirmation provides another speed bump before exposing real-money features. Activity patterns suggestive of kids attempting to bypass guards should trigger automated identity revalidation.

Users themselves also need better customization around financial visibility. Family safety settings enabling spending caps, self-cool-off periods, and other constraints allow people to control their environment and limits. Synchronizing these tools to player accounts across partner platforms strengthens self-governance.

These safeguards reinforce age boundaries across sites. Ensuring clear separation between adult and minor spaces supports lawful entertainment while protecting those legally barred. Through persistent architecture considerations and consumer tools, real-money gaming and youth protection can coexist responsibly.

Publicizing terms of use

A Web3 attorney experienced in real-money and skill-based gaming can assist businesses to craft a legally sound terms of service (TOS) agreement that frames the restrictions and permissions for participation. Beyond protecting the company legally, TOS design choices demonstrate regulatory alignment, youth protections, and incentives for lawful entertainment.

The TOS should start by expressly and unambiguously forbidding underage users. Stating age restrictions upfront right as users create accounts notifies potential violators against prohibited conduct. An external link to the specific applicable statutes further cements the notice should any violations occur.

Secondly, the agreement should detail the verification requirements for creating accounts, logging in, and playing the games, including consent for third-party age checks. Users have a right to understand what personal data a site will collect and how sensitive information like IDs is secured. Outlining compliance internally and via partners provides transparency.

Crucially, the TOS must note that verification occurs both at account creation and periodically thereafter, enabling the site to suspend players engaging in suspicious activities and block users ─ even mid-session ─ until additional age checks can be completed.

Additionally, the terms should discuss geolocation-based access policies per local gambling regulations. Explaining compliance with laws inhibiting certain regions reduces liability in prohibited situations while demonstrating sound governance standards.

Overall, precise and explicit TOS guides behavior, sets consumer expectations, and protects the site from liability in cases of noncompliance.

Closing the gateway

The last decade has witnessed the birth of a revolution in video game monetization. From subscription and freemium models to battle passes to in-game advertising and product placement, game developers and platforms give gamers multiple options beyond buy-install-play.

One of the fastest-growing and most controversial moneymaking schemes introduces loot boxes, gacha mechanics, and other microtransactions. These systems share a common trait: players spend real money for a chance to obtain virtual items or rewards that enhance gameplay. With the outcome being determined by a random number generator, they introduce an element of chance and randomness to the game experience. It is a dynamic that closely mirrors the mechanics of traditional gambling activities, such as slot machines or scratch-off lottery tickets. The thrill of anticipation, the rush of winning, and the potential for chasing losses are all present, creating an environment that can be highly addictive for impressionable young minds.

According to some activists, this development demonstrates the need to extend age verification beyond real-money games to those that mimic their mechanics and appeal.

Research has shown that exposure to gambling-like mechanics in video games can lead to an increased risk of developing gambling problems later in life. Children and adolescents, whose brains are still developing and lack the executive function to regulate impulses, are particularly vulnerable. The normalization of these practices at an early age can desensitize them to the risks associated with gambling and potentially lay the foundation for future compulsive behaviors.

Game companies should adopt ethical design principles that prioritize player well-being over profits. These practices include designing games that do not leverage or encourage compulsive behavior, excessive spending, or excessive play. Responsible companies will shield young players from microtransaction promotions and loot box offers. They will highlight non-randomized means to obtain valuable in-game items and advance to higher levels. These achievements can be based on players’ skills or time invested, reducing the attraction of luck-based shortcuts and the lure of “gambling” on loot boxes.

Conclusion

Protecting minors from the potential harms of real-money gaming is not only ethical but also brings significant benefits to gaming platforms themselves. Robust age verification and other measures to prevent underage access cultivate a safer, more positive environment that attracts and retains responsible adult players.

In addition to minimizing legal risks, including costly fines, license revocations, and lawsuits from regulators and parents, these practices demonstrate commitment to social responsibility. Protecting minors can significantly boost a platform’s reputation and brand image. In an era of heightened scrutiny around online safety and ethical business practices, platforms that prioritize robust age verification measures position themselves as industry leaders in corporate social responsibility.