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S’pore Proposing Amendments to Laws That’ll Cover Claw Machines & Arcade Games

2021-07-13 , 1:54 pm

At some point in our lives, we’ve all tried the innocent-looking claw machine at the arcade.

Unfortunately, most of us probably failed to get whatever prize we were eyeing.

If we tried a few more times and wasted some money in the process, well—let’s keep that a secret.

But did you know that claw machines are technically considered to be a form of gambling?

Gambling Legislation to be Amended

On Monday (12 July), the Ministry of Home Affairs (MHA) announced that it will be amending the gambling legislation later in the year. This is to ensure that Singapore’s laws and regulations remain effective in the face of evolving gambling products and business models.

This comes after MHA’s announcement in April last year that a new gambling regulator will be set up by 2021, and that the gambling legislation will be reviewed and amended within the same period.

The MHA is currently inviting feedback from the public on proposed amendments to gambling laws that cover social gambling, online games and claw machines.

It is also proposing to raise penalties for repeat offenders who facilitate or operate illegal gambling services, as well as amend the definition of gambling so that it will cover emerging products.

According to MHA, gambling-related crimes remain low—the number of people arrested for illegal gambling activities has been stable from 2011 to 2020.

It also said that problem gambling remains “under control”, citing surveys that showed problem and pathological gambling rates remaining relatively stable at around 1%.

“To continue to enjoy these good outcomes, we need to make sure that our laws and regulations can address two trends in the gambling landscape,” said MHA.

It continued, saying: “First, advancements in technology. The Internet and mobile computing have made gambling products more accessible.”

“Second, the boundaries between gambling and gaming have blurred. Business models have adapted to suit changing customer preferences by introducing gambling elements in products that are traditionally not perceived as gambling,” MHA said.

Proposed Amendments to Laws Regarding Social Gambling

MHA said that it currently takes a practical approach towards gambling. This means that it will only regulate or prohibit when there is a risk to law and order, or potential to cause social harm.

According to MHA, it thus intends to explicitly permit physical social gambling among family and friends as it poses “low” law and order concerns.

“We recognise that gambling amongst family and friends in homes is socially acceptable amongst many Singaporeans,” said MHA.

Phew, none of us would want our mahjong sessions between relatives to be banned.

That being said, MHA also warned that “We will take strong enforcement action against syndicates which exploit this exemption to conduct illegal gambling activities.”

The Common Gaming Houses Act currently does not define private gambling. However, it does prohibit gambling in a common gaming house, which includes any place kept or used for gambling, habitual gambling and public lottery.

The permit of online social gambling among families and friends, including gambling over the Internet, was also considered by MHA. However, it ultimately proposed not to permit this.

“Explicit exemption of online social gambling will pose enforcement difficulties, as it will be difficult to establish if individuals are sufficiently and meaningfully acquainted with each other in the online context to qualify as social gambling,” explained MHA.

Online social gambling is currently prohibited under the Remote Gambling Act.

Proposed Amendments to Online Games with Virtual Prizes

Games that allow virtual items to be transferred out, and potentially be exchanged for money or money’s worth on a third-party hosted exchange, will be MHA’s focus with regard to online games.

The current proposal from MHA is to introduce conditions to ensure that transferable virtual items are retained in the context of gameplay and entertainment, as intended by game developers.

“Online games of chance that allow players to use virtual items from other games as a form of stake on casino games or match outcomes, such as skin-betting sites, will not be allowed,” MHA stated.

In-game monetisation facilities for free-to-play games where players do not have to pay to play or receive virtual prizes are also currently under consideration to be permitted.

Of course, this would be subject to conditions similar to those imposed on currently exempted business promotion lucky draws.

According to MHA, the reason for the proposed changes is because it is becoming increasingly common for online and video games to incorporate in-game micro transactions like loot boxes that can resemble gambling.

Such games of chance with virtual prizes are presently not considered to be gambling under the law, so long as there are no in-game monetisation facilities that allow players to exchange virtual prizes for real-world payouts.

What About Mystery Boxes, Arcade Games and Claw Machines?

MHA’s proposal is to introduce a $100 cap on the value of prizes for mystery boxes, arcade games and claw machines.

“This cap will be sufficient to address the inducement effect of high-value prizes, without increasing the regulatory burden on operators,” said MHA.

High-value prizes that can be easily traded for cash, like smartphones and game consoles, have become increasingly common for mystery boxes, arcade games and claw machines.

According to MHA, this has the potential to induce gambling behaviour, especially as these machines could feature elements of chance.

“We are careful not to over-regulate. We recognise that many Singaporeans consider mystery boxes, arcade games and claw machines as a form of entertainment,” assured MHA.

“However, there remains a need for safeguards to ensure that these activities do not induce gambling behaviour and cause social problems,” it added.

Penalties for Gambling Might be Raised

Penalties for repeat offenders who facilitate or operate illegal gambling services might also be raised in order to increase deterrence.

According to MHA, “for now”, the increased penalties will not apply to punters of illegal gambling services.

Currently, there is a three-tier penalty structure for illegal online gambling under the Remote Gambling Act. Operators receive the highest penalties due to having higher culpability than that of agents, followed by punters.

Another of MHA’s proposals is to apply said penalty structure across all forms of gambling activity so that consistency between online and physical gambling activities can be ensured.

Definition of Gambling to be Updated

MHA has also proposed that the definition of gambling should be amended such that it will be technology-neutral. This is so that the gambling legislation can cover existing and emerging gambling products.

The definition of gambling currently differs across pieces of legislation. MHA explained that this was because these legislations were enacted at different points of time and for different gambling products.

“This broader definition of gambling may, however, cover products that MHA has no intention of treating as gambling products, for example, financial products already regulated by Monetary Authority of Singapore,” MHA also noted.

“We will carve out these products from the definition of gambling,” it added.

MHA is open to feedback by the public via email at [email protected] until 10 August.

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