From Gaming to Gambling: The Evolution of Social Games

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Online gambling, also known as Internet gambling and iGambling, is a general term for playing games using – and with the objective of gaining – real money. Recent years have seen a steep increase in …

Online gambling, also known as Internet gambling and iGambling, is a general term for playing games using – and with the objective of gaining – real money. Recent years have seen a steep increase in the popularity of social games and browser games, with social media providing a convenient distribution platform for such games but, given the stigma and legal restrictions imposed in some countries, will this pattern be mirrored in the global popularity of online gambling?

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  • 1. From Gaming to Gambling: The Evolution of Social Games Online gambling, also known as Internet gambling and iGambling, is a general term for playing games using – and with the objective of gaining – real money. Recent years have seen a steep increase in the popularity of social games and browser games, with social media providing a convenient distribution platform for such games but, given the stigma and legal restrictions imposed in some countries, will this pattern be mirrored in the global popularity of online gambling? The company 888 Holdings operates an online portal, offering real-money games such as poker, bingo and sports betting in markets where online gambling is regulated. Thanks to their 2010 acquisition of Mytopia from Real Dice, 888.com was also able to join the social and mobile gaming markets. Although Zynga abandoned their plans for real money games in the U.S., where gaming regulations are far stricter, CEO Mark Pincus followed up his 2012 announcement that the company was indeed expanding into the market. Zynga’s shares rose 5% within hours of announcing that they would launch their first real-money game in the UK back in April of last year. The convergence of social and gambling games seems set to continue. Real Cash it is, Then! Why are providers of social games so eager to add the cash option? Will it actually meet the wants and needs of players? What do players want? Quality graphics and playability? A social experience? Or just the cash? Let’s investigate… The answer seems obvious and, once again, Facebook provides the ideal platform with trust and accessibility, but the advantages of presenting online gambling games on a social platform don’t stop there:
  • 2. - Social games do have an addictive factor, but are a lot more enjoyable than playing slot machines in a dark room - Social games often feature promotions and bonuses, which be converted into real money - The sums of money placed on social games are usually far smaller, meaning that you get to play more (in terms of hands/rounds), or for a longer period of time. Mo’ Money, Mo’ Problems? Leading the way, Facebook launched online gambling games in the UK due to their popularity in many countries. Since September 4th 2012, British citizens with a Facebook account have been able to play such games and win – or lose – money, with games such as ZyngaPlusPoker, and ZyngaPlusCasino. Apps such as Paddy Power have also enabled users to place bets on real sporting events from their mobile devices. Julien Codorniou, Facebook’s Head of Gaming for Europe, the Middle East and Africa, said of the occasion, “Gambling is very popular and well regulated in the UK… for millions of bingo users it’s already a social experience so it makes sense for us to offer that as well.” While Internet gambling seems to have really taken off in the UK, many other markets can pose considerable legal risks, as regulations vary considerably from country to country. However, in April of last year, the French National Assembly followed suit, adopting a bill which officially opened the competition in the online gambling industry.
  • 3. Since 2012, thanks to the new license regime, gambling operators established in Malta, London or any other European country can get a license, allowing them to offer online gambling games and sports bets. In Belgium on the other hand, in order to protect players, the national laws are much tougher. Licenses for apps and online gambling websites are only permitted to companies who have a land-based facility, and operate from a Belgian web domain (.be). Third parties can also request that individuals are banned from any form of gambling if they feel the activity is having a negative effect on the gambler. In the US, where the majority of Facebook revenues are generated, the market for social iGambling is largely closed, demonstrating that there’s still a high level of resistance to the rise of online gambling and move toward social gaming. Online gambling was permitted by state law, however until recently only two states (Delaware and Nevada) allowed iGambling. In November 2013, New Jersey was added to this list, potentially showing a slow relaxation of the regulations in light of the industry’s multibillion dollar worth. Will Zuckerberg Take the iGamble? Currently, the top five casino games on Facebook are Texas HoldEm Poker, Slotomania, DoubleDown Casino, Bingo Blitz, and Bingo Bash which, altogether, account for over 11 million daily users. Looking at Facebook games overall, we can see that about 20% of gamers have paid for in- game benefits through the network’s virtual currency (introduced in 2011). This means that money made in social games comes from players paying for additional virtual goods and currency to unlock desirable features and demonstrates that these players are already willing to spend money in-game. Now, considering that Facebook’s social games reach 290 million global active players every month, while the online gambling industry is estimated in excess of a phenomenal $30.3 billion – doing the math is fairly easy.
  • 4. Gambling on the Future So what does all this mean? First and foremost it means that over the next year we can expect to see a continued increase in the number of online gambling games in Europe, and perhaps even the initial boom period of iGambling in the United States as laws are relaxed. Whether the floodgates open or not remains to be seen. More interestingly, it seems that online gambling games have become increasingly integrated with social games, making them more accessible via social media platforms. The implication that this has had, and will continue to have upon games publishers is huge, changing the way that they make money. No longer does the money change hands on acquisition of the game – this process will increasingly become a part of the actual gameplay itself. This puts more pressure on publishers to develop games that are engaging enough to keep players coming back and spending their money. And who wouldn’t be excited about that? What was changed in this article? ‘recent 888 acquisition of Mytopia from Real Dice’ isn’t really recent anymore! Zynga has now launched first real-money gaming in the UK in spring 2013. ‘Gambling operators will soon be able to get a license’ – this has now happened, but subject to the country’s laws. Changed the details of the Belgian law – see above. Top games on Facebook have changed. The US is becoming less closed to gambling. See above.