Illustration: Saratta Chuengsatiansup for Bloomberg Businessweek
Somewhere out there, a Skee-Ball shark lies in wait to lighten your wallet. A Dance Dance Revolution hustler plots your downfall. A bumper-pool savant, a budding Tom Cruise in his own version of The Color of Money, prepares to barnstorm through pool halls, raking in cash from hapless opponents. These fantasies and more will soon be alive at your local Dave & Buster’s, the $2 billion eatertainment chain that recently announced plans to let patrons place real-money bets on the company’s main attraction: its arcade games.
The suburban gaming den’s new betting operation is part of a partnership with Lucra Sports, a technology company that describes its product as “gamification services.” In practical terms, Lucra licenses its software to other businesses, allowing them to integrate certain kinds of betting into their existing apps and websites. Lucra deals in the kinds of bookie-free “peer to peer” bets—say, on the results of a night of bowling or a game of pickup basketball—that might have previously been sealed with a handshake.
At Dave & Buster’s, the betting will happen within its app-based loyalty program, where, in addition to offers for all-you-can-eat wings and half-price mozzarella sticks, it will join a relatively new and extraordinarily convoluted “rewards sportsbook,” which currently allows patrons to place bets on pro sports by converting tickets they win in the arcade into a series of tokens that can eventually be cashed out for more tickets. The chain is expected to roll out all of this in the coming months, and it will be available only to adults—with apologies, one presumes, to third-grade partygoers, who will have to wait until the age of majority to shake down their friends for a few bucks. Beyond that, neither Dave & Buster’s nor Lucra Sports—which both declined to comment—is saying what kinds of betting will be allowed and at what scale.
While the particulars are vague, what’s clear is the endgame. “Lucra’s approach will help to destigmatize cash-based competition by evolving it into a fun, friendly and social experience,” according to the Dave & Buster’s press release. In other words: goading people to see more and more parts of everyday life as potential betting opportunities. At a moment when legal sports gambling, in all of its sudden inescapability, is weathering its first real backlash—over its negative effects on both bettors and sports—it’s time to find out what else Americans can be persuaded to bet on.
If you’ll forgive me, we need to spend a moment splitting regulatory hairs, which itself is a time-honored tradition in the gaming industry. There are, for our purposes, two main types of betting: games of chance, in which the gambler’s success relies predominantly on luck; and games of skill, in which success relies on the participants’ own abilities in competitions. Sports betting in the form that’s proliferated in the US—wagering on the outcome of the Super Bowl or on how many points Anthony Edwards will score in an NBA game—is a game of chance, a designation that brings with it more regulatory scrutiny and therefore a high barrier to entry for companies looking to get in on the action.
Gambling on games of skill has a much easier time cruising past legal roadblocks. If you pay an entry fee to play in a golf tournament that will award its victors a cash prize, that’s technically a game of skill, as is gathering your buddies into a pay-to-play fantasy football league. So is having four or five beers, sidling up to the Skee-Ball lanes and challenging the stranger next to you to a best-of-three competition for $20 to be awarded via Dave & Buster’s smartphone app, at least in theory.
Because of these legal distinctions, Lucra Sports—which has financial backing from a host of sports executives and professional athletes, including former Milwaukee Bucks owner Marc Lasry and former NFL player Emmanuel Sanders—says its services are legal on some level in 45 US states. If you want to usher more people into traditional gambling, this kind of skill gaming is among the most reliable points of entry. That’s where DraftKings and FanDuel—now the twin titans of American sports betting—got their start. Fantasy sports, which made these apps household names among fans, are games of skill, and those companies poured their fantasy sports profits into a streak of successful legal efforts to bring sportsbooks to the American mainstream, chiefly by turning millions of smartphones into betting portals.
Even in their relatively milquetoast skill-game form, these kinds of betting services normalize something that feels a lot like traditional gambling as most Americans now experience it: uploading money to an app, selecting an amount to pledge toward your unlikely success at an activity, despite your probable lack of skill or experience, losing that money and then doing it all over again. That people are losing most of that money to another person instead of a sportsbook or casino doesn’t materially change the act of betting. You could even argue that, because these services embed wagering into social activities, they encourage something far more dangerous—pulling your gambling-ambivalent friends and family in, too. Kids too young to grasp how football works or what betting on it might mean will soon be able to encounter a version of it at the arcade, potentially priming them to open their own betting accounts once they hit legal age.
This new offering also gives us a peek into how that playbook can be run on the rest of American life. Novelty cash bets—on the outcomes of reality shows or the ends of celebrity relationships—are mostly illegal in the US, but they’ve grown more popular in questionably legal online casinos. PredictIt, a site that American regulators have been trying to shut down for several years, offers a method for betting on electoral outcomes, handling tens of millions of dollars of bets per year on everything from the electoral college victory margin to which party will win a particular Senate seat. (PredictIt spokesperson Lindsey Singer says the attempts to shut down the platform have been unsuccessful and “new users continue to trade in the markets.”) Apps that let bettors wager points or digital coins on those topics have also flourished, and in a few states, the results of awards shows are now the subject of legal bookmaking. These are all still relatively niche activities that people have to seek out, but when big consumer-facing companies—especially ones with outposts in towns all across the country—actively seek to integrate betting into their products at a mass scale, niche interests can go mainstream very quickly.
That Dave & Buster’s would decide to dive in right now is best read as an indicator of just how nervous traditional entertainment industries have become about gambling and its capacity to devour their customer base and its disposable income. In its 2022 annual report, Dave & Buster’s identified the spread of legalized gambling as an existential threat, even as the company was continuing to grow and its stock price was soaring. Like executives in other industries who are looking for any possible opening where they can wedge AI into their businesses—whether or not those implementations are desired by customers, and whether or not they even work—this move feels motivated more by the fear of being left behind while others profit than by a genuine belief in the value of the product itself. And perhaps that’s not so surprising.
What may be more surprising is just how eager some companies with robust businesses and enthusiastic customer bases are to gamble with their long-term credibility. In this way, at least, Dave & Buster’s is just following the lead of the professional sports leagues. Embracing the sudden cash flow of traditional gambling, they’ve already sprung a few highly publicized leaks in the integrity of their product. The vision that’s dancing in executives’ heads, I have no doubt, is something akin to the opportunity to be a little Las Vegas in every American suburb. They should probably be more wary of the likelier—and grimmer—alternative: becoming something closer to most of the other casinos in America, where no parent would ever dream of throwing their kid’s birthday party.