Adding Betting to Your Brand App? Don’t Forget Gambling Use Restrictions

Arcade and entertainment franchise Dave & Buster’s recently announced “social wagering” on the Dave & Buster’s app. Projected to launch in 2024 (subject to assorted objections; see below), the app offering will allow Dave & Buster’s rewards customers to bet real money on games that they and other rewards customers are playing while on-site, such as skee-ball and air hockey.

The betting will be limited to adults and will have a dollar cap that is yet to be announced.

Following the explosion of sports betting apps, which reached $7.4 billion revenue in 2022 (a 71% year-over-year increase), the “gamification of things” is trending up. Lucra, Dave & Buster’s partner on the in-house betting app, has also signed a deal with pickleball and tennis services to allow players to bet cash on those competitions.

Sports-themed bars and restaurants, sports merchandise retailers, and entertainment brands offering experiences ranging from golf to laser tag are natural partners for wagering apps, whether proprietary like Dave & Buster’s or a standalone app.

When it comes to retail leases — gamification with real money is gambling. Check your existing leases and/or covenants, conditions, and restrictions for gambling prohibitions. If you’re leasing locations at a shopping center or other organized development, either as lessee or lessor, you need to be familiar with the list of use restrictions on your property imposed either by anchor tenants or a recorded declaration of covenants, conditions, and restrictions applicable to the development.

Common prohibited uses include pawn shops, pornography, second-hand or surplus stores, warehouses, manufacturing facilities, and gambling.

Even if a customer is carrying out game-day snacks from your storefront, if betting is linked to that purchase (for example, a sports-betting app partnership), this may run afoul of property use restrictions.

State governments may also weigh in on social wagering, with Illinois Legislature Gaming Committee Chairperson Rep. Dan Didech filing a bill to prohibit Dave & Buster’s proposed betting, as well as lawmakers in Ohio and Pennsylvania signaling they’re reviewing the issue.

But regardless of how local governments react, property use prohibitions may have the last word on any type of gambling.

Depending on gambling app trends going forward, lessors should consider including language around gambling use prohibitions to allow on-site gambling app use by established brands subject to applicable law. Double check whether a tenant brand has already subtly incorporated gambling by including phrases like “operating as a typical [store name here]” in its lease, as a brand’s typical store use may evolve to include gambling. Similarly, brands that currently promote gambling, whether sports betting or “social wagering” connected to on-site activities, should review all use restrictions applicable to any project you may be considering, with an eye toward potential future property uses as brand concepts continue to integrate digital apps.