Arcade chain Dave & Buster’s plans to introduce customer betting are facing significant backlash. On Tuesday, software company Lucra Sports announced its collaboration with the entertainment chain to allow customers to place wagers on arcade games through the Dave & Buster’s app. This initiative aims to attract more customers and keep them engaged longer, but it has sparked considerable controversy.

Illinois State Representative Daniel Didech, a Democrat from Buffalo Grove, filed a bill on Thursday designed to prohibit family amusement establishments from facilitating wagering on amusement games. The proposed legislation seeks to criminalize this activity by amending the Illinois Criminal Code. The bill has garnered bipartisan support and is backed by more than two dozen other state lawmakers.

“It is inappropriate for family-friendly arcades to facilitate unregulated gambling on their premises. These businesses simply do not have the ability to oversee gambling activity in a safe and responsible manner,” Didech said in a statement. As chairman of the Illinois House Gaming Committee, Didech plans to advance the legislation this session to ensure such conduct is illegal under Illinois law.

Didech told CNBC that he sees numerous issues with the idea, ranging from the lack of protections for problem gamblers to exposing younger people to gambling. He highlighted that while Illinois requires people to be 21 and older to gamble, Lucra’s service is for people 18 and up. “None of those protections are in place at Dave & Buster’s locations. They haven’t even remotely done their due diligence,” Didech said.

The Ohio gaming control board has also expressed concerns. “The Commission does have serious concerns about the proposal – including that it appears to violate Ohio law regarding the facilitating of illegal prizes for skill-based amusement machines,” a spokesperson for the Ohio Casino Control Commission told CNBC. “We are reaching out to Dave & Buster’s for additional information.”

Both Lucra Sports, the company powering the wagers on Dave & Buster’s app, and Dave & Buster’s declined to comment on the opposition.

As sports betting has exploded since becoming legal in much of the country, companies are eager to capitalize on the gambling craze. Dave & Buster’s aims to provide customers with a new form of entertainment to keep them engaged longer and ultimately increase spending. Lucra said most of the wagers across its software platform, which allows users to compete for real money in friendly competitions, are an average of about $10. However, the company has not yet decided on a maximum bet amount for Dave & Buster’s.

Lucra argues that its arrangement with Dave & Buster’s isn’t subject to the same gambling regulations or taxes as sportsbooks because peer-to-peer betting is considered skill-based. Lucra also stated it has extensive responsible gaming policies in place, including options to self-exclude or self-limit on the platform.

Brett Abarbanel, executive director of the University of Nevada, Las Vegas, International Gaming Institute, expressed interest in what safeguards, if any, Dave & Buster’s will implement. “Regardless of the legal classification of the activity as ‘not gambling’ vs. ‘gambling,’ this is an activity in which participants are risking something of value on an outcome that is uncertain. Therefore, there should be consumer protection measures in place for players, particularly when the target audience is skewed toward younger participants,” she said.

Critics argue that introducing gambling in a family-friendly environment could normalize the behavior for younger audiences, potentially leading to future gambling problems. They also worry about the lack of regulatory oversight and the ability of such establishments to manage the complexities of gambling activities safely and responsibly.

The debate over Dave & Buster’s plan underscores the broader issues surrounding gambling and the responsibilities of businesses to ensure safe and regulated environments for their customers. The potential impact on young people and problem gamblers, along with regulatory concerns, are at the forefront of the discussion. As the legal and ethical debates continue, the future of betting on arcade games at Dave & Buster’s remains uncertain.