September 10, 2021 Casino, Poker

Hiding in Plain Sight

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Jeffrey Silver, Of Counsel at Dickinson Wright, PLLC, explores the modern-day incarnation of shills and how they’re adapting in the digital age.

I recently saw an ad seeking players for their cyber casino. While I was aware that with the latest interpretation regarding the Wire Act’s applicability to sports only, which had not been appealed by the US Department of Justice before the deadline in June, the decision was limited to a single Circuit Court of Appeals, making enforcement of the ban on interstate transmission of any type of wagering information still a very gray area for most operators.

Of course there is intranet wagering on casino games permitted by some states on a wholly in-state basis (Delaware, Michigan, Nebraska, Nevada, New Jersey, Pennsylvania and West Virginia). The idea that casino games being available across state lines or international borders still  has to contend with both the Wire Act and other Federal  laws, such as the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which makes it illegal to operate an  online gambling website in the US.

UIGEA prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the internet and that is unlawful under any federal or state law. The rule requires participants in the payment system process to establish policies and procedures to identify and block restricted financial transactions. While there are exceptions for certain card systems and third-party processors, there’s enough uncertainty and pitfalls to restrict the growth of this market segment. In other words, UIGEA compliance is still a risk-focused endeavor.

Notwithstanding, UIGEA does not make it illegal for individuals to place wagers on an online gambling website. This is grist for the mill of the casino operator licensed in some offshore location. Thus, we find advertisements for cyber casinos with numerous so-called experts weighing in on which cyber operators are more likely to give the customer an honest random number generator on their slots and actually pay out on a winning wager on other games.

Like everything else in this world, the name of the game is about advertising and hype. Several years ago in the esports arena, a scandal broke out when it became known that some well-known YouTubers were steering viewers to a gambling site based on the popular CS: Go game, misleading viewers, many of whom were teenagers, by encouraging them to make real money wagers using skins they had earned from their play or purchased online. Apparently, the YouTubers were shills to promote a website that they secretly owned. The Federal Trade Commission let them off with a slap on the wrist and the game producers received a black eye for not adequately policing the use of their intellectual property.

That got me thinking about the use of shills in gaming. I recall that the practice used to be widespread in Nevada, so much so that there is still a regulation in place governing such activity. Although the definition of shills, who are casino employees staked by the house, no longer exists after the section discussing them was repealed in 1979 (an oversight, perhaps), Nevada Gaming Commission Regulation 23.065 still uses the term by explaining that, “shills may not check and raise or play in any manner between themselves or in collusion with others to the disadvantage of other players within the game.” Moreover, each establishment employing shills or proposition players shall identify such persons upon request and shall display a sign clearly legible from each table so stating.

Many of you who have been to a bricks-and-mortar casino may have noticed after sitting down at a poker table with others already playing, or at other table game, only to have those original players quietly excuse themselves after other patrons started to play. No, they were not being polite in giving up their seats, but instead were shills moving on to the next “dead” game.

Comes now the cyber casino where creating activity to induce real customers to play is not so transparent. In fact, in a recent article by Cecilia D’Anastasio, an award-winning video game journalist and staff writer for Wired, she wrote about shady and possibly illegal activities by prominent Twitch Streamers who were shown playing at an online crypto casino before live audiences of 25,000 viewers and “winning big, sometimes as much as $400,000 in crypto in one fell swoop, and never seemed to go broke.”

The problem was that the digital casinos were paying these streamers to play the casino games on their channels, and according to D’Anastasio, paying them tens of thousands of dollars an hour. Her investigative report revealed that one casino had offered a top gambling streamer over $1.5 million per month to stream on their site. This was better than the Howard Hughes story about his checkbook that never had a balance, because normal people would never be able to exceed what he might want to spend.

Today’s marketing of crypto casino products makes the Nevada definition of a shill, or lack of it, appear amateurish and awkward. The new generation of shills is no longer merely game starters, but are highly paid performers playing with the house’s money in exchange for appearance fees that make a sport’s celebrity endorsement pale into insignificance.  The old adage stands about if something seems too good to be true, it probably is.

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