In the midst of Dave & Buster’s illuminated aisles and makeshift arenas, it is common to see groups of friends engaging in friendly competition. With an array of physical and virtual games available at each of the arcade chain’s 222+ locations nationwide—including Hot Shots basketball, Skee-ball, air hockey, billiards, virtual car racing, and shooting—there is no shortage of challenges to conquer. This is just the tip of the iceberg. ATS.io delves into how gambling is making its way into arcades across the United States and the potential implications for these industries.
In a groundbreaking move, Dave & Buster’s announced in April 2024 a partnership with technology company Lucra to introduce a social wagering channel on its app, allowing customers to bet on arcade games. The gamification software will facilitate peer-to-peer digital cash bets on “skill-based” games, defined as activities where the outcome depends largely on the participants’ knowledge, ability, strength, speed, endurance, and intelligence, as stated by Lucra’s chief operating officer Michael Madding in an interview with the New York Times.
This collaboration will enable loyalty members to wager on each other’s recreational skills, earn rewards, and unlock exclusive benefits, effectively merging sports betting with arcade fandom. Simon Murray, senior vice president of entertainment and attractions at Dave & Buster’s, expressed excitement about this new venture in the company’s press release, emphasizing how it enhances the customer experience through innovative technology.
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The Intersection of Gambling and Gamification
The decision to incorporate betting mechanisms is a strategic move to capitalize on the booming gambling industry. With nearly 40 states legalizing sports betting as of May 2024, the sector raked in record revenues of $10.9 billion in 2023, according to the American Gaming Association. Concurrently, traditional casino games generated a staggering revenue of $49.4 billion, highlighting the immense growth of the gambling landscape. The fantasy sports market also shows promising potential, projected to reach $56.36 billion by 2030, as stated in a report by Grand View Research.
“Many of these new skill games are benefiting from the surge in sports betting and fantasy sports,” explained gaming law and sports betting attorney Daniel Wallach to ATS.io. By leveraging the legality of fantasy sports as skill-based games exempt from gambling restrictions, Dave & Buster’s aims to tap into this market.
Despite the growth opportunities, there are regulatory challenges and potential legal obstacles to navigate. Instances of “adult arcades” engaging in unlawful gambling activities have been reported, highlighting the importance of compliance with state laws. However, Wallach suggests that operating a peer-to-peer betting product, where the arcade does not act as the house setting odds, could be a legally viable approach in most jurisdictions.
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A Strategy for Sustainable Relevance
In the wake of the pandemic, attracting and retaining customers has become crucial for major entertainment venues. Arcades, once considered obsolete due to competition from home video game consoles, have undergone a transformation to stay afloat. Several entertainment establishments have embraced hospitality elements and virtual/augmented reality experiences to entice customers back. Casinos have also integrated video game elements into their traditional slots to enhance player engagement, drawing inspiration from sports betting platforms to gamify their offerings.
While some arcades have resorted to nostalgia to cater to a niche audience, others like Galloping Ghost Arcade have maintained a focus on classic games and resisted online trends. Owner Doc Mack emphasizes the intrinsic appeal of timeless arcade games in attracting customers, contrasting this approach with Dave & Buster’s strategy of phasing out older games. As the industry evolves, innovation and adaptation are key to driving revenue growth for large-scale operations.
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The Ethics of Family-Friendly Entertainment
With family-friendly venues like Dave & Buster’s incorporating betting features, concerns about underage gambling have surfaced. Legislators and advocacy groups have raised alarms regarding the lack of safeguards to prevent minors from participating in betting activities. Lucra assures that its betting services are designed for adults aged 18 and above, with an average contest size of $5 to $10. However, without regulatory oversight, the chain is vulnerable to criticism and scrutiny for potentially exposing youth to gambling.
As the arcade industry explores new revenue streams, the peer-to-peer betting model pioneered by Dave & Buster’s is poised to inspire similar initiatives in recreational venues. Wallach predicts a proliferation of skill-based gaming offerings at commercial establishments, reflecting the broader trend of gamifying experiences to enhance customer engagement.
Story editing by Carren Jao. Copy editing by Tim Bruns.
This story originally appeared on ATS.io and was produced and distributed in partnership with Stacker Studio.
