Put on Your Game ‘Face’: Facebook Turns to Social Gambling

Put on Your Game ‘Face’: Facebook Turns to Social Gambling
By Allie Blankinship

Investors have been betting on Facebook ever since it became a publicly traded company; now you can bet on Facebook in a different way, thanks to the release of Bingo Friendzy, the first Facebook app to ever allow users to play for real money.

This essentially marks Facebook’s entry into the high-paying world of online gambling. The app was created by Gamesy and, according to an article on Slate, Facebook representatives stressed this doesn’t represent a full partnership with Gamesy, but rather a single-shared project. The game was launched in Great Britain, apparently due to the high level of interest in online gambling and the quality of the gaming regulations they have in place.

The report, TechCrunch:2012, presents the number of users who played games on Facebook in 30 days and that 8 of the 10 top iPhone apps are integrated with Facebook. According to the report, the number of users playing games on Facebook, at 230 million, has been increasing since summer 2012. Facebook is making money off those 230 million people in the form of ad revenue and the users who pay to get bonuses in their games (“Credit Card Warriors” as they’re sometimes disdainfully called by free gamers), but nowhere near the money being made by online gambling sites. How much money? According to Global Information, Inc., in South America alone, more than 124 billion dollars in gambling revenue was collected in 2011. Just to give you some perspective, that is more than four times as much as Hollywood movies grossed worldwide in the same time period.

The odd thing about the amount of money that’s being made with online gambling is that such gaming is illegal in many countries around the world, including the United States. A recent article in the Sacramento Bee stated that only two countries in Latin America allow online gambling, and in the Asia Pacific, there is only one country with legalized online gambling; laws tend to vary a bit more in Europe and Canada. Countries like the United Kingdom, Spain and France are at the forefront of legal online gambling and contribute greatly to its revenue.

Online Gambling Interdiction

Even with the online gambling interdiction in so many prime markets, online gambling continues to grow. Huge increases in online gambling are forecast for Germany, and there is cautious optimism about India and China becoming major markets for the activity. Even in the United States, as states begin to struggle with financial shortfalls, there is a growing push toward legalization and taxation of Internet gambling. It’s even possible that monetized social gaming, like the type Facebook could provide, could bridge the gap and open the door to legalization of online gambling in the United States and other countries where it’s banned. In fact, U.S. Digital Gaming has recently been created because of a former executive at Mirage Resorts. Richard Bronson paved the way because of his firm opinion in the legalization or online gambling in the United States, according to a comprehensive press release on social gaming published this year by Top 10 Best Online Casinos.

Of course, illegal doesn’t always mean unavailable, and it’s very difficult to keep people from gambling online if they really wanted. While nowhere near as popular as legal gambling like Lotto in the United States, there are still plenty of people who gamble online through offshore gambling sites. The challenge for U.S. players is often finding a way to cash out, as offshore casinos aren’t supposed to make payments to people in the United States, but as with most things, persistent people who don’t mind bending a rule (or even a law) and can usually find a way to make it work.

The idea of adding a “real money” element to social gaming has been gaining popularity lately and it will not stop with bingo. In any case, slot-machine style games might be available for real-money play on Facebook within the next year—that may be just the tip of the iceberg. Imagine being able to bet on a player’s success in Farmville or on the outcome of a superhero battle in “Marvel Avengers.”

Facebook certainly wouldn’t mind the extra revenue that online gambling would bring. According to an article on PaidContent, revenue generated from player payments on Facebook’s Zynga games has been disappointing recently and adding a gambling element to some of those games could be just what the doctor ordered. One company working on monetizing social gaming predicts that they could increase revenue per user by a factor of 300 if they attach real money to social games.

Despite its popularity and the fact that online gambling is viewed as a cash cow by many corporations and governments alike there is a dark side to it as well. Someone with a gambling addiction could get themselves into trouble easily with online gambling. Gamesy, the company that developed Facebook’s Bingo Friendzy game, built in several self-help tools and ways for gamers to set spending limits. If that approach works to curb abuse by gambling addicts, you can expect Facebook to use that as a template going forward.

Online gambling is clearly a lucrative industry, probably too lucrative to remain illegal in most countries. By creating a new line of monetized social games, Facebook may be paving the way for a massive expansion of online gambling along with a healthy padding of their own profit margin. While there are dangers and drawbacks, you have to believe that if anyone can navigate the minefield of online gambling and make it safe and profitable worldwide, it would be Facebook.

Allie Blankinship is a freelance writer and consulting analyst who is fascinated by business and finance. In her free time, she is teaching herself to code.