The fuzzy line between gaming and gambling online is getting fuzzier: the Silicon Valley developers behind popular social media games like Farmville, Mafia Wars and Words with Friends have applied for a Nevada online gambling license. San Francisco-based leading social media games developer Zynga says they are following market trends and want to be ready when online gambling becomes legal in key states such as Nevada, New Jersey and Delaware to take advantage of their potential market share.
“There is no question there is great interest from all kinds of people in games of chance, whether it is for real money or virtual rewards,” said CEO of Zynga, Mark Pincus. The company failed to meet revenue expectations last year and is looking to gambling dollars online as a new marketing strategy. They’re not the only social media gaming app developers to do so, either.
It Just Makes Dollars and Sense
The shift to gaming for dollars from just plain gaming for fun is a practical one: it means more revenues for gaming app developers. While the U.K. is already enjoying real-money gaming, it’s inevitable that the same trend will come to America once imminent legalization takes place in a few key states.
“Gambling in the U.S. is controlled by a few land-based casinos and some powerful Indian casinos,” said Chris Griffin, CEO of the London-based Betable, a company that helps gaming app developers make their way through the complex and difficult world of gaming licenses and online betting mechanics. “What potentially becomes an interesting counterweight is all of a sudden, thousands of developers in Silicon Valley making money overseas, and wanting to turn their efforts inward and make [the same kind of] money in the U.S.”
Betting that more and more U.S. developers will follow suit, Betable has established a U.S.base in San Francisco, where 15 companies have now made use of its back-end platform for their gaming apps. “This is the next evolution in games, and kind of ground zero for the developer community,” added Griffin.
Money Makes the Apps Go Round
It’s no wonder that U.S. companies want to jump on board this burgeoning trend overseas; online betting in the U.K. and Euro marketplace is bringing in an estimated $32 billion annually, which is close to what the land-based U.S. casino market generates. A recent study by Juniper Research shows revenues on mobile devices alone to hit the $100 billion mark worldwide within the next four years.
Key Investors Get On Board
The financial potential is so staggering that some of the Internet’s biggest players are putting their own money into it; among them, Jeff Bozos, founder of Amazon.com, and Eric E. Schmidt, executive chairman of Google. “Everyone is really anticipating this becoming a huge business,” said Chris DeWolfe, co-founder of the early social media site Myspace, who is himself investing in a gaming studio with a gambling adjunct backed by the aforementioned heavy hitters as well as others.
While tech companies admit that a relatively small number of online gamers may ultimately convert to real money, they say that those who do will most likely bet heavily, making their value to developers enormous; they will be the online equivalent of a land casino’s “whales.” So enormous, in fact, that Betable is calculating the lifetime value of future real-money players at $1,800, versus the play-money gamer’s more modest $2.