Tech industry sets its sights on gambling

Feb 18, 2013, 11:46 am (42 comments)

Online Gambling

SAN FRANCISCO — Look out Las Vegas, here comes FarmVille.

Silicon Valley is betting that online gambling is its next billion-dollar business, with developers across the industry turning casual games into occasions for adults to wager.

At the moment these games are aimed overseas, where attitudes toward gambling are more relaxed and online betting is generally legal, and extremely lucrative. But game companies, from small teams to Facebook and Zynga, have their eye on the ultimate prize: the rich American market, where most types of real-money online wagers have been cleared by the Justice Department.

Two states, Nevada and Delaware, are already laying the groundwork for virtual gambling. Within months they will most likely be joined by New Jersey.

Bills have also been introduced in Mississippi, Iowa, California and other states, driven by the realization that online gambling could bring in streams of tax revenue. In Iowa alone, online gambling proponents estimated that 150,000 residents were playing poker illegally.

Legislative progress, though, is slow. Opponents include an influential casino industry wary of competition and the traditional antigambling factions, who oppose it on moral grounds.

Silicon Valley is hardly discouraged. Companies here believe that online gambling will soon become as simple as buying an e-book or streaming a movie, and that the convenience of being able to bet from your couch, surrounded by virtual friends, will offset the lack of glittering ambience found in a real-world casino. Think you can get a field of corn in FarmVille, the popular Facebook game, to grow faster than your brother-in-law's? Five bucks says you cannot.

"Gambling in the U.S. is controlled by a few land-based casinos and some powerful Indian casinos," said Chris Griffin, chief executive of Betable, a London gambling start-up that handles the gaming licenses and betting mechanics of the business for developers. "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 money in the U.S."

Betable has set up shop in San Francisco, where 15 studios are now using its back-end platform. "This is the next evolution in games, and kind of ground zero for the developer community," Mr. Griffin said.

Overseas, online betting is generating an estimated $32 billion in annual revenue — nearly the size of the United States casino market. Juniper Research estimates that betting on mobile devices alone will be a $100 billion worldwide industry by 2017.

"Everyone is really anticipating this becoming a huge business," said Chris DeWolfe, a co-founder of the pioneering social site Myspace, who is throwing his energies into a gaming studio with a gambling component backed by, among others, the personal investment funds of Jeff Bezos, Amazon's founder, and Eric E. Schmidt, Google's executive chairman.

As companies eagerly wait for the American market to open up, they are introducing betting games in Britain, where Apple has tweaked the iPhone software to accommodate them. Facebook began allowing online gambling for British users last summer with Jackpotjoy, a bingo site; deals with other developers followed in December and this month.

Zynga, the company that developed FarmVille, Mafia Wars, Words With Friends and many other popular casual games, is advertising the imminent release of its first betting games in Britain. "All your favorite Zynga game characters will be there, except this time they'll have real money prizes to offer you," an ad says. "Play online casino games for pennies and live the dream!"

Mr. DeWolfe's studio, SGN, is also on the verge of starting its first real-money games in Britain. "Those companies that have a critical mass of users that are interested in playing real-money games are going to be incredibly valuable," he said.

Mark Pincus, the chief executive of Zynga, said the company was just following the market. "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," he said. Zynga, which has missed revenue expectations in the last year, is making gambling a centerpiece of its new strategy. It has just applied to Nevada for a gambling license.

Casual gaming first blossomed on Facebook's Web site, where players could readily corral friends into their games. It is now being rethought for mobile devices, so people can play in brief snippets as they wait for a bus or a sandwich.

Some games mimic the slots and poker found in casinos; others emphasize considerably more creativity. The vast majority of casual game players play at no charge. A small number buy virtual objects in the game to speed their play or increase their status.

Tech executives expect an equally small number to play for real money but believe they will bet heavily, making them much more valuable to the gaming companies. By Betable's estimate, the lifetime value of a casual player is $2 versus $1,800 for a real-money player.

Big Fish Studios, a Seattle developer, introduced Big Fish Casino, an iPhone app, in Britain last fall. "We started with a one-pence slot machine," little more than a penny, said Paul Thelen, Big Fish's founder and chief executive. "Now it is up to a maximum of about $50 a bet." Average revenue per player is exceeding $20 a day, whereas in virtual currency it was 30 or 40 cents.

"Like in Vegas, some people get lucky and some don't," he added.

The powerful Las Vegas and Indian casinos have mixed attitudes toward online gambling. Caesars Entertainment in 2011 acquired the Israeli start-up Playtika, developer of the popular Facebook game Slotomania, for about $180 million, offering it a springboard into the digital world. But Sheldon Adelson, the Las Vegas magnate and major Republican Party donor, is opposed to online betting because he thinks children will end up gambling.

In New Jersey, Gov. Chris Christie has had different qualms. He has vetoed two online gambling bills, the second earlier this month. One concern: the state's take, a proposed 10 percent tax, was not large enough.

The measure, which is likely to be refined and successfully resubmitted in the next few months, followed the state Constitution, which mandates that Atlantic City is the only spot in the state where gambling can take place. And so only the casinos were allowed to offer online games, although they could partner with tech companies; the actual computers allowing the gambling would have to be housed in the casinos. And of course players had to be over 21 and physically located in New Jersey.

Meeting those last two requirements seems a tall order to Doug Creutz, an analyst at Cowen & Company who follows online gambling closely. "The Internet isn't bound geographically," he said. "There are other problems too, like preventing money laundering. Online gambling is going to be a complex issue that will take a while to sort out."

In the meantime, though, he notes that games themselves are sometimes changing to incorporate elements akin to gambling. Diablo III, the latest version of the popular role-playing series from Blizzard, was released last year with an in-game auction house where players could buy and sell loot that they had found. If they chose, they could literally take the profits out of the game.

Since the loot was randomly generated, like the numbers on a slot machine, Blizzard had to remove the auction house game from the South Korean version of the game to satisfy the country's strict antigambling provisions.

Cesar and Edgar Miranda are two young developers who have won hackathons, where the goal is to build a game in a weekend. The brothers, who rent rooms from their parents in San Jose, have spent the last few weeks refining their game, Claw Crane.

It is a simple variation of the grabbing game found in amusement arcades for decades: successfully secure a toy from a pile and you win. If Apple approves, the game, offering cash prizes, will be available in Britain later this month. A virtual money version will be available in the United States.

"We saw the opportunity here," said Cesar Miranda, 24. "Anyone can jump in and try and grab a piece of this market while it is still fresh. There's a low entry to failure."

Neither he nor his brother, born in Mexico and raised in California, have even been near Britain. "I think the closest I've gotten is Las Vegas," Cesar Miranda said.

NY Times

Comments

sully16's avatarsully16

The new stay at home job ?

rdgrnr's avatarrdgrnr

When there's an available source of revenue with tons of money to be made, laws will be changed.

It's only a matter of time before everybody will be gambling and buying lottery tickets online.

They'll just have to be politically correct about it and call the bill the "Widows & Poor Little Orphans Online Gambling Bill" or the "Education Online Gambling Bill."

Then it will sail right through.

mightwin's avatarmightwin

After scanning through the 150+page requirements that the Michigan lottery is asking system vendors for its proposed iLottery, seems like they want to do pretty much everything they have now plus new games over the internet/smartphones. That's a lot of electronic transactions taking place with regards to players buying wagers, winnings automatically deposited into players accounts etc. Maybe the technology is there now maybe not. Call me old fashioned I guess, but having a physical ticket seems a lot better to me.

Ronnie316

Quote: Originally posted by mightwin on Feb 18, 2013

After scanning through the 150+page requirements that the Michigan lottery is asking system vendors for its proposed iLottery, seems like they want to do pretty much everything they have now plus new games over the internet/smartphones. That's a lot of electronic transactions taking place with regards to players buying wagers, winnings automatically deposited into players accounts etc. Maybe the technology is there now maybe not. Call me old fashioned I guess, but having a physical ticket seems a lot better to me.

Seems better to me too.

Ronnie316

I don't think I would have much interest in online gambling.

Ronnie316

Quote: Originally posted by rdgrnr on Feb 18, 2013

When there's an available source of revenue with tons of money to be made, laws will be changed.

It's only a matter of time before everybody will be gambling and buying lottery tickets online.

They'll just have to be politically correct about it and call the bill the "Widows & Poor Little Orphans Online Gambling Bill" or the "Education Online Gambling Bill."

Then it will sail right through.

I Agree! Perhaps "Keep Firefighters and Teachers working online gambling bill" What?

Ronnie316

Quote: Originally posted by mightwin on Feb 18, 2013

After scanning through the 150+page requirements that the Michigan lottery is asking system vendors for its proposed iLottery, seems like they want to do pretty much everything they have now plus new games over the internet/smartphones. That's a lot of electronic transactions taking place with regards to players buying wagers, winnings automatically deposited into players accounts etc. Maybe the technology is there now maybe not. Call me old fashioned I guess, but having a physical ticket seems a lot better to me.

I Agree! I like stopping at the gas station for lottery tickets.

rdgrnr's avatarrdgrnr

Quote: Originally posted by Ronnie316 on Feb 18, 2013

I Agree! Perhaps "Keep Firefighters and Teachers working online gambling bill" What?

That'll work.  Yes Nod

jackpotismine's avatarjackpotismine

This will be a gold mine for 'hackers'. They'll have plenty of choices which online sites to hack and steal your credit card numbers and money.

mightwin's avatarmightwin

Quote: Originally posted by Ronnie316 on Feb 18, 2013

I Agree! I like stopping at the gas station for lottery tickets.

Hopefully lottery retailers won't become extinct in the future. I could see that happening eventually though

Ronnie316

Quote: Originally posted by jackpotismine on Feb 18, 2013

This will be a gold mine for 'hackers'. They'll have plenty of choices which online sites to hack and steal your credit card numbers and money.

Good point. Another good reason NOT to hand out my credit card information.

Ronnie316

Credit cards cant be used to buy lottery tickets. Will that change when online gambling starts?

mightwin's avatarmightwin

Quote: Originally posted by Ronnie316 on Feb 18, 2013

Credit cards cant be used to buy lottery tickets. Will that change when online gambling starts?

You can in michigan and ohio its up to the retailer if they want to or not

Ronnie316

Quote: Originally posted by mightwin on Feb 18, 2013

You can in michigan and ohio its up to the retailer if they want to or not

I was at my lottery HQ and they insisted on "cash only" so I assumed it was a law in AZ. What?

mightwin's avatarmightwin

Quote: Originally posted by Ronnie316 on Feb 18, 2013

I was at my lottery HQ and they insisted on "cash only" so I assumed it was a law in AZ. What?

It doesnt make much sense for the retailer to do it. Dont they get charged a percentage fee or per transaction fee for each swipe? I would think it would eat away too much at whatever they get for selling the ticket.

Ronnie316

Quote: Originally posted by mightwin on Feb 18, 2013

It doesnt make much sense for the retailer to do it. Dont they get charged a percentage fee or per transaction fee for each swipe? I would think it would eat away too much at whatever they get for selling the ticket.

Yes,  but that would be true of any small transaction. Ive heard them say so many times that "You cant buy lottery tickets with credit cards" I always thought it was illegal.

sully16's avatarsully16

Quote: Originally posted by rdgrnr on Feb 18, 2013

When there's an available source of revenue with tons of money to be made, laws will be changed.

It's only a matter of time before everybody will be gambling and buying lottery tickets online.

They'll just have to be politically correct about it and call the bill the "Widows & Poor Little Orphans Online Gambling Bill" or the "Education Online Gambling Bill."

Then it will sail right through.

Also, it won't be fair to those without computors or access to the internet, so for votes, they'll hand out computors and on-line vouchers at the tax payers expense, after all it's only fair.

NoCompLotto!

In Michigan, it is expressly against lottery policy to accept credit cards for payment on lottery tickets. However, Debit cards are accepted, as long as you enter your PIN when purchasing them - the transaction may not be ran as credit.

Indiana has a policy allowing any form of payment to be used. As a matter of fact, they tell retailers to promote using credit/debit cards as a method of payment... I dunno.

Retailers will most likely never stop selling tickets - especially scratch-offs. There are people who play the lottery who want the instant gratification of cash in their hand should they win, and the lotteries know this. Lotteries would be foolish to take that feeling away from people.

However, there are people (like myself) who like sitting at their computer versus going to a crowded, loud and stinky casino to gamble. Just my thoughts.

Ronnie316

Quote: Originally posted by NoCompLotto! on Feb 19, 2013

In Michigan, it is expressly against lottery policy to accept credit cards for payment on lottery tickets. However, Debit cards are accepted, as long as you enter your PIN when purchasing them - the transaction may not be ran as credit.

Indiana has a policy allowing any form of payment to be used. As a matter of fact, they tell retailers to promote using credit/debit cards as a method of payment... I dunno.

Retailers will most likely never stop selling tickets - especially scratch-offs. There are people who play the lottery who want the instant gratification of cash in their hand should they win, and the lotteries know this. Lotteries would be foolish to take that feeling away from people.

However, there are people (like myself) who like sitting at their computer versus going to a crowded, loud and stinky casino to gamble. Just my thoughts.

I Agree! Except I don't see how online gambling could be made safe for the bettor. Once a person voluntarily gives up their money online it could be permanently lost. Especially if it goes out of the country.

Ronnie316

Quote: Originally posted by sully16 on Feb 19, 2013

Also, it won't be fair to those without computors or access to the internet, so for votes, they'll hand out computors and on-line vouchers at the tax payers expense, after all it's only fair.

Sounds like something the government would promote. lol. "Gambling online is a right" lol.

Remember when everyone was going to get FREE cable TV???? I'm still waiting for my "BOX" that will give me all the local channels that are now ONLY available via cable.

helpmewin's avatarhelpmewin

Quote: Originally posted by Ronnie316 on Feb 19, 2013

I Agree! Except I don't see how online gambling could be made safe for the bettor. Once a person voluntarily gives up their money online it could be permanently lost. Especially if it goes out of the country.

didnt yo momma teach you to shareYes Nod

helpmewin's avatarhelpmewin

Quote: Originally posted by Ronnie316 on Feb 19, 2013

Sounds like something the government would promote. lol. "Gambling online is a right" lol.

Remember when everyone was going to get FREE cable TV???? I'm still waiting for my "BOX" that will give me all the local channels that are now ONLY available via cable.

Hyper

helpmewin's avatarhelpmewin

Quote: Originally posted by Ronnie316 on Feb 18, 2013

Yes,  but that would be true of any small transaction. Ive heard them say so many times that "You cant buy lottery tickets with credit cards" I always thought it was illegal.

No Nod

helpmewin's avatarhelpmewin

Quote: Originally posted by Ronnie316 on Feb 18, 2013

I was at my lottery HQ and they insisted on "cash only" so I assumed it was a law in AZ. What?

Laws are different in AZI Agree!

mightwin's avatarmightwin

Quote: Originally posted by NoCompLotto! on Feb 19, 2013

In Michigan, it is expressly against lottery policy to accept credit cards for payment on lottery tickets. However, Debit cards are accepted, as long as you enter your PIN when purchasing them - the transaction may not be ran as credit.

Indiana has a policy allowing any form of payment to be used. As a matter of fact, they tell retailers to promote using credit/debit cards as a method of payment... I dunno.

Retailers will most likely never stop selling tickets - especially scratch-offs. There are people who play the lottery who want the instant gratification of cash in their hand should they win, and the lotteries know this. Lotteries would be foolish to take that feeling away from people.

However, there are people (like myself) who like sitting at their computer versus going to a crowded, loud and stinky casino to gamble. Just my thoughts.

Not true for Michigan I use credit 4 times a week.

Stack47

Quote: Originally posted by Ronnie316 on Feb 18, 2013

Yes,  but that would be true of any small transaction. Ive heard them say so many times that "You cant buy lottery tickets with credit cards" I always thought it was illegal.

I've heard the same thing from lottery retailers, but have used a credit card and debit/credit card to purchase tickets in other stores. It probably depends on how the purchases are coded and I doubt any store would incorrectly code a transaction if it was illegal. The store where I usually buy my tickets doesn't accept debit or credit cards for lottery tickets, but the owner explained it's because of his cost for the transaction.

sully16's avatarsully16

Quote: Originally posted by mightwin on Feb 19, 2013

Not true for Michigan I use credit 4 times a week.

Not supposed to, that retailer can lose his license if anyone finds out.

Ronnie316

Quote: Originally posted by sully16 on Feb 20, 2013

Not supposed to, that retailer can lose his license if anyone finds out.

Sounds like a job for the lottery investigators. But wait, it may not be in their best interest to bust a retailer.

Ronnie316

Quote: Originally posted by Stack47 on Feb 19, 2013

I've heard the same thing from lottery retailers, but have used a credit card and debit/credit card to purchase tickets in other stores. It probably depends on how the purchases are coded and I doubt any store would incorrectly code a transaction if it was illegal. The store where I usually buy my tickets doesn't accept debit or credit cards for lottery tickets, but the owner explained it's because of his cost for the transaction.

Perhaps all the retailers have created a perception thats its illegal to save expenses. What?

Ronnie316

Quote: Originally posted by mightwin on Feb 19, 2013

Not true for Michigan I use credit 4 times a week.

Some places have minimum translation size like $10. or something.

Ronnie316

Quote: Originally posted by helpmewin on Feb 19, 2013

Hyper

       See Ya!

Ronnie316

Quote: Originally posted by helpmewin on Feb 19, 2013

Laws are different in AZI Agree!

I Agree! We still live in the wild west.

mightwin's avatarmightwin

Quote: Originally posted by sully16 on Feb 20, 2013

Not supposed to, that retailer can lose his license if anyone finds out.

To clear it up I emailed the Michigan Lottery and their response was "Whether a retailer will allow a Lottery purchase with a debit or credit card is up to that individual retailer."

Ronnie316

Quote: Originally posted by mightwin on Feb 20, 2013

To clear it up I emailed the Michigan Lottery and their response was "Whether a retailer will allow a Lottery purchase with a debit or credit card is up to that individual retailer."

What do you know mightwin? I just called my lottery HQ and they told me the very same is true here in AZ.

mightwin's avatarmightwin

Quote: Originally posted by Ronnie316 on Feb 20, 2013

What do you know mightwin? I just called my lottery HQ and they told me the very same is true here in AZ.

Its a retailer conspiracy I tell ya...................lol. Now all you have to do is find one!

Ronnie316

Quote: Originally posted by mightwin on Feb 20, 2013

Its a retailer conspiracy I tell ya...................lol. Now all you have to do is find one!

I think I know a liquor store that may take a credit card for lottery tickets. What?

Ronnie316

Quote: Originally posted by mightwin on Feb 20, 2013

Its a retailer conspiracy I tell ya...................lol. Now all you have to do is find one!

I think its easier to say "you cant buy lottery tickets with a credit card" than to have to explain every time that they lose money on the deal and "won't" take a credit card. Just think of all the people who would declare that its their "right" to use a credit card if they want to.Yes Nod

mightwin's avatarmightwin

Lottery Post members unite!.............demand all retailers take our credit/debit cards for lotto!!!! Lol

Ronnie316

Green laughNow that we know the truth, I wonder how often they will hear the question......

"Are you saying you cant take a credit card, or you WON'T take a credit card"  lol.

rdgrnr's avatarrdgrnr

Quote: Originally posted by sully16 on Feb 19, 2013

Also, it won't be fair to those without computors or access to the internet, so for votes, they'll hand out computors and on-line vouchers at the tax payers expense, after all it's only fair.

Oh no, I hope that Obama-phone lady in Cleveland doesn't make another video about Obama-computers now.

sully16's avatarsully16

Quote: Originally posted by rdgrnr on Feb 20, 2013

Oh no, I hope that Obama-phone lady in Cleveland doesn't make another video about Obama-computers now.

heheherhehehe, I hope not either

jamella724

I think it is very convenient to purchase lottery ticket online. Playing games will be very accessible. However if most players prefer online it will definitely have an effect on retailers that sell lottery ticket.

End of comments
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