Dave & Buster’s plan to allow betting on arcade games draws scrutiny

Arcade chain Dave and Buster’s plan to allow customer betting isn’t winning over everyone.

Software company Lucra Sports announced on Tuesday that it was working with the entertainment chain to allow customers to place wagers on their arcade games through the Dave & Buster’s app.

But some lawmakers are calling foul.

Illinois State Rep. Daniel Didech, a Democrat from Buffalo Grove, filed a bill on Wednesday that’s designed to prohibit family amusement establishments from facilitating wagering on amusement games. He also is looking to criminalize the activity for violators by amending the Illinois Criminal Code.

“It is inappropriate for family-friendly arcades to facilitate unregulated gambling on their premises. These businesses simply do not have the ability to oversee gambling activity in a safe and responsible manner,” Didech said in a statement.

Didech, who also serves as chairman of the Illinois House Gaming Committee, says he will be advancing the legislation this session to clarify that such conduct is illegal under Illinois law.

Didech told CNBC that he sees many issues with the idea, ranging from the lack of protections for problem gamblers to exposing younger people to gambling. He said that while Illinois requires people to be 21 and older to gamble, Lucra’s service is for people 18 and up.

“None of those protections are in place at Dave & Buster’s locations. They haven’t even remotely done their due diligence,” Didech said.

The Ohio gaming control board has also taken notice.

“The Commission does have serious concerns about the proposal – including that it appears to violate Ohio law regarding the facilitating of illegal prizes for skill-based amusement machines,” a spokesperson for the Ohio Casino Control Commission told CNBC. “We are reaching out to Dave & Buster’s for additional information.”

Both Lucra Sports, the company that will power the wagers on Dave & Buster’s app, and Dave & Buster’s declined comment on the opposition.

As sports betting has exploded since it has became legal in much of the country, companies are looking to cash in on the gambling craze. The idea for Dave & Buster’s is to give customers a new form of entertainment and to keep them engaged longer and ultimately to spend more money.

Lucra said most of the wagers across its software platform, which allows users to compete for real money on friendly competitions, are an average of about $10 in size, but the company hasn’t yet decided on a maximum bet amount for Dave & Buster’s.

Lucra said the arrangement with Dave & Buster’s isn’t subject to the same gambling regulations or taxes that sportsbooks are because peer-to-peer betting is considered skill-based. Lucra also said it has extensive responsible gaming policies in place, such as options to self-exclude or self-limit on the platform.

Brett Abarbanel, executive director of the University of Nevada, Las Vegas, International Gaming Institute, said she is interested to see what safeguards, if any, will be implemented By Dave & Buster’s.

“Regardless of the legal classification of the activity as ‘not gambling’ vs. ‘gambling,’ this is an activity in which participants are risking something of value on an outcome that is uncertain. Therefore, there should be consumer protection measures in place for players, particularly when the target audience is skewed toward younger participants,” she said.