In a new twist for real-money gambling, Betable is announcing a partnership with 3Oak, a new studio funded by Canada’s Frima Studio. Under the deal, 3Oak will make gambling games out of titles that are not typically real-money gambling games.
The move is part of Betable’s campaign to break down barriers between real-money online gambling and social-mobile games. It is a disruptive strategy that could yield riches and change the status quo in two industries if Betable pulls it off as planned.
3Oak will create original titles that will incorporate gambling mechanics into the social gameplay experience. Theoretically, 3Oak could create a fantasy role-playing mobile game that has a minigame. With Betable’s technology, players could bet real money against each other to see who plays it the best. The winner could walk away with actual winnings, not just a virtual prize.
3Oak isn’t yet talking about what kinds it will make, said Mikael Lefebvre of 3Oak, which is a 15-person real-money gambling division within Quebec-based Frima, which has 300 employees. In an interview with GamesBeat, Lefebvre said, “We are not doing social casino games.”
“We are real excited about this,” said Chris Griffin, the chief executive of San Francisco-based Betable. “That has been the thesis of Betable. We make it easy for companies to go into the real-money space, leveraging creativity and know-how from nongambling games. We want to reach a much larger market with real-money gambling, and to do that, you have to do it with games that have broader appeal than casino games. We are particularly excited about Frima. They are redefining what it means to play games with real money.”
As we’ve noted in past stories on Betable, the company has a license in the United Kingdom to operate online gambling on a worldwide basis. In some territories, it will still require a separate license, and in places like the U.S., it has to wait for real-money online gambling laws to be passed by states.
Betable has created a technology to verify where a user is, and it has antifraud measures that can overcome someone who “spoofs” his Internet protocol address to fake his location. It does so by checking into a variety of records, such as credit reports, bank accounts with real addresses, and voting records. If the location is spoofed, it rejects the user for real-money gambling. But if that person passes and it is legal to gamble in his actual location, Betable permits the gambling to take place.
Here’s one of the clever tricks in dividing the gambling process: The developer creates and builds the front end of the game. Betable’s servers handle the back-end processing. Users see the front end, such as a slot machine. They bet money and play the slot machine. The game turns this information over to Betable, which then calculates the result. If the player wins, Betable credits the account. If he loses, Betable deducts money. Betable handles the payment processing by itself, said Griffin.
This makes Betable’s platform universal. Any game can be plugged into its applications programming interface and be converted into a real-money gambling game. Betable can handle all sorts, including bingo, cards, and slots. The developer simply tells Betable what type it has built, and then Betable spits out the right result. As in the partnership with Frima, Betable can also create new kinds of gambling games through custom mechanics. An example: In a horse-racing game, you could pay real money for virtual goods to raise a proper horse. Then you could enter that horse in competitions and bet real money it would win. If it does, you collect real gambling winnings.
The significance of Betable’s system is huge. As of now, no other company has both a license and the technology to help the entire social casino industry convert its titles from virtual currency games into real-money gambling games. The conversion process is painless, and companies can use Betable to stay within the constraints of territorial gambling laws. If a user with a mobile phone moves into a place where it’s legal to gamble, and then the user fires up a game, ot will ask, “Do you want to play for real money?” If the user answers “yes,” Betable executes the gambling part.
Here’s where the economics matter: Typical social-game companies make 10 cents to 20 cents on average per paying user in a month. For Zynga, about 2 percent of its users pay real money for virtual goods, and those paying users spend around a couple of bucks a month. That is why Zynga needs a massive number of players to make decent profits. But real-money gambling players spend $99 to $200 a month on poker games, according to market researcher Playtech. The lifetime value of one of these poker players is about $1,800. That’s a huge difference.
If the social casino companies can convert some of their players to real-money gambling — in the areas where it is legal — then they could make a huge windfall. Zynga is already a billion-dollar company with virtual goods revenue. If it converted to real-money gambling, its revenues could shoot upward.
“With real-money gaming growing briskly and expanding into new territories, we see the opportunity to leverage our development talents in a nascent industry, and Betable is the best method of entry,” said Steve Couture, the CEO and co-founder of Frima Studio. “As the market continues expanding, free-to-play developers will adopt real-money play to boost monetization, engagement, and retention. 3OAK powered by Betable will be there to meet the demand.”
LeFebvre said that his team did a prototype game and tested it. The results showed that the conversion of players into online gamblers was far above the typical 3 percent in a standard social game.
“It showed that it makes sense to do free-to-play games where you can cash out,” he said. “It brings you higher engagement rates.”
Griffin said the demand for Betable’s real-money gambling platform has exceeded expectations, and the real results from existing games such as Big Fish Games’ real-money gambling game in the United Kingdom have also “exceeded our wildest dreams.”
Betable also has partnerships with Digital Chocolate, SGN, Slingo, Mandala Games, and Murka. Betable’s newly appointed employees include Ya-Bing Chu, Betable’s chief product officer and former vice president at Zynga; and Jonathan Flesher, the executive vice president of business development and former vice president of business development at Zynga.
3Oak is working on its own titles and partnering with third-party developers as well. Frima has worked for other publishers, including Electronic Arts, Microsoft, and Activision. but it has decided to make a shift into social-gambling games under its own name through the 3Oak Studio, said LeFebvre. 3Oak’s titles will run on the web, iOS, and Android. [Update: 3Oak clarified that it is not doing social casino games now, but it may do so in the future with third-party game developers].
Griffin said that the next six months to nine months, there will be a very big movement toward real-money gambling.
“The tipping point will come when we open our platform up broadly and allow a larger pipeline of game developers,” said Griffin. “We are not saying exactly when that will happen yet. We think the effect will be like what happened when Facebook opened up its platform.”