About a year after New Jersey’s Division of Gaming Enforcement implemented regulations for skill-based machine gaming, “video game slot machines” have finally made their entrance in Atlantic City, to mixed acclaim.  Most of the major Atlantic City casinos—Harrah’s, Caesars, and Tropicana—have now installed one of two skill-based machines (in some cases, both):  Danger Arena, a first-person shooter, and Pharaoh’s Secret Temple, a puzzle game similar to Candy Crush.

Although the games are intended to attract millennial gamblers in theory, the response to their introduction has been somewhat tepid.  Danger Arena and Pharaoh’s Secret Temple have drawn some millennial interest, but complaints about graphic and gameplay quality have diminished initial excitement about the games.  As the skill-based machine gaming industry grows out of its infancy, however, these concerns are likely to be rectified.

And as the games evolve, so, too, will the regulations that govern them.  New Jersey’s regulations, which are temporary, provide a useful model for getting the ball rolling.  But there is much room for improvement.  As it stands now, these regulations provide guidelines on:

• Identification of skill-based machine games. New Jersey law allows a machine to be identified as a skill-based game based on these factors:  the frequency, value or extent of predefined commercial activity; the subscription to or enrollment in particular services; the use of a particular technology concurrent with the play; the skill of the player; the skill of the player relative to the skill of any other player participating in the same game; and the degree of skill required by the game.  Moving forward, skill-based machine gaming laws will need to be clearer differentiating between pure skill-based games and skill-based games with some chance component—for the most part, the regulations currently treat the two as one and the same.
• Payouts for skill-based machine games. The regulations in force currently require a theoretical payout of 83%, unless the machine game relies “entirely on skill” or does not utilize a random number generator.  As of now, this is the only difference in how the regulations treat pure games of skill and games in which there is some component of chance.
• The role of in-game enhancements. New Jersey law currently prohibits in-game modifications during gameplay—i.e., “once a game containing a skill based feature is initiated, no aspect or function of the gaming device may be altered during the play of the game.”  But players may obtain enhancements (either purchased or randomly awarded), so long as the enhancements and the methods of obtaining them are announced in advance.  This may prove to be a sticking point in head-to-head play—players who purchase such enhancements may have a leg up on those who do not.  For now, the New Jersey regulations require only that gamers have the information necessary to make an informed decision about whether they want to play against players with enhancements.  Although it is unlikely that game developers would allow enhancements to be abused, expect to see proactive or reactive regulatory measures to ensure that such abuse does not happen.
• Rules for playing against a computer. For now, the only restriction placed on the “house”—computerized or otherwise—is that the house may not peek at a player’s information (such as the player-opponent’s hole cards or upcoming events).  As the games and corresponding regulations continue to develop, regulators may consider adopting measures to place limits on game difficulty—no one, for example, wants to play IBM’s Watson in Jeopardy.