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Let’s Talk About Social Gambling

The rise and (sort of) fall of social gambling is a saga that has gone (almost) untold by the gaming press. Sam Miranda tackles this complex, convergent media phenomenon and speculates about the future of the social gambling industry.

samuel miranda, Blogger

December 10, 2013

5 Min Read

It seems that nobody can make sense of social gambling.

This relatively nascent arm of the videogame industry has proved an awkward presence in the social gaming space, expanding to a $2.9 billion monolith last year and deflating just as quickly. With former market leaders Zynga reportedly stepping down their real-money gambling operations, it seems like an appropriate time to give social gambling a proper run-down.

As I intimate in my LiveCasino.co.uk resource, the term ‘social gambling’ is frankly a bit useless and only serves to breed confusion. Online casino operators have been taking advantage of social media to promote their services for years and besides, aren’t all online table games inherently social? If I were to, say, sign up to an online casino and play a few hands of blackjack with other users logged into the same lobby, would I be engaged in social gambling?

The short answer is, no. The term ‘social gambling’ can refer to a number of different services, but as a rule it means online gambling played via social media platforms instead of through a dedicated casino website. Consequently, social gambling occupies a distinct market sector that straddles the gambling and social gaming industries.

Just to complicate matters even further, many social games permit real-money transactions to obtain additional content: the microtransaction monetisation strategy with which we’re all familiar. However, social gambling and social gaming are – unequivocally - not the same thing. The key difference is that, in social gambling, players wager cash in hope of winning more (put simply, they gamble). However, in social gaming, players can pay for additional content but do not stand to win any additional money.

While it could be argued that social gambling is simply a sub-genre of social gaming, I think of social gambling as a hybrid entertainment industry that stands alone from its forebears. Social gambling runs the gamut from games of chance (e.g. Slotomania and Bingo Blitz) to skill-based, competitive games like Poker. Recently, sports betting has also joined the social gambling fold with Paddy Power’s In-Play.

It is no secret that social gambling has fallen on hard times. In 2012, Zynga alone accounted for 12% of Facebook’s revenue, primarily through its popular Zynga Poker series. However, the company has lately been forced to pull out of plans to obtain a gambling license in the States, stepping back real-money gaming in general after social gambling profits took a plunge. Zynga’s active users fell from a 60 million peak in the third quarter of 2012 to half that number today. Don Mattrick has certainly got his work cut out for him.

However, despite these ominous developments, many industry insiders remain optimistic about the future of social gambling. In an interview with CalvinAyre.com, online gambling expert Evan Hoff describes Zynga’s misfortune as “a separate story of failed execution and lots of internal issues.”

“I don’t think it’s the end of the road in terms of interest in social gaming,” he continues. “We have seen several startups recently – for example Bingo Godz – using social mechanics in real money and I think that trend and the desire to learn from social gaming, will continue for some time to come.”

Of course, the basic utility provided by social gambling as an entertainment industry varies by territory, creating distinct challenges for developers. For instance, Hoff identifies two ‘constituencies’ of social gambling users in the UK: non-gamblers who play free casino games for fun and seasoned online gamblers dipping their toes in social services. He notes that there is “very little overlap between these two groups.” In sum, while developers can eke a profit from online gamblers it is near impossible to convince the social gamers who enjoy Zynga Poker and Pokerstars’ free games to “jump over the wall” to real-money gaming.

In the U.S., social gambling is basically non-existent due to stringent online gambling regulations. However, free-play casino games do a roaring trade on social media – with players amassing chips to advance through poker leader boards and plugging reams of virtual coins into slot games. Despite the lack of a real-money social gambling market, gambling brands continue to acquire social gaming companies through which they market casino games to American users. For example, SoftBank and GungHo Entertainment recently bought a 51% stake in mobile-only game studio Supercell, the publisher of Hay Day and Clash of Clans. Through gaming companies, casino brands can showcase their content and gain valuable insights into the playing habits of non-gamblers.

It seems that, for many users, the casino element of social gambling can be divorced from the merits of the games themselves. Despite critiquing Zynga’s administrational woes, Hoff complements the quality of their poker software and praises the company for providing a service that looks “fresh and plays beautifully.”

This focus on high-quality game design and the provision of an attractive interface has been a core tenet of social gambling development. In 2012, Raf Keustermans (CEO of social casino game studio Plumbee) argued that “the main job for a game studio is to create a fun experience.” Echoing these comments, Christoph Jenke, COO of social betting company Crowdpark identified the ‘causal’ draw of social gambling: “Social gambling is so different from real-life gambling because users think of it as casual games. The amounts of money placed are far smaller, and the pull of casinos – dark halls with lots of noise and flashing lights – doesn’t exist.”

Targeting the casual market may have been the imperative last year, but as we have seen, converting casual social gamers into real-money gamblers is a dead-end pursuit; so where does this leave social gambling? Are start-ups destined to become a market research tools for casino brands, while popular games are steadily reincorporated into the social gaming market through the proliferation of free-play services?

Who the hell knows? Ask Don Mattrick.

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