Retail arcade and restaurant chain Dave & Buster’s is entering the growing and unregulated skill gaming sector by allowing customers to bet against each other on games like Hot Shots and Skee-Ball. The new feature will be available to loyalty members through the Dave & Buster’s app. The company anticipates rolling out the feature in a few months.
Dave & Buster’s has partnered with Lucra Sports to introduce the feature. In addition to providing technology, Lucra has a standalone app that allows users over 18 to play skill games against each other for cash in 44 states. Dave & Buster’s hopes the loyalty program database of five million members will give the company initial traction. It also says the app has 30 million unique monthly visitors, which could be an additional opportunity.
Simon Murray, Senior Vice President of Entertainment and Attractions at Dave & Buster’s, shared with CNBC his excitement about the partnership with Lucra. He added,
This new partnership gives our loyalty members real-time, unrivaled gaming experiences, and reinforces our commitment to continuing to elevate our customer experience through innovative, cutting-edge technology.
Dave & Buster’s said there would be a limit on how much customers can bet. However, it did not disclose that amount. According to Lucra, historically, the average bet on its platform has been $10. Even so, the announcement has been met with plenty of hand-wringing about the responsible gambling implications of adding such features to arcade entertainment.
Social Gaming Is Key to Gen Z Engagement
In its 2022 Annual report, Dave & Buster’s identified its primary customer target as those between 21 and 39 (millennials and Gen Z). It also pointed out that changes in consumer priorities could negatively affect its traditional retail stores if the company does not adapt.
According to the report, the advancement of technology and increased competition in entertainment, including sports betting and online casinos, could threaten the company’s growth.
Adding a social gaming component aligns Dave & Buster’s with what many believe is the key to attracting younger customers. By offering social betting between players, the company hopes to increase engagement from its target customers while staying competitive with other entertainment companies.
The gambling industry has been discussing how to attract younger consumers, such as Gen Z. Global lottery operator Allwyn Entertainment recently released a report saying that lotteries must adapt and implement more social causes and technology.
Meanwhile, the opening panel at last year’s iGaming Next conference predicted that the future lies in targeting Gen Z through social experiences that include gambling instead of a self-contained gambling product.
According to Edward King, co-CIO of Acies Investments, entertainment, technology, media, and gambling will combine in the future. Julian Buhagiar, Partner at Yolo Investments, added:
Gen Z will get its gambling fix off apps that aren’t primarily gambling. They won’t be online casinos, they’ll be social mainstream entertainment apps with an optional layer of gambling added.
Social Skill Games Are Gaining Popularity
Several products similar to what Buhagiar described were among the “Hot 6” startups on another panel at the same conference. Friday Beers combines sports betting and comedy, while BigBrain allows users to play trivia and other skill contests against each other for money. Meanwhile, Goss targets women by allowing them to win cash prizes by successfully predicting the outcome of reality shows and other pop culture propositions.
Lucra is a successful participant in the same space. According to the company, the Lucra Sports app has been downloaded over 150,000 times and processed over $20 million in player wagers. In addition to games, the app allows users in over 30 states to place social sports picks, similar to daily fantasy sports (DFS).
Skillz is another app that features a wide range of games, including arcade and board, where players compete against each other. According to its 2023 financial data, the platform has over one million active users, including 179,000 paying monthly active users.
Even gaming giant FanDuel has entered the skill games segment with its FanDuel Faceoff app. The company has found success with adding bespoke games featuring athletes like Jordan Spieth and Rob Gronkowski.
Last fall, FanDuel General Manager of DFS, F2P & Skill Gaming, Aaron Champagne, told Bonus Managing Editor Alex Weldon that Faceoff had exceeded the company’s expectations. Champagne said that in the app’s first 18 months, users have played almost 75 million games.
Ambiguous Skill Games Have Come Under Scrutiny
While popular, skill games are also the subject of much debate among lawmakers and regulators across the US regarding their legal status. As they are not considered gambling, the discussion is how and whether to regulate or ban them. A large company like Dave & Buster’s entering the skill game segment could further complicate the matter.
One type of skill game that has gained attention is props-style DFS. DFS prop bets allow users to bet on a player’s performance and pick multiple players for higher payouts. Their resemblance to sports betting has caused several state regulators to question whether props-style DFS is illegal sports betting.
Some, like Maryland, New York, and Michigan, have banned DFS prop bets. Arizona and Wyoming have sent cease-and-desist letters, while others, like Maine, have fined operators. That has led companies like Underdog Fantasy to allow only free-to-play games in some states.
Retail skill games have also given lawmakers a headache in states like Pennsylvania and Virginia. The latter banned the games in 2020. However, legal challenges left them operating until 2023, when the Virginia Supreme Court deemed them illegal.
This year, the Virginia General Assembly passed a bill to regulate skill games, but Gov. Glenn Youngkin amended the legislation. The Assembly rejected his amendments, leaving skill games at a dead end.
Meanwhile, Pennsylvania is divided on whether to ban or regulate over 15,000 skill game machines operating in the state. Pennsylvania courts have ruled they’re not gambling devices and thus not illegal, but they remain unregulated.
Proponents, including small businesses, game manufacturers, and Gov. Josh Shapiro, want to legalize and regulate skill games. Meanwhile, some lawmakers and the casino industry want them banned, saying they hurt legal gambling options.
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