SCCG Research provides Gambling Insider with its latest exclusive excerpt exploring the past, present and future of distributed gaming in the US market.
Early roots: Pull tabs, bingo and charitable gaming
Distributed gaming has deep roots in American communities. Pull tabs, bingo halls and charitable raffles have historically raised funds for veterans’ groups, religious organisations and local schools. These formats introduced the concept of decentralised gaming long before commercial casinos became widespread. Bingo, in particular, became a staple of social gatherings, with its origins tracing back to the early 20th century. Charitable gaming, often regulated at the state level, provided a legal framework for small-scale, community-based gambling activities.
The rise of route operations
Route operators – third-party companies managing machines in venues like bars, truck stops and convenience stores – emerged as critical players in states like Montana, Nevada and Illinois. Their model proved that decentralised gaming could be operated at scale while delivering reliable returns for both operators and host venues. This system allowed small businesses to benefit from gaming revenue without the need to operate full-scale casinos. The success of route operations in states like Nevada demonstrated the viability of distributed gaming as a sustainable business model.
Legal milestones and regulatory gaps
The lack of uniform federal laws has led to a patchwork of state-level approaches. Key moments include the 1988 Indian Gaming Regulatory Act (IGRA), which established a regulatory framework for tribal gaming operations, and early Video Lottery Terminal (VLT) legalisation in South Dakota and West Virginia. More recent court rulings have distinguished skill-based games from illegal gambling, further complicating the regulatory landscape. States like Illinois and Pennsylvania have also implemented VLT programs, expanding the scope of distributed gaming.
The expansion of video lottery terminals (VLTs)
The introduction of VLTs in states like Oregon, West Virginia and Rhode Island marked a significant evolution in distributed gaming. These terminals, often placed in bars and restaurants, are connected to a central system that ensures fair play and revenue tracking. VLTs have provided substantial tax revenue for states while offering a regulated alternative to unlicensed gaming machines.
The role of skill-based gaming
Skill-based gaming machines, which incorporate elements of player skill rather than relying solely on chance, have gained traction in recent years. These machines often resemble traditional slot machines but require players to demonstrate proficiency in certain tasks to influence outcomes. The rise of skill-based gaming has led to legal debates over whether these machines constitute gambling or amusement devices, with different states adopting varying stances.
How technology began to blur lines
The rise of touchscreen interfaces, mobile payments and internet connectivity introduced new ways to gamble – or simulate gambling – outside regulated environments. This blurred the lines between amusement, skill, and gambling, creating challenges for regulators and opportunities for innovators. The proliferation of mobile gaming apps and social casinos has further complicated the landscape, as these platforms often operate in legal gray areas. Additionally, advancements in blockchain technology and cryptocurrencies have introduced new possibilities for decentralised and peer-to-peer gaming experiences.
The emergence of online and mobile distributed gaming
The advent of online gaming platforms and mobile apps has transformed distributed gaming into a global phenomenon. States like New Jersey, Pennsylvania, and Michigan have legalised online casinos and poker, allowing residents to participate in regulated gaming from their smartphones and computers. The rise of daily fantasy sports (DFS) and esports betting has also contributed to the diversification of distributed gaming options.
The future of distributed gaming
As technology continues to evolve, the future of distributed gaming will likely involve greater integration of virtual reality (VR), augmented reality (AR), and artificial intelligence (AI). These innovations have the potential to create immersive gaming experiences that bridge the gap between traditional and digital gaming environments. Additionally, the ongoing debate over the regulation of skill-based and online gaming will shape the industry’s trajectory in the coming years.
In summary, distributed gaming has evolved from simple community-based activities to a complex and multifaceted industry. Legal and technological developments have played a crucial role in shaping its growth, and the future promises further innovation and regulatory challenges.
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