Station Casinos opened up the first real-money gambling website in the state of Nevada today with the debut of UltimatePoker.com.

Nevada has more than its share of flashy casinos. But its newest high-stakes game will let Nevadans gamble in the comfort of their own homes. On Tuesday, Nevada became the first state where residents can legally play online poker for real money.

The state legalized online poker in February, followed by New Jersey and Delaware. The hope is that such online gambling will generate billions of dollars in revenue for both companies and local governments collecting taxes.

Michael Caselli, publisher and editor in chief of iGaming Business, said, “This is a necessary move for American Gaming. The world has gone digital and with online gaming proven a safe and reliable technology throughout the rest of the world, it was only ever a matter of time before the largest gaming operators in the world moved into the 21st century. Besides being the right technological move for the casinos, it brings convenience, innovation and better entertainment value to the consumer, making this a win-win move by Ultimate Gaming that every other terrestrial gaming group in the United States is sure to follow.”

UltimatePoker.com will operate under a 30-day license as the site works out any problems before getting a permanent license, according to a Reuters interview with A.G. Burnett, the chairman of the Nevada Gaming Control Board. Other companies are following close behind, he said. So far, players have to be in the state of Nevada in order to play UltimatePoker.com.

With UltimatePoker.com, players can compete for a daily prize of $1,000 or $10,000 on Sunday. Players must be 21 years or older.

Internet gambling was banned by Congress in 2006, but the Justice Department relaxed rules in 2011, allowing states to explicitly approve online gambling on a local basis. Ultimate Gaming is headed by chief executive Tobin Prior and Tom Breitling, co-founder and chairman. Breitling came to Las Vegas in 1993 with $100 in his pocket. He set up an online reservations company and grew the business to $104 million in 1999. He sold the company in 2000 to Expedia for more than $100 million. In 2004, Breitling and his co-founder, Tim Poster, acquired the Golden Nugget hotel-casino properties for $215 million.

Their operation became the subject of the Fox TV reality show, The Casino. In 2005, Breitling and Poster sold the Golden Nugget to Landry’s Restaurants for $340 million. Breitling published his autobiography, Double or Nothing, in 2007 and worked at Wynn Resorts from 2008 to 2010.

Prior, meanwhile, was previously president of the International Gaming Division of Kerzner International.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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In a partnership with Betable, mobile gaming firm Digital Chocolate is launching a social casino game that gives you the option of turning it into a real-money gambling game in the United Kingdom.

The move is Digital Chocolate’s first step to transform ultracompetitive casual social casino games into the potentially lucrative real-money gambling market. Real-money gambling promises to revolutionize social games as the barriers between gambling and social casino games collapse around the world. The U.K. is one of the first markets where this has happened.

San Francisco-based Betable’s aim is to disrupt traditional online gambling by making it extremely easy for companies to convert their non-real-money gambling games into gambling titles. Betable is trying to become a one-stop shop where game companies go to enter the real-money gambling market on mobile devices in the U.K. It has ambitions to move to other territories too.

“We are charging real fast into social mobile gaming, and part of our strategy is real-money gaming,” said Jason Loia, the chief operating officer at Digital Chocolate in San Mateo, Calif., said in an interview with GamesBeat. “Real-money gambling is a real part of our strategy in 2013.”

The new Slots! Pocket U.K. game — the first combination virtual goods and real-money gambling title for Digital Chocolate — is launching today on the iPad and iPhone. Another title coming soon from Digital Chocolate is a real-money Blackjack game on iOS. As you can see from the image at the top, Slots! gives players based in the U.K. the option to bet real money or virtual currency and chips on pulls of the slot machine. There are seven different types of slot machines in the title.

Loia said that Digital Chocolate considered the consequence of having another company in between it and its customers. That always carries risks, such as a potential loss of privacy or  But Betable has expertise in complying with the law by checking to see if the person who is making the request can legally gamble from the location where he or she is. It has to be crystal clear that someone is playing for real money, and Betable knows how to do that. Loia said his own company doesn’t have the same kind of ability.

“After talking with our lawyers, it was pretty clear we couldn’t do real-money gambling ourselves,” Loia said. “So we formed the partnership with Betable.”

The companies have been working on the project since they announced a deal in December. Digital Chocolate took an existing social slots game and modified it. The real-money gambling game had to be random and comply with strict laws governing slot machines. But the social casino game can be different in that it can reward players with a lot more winnings or gifts in the early part of the game to entice them to keep playing. Loia said his team did not have to spend a lot of time recreating the foundation of the game in order to meet those different goals and to meet regulations.

“We could plug in real-money gaming as a separate game that sits alongside the social casino game,” Loia said. “Players can participate in virtual goods gaming or real-money gaming. We like the idea of attracting a large audience for social casino gaming and then finding the smaller number of people who want to play with real money.”

Betable provides the backend processing to enable a person to bet real money in what would otherwise be a non-real-money casino game. It detects where the player is and then checks to see if that person can legally gamble where they are. If the player can, it asks if the player wants to play for real money. Then the game executes the random gambling round and pays out coins that can be converted into real money.

Betable handles compliance, fraud prevention, identity checks, wagering and gambling results.

Earlier this year, Beatable chief executive Chris Griffin said that it was getting great results from its first customers in the United Kingdom. At the time, he said that the company was seeing “incredible performance” in converting social gamers to gamblers.

About 80 percent of the gamblers had never spent money in a social casino game before. And the engagement is about 10 times better for real-money gambling games than normal social casino games. The daily average revenue per paying player is 10 times higher with real-money gambling games compared to the same games without it.

Regulatory barriers have fallen in the U.K., and the gambling and game industries are hoping the same will happen in the U.S. States such as Nevada, New Jersey, and Delaware have authorized real-money online gambling, but change is happening more slowly here. So the U.K. market has become an experimental market of great significance.

If the walls come down, then both sides could benefit. Real-money gambling companies could find new recruits among the larger audience for the social casino games, and social casino game companies could enjoy much higher average revenues per paying player associated with real-money online gambling metrics. Griffin says the lifetime value of a user in social casino games may be $2, but the lifetime value of a gambler could be $1,800.

Digital Chocolate will compete against other customers of Betable, such as Big Fish Games. Betable has 10 announced customers so far, including some that launched in December.

Loia said his company has more real-money gambling games in the works. He won’t say what those games are, but he looks forward to the possibility of creating betting games that have nothing to do with casino titles.

You can now pay Mark Pincus’s salary with a single $1 microtransaction in one of his social games.

Zynga chief executive Mark Pincus imposed a pay cut that will drop his annual salary to $1, according to an SEC filing first spotted by Games Industry International. The company founder also requested that the board exempt him from any bonus or equity awards.

This move shouldn’t curb Pincus’s daily spending habits by any significant amount. The executive is worth $800 million, according to Bloomberg.

Zynga’s other top-level officers, however, won’t be taking cuts. Each makes at least $425,000 before target bonus levels of 100 percent of their annual salary.

Pincus’s pay cut should show the board and shareholders that he is serious about getting the stock price up. The game maker’s shares are down to $3.60 (NASDAQ:ZNGA) from $12.13 this time last year.

Over the last 12 months, Zynga has experienced an exodus of talent. Nearly a dozen important managers and officers have left the studio, including its chief operating officer, John Schappert, and chief marketing officer, Jeff Karp.

Despite the turnover, speculators are positive about Zynga following the news that it launched its first real-money gambling games in the United Kingdom. This is a potentially huge source of revenue for the company. Zynga has long worked toward laying the foundation for this move to regulate gambling.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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If you’re 18, living in the United Kingdom, and hate the money you have in your bank account, then Zynga has some exciting news for you.

The social-game developer will officially launch its first real-money gambling products in the region starting tomorrow in partnership with online-gaming firm Bwin.party. Players can wager real funds in ZyngaPlusPoker or ZyngaPlusCasino through their respective websites, and the studio plans to debut Facebook and mobile versions soon.

“Our long-term vision is to offer our players the next generation of real-money games on multiple platforms in regulated markets worldwide,” Zynga chief revenue officer Barry Cottle wrote on the Zynga blog. “We take responsible gaming seriously and are proud to partner with Bwin.party, an industry leader and a reputable company that is fully licensed by a premier regulatory authority.”

ZyngaPlusPoker is, as the name would imply, an online poker room with “a wide variety of games and tournaments with buy-ins at every level.”

ZyngaPlusCasino features over 160 slot games and table games like blackjack, roulette, and baccarat. The gambling game even features video poker and a FarmVille-themed slot machine.

“This is just the beginning for us and we’re looking forward to seeing what our U.K. players think about ZyngaPlusPoker and ZyngaPlusCasino, and creating the most valuable casino games and social experiences for them,” wrote Cottle.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Casino companies and investors poured more than $2.2 billion into acquisitions of social casino games companies in the past year or so. And while investment values have sunk, the acquisitions have turned out to be good ones.

In fact, those deals have turned out so well that the social casino game boom is likely to continue as the online gambling, land-based casinos, and social casino games converge into a single industry, said Brock Pierce (pictured), the chief executive of casino game maker Playsino, at the Casual Connect Europe event.

Social casino games monetize at about twice the rate of other casual games. The only segment that generates more revenue per user is midcore games, but the numbers of social casino game players is far higher.

“The casino businesses have come to recognize that and want to know how to get in on that business,” Pierce said.

Melissa Blau (pictured right), a gambling consultant at iGaming Capital, advises land-based casinos on how to move into online gambling and social casino games. She represents around eight different casino groups. She confirmed Pierce’s assessment.

“My clients are trying to figure out their social casino gaming strategy,” she said in her own talk at Casual Connect Europe. “Social casino virtual currency games are smaller, but they are so important, the gambling industry is always looking for where they will find the next players.”

Revenues justify high-value deals

The deal values have raised eyebrows. Caesars Entertainment Casino Group bought Playtika for $180 million in 2011 and Caesars International Entertainment bought Bingo Blitz maker Buffalo Studios for an estimated $100 million in December.

Slot machine maker IGT bought Double Down Interactive for $500 million in early 2012. Double Down had just 70 employees at the time. Aristocrat bought Product Madness in November for an estimated $40 million. And last week, Scientific Games bought WMS for $1.4 billion.

Many viewed those prices as inflated. But Pierce believes they were bargains, since the revenues generated from them are impressive.

“How often do you find a market where every acquirer has done phenomenally well and is making out like a bandit,” he said. “It’s very uncommon in an M&A market where every buyer does well.”

Double Down is generated an estimated $80 million in earnings before income tax, depreciation, and amortization. That comes from about $129 million a year from revenues for Double Down Casino on Facebook. Caesars is generating about $350 million in revenue a year from the Playtika deal.

It makes sense that the deals continue to generate revenue, since games like poker are evergreen. They were popular a year ago, five years ago, or even 100 years ago.

“Most games see growth, and then you have to move on to the next hot title,” he said.

The sector could stay hot in terms of acquisitions. Potential acquirers include Electronic Arts, Gree, DeNA, Harrahs, Tencent, Universal, Zynga, MGM, Nexon, bwin.party, and Bally. That’s a diverse group of companies. Casino companies are used to paying low prices for the acquisitions, but the presence of all of the other acquirers from different industries will keep the prices higher.

Land-based casinos are “desperate for product” in the form of social casino games, Blau said.

Pierce thinks that the creativity of game developers will introduce new innovations to the somewhat staid online gambling business. Chris Griffin, chief executive of Betable, also believes that game makers will disrupt the land-based casinos and online gambling.

Categories include sports betting games, poker, slots, bingo, lottery and others. Caesars Casino is generated about $56 million in revenue a year. Best Casino is generating $34 million. Slotomania is generating $152 million a year. Lucky Slots is generating $62 million a year. And Zynga’s Texas HoldEm Poker is generating about $267 million as the No. 1 poker game on Facebook and iOS. 

Innovation is happening

Zynga’s market looked to be the most mature, where new entrants are unlikely to do well. But new entrants are already doing well, such as Fresh Deck Poker from Idle Games. Pierce credited Idle with creating an interesting new design, with a 2.5-dimensional point of view from a seat, rather than overhead. 
“It’s still early, but you’re seeing meaningful success there,” Pierce said.

Pierce said he is excited about rewards-based gaming as enabled by RockYou’s Ryzing bingo game, which incorporates sweepstakes prizes as legal rewards in its games. And Virgin Gaming is allowing players to wager on games in tournaments for core game players. King.com, Worldwinner, and GameDuell are doing similar things with betting in casual games, but you can’t cash out in territories where it is not legal.

Bingo is popular and is attracting a lot of new entrants. Sports betting apps are plentiful, but not generating much money yet on social and mobile networks. Pierce said the average lifetime value of a social casino player is $78, but the average LTV of a gambler is $1,600. Only about 2 percent of social casino players actually purchase chips.

But social is the “top of the funnel,” or the industry that could recruit the new players at very low marketing costs for the gambling companies. Indeed, while online gambling may current draw about 40 million players, the number of social casino players is about 170 million, Blau said.

While social casino games are generating around $1.7 billion in revenue, online gambling is a $35 billion worldwide business, according to Morgan Stanley. It is part of a larger $390.5 billion real-money gambling casino business, with the turnover of dollars reaching into trillions of dollars. Japan’s Pachinko game business, for instance, is a $2.2 trillion turnover business, meaning that’s how many dollars go through the system. Overall video games, meanwhile, are about $68 billion.

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Betable, which enables companies to convert their casino games into mobile-online gambling titles, says that the results it is getting from its first customers in the United Kingdom are well beyond expectations.

Real-money gambling promises to revolutionize social games as the barriers between gambling and social casino games collapse. Betable’s aim is to disrupt traditional land-based casinos and online gambling by making it extremely easy for companies to convert their non-real-money gambling games into gambling titles.

“The opportunity for disruption is enormous, with social casino games taking money from the core incumbents,” said Chris Griffin, the chief executive of San Francisco-based Betable, speaking at the Casual Connect Europe event in Hamburg. “Across the board, we are seeing incredible performance.”

The best news is that 80 percent of the players have never spent money in the social casino games before.

“It’s complementary,” Griffin said. “That’s what we’re excited about.”

Betable provides the back-end processing to enable a person to bet real money in what would otherwise be a non-real-money casino game. It detects where the player is and then checks to see if that person can legally gamble where they are. If the player can, it asks if the player wants to play for real money. Then the game executes the random gambling round and pays out coins that can be converted into real money. Betable makes the process seamless so the social casino gamemaker can convert a title to real-money gambling in 48 hours, said Griffin.

The walls between real-money gambling and social casino games (where you play for fun and can’t cash out) is collapsing as regulatory barriers fall and countries around the world eye the possible windfall in tax revenues. In the U.S., the Justice Department ruled in 2011 that online gambling is permissible so long as states pass laws to allow it. Nevada and Delaware have passed such laws, and more are on the way.

If the walls come down, then both sides could benefit. Real-money gambling companies could find new recruits among the larger audience for the social casino games, and social casino game companies could enjoy much higher average revenues per paying player associated with real-money online gambling metrics. Griffin says the lifetime value of a user in social casino games may be $2, but the lifetime value of a gambler could be $1,800.

Betable’s customers in the United Kingdom include Big Fish Games, which has launched a popular casino game suite on mobile using the Betable technology.

“We are seeing 10 times engagement,” Griffin said. On top of that, about 2 percent of the social casino game players are converting to real-money gambling. The daily average revenue per paying player is 10 times higher with real-money gambling compared to the same games without real-money gambling.

Griffin said the company is in the process of getting licenses to operate in other territories where online gambling is legal.

Disclosure: The event organizers paid my way to Hamburg, where I moderated a panel. Our coverage remains objective.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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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.

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.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Before I make predictions on the new year, I’ll take a look at how I did on my predictions last year, with letter grades on them. In a separate post, I’ll let fly the predictions for 2013. If you have ideas of your own, please leave them in the comments and take our poll at the end. After you get a look at this story, be sure to check out our 2013 predictions. Of the 12 predictions I made last year, I’m giving myself a letter grade of A on four of them, a B on 5, a C on one, a D on one, and an F on one. Here’s this year’s predictions.

Last year’s predictions

1. Social and mobile gaming will get stronger. I predicted, “Now that Zynga and Nexon have both raised a billion dollars, they’ll be able to use that money to accelerate acquisitions and expand their positions in the fastest-growing parts of the video game business. The good thing is that social and mobile games are already popular, but they’re in their infancy. They have plenty of room to evolve and grow.”

Letter grade: B

Mobile games took off as the number of smartphone and tablet users soared. But social games stalled as Facebook’s growth slowed and Zynga failed to execute on its strategy, disappointing Wall Street.

2. Console games become the Red Queen. ”Like the Red Queen in Through the Looking Glass, console and PC games will continue to run just to stay where they are. With sales flat compared to 2009 and 2008, the console game sector appears to be stuck.”

I got this one wrong because the retail game industry led by the consoles saw double-digit declines in the U.S. for just about every month in 2012. December sales haven’t come in yet, but I don’t expect it to have a lot of great news for publishers. Blame the slowdown on the aging consoles and the growth of digital games.

Letter grade: B

3. World of Warcraft will continue its steady decline. “The question is whether Blizzard will be able to execute an orderly retreat. At some point, the company will launch Titan, its next massively multiplayer online game. But it sure doesn’t look like that game will arrive in 2012.”

World of Warcraft has been losing players, falling from a peak of 12 million at the beginning of 2011 to 10 million in the most recent quarter ended Sept. 30. The losses haven’t been drastic, with the 10 million figure down only 200,000 from the beginning of the year. WoW lost a million players in the second quarter, but in the third quarter, WoW regained nearly a million subscribers thanks to the launch of its Mists of Pandaria expansion. Will the number go back down again in the fourth quarter? If it does, I’ll get an A on this prediction.

Letter grade: B

4. Cloud gaming gains ground. “In 2010, OnLive launched its cloud-based game streaming service. But its impact hasn’t really been measurable yet. OnLive hasn’t released user numbers, retailers such as GameStop haven’t gone out of business, and publishers are still counting on retail sales for a big part of their revenues. In 2011, cloud gaming continued to expand, growing to the United Kingdom and spreading to mobile devices. As more websites embed cloud-gaming demos for free, users will start to see the benefits of the games-on-demand services. We can expect to see more game streaming in 2012, since Gaikai has teamed up with Wal-Mart and GameStop is prepping its own service. OnLive has a couple of hundred games available, making it a force to be reckoned with among those distributing games in digital form. If more titles and more exclusives land in the lap of OnLive, the gamers will follow. But the question is, will the growth be gradual, or will it pick up momentum in 2012?”

Cloud gaming isn’t dead, but it suffered its worst setback as OnLive (led by Steve Perlman, pictured right) hit the wall and filed for a bankruptcy alternative. The company failed to raise funding and changed ownership.

Letter grade: F

5. Tablets and smartphones will continue to steal gamers from dedicated handheld gaming devices.  “The competition between Android and Apple will accelerate the rate of innovation in mobile, and that will grind up the dedicated gaming devices. Kids in particular will drive this transition as they move from the iPod Touch to iPhones to iPads, possibly skipping handhelds altogether. The PS Vita has plenty of cool new games, but it’s hard to beat the free-to-play or 99-cent prices on iOS and Android.”

Even as console game sales fell at double-digit rates during 2012, the growth of smartphones and tablets paved the way for big gains in mobile game downloads.

Letter grade: A

6. The platforms will multiply. In every part of the business where there isn’t enough competition, new platforms will emerge to provide it. Google+, for instance, will rise as a gaming platform to compete with Facebook, which has pretty much wiped out a lot of its competition. In mobile, Microsoft’s Windows Phone will mount a bigger challenge to Android and iOS. And within existing platforms, such as Android, we’ll see new kinds of gaming devices emerge. And where these new platforms arise, they will prominently feature games because games will help differentiate these platforms and show off what they can do.

This year saw the launch of the Wii U, the expansion of the Amazon Kindle Fire, new smartphones, the iPad Mini, and the announcement of the Ouya Android-based game console.

Letter grade: A

7. Nintendo launches a console in the fall of 2012, but Sony and Microsoft wait until 2013. “Nintendo’s new Wii U console is expected to debut in 2012 with its tablet-like controller. But I don’t expect it to set the world on fire the way the Wii did starting in 2006. That will give Microsoft and Sony some breathing room to create high-end machines that can run circles around the Wii U. By waiting a year, the heavy-duty console makers can stretch out the console cycle by one more year and then make more money on the current generation. They will also be able to launch advanced consoles with one more year of the cost learning curve under their belts. Having said that, I would bet that it is more than likely that Sony and Microsoft will try to dampen the enthusiasm for the Wii U by announcing new systems in 2012 that won’t ship until 2013. That’s the familiar vaporware tactic that helped the PlayStation 2 defeat Sega’s Dreamcast in the good old days.”

This was right on the mark on the timing of the consoles as the console makers didn’t pull any big surprises. But Microsoft and Sony didn’t announce anything.

Letter grade: B

8. Location-aware mobile gaming will gather momentum. “Will Wright, the gaming legend who created SimCity, is exploring location-based entertainment because it can lead to what he calls “personal gaming,” where a game can be more easily customized to a person’s tastes because it makes use of data that it knows about that person. By tapping into location information, game creators can make their titles more and more relevant to consumers. To date, location-based games have had density problems, where not enough players are playing in one location. But it’s possible to design games that get around this issue, and developers will be able to keep you entertained based on where you are.”

Unfortunately, Wright got into a lawsuit with a co-founder and spent much of the year dealing with the litigation. The lawsuit was finally settled, but personal gaming will have to wait. Meanwhile, Red Robot Labs scored big with its Life Is Crime location game in 2012.

Letter grade: C

9. Family mobile data plans increase game consumption. “I borrowed this prediction from Exent, which forecasted that numerous mobile carriers will lower their data fees per device and allow families to share plans. This means that you won’t have to pay a lot extra to enable your kid to play online games. That will enable more users to engage in connected social games on mobile devices that operate at satisfyingly high speeds. That could trigger sales of more data-enabled devices, which are ideal gaming machines.”

Verizon Wireless followed through on its plan, but there is no indication whether this affected game downloads.

Letter grade: D

10. HTML5 won’t be ready for prime time yet. “This new format for web content wants to be the lingua franca of the web. But it isn’t so fast when it comes to running games. By contrast, native apps run much better on mobile devices. HTML5 games can’t make use of specific hardware in games such as a camera, and they don’t work well if the browser’s connection is weak. As devices get better and web speeds improve on mobile, HTML5′s performance will get better. But it has a long way to go, and native or hybrid solutions are likely to rule the day next year.”

Some companies tried to launch HTML5 games, but there was a lot of pushback. Wooga created a HTML5 mobile game but decided not to launch it commercially. But advocates of HTML5 hybrid apps such as Ludei and Game Closure launched ways to speed gaming up.

Letter grade: A

11. Monetization matters.“New revenues from ads and improved conversion rates will provide a bigger growth rate for the industry. Too many companies rely on one business model when they could embrace multiple ones. If you look at Zynga, the company gets only 5 percent of its revenue from advertising and 95 percent from virtual goods. With more than 200 million monthly active users, Zynga has amassed a huge audience for brand advertisers, yet it has shied away from ads for fear they could be intrusive in the game experience. But in-game ads can be crafted so that users like them. Just ask innovators such as Kiip, which offers promotional rewards in a mobile game at the moment when you achieve something. If Zynga made just $1 a month in ads from each user, it could generate an extra $2.4 billion in annual revenues. That’s an untapped opportunity. By the same token, Zynga generates revenue from only 2.5 percent of its users. If it could double that number to 5 percent, it could double its revenue. In 2012, I expect to see publishers take advantage of multiple monetization strategies.”

The use of alternative monetization strategies expanded on mobile platforms, but Zynga was still very dependent on virtual goods revenue during 2012.

Letter grade: B

12. Somebody will get hacked. “With embarrassing security breaches all over the place, game companies can expect more hacker attacks in 2012. The PlayStation Network suffered the ultimate embarrassment as it went down for six weeks after being hacked. Valve, Square Enix, and many others suffered the same indignity. It’s good to be prepared. Online game sites and companies that use virtual currency have a lot at stake.”

A variety of firms were hacked, including Zynga, NCsoft, Gamigo, and others.

Letter grade: A

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The big initials at Zynga these days are RMG. That stands for real-money online gambling, and the company just filed for the right to publish such games in the state of Nevada.

Formally, the company filed its “application for a preliminary finding of suitability” with the Nevada Gaming Control Board. The move positions Zynga to offer real-money online games (and, quite possibly, real-money gambling) in the state of Nevada, where it is already legal to play such online games as long as players are inside the state. The prospect of real-money gambling is the only piece of news that lifts Zynga’s stock price these days (up 0.43 percent in after-hours trading), and social casino games have been hot all year.

That’s because Zynga makes the world’s most popular social casino game: Zynga Poker. It makes perhaps a couple of bucks a month per paying user, and a small percentage of players pay money. But with real-money gambling, the stakes are bigger. Players who pay real money to gamble online will spend several hundred dollars a month, according to market surveys. If Zynga can use its poker brand power to tap into the real-money gambling market, it will have a chance to disrupt the online gaming market and lift its sagging profits.

“This filing continues our strategic effort to enter regulated RMG markets in a prudent way,” said Barry Cottle, the chief revenue officer at Zynga, in a statement. “We anticipate that the process will take approximately 12 to 18 months to complete.  As we’ve said previously, the broader U.S. market is an opportunity that’s further out on the horizon based on legislative developments, but we are preparing for a regulated market. We’ve also recently partnered with bwin.party to bring the highest quality real-money gaming experiences to our U.K. players in the first half of 2013.”

Zynga has cut a deal to publish real-money casino games in the United Kingdom in a partnership with real-money online gambling firm bwin.party. In the U.S., online gambling is still illegal in most states, but the federal government is stepping back from enforcing a ban since the Justice Department reevaluated its stance on the matter in Dec. 2011. In the wake of that ruling, Delaware and Nevada approved online gambling laws in their states.

If all states approve online gambling, Zynga could have a bigger market. But the chances of that happening quickly are low. And in Nevada, the Gaming Control Board has a lot of power. It can decide whether or not to grant a gambling license to companies requesting permission. And for years, it has developed the know-how to determine whether companies applying for such permissions are shady or not. If Nevada grants a company a license, it is likely that other states could do so as well. Or so the theory goes.

Approval in Nevada takes an estimated 12 to 18 months.

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Real-money gambling could generate considerable revenue for Facebook and other social gaming companies as regulations loosen around the world. So Gamesys hopes to have the jump on big companies from Zynga to PKR (makers of online poker) as it conducts its first real experiment with gambling with Facebook’s audience in the U.K.

Gamesys launched its real-money gambling app, Bingo Friendzy, on Facebook in August. The result so far is very positive, said chief executive Noel Hayden (pictured above) in his talk last week at the Social Gambling Conference in London. Gamesys will get more competition over time, as Facebook authorizes more real-money gambling games on its platform in places where it is legal, such as the U.K. At some point in the future, U.S. online real-money gambling could be legalized, according to bullish investors.

“The players that we have converted [from free to play to real-money paid gambling] are high-value players,” he said. “The social players are more valuable than our standard real-money players.” Real-money gambling games can be very lucrative, generating $500 a month from a paying player, and word about such games can spread very rapidly among friends on Facebook.

“We’ve been thinking about these things for a long time,” Hayden said. “We’re excited because Facebook has so many rich viral features, amazing targeting — it’s unbelievable the targeting you can do. We’ve all had refer-a-friend features in our games, but Facebook enables refer-a-friend on steroids.”

The key advantage on Facebook is that members don’t normally trust ads but look favorably on referrals. So if your friend recommends that you play a real-money gambling bingo game on Facebook, you’re more likely to do it.

Hayden started the company in 2001 with Robin Tombs, Andrew Dixon, and several developers. In 2003, they launched the Jackpotjoy web-based casino game, which had both free-to-play title and pay-to-play versions. On its first day, the game generated £35 in revenue.

“I was absolutely delighted,” Hayden said. “Back in those days, I was doing all the support calls. I was doing chat hosting in bingo. I printed the games of the winners and was writing checks to them manually.”

The company launched a real-money online gambling version of bingo. It has provided its version of bingo under license to a variety of brands, such as Lycos, Ryanair, News International, Orange, and Harrah’s Entertainment.

Eleven years later, Gamesys has more than 700 employees. In 2011, the company took more than 3.2 billion real-money gambling bets from players, and it generated £125 million — $198 million in U.S. currency — in revenue.

“I’ve got some seriously great people in the business and things are going well,” he said. “In 2008, we started to notice a lot more of our players spending time on Facebook. So in 2009, we decided to start our social gaming division,” which made non-gambling freemium games (where users play for free but may pay real money for virtual currency).

Gamesys tried out Facebook by launching a social city-building game, but it didn’t do so well because Facebook had scaled back on the viral messages that games could send out to people on the network, largely because of too much game spam going to those not interested in games. The city-builder failed, but Gamesys learned a lot about the need to continuously update a game.

“You have to be constantly adding features and that creates a huge added cost for a team,” Hayden said.

Hayden said that non-gambling social gaming companies had the advantage of speed and agility over the traditional online gambling companies. They can, for instance, make use of analytics and act upon them in short order to change games to better suit users.

“I thought cash gaming moved quickly, but social gaming was moving at light speed,” Hayden said. “You can move really fast with the right team. … It’s about the science and the creativity coming together. You have to do all this stuff really fast to compete with the San Francisco dudes.”

He visited San Francisco to visit the social gaming ecosystem and understand the business better. That opened his eyes to the competitive landscape. Social casino gaming had its attractions because of no regulation, in contrast to online gambling, which has regulations such as putting limits on how much people can lose in a month of gambling.

With the new game, Gamesys “gets a single view of the customer, both on the freemium side and the real [money gambling] side,” Hayden said.

One difference between the games is that a freemium game can pay a lot more chips out to winners and reward them more frequently, while developers face limitations to how much cash you can give out in a real-money gambling game. So the games actually have to have different designs.

In designing social bingo games, Gamesys included features such as signing in again after an interrupted session and start back where the game left off. It also added pictures of Facebook friends on the game board so a player can immediately see who wants to play a round. Such features are typical in social games, but they’re relatively new for real-money online gambling games.

The Bingo Friendzy game had to be designed to fit in the Facebook Canvas, or the user interface that fits around a Facebook app.  When someone wins a round, it’s treated as a huge deal, with all of the appropriate fanfare. That’s a big part of the fun factor that social gaming companies have executed better than real-money gambling firms, Hayden said.

The Facebook gambling game works well in a social context because it gives you bigger payouts if you play with multiple friends. That encourages people to play together. Friends can take videos of game sessions and put them on YouTube. And that leads to more notifications going out about how your friends are playing a particular game on Facebook.

“You get tons of impressions going out in all kinds of ways,” he said.

Gamesys also created Slot Friendzy, a slot machine game as another addition to the bingo game. One of the unique things about Facebook is that it uses real names. When you’re gambling, you don’t necessarily want everyone in the world to know it. So the app has to get your permission before it posts that you won ten pounds in a bingo gambling game.

“You have to really think carefully about the type of content you are sharing and promoting,” Hayden said.

As far as what is coming next for Gamesys, it is soon launching a free-to-play social gaming title called Here Be Monsters, a mashup of a social farming simulation and a Pokémon-like monster collection game. It has worked on the game for the past 18 months and plans to launch it in 2013.

The company will continue to make web-based games, move into mobile, and continue to make Facebook games as well. Watch out Zynga.

The conference organizers paid my way to London, where I gave a speech. Our coverage of the event remains objective.

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That was one of the topics debated at the Social Gambling Conference in London on Friday. The discussion put the real-money online-gambling companies at odds with the makers of non-gambling social casino titles, where users pay for virtual goods (such as poker chips) but are not allowed to cash out their winnings.

The panel, moderated by Stuart Tilly, director of a new group dubbed the Social Gaming Association, produced some fireworks at the first-time summit in London on Friday. Tilly’s group is a new association representing the non-gambling social-casino-game companies.

Jez San, president and founder of real-money gambling firm PKR, said he does not believe that gambling regulators should force social-casino-game enterprises to comply with responsible-gaming regulations.

But San (pictured above in blue on the far left), who spent two decades in the non-gambling video-game business and participated in the real-money gambling industry for the last six years, said that the social-casino-game industry should voluntarily submit itself to its own self-regulation.

“I don’t believe social games should be regulated. But I do believe the providers of the social games should take a more responsible attitude than they are currently taking,” San said.

He said the most important thing is that the social-gaming outfits should allow individuals to impose their own limitations on how much money they can spend in a month. The people behind real-money online gambling experiences must currently do so in order to show they are taking responsibility for the possibility that addicted players might overspend.

San said that he doesn’t want to see a newspaper like the (tabloid) Daily Mail write a profile of a single mother who lost all of her money playing casino-like social pastimes on Facebook. If the industry doesn’t impose its own regulations, it will inevitably face more strict government regulation in the future. If social-game companies (such as Zynga) do not self-regulate, they could make the whole industry look bad when the inevitable addiction problems surface.

“We don’t want to be profiled as having ruined someone’s life or bankrupted a single mother who can’t pay the bills,” San said. “We act in a very responsible manner. We don’t allow minors to play, and we don’t allow the vulnerable to play. The social gaming world doesn’t acknowledge such problems and would like to put its head in the sand and pretend that it’s a free world and people can spend whatever they want.”

Andrew Hughes (pictured left), chief executive of social-casino-title firm AbZorba Games, was on the other side of the discourse.

“There is a lot of debate still to be had,” he said. “I don’t think regulation should happen now. It’s too confusing … First, it is entertainment. You do not have to play. About 98 percent of my gamers never pay a single cent. They can earn chips looking at advertisements. Nobody can take the monetary value out of our game.”

Consumers can self-regulate now, and Hughes said voluntary self-regulation is fine. So in that sense, he agreed with San. But he would not grant that the social-game companies try to get people addicted. He noted that, among paying players of social casino titles, only 7 percent of them ever buy anything.

San said that average revenue per paying person is misleading, given that a small amount of gamers account for a large amount of sales. Hughes returned to the fact that it is clear in his releases that the play is just for fun.

San added, many of the social-game firms will not impose limits because “their job is to find whales” (people who spend a lot of money on social casino efforts, sort of like high rollers in Las Vegas) and then get them addicted.

“Can we keep it to social gaming,” Hughes asked. “We are not talking about social gambling. Social gaming is about a free experience.”

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The San Francisco-based Betable announced today that it has signed partnerships with Slingo, Digital Chocolate, and Murka Games. The news comes two days after Big Fish Games announced that it had launched a real-money gambling version of its Big Fish Casino game in the United Kingdom.

Betable makes it easy for companies to offer real-money gambling, helping them get around years of complicated legal and technical challenges. It offers a license so that they can offer real-money gambling to players on mobile devices or the web, provided the players are in territories where real-money gambling is legal.

“The real-money gaming space is moving faster than anyone could have predicted, and it’s exciting to have industry leaders implementing real money into their games through Betable,” said Christopher Griffin, the founder and chief executive of Betable. “Unlike recently announced IP licensing partnerships, Betable’s developers have the unique advantage of launching their own real-money games that they control. The freedom that Betable provides will be the backbone for innovation in real-money gaming and will allow developers to do what they do best: build great games and acquire users.”

Slingo makes a slots-bingo combination game that is a hit on both the web and in casinos. CEO Rich Roberts said, “Slingo was the first social game to successfully move to real-money wagering in casinos more than 12 years ago. Our agreement with Betable puts us again at the forefront of iGaming by offering immediate engagement with the more than 30 million users outside the U.S. who have played Slingo on Facebook. Most notably, 20 percent of the players who have interacted with Slingo have wagered around the brand, and Betable will enable us to maximize that dynamic.”

“We are already seeing very positive signs that betting mechanics will play a major role in the future success of our social games and Betable lets us get out ahead of the pack,” said Jason Loia, Chief Operating Officer of Digital Chocolate. “The ability to control our own development without needing to get a gambling license made a partnership with Betable the best fit for our real-money gaming strategy.”

“With more than 20 million monthly active users playing Murka’s casino-style games, we know how hungry players are for real-money games,” said Max Polyakov, the CEO of Murka Games. “Partnering with Betable is the best way for us to implement real-money play into future blockbuster titles, as well as existing ones including Slots Journey. We believe that our partnership with Betable will give Murka’s games the best average revenue per user in the industry.”

Founded in 2011, Betable’s investors include Bullpen Capital, CrunchFund, FF Angel LLC, Greylock Discovery Fund, Morado Ventures, Start Fund/DST, Tekton Ventures, True Ventures, Venture51 and a bunch of individual investors.

Here’s how we described Betable in a previous story:

In the U.K., Betable has a license to operate online gambling on a worldwide basis. It has the technology to verify where a user is, and it has antifraud technology that can overcome someone who “spoofs” their Internet protocol address to fake their 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 the user passes and it is legal to gamble in their 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. The user sees the front end, such as a slot machine. They bet money and play the slot machine. The game turns over this information to Betable, which then calculates the result of the slot machine play. If the user wins, Betable informs the game and credits their account. If the user loses, Betable deducts money from the their account. Betable handles the payment processing by itself, Griffin said.

This makes Betable’s platform universal. Any game can be plugged into its API and converted into a real-money gambling game. Betable can handle all sorts of games, including bingo, card games, and slots. The game developer simply tells Betable what type of game it has built, and then Betable spits out the right result. 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 game industry convert its titles from virtual currency games into real-money gambling games. The conversion process is painless, and the game companies can use Betable to stay within the constraints of territorial gambling laws.

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 users 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 game 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.

[Image credits: Fellow Gamblers, Betable]

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Big Fish Games has launched its first casino game in the United Kingdom that enables real-money online gambling.

The new Big Fish Casino U.K. app allows players to choose whether they want to play for fun or if they want to make a real-money wager in the slot machine title.

The game uses technology from Betable, which hopes to enable online gambling as an option for all sorts of social mobile games. Betable does the hard work of verifying who a user is and determining if that player is old enough to make real-money bets in a game. It also checks to see if the player is in the right location for legal gambling, and it executes the round to determine whether a player won or lost a bet.

The game is the first in a series of Betable-enabled games that Big Fish will launch. The title is available in the Apple App Store in the United Kingdom and runs on the iPhone, iPad, and iPod Touch.

“Real-­money betting is just one more way we are enhancing the Big Fish Casino gameplay experience,” said Carey DiJulio, the general manager of Big Fish Casino. “With the launch of Big Fish Casino U.K., real‐money players in the United Kingdom can join our other Big Fish Casino players in the social aspects and thrill of casino gaming from their iPhone, iPad, or iPod Touch — anywhere they happen to be.”

Seattle-based Big Fish said Big Fish Casino is one of the top-grossing mobile games with more than one million monthly active players worldwide. Betable’s servers for handling the processing are based in the U.K., but Betable contends that its technology could be used by developers anywhere in the world except in countries that explicitly forbid online gambling like the U.S.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Real-money online gambling is illegal in most states in the U.S. — except when it comes to live horse racing. Gamblers can bet on the horses via online web sites. But now Churchill Downs’ Luckity.com subsidiary has started a number of casino games — such as daily jackpots and slot machines — in which players can put down real bets and win cash prizes.

They do so by placing bets on horse races that are disguised as casino games. You are really making a bet on a horse race, but Luckity may have reskinned that contest to look like a a slot machine game.

The Luckity.com games are legal because federal law allows interstate gambling on horse races. When you place a bet in a game on Luckity.com, it is put into a wagering pool on one or more live horse races that are occurring (24 hours a day, all over the world). The outcome of a horse race becomes the way to resolve how a particular bet turns out, either as a win or a lose.

“The horse race is our random number generator,” said Eric Hartness, the vice president of marketing at Luckity.com, in an interview with GamesBeat.

Technically, you’re still betting on horse races through Churchill Downs’ online horse racing gambling site, twinspires.com, based in Mountain View, Calif. That’s how Luckity.com stays within the law. But it dresses the bets up by disguising them as casino games, which have wider appeal. The online gambling business is licensed and regulated in the state of Oregon. With this kind of betting, bettors have to put down money in advance, known as advanced deposit wagering.

Players can bet real money and win cash prizes. It may sound illegal, but it’s not, Hartness says. The idea of Luckity.com is to extend online gambling beyond those interested in horse racing to a broader market. While horse racing is more interesting to males, the broader games on Luckity.com are targeted at older women and others who like casual games.

Horse racing is popular, with races taking place around the world at all hours. But sometimes you’ll have to wait for another race to start. So the experience of playing games on Luckity.com is not like an instantaneous slot machine. In that sense, Luckity.com may have trouble satisfying players who want instant gratification. On the other hand, you can bet real money on it — something that you can’t do in most states.

The payouts can vary widely. Right now, the challenge is convincing gamers that the gambling is legal. The site has 24 cash-based games, with more on the way. Churchill Downs Interactive president Ted Gay said the company has worked on the technology for months.

Churchill Downs has about 2,000 employees, while the Louisville, Ky.-based Luckity division has six dedicated employees. While Zynga wants to enter the real-money gambling market, it cannot yet legally do so. But if the online gambling laws are changed, as some in Congress want to do, then Luckity will have a lot of new competition. Luckity has pplied for a patent on the technology.

Check out Luckity’s videos below.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Zynga is jumping into the regulated real-money gambling market in the United Kingdom through a major partnership.

Bwin.party will launch Zynga-based real-money online games in the United Kingdom. Zynga’s poker title — the most popular in the world — will be among 180 Zynga social casino games that bwin.party will release in the United Kingdom.

Bwin.party has a leading role in the real-money gambling business. The partnership has potential to lift Zynga’s financials because of how the monetization works. Free-to-play social games typically generate a few dollars a month in revenue per player from 2 percent to 3 percent of social gaming players. Zynga makes money because it has more than 300 million users on Facebook, mobile, and Zynga.com. But real-money gambling casino games can make as much as $100 per player per month. That’s a huge difference, and it’s why bwin.party is a major company in the gambling business.

The partnership will launch games on bwin.party in the first half of 2013.

“Bringing together Zynga’s expertise in social gaming with the top international real money gaming operator is the best way to create the highest quality gaming experiences for our players in the UK,” said Barry Cottle, the executive vice president of corporate and business development at Zynga. “Partnering with an established leader like bwin.party is a strategic and prudent way for us to enter a key RMG market while giving local players the real money games they’ve been asking us for.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Confirming a rumor from a couple of weeks ago, Zynga has recruited a former online gambling executive as the head of its real-money gambling initiative.

Maytal Ginzburg Olsha, the former senior vice president of corporate and regulated markets at online gambling firm 888, is becoming the chief operating officer of new markets for the social gaming company, as first reported by Social Casino Intelligence. She reports to Zynga executive Barry Cottle, executive vice president of business and corporate development.

Cottle said, “Maytal Olsha is a fantastic addition to Zynga. She joins our team with a deep understanding and direct experience in getting online gaming product offerings off the ground and directly into the hands of players. She is a strong advocate for integrating social features into real money offerings in order to make them more appealing and interactive for casual audiences. Maytal’s arrival is a win for Zynga and our player network.”

Even as a bunch of executives have left the company in the wake of a weak earnings report, the new hire shows that Zynga can still bring aboard some talent where it needs it. Ginzburg Olsha will be helpful in bridging Zynga’s social casino business with the complex, heavily regulated world of real-money gambling.

In a statement, Ginzburg Olsha said, “Zynga is at the forefront of the next evolution of games and entertainment. The company has already built enthusiastic, engaged communities around free social casino games. And as we move down the path towards real money offerings we will be listening carefully to our players to align with the right potential partners and offer the best gaming experience possible. Zynga is made up of incredible talent and dedicated leaders and I am proud to have joined the team.”

Zynga confirmed in July that it would enter the overseas real-money gambling market in early 2013. Zynga has the world’s largest online poker game in Zynga Poker, and it has launched social casino slots and bingo games recently. But the prospect of converting its games into real-money gambling titles represents a big opportunity.

Ginzburg Olsha left 888 in June. Zynga has lost its chief operating officer, chief creative officer, a couple of vice presidents, and a couple of general managers since it reported weak earnings in July. Most recently, Zynga’s chief marketing officer, Jeff Karp, resigned.

Ginzburg Olsha joined 888 as vice president of customer acquisition in 2007. She was promoted to VP of poker and corporate customer acquisition in 2009 and was appointed senior vice president of corporate and regulated markets earlier this year. Real-money gambling could help boost Zynga, which has seen its stock price drop dramatically this year.

Zynga has recruited a former online gambling executive as its chief of its real-money gambling initiative.

Maytal Ginsburg Olsha, the former senior vice president of corporate and regulated markets at online gambling firm 888, will become the chief operating officer of new markets for the social gaming company, according to Social Casino Intelligence. This kind of executive is necessary to help bridge Zynga’s social casino business with the complex, heavily regulated world of real-money gambling.

Zynga confirmed in July that it would enter the overseas real-money gambling market in early 2013. Zynga has the world’s largest online poker game in Zynga Poker, and it has launched social casino slots and bingo games recently. But the prospect of converting its games into real-money gambling titles represents a big opportunity.

Ginsburg Olsha left 888 in June. Zynga has not yet confirmed the move. The addition is coming at a time when other executives are departing the firm. Zynga has lost its chief operating officer, chief creative officer, a couple of vice presidents, and a couple of general managers since it reported weak earnings in July.

Ginsburg Olsha joined 888 as vice president of customer acquisition in 2007. She was was promoted to VP of poker and corporate customer acquisition in 2009 and was appointed senior vice president of corporate and regulated markets earlier this year. Real-money gambling could help boost Zynga, which has seen its stock price drop more than 70 percent this year on the weakness of social and the poor earnings report.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Social gaming giant Zynga has announced it will move into real-money online gambling in early 2013. Electronic Arts has a big stake in casual social casino games such as Lucky Gem Casino Slots, and it has a relationship with the World Series of Poker TV series.

But it hasn’t decided yet whether to add real-money gambling to those games, according to Frank Gibeau (pictured below), the president of EA Labels and the head of the company’s game development efforts. It would be easy to do, but there’s a lot of discussion about the complexity it would add to the business and whether it’s the right thing to do culturally, Gibeau said.

Gibeau made the remarks at a luncheon with reporters at Bloomberg’s San Francisco office. Zynga is eying the potential for real-money gambling to lift revenues from users from a few dollars a month, as is typical in social games, to potentially hundreds of dollars a month in real-money gambling. That kind of revenue could go a long way toward propping up Zynga’s earnings.

But regulations around real-money gambling are complex. It is still illegal in the U.S., though that may change as each state enacts laws that make it legal, in the wake of a favorable federal ruling on interpreting online gambling.

“The leap from [social casino games] to real money is conceptually small, but it is a complicated one,” Gibeau said. “It’s a world market issue. There is a lot of U.S. regulation. There are fully regulated markets all over Europe and some emerging in Asia. I do thing real-money will be a growth driver for gaming. I have nothing to announce. We’re following the trends and events in real money. “

Ask if some EA people oppose real-money gambling on a philosophical level, Gibeau said, “Yes.” Gibeau says he likes gambling at the sports books in Las Vegas and so he would be a hypocrite if he opposed gambling himself. But he added, “There is an issue we have to tackle there. This is all hypothetical since I am not announcing anything. Culturally, we built our money around entertainment, not necessarily real-money gambling. That’s something that we have to figure out.”

He added, “For a while, we didn’t publish mature-rated games. That was a big cultural shift when we started to publish games like Battlefield, Mass Effect, and Dead Space. When we make a cultural choice, we do it very methodically and talked to a lot of people. This would definitely fit into that category. I don’t know yet.

“What is important at EA is to build high-quality experiences that connect with customers and they love you for it. I don’t know if taking money for poker falls into that mission or not. Free-to-play casino game are fun, but once you cross over into taking real money, it’s a bright line that you have to cross with eyes wide open…. We don’t need to do this to achieve our goals. If you ask me if it is in my top five, it is not in my top five. We don’t need it to grow our company. Some other companies are betting on it. We are not.”

In other matters, Gibeau said that EA knows that charges of copying are common in the game industry, but EA filed a lawsuit on Aug. 3 against Zynga for copying The Sims Social when Zynga launched The Ville last month because it was clearly a copycat.

“We have never seen anything this egregious before,” Gibeau said. “We felt we had a strong argument and felt that our rights were trampled in terms of how they brought that product out. We don’t sue a lot of people. I think there was one actor out there that has a track record for doing this with others. They stepped on the wrong toes. I don’t think the industry is rife with copying, other than when you get to China.”

Zynga shot back that EA’s SimCity Social copied a lot of the game mechanics in Zynga’s older CityVille game. Gibeau said that the original SimCity came out in 1989 and so it was really the first out. He added that the evidence suggests that Zynga “stripped our Flash file” and copied things like skin tones and other graphics.

“It’s pretty clear,” he said. “Name how many times we sued someone for copying in our [30-year history].”

As for Android games, Gibeau said that they monetize less than iOS (iPad, iPhone and iPod Touch) games. He said that the monetization is improving as Google provides more ways for people to pay for games. But the in-game purchasing still has to catch up with iOS. He said discovery is a big problem, and Android is still a very fragmented market. Check out The DeanBeat column for tomorrow for more from the interview with Gibeau.

Asked what he thought about Amazon moving into games, he said that Amazon is very good at selling but it remains to be seen if it is good at making content. Retailers are all moving toward digital distribution and making their own content, but it “remains to be seen how successful they will be,” he said.

“It’s different when you start to build things,” he said. “They are a competitor in the future and we’ll see how they move from being a merchant to making games.”

As for supporting the upcoming Android-based Ouya console, Gibeau said his company has not yet committed to making games for it. He said that a platform needs scale before EA moves on to it, and he said that EA is agnostic overall.

“If that one takes set and grows, we’ll jump on it, but it’s not on my priority list now,” he said.

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