04/25/2012 : INTEREST IN ONLINE GAMBLING AT GIGSE
The intersection of social and internet gambling is getting busy
The opening day of the Global iGaming Summit & Expo in San Francisco this week has illustrated the considerable enthusiasm in the wider gambling industry regarding real money internet gambling and the burgeoning social gaming sector, reports the publication Venture Beat.
Attendance at the conference and expo almost doubled this year, no doubt due in part to the US Department of Justice’s change of stance on what constitutes online gambling in terms of the Wire Act. This has created expectations that a more realistic and positive approach to online gambling will soon emerge in the United States through legalization at either federal or state levels.
The prospect of legalization has triggered practical moves by several major land suppliers, among them Bally Technologies and IGT, both of which have acquired mobile and internet gambling companies to expand their capabilities in the potential new markets, widening revenue streams. In other moves, both land and internet companies have been looking for partners and cementing relationships with the same objectives in mind.
“Social gaming is obviously the coming thing and in some sense it has already arrived,” Simon Burridge, chief executive of Virgin Games, opined, speaking on a panel at the conference. “Social gaming meets real gambling is the high ground of the future.” Burridge said the appeal of social interaction on social gaming sites was an important facet, making the sites highly retentive in a user sense.
Jim Ryan, co-CEO at Bwin.Party digital said that social gaming companies like Zynga had taken advantage of the social networking scene to build up massive online audiences, but that online gambling firms had been slow to grasp the importance of the sector:
“As an industry we have missed the ball," Ryan commented. "Bingo is easy. That is the one and only social game that our industry has gotten right.”
Ryan, an experienced online gambling executive, was positive about US legalization whilst acknowledging that getting licenses is a protracted, expensive and complicated process. He voiced the belief that the market for legal online gambling will open up in the U.S. in 2014.
By that time, both state and federal regulations would hopefully be clearer, he said, adding that getting a license to operate an online gambling site in just one location can be challenging.
Giving an example, he said that he anticipates a license to operate online gambling in California, once the state legalises it, will be about $30 million…. but the commercial rewards can be equally sizable, given the numbers of users who play online casual non-betting casino games on social networks.
PKR's chief executive Malcolm Graham concurred, saying: “We have all missed the opportunity to build tournament-style gambling games for no real-money betting on Facebook." But, he predicted, in the next 12 months to 18 months, the internet gambling industry will move onto Facebook.
The sheer volume of users reachable through social gaming makes it a potent resource, said Brock Pierce, managing director at the Clearstone Global Gaming Fund, who described social gaming as the “top of the funnel.”
He explained that the pastime brings in huge volumes of potential customers who want to try or play free casino games. Although only a small percentage of those wind up spending money, and an even smaller percentage can be converted to real money gambling, the volumes are so large that the sector represents important potential returns for companies that enter it.
Most panelists agreed that it may be years before the complex regulatory and legal picture, especially in the United States, is clear for the real-money online gambling market, and its application to the social gaming scene.
The growing field of mobile gambling and social gaming is just one area where legal complexities have restricted full development.
Rip Gerber, CEO of geo-location technology provider Locaid, said it is possible to spoof the built-in global positioning system (GPS) and Wi-Fi location systems in smartphones. His company engages with mobile phone carrier providers to use the signals from cell towers to fix the location of users for the purpose of verifying whether they are using a gambling app in a territory where it is legal.