It took only a few weeks before Geoffrey Pelham became hooked playing games on the Big Fish Casino app where he would spend $800 in a matter of minutes.

Every day, the 58-year-old would spend at least an hour playing virtual slot machine games on his mobile phone.

"They give you free chips when you first sign up to suck you in," the Perth-based fly-in-fly-out miner told the ABC.

Once the chips ran out, he had to start paying.

"I used to pay $160 for 80 million chips and then lose it all in 10 minutes," he said.

All up he said he spent thousands on the game and won nothing in return.

"They don't pay real money out. All you do is win virtual chips," he said.

The app-based games simulate casino games such as blackjack, roulette and slot machines. ( ABC News )

Market growing as gambling declines

Games like Big Fish Casino are not traditional gambling — they're part of an unregulated grey area known as "social casinos".

The app-based products simulate casino games such as blackjack, roulette and slot machines but players can never cash out their virtual chips for money.

While social casinos are relatively new, it has become a multibillion-dollar industry.

Australian are the world's biggest gambling losers per capita, losing more than $1,200 every year.

According to the Victorian Responsible Gambling Foundation, Australian spent a total of $25 billion on gambling in 2017-2018.

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Dr Christopher Hunt from the University of Sydney's Gambling Treatment Clinic said social casino games appeared to be increasing rapidly in Australia, while participation in traditional forms of gambling was declining rapidly.

"Some of these games are being played by people in their spare time, like on the bus or on their way to work," he said.

"A lot of companies that have previously focused on traditional forms of gambling are moving into more internet-based and social media types of gambling."

In 2017, Australian gaming giant Aristocrat bought the Seattle-based Big Fish Games digital arm for $1.3 billion.

Geoffrey Pelham says he would sink $800 in a matter of minutes buying chips. ( ABC News )

Legal grey zone

Online casino games are illegal in Australia but social casinos fall into a grey area.

They are classified as entertainment so are not subject to any gambling regulations.

Independent Federal MP Andrew Wilkie wants that changed, and said he would push the Federal Government to act this year.

"This is gambling and anyone who tries to tell you it's not is wrong," Mr Wilkie said.

"In my opinion, these should be regulated in Australia in exactly the same way as mainstream online casino games and that's to ban them."

Aristocrat refused to comment, instead referring the ABC to the International Social Games Association (ISGA).

ISGA chief executive Luc Delaney argued social casino games were "purely for entertainment".

Mr Delaney said despite heavy scrutiny in recent times, no new regulation of social casino-themed games had been adopted — either under gambling or consumer protection laws.

"That's because casino-themed social games offer no opportunity to win money, or anything of value.

"Video games, including social games, fall under a range of consumer protection regulations as do all forms of digital entertainment, which we believe is appropriate."

Geoff still plays the slot machine games using free chips Big Fish Casino occasionally gives him.

But he says he never pays to play any more.

"I'm glad I saw the light a couple of years ago."