As Internet gambling begins to pick up legal steam across the United States, it's hard to ignore the massive growth of social gaming.
You know: those cute, seemingly harmless games offered on social networks such as Facebook, where you'll find "FarmVille" and "Angry Birds" and "The Sims."
Every day more than 800 million people log into social networks to play games. And of those, 173 million play social casino games like "DoubleDown," which allows players to buy virtual chips with real money. Since 2010, social gaming has generated more than $2 billion.
And while social casino games generally don't allow players to win anything of monetary value, it begs the question: Should social gaming be regulated?
A group of industry experts — including academics, psychologists and businesspeople — tried to answer that question in a mock trial at the 15th International Gambling and Risk Taking Conference at Caesars Palace this week.
The scenario behind the case was pure fiction, featuring the Alpha Co., which develops and distributes social games on Facebook and mobile devices.
Their games include "Lazy Birds," a game that allows players to aim and shoot sleeping parakeets from a cannon toward a pile of birdseed for points. And "Words with Frenemies," a multilayer word puzzle game.
But this mock trial focused on "Slottopalooza," a virtual slot machine game in which players can play for nonredeemable virtual currency.
Like most states that regulate gaming, the imaginary jurisdiction of Playerville defines gambling activity as a game of chance that patrons pay to play in order to win a prize.
But a new law enacted by the Nevada Legislature says that any Internet game with at least two of the three elements required for gambling cannot be offered in Playerville without first being approved by the Gambling Control Board, which can determine if the game threatens the health, safety, welfare or morality of Playerville residents.
Unhappy with the new law, the Alpha Co. brought the state of Playerville to court — a conference room at Caesars Palace.
There, Alpha Co.'s lawyer Mitch Kamin, of the California law firm Bird Marella, made his opening statement, calling the law unconstitutional and threatening to his client's well-being.
"Gambling laws have a policy rationale, and some of it is historic, and when you think of gambling laws, what do you think about?" Kamin said. "You think about dark, smoke-filled back rooms, illicit activity, tragic tales of financial ruin … Problem gamblers hate social games; they're no fun to them."
I. Nelson Rose, the state's counsel and professor of Southern California's Whittier Law School, took the stand next.
"We are not arguing that this is gambling," Rose said.
Since Alpha Co.'s Slottopalooza requires players to pay real money to play slot machines, Rose said gaming regulators should examine the game to make sure it's not harmful to residents.
Kamin then called to the stand his first expert witness, Sally Gainsbury, a professor at Southern Cross University in Australia who has studied social gaming.
Gainsbury described the key difference between brick-and-mortar casino games and social casino games. While players can buy chips, they're not playing for the same reason a gambler would play.
"There is no opportunity to win anything of monetary value," Gainsbury said.
Gainsbury said one of the risks of regulating social games is creating a taboo, which generally attracts adolescents.
But more important, she said, the more than 2,400 real-money gambling sites on the Internet can do much more damage to children.
"If there's going to be an effort to regulate an activity and really put efforts into making sure children are protected, it would be advisable to look at [real-money gambling,]" Gainsbury said.
During cross-examination, Rose pointed to Gainsbury's comments during a previous television interview.
"You gave an interview on ABC News on June 7, 2011, where you said the following …" Rose said, causing giggles in the crowd. "'Free pay sites should definitely be regulated in the same manner that online gambling sites should be regulated — they're virtually identical and they're training grounds for further gambling problems.'"
As the jury erupted in laughter, Gainsbury argued the quote was out of context.
"I have no further questions," Rose said.
Next to take the stand was Rob Hunter, director of Nevada's Problem Gambling Center. For the past 25 years, he's dealt with the worst of problem gamblers.
Kamin peppered Hunter with questions about his experience with patients who claimed their gambling problems stemmed from social gaming.
But Hunter couldn't offer a single example, suggesting social gaming doesn't often sway players into problem gambling.
"They're there because there's money involved," Hunter said. "My patients are absolutely alone when they play. It's not a social event for problem gamblers."
During cross-examination by Rose, Hunter avoided questions about adolescent gamblers, because, he said, he's no expert when it comes to children.
Rose then brought up a Wall Street Journal article in which Hunter likened video poker to crack cocaine.
"What a hideous phrase," Hunter said.
Hunter said the quote was taken out of context, but didn't deny its accuracy.
Then it was Playerville's turn to call up their own expert witnesses.
First to the plate was Jeffrey Derevensky, a child psychologist from McGill University in Montreal.
"I think social gambling games that are related to casino-type gambling are potentially problematic to a group of young people," Derevensky said. "The fact that they simulate real forms of gambling is potentially problematic."
Derevensky said the natural inclination of most youths, if they're winning lots of virtual money or avatars in social games, is that they'd have no problem winning real money.
Regarding problem gambling, Derevensky said studies have showed 17 percent of problem gamblers started on social games before the age of 10.
"I don't think the industry is doing an adequate job," Derevensky said
During cross-examination, Kamin mentioned built-in age restrictions on social networks like Facebook, which prohibits players under 13 from playing social casino games.
"They exist in principle," Derevensky said, causing a bit of laughter in the jury.
Then, taking a page out of the book of I. Nelson Rose, Kamin alluded to some of Derevensky's past presentations, many of which the professor did not remember.
Last to take the stand was Malcolm Bruce, of Gambling Integrity Services in the United Kingdom.
Bruce pushed the importance of regulation, pointing to circulated transcripts of conversations between gaming executives that allegedly included comments about the dangers of social gaming and its potential impact on children.
His comments came back around during Kamin's cross-examination.
"What is interesting is when you hear social casino executives describe their peers as cheating and manipulating customers," Bruce said.
"Well," Kamin said, "it's just like any other business."
The jury hooped and hollered.
"Move to strike my comment," Kamin said, causing more laughter.
Rose then offered a brief closing argument.
"Does the state have the power to do this?" Rose said. "We can say, 'no, they have the obligation to do this … It needs to be regulated."
Kamin's closing focused on the thesis of his opening point: social gaming is not gambling.
"When it is real gambling, it will be subject to gambling regulation," Kamin said. "You can't win something of value, and that's the key distinction … I don't think a government should legislate based on correlations, I think that a government should regulate upon scientific evidence of causation, and as of now, there is no such evidence at all."
The mock trial's judge — Robert Melendres, vice president of IGT's Interactive Group — then dismissed the jury without a verdict.
"I hope that it was food for thought," Melendres said.