Up in arms over U.K. child gambling? Go protest Chuck E. CheeseBy Aaron Stanley, CDC Gaming ReportsJanuary 5, 2018 at 9:45 pmBased on moral or reputational grounds, there are plenty of reasons to be alarmed about the reports emerging from the United Kingdom chronicling the prevalence of child gambling.Some 370,000 kids – aged 11 to 16 – are gambling per week, a recently-commissioned study on youth gambling by the U.K. Gambling Commission found. And, 60,000 of those were already problem gamblers or at risk of developing such an addiction.Further, Scientific Games – the Las Vegas-based gaming equipment manufacturer – came under fire in a report last week by the Guardian for producing social game content that is marketed to children on Facebook.But before they cast the first stone, those on the U.S. side of the pond feeling indignant may want to first examine the gambling that’s happening at their child’s birthday party.Full disclosure: I enjoy going to Chuck E. Cheese as much as the next parent. The kids have a blast, they burn lots of energy, they love the pizza and cheesy entertainment, they get a rush from showing off the prizes and trinkets they have won, and overall it’s a great time for parents and kids alike.To put it in gaming industry and integrated resort parlance, Chuck E. Cheese is in the “experience” business.While it may be very fun and interactive family environment that’s impossible to replicate, there’s no denying that its core value proposition is that it’s a casino for kids.The experience itself is highly addictive and has the same stimulating effect on the brain as an adult casino. I’m obviously not a neuroscientist, but if you’ve ever been in a car with a 6 year old when the phrase “Chuck E. Cheese” is mentioned, you’ll understand where I’m coming from here.Conceptually, the games are the same as what you’d find in a casino. Many of the them could be considered “skill-based” games, such as shooting baskets or throwing footballs into a hole, where one’s performance dictates the amount of tickets the game pays out.Others, such as a Wheel of Fortune game where one spins the wheel to randomly determine the ticket payout, bear striking resemblance to casino slot machines.Even the fights that frequently occur among Chuck E. Cheese parents are reminiscent of the quarrels that arise between intoxicated casino patrons.When it comes to capturing customer wallet share, one could argue that Chuck E. Cheese actually beats casinos at their own game.For example, the last time I went to Chuck E. Cheese, I bought $50 worth of tokens that myself and my family divided and played with. After an hour or two, we combined all of the tickets we had won and redeemed them for some prizes that couldn’t have cost the business more than $1 or $2 to acquire.If we assume the prizes indeed cost $2, that equates to a payout rate of 4 percent on my $50 worth of coin in. Compare that to the payout rates casinos are mandated to pay around the country, which are in the 80-90 percent range in most jurisdictions.I don’t even want to think about the profit margins on the pizza and the other “non-gaming amenities” I spent additional money on.The question of whether or not Chuck E. Cheese allows child “gambling” isn’t new.The company was hit with a class action lawsuit in 2011 from a group of parents alleging that the company was exposing kids to casino-style gambling, but the suit was voluntarily withdrawn shortly thereafter by the lead plaintiff.The Chuck E. Cheese’s lawyers shrewdly argued that if the games were in fact illegal, the parents themselves would have been participants in the illegal gambling operation and should therefore be prevented from receiving any restitution.This puts any potential future litigants in a bind, because in order to claim any harm they must acknowledge they were participants in illegal gambling activity and even willfully exposed their children to such an environment.I’m not calling for a boycott or arguing for the torches and pitchforks to come out in protest of Chuck E. Cheese, but if child gambling is something we’re really concerned about as a society, this is an area we should be paying more attention to.