Israel is a powerhouse of Casino inspired games. It boasts dozens of companies whose main focus is the development and distribution of video games intended to emulate casino gambling (Poker, Slots, Roulette, Bingo etc.), including monster sized companies such as Playtika and US based but Israeli dominated SciPlay. In fact, financial newspapers in Israel had previously estimated that Casino related games are responsible for around 95% of revenue generated by the Israeli gaming industry.
This might seem strange once you consider that participation in any and all gambling activities is strictly prohibited under Israeli law and can lead to extensive prison sentences. There is a catch, though: these games only emulate the gambling experience, requiring you to spend your hard-earned money on game chips, as an actual Casino would, but restricting your ability to win any real world money in return and offering only digital credits that allow you to keep playing as a form of winnings. ‘Social Casino’ games, as they are called, were initially met with skepticism – who would want to bet without the ability of actually winning? – but it is difficult arguing with their ongoing success.
To see how they came to dominate the Israeli gaming market, you would need to look back at the internet as it was in the 90’s and early 2000’s, or at least how it apparently looked in the eyes of Israeli authorities and decision makers: either a playground – full of bespectacled and pimpled adolescents – not worth regulating or even seriously addressing; or an impossible to regulate no man’s land (a common trope of the Web 1.0 era).
This official approach led to an influx of online gambling activity which gained the outsized engagement of the apparently gambling-starved local user base, including a number of online gambling companies opening up shop in the country (888 Holdings being a notable example). By the mid-late 2000’s, however, the tide was turning and Israeli authorities were moving to regulate online gambling activity.
In a dramatic turn of events, Michael Carlton, CEO of British, Gibraltar based, bookmakers ‘Victor Chandler’ (now VictorBet.com) who had been visiting the country in January 2007 at the formal invitation of Israeli MKs to participate in a parliamentary session on online gambling, was summoned by Israeli police on arriving at his hotel and charged with a violation of the country’s anti-gambling laws with respect to his company’s online gambling activities.
The charges against Michael Carlton were ultimately dropped, but the subsequent court case led to a groundbreaking 2007 decision by the Tel-Aviv Magistrate Court, the first of its kind in Israel: online gambling activities hosted on a foreign server but accessible to Israeli users constitute a criminal offence committed within the borders of the state of Israel, and as such confer the jurisdiction of Israeli criminal law on any person participating in them, including non-Israelis operating from abroad. This ruling was later upheld by the Tel-Aviv District Court and eventually referred to by the Israeli Supreme Court as settled law.
Israeli authorities’ success in the Michael Carlton case was followed by the implementation of increasingly stricter enforcement policies over the following decade, including efforts to prevent local credit card companies and ISPs from providing services facilitating, even indirectly, online gambling by Israeli users.
The viability of largescale online gambling operations had therefore dried up, and ‘Social Casino’ gaming rose to replace and then surpass it – seemingly using the groundswell of professional knowledge and unaddressed user base left over by major online gambling activities. That the more ‘traditional’ local gaming industry was largely written off as a joke at that point – the Israeli gaming portfolio to date amounting to a few niche titles such as rambunctious point and click adventurer Piposh or Jane’s IAF flight simulator (known to Israelis as ‘Blue Star’) – seem to have helped solidify ‘Social Casino’ gaming as the forerunner of the entire local industry.
But are these ‘Social Casino’ games even permitted by local law? Well, Israeli Penal Law (5737-1977) firmly prohibits participating in, organizing, hosting or even publicizing gambling activities, including betting, lotteries or sweestakes and lack any meaningful exceptions besides the activities of the two national gambling monopolies. These gambling activities are all defined to require the following conditions: (a) that the outcome of the game or activity ‘depend more on chance than on skill’, and that (b) they allow a person to ‘win money, valuable consideration or a benefit according to the outcome of a game’.
The existence of (a) with respect to ‘Social Casino’ games appears to be incontrovertible, but Israeli authorities seem to have nevertheless taken the position that they do not amount to gambling – though this does not appear to have been publicly or explicitly acknowledged. Whether this is because (b) does not apply or because of the limited exception applicable to activities not exceeding ‘amusement or entertainment’ in Section 230 of the Israeli Penal Law, remains unclear. A similarly passive position on ‘Social Casino’ games seems to have been adopted by many other regulators globally, allowing Playtika for example to ring the opening Nasdaq bell to much fanfare without so much as an application for a US gambling license.
But the tide could be turning again – both locally and globally.
A glut of consumer and class action lawsuits in the United States and Israel, among others, had been targeting ‘Social Casino’ developers for the past couple of years. Such lawsuits often argue that ‘Social Casino’ games constitute unlicensed and illegal online gambling because they are games of chance where users do have the ability to win a benefit or a valuable enough consideration (as is required by Israeli law and other similar foreign statutes in order to constitute gambling): those digital credits that allow players to keep playing.
Playtika, it of the Nasdaq bell ringing, had personally been the subject of numerous such lawsuits – both in the US and in Israel – which it has so far reportedly settled in exchange for multimillion dollar or NIS payouts. The latest such example came as recently as last month (April 2025), when the Tel-Aviv District Court approved a settlement to have such a class action filed in 2022 withdrawn in exchange for Playtika making a payment of around 1.5 Million NIS (~430,000 USD) to the plaintiffs.
By continuing to settle such lawsuits, Playtika and other ‘Social Casino’ game developers, seem to be playing for time and delaying any binding adverse decision on the subject. As with the Nasdaq bell, the bells will eventually toll on these efforts as well. A binding decision by a court which clarifies the legality and viability of ‘Social Casino’ games in Israel will likely eventually come – as it did for online gambling in the Michael Carlton case. I just hope the local gaming industry is getting ready for it.
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