social casino game debate

Betable has blasted a hole in the barriers between the social casino game and online gambling business. That was clear from a discussion about the San Francisco startup at the recent Social Casino Summit in San Francisco, where rivals and partners highlighted some of the hopes and fears about the disruption of the online gambling business and the potential for increased regulation of social games that may happen as a result.

betable illustrationAs we’ve reported before, Betable’s ambition is to disrupt real-money online gambling by enabling many more businesses to enter the market. By converting mobile games so they can accept real-money bets, it breaks the walls between real-money gambling and social casino games, where players typically purchase chips for social games but can’t cash out their winnings. The early results look promising, Betable says, but real-money gambling executives see controversy in Betable’s tactics.

I moderated a debate at the summit April 25, and I’m summarizing the Betable-focused parts of that discussion here.

Focused on mobile games, Betable’s service presents players the option to play for real money in the United Kingdom, where it has a license to operate real-money gambling games. Social casino game makers can take their existing products and integrate the Betable applications programming interface (API) that turns them into real-money gambling games. Betable’s backend infrastructure handles tasks such as regulatory compliance, identification of the player and whether the player is actually located in a place where they can legally gamble, security, and if the player really has the money that they intend to gamble with.

This capability to transform a social casino startup into a real-money gambling house is important, since social games have large audiences where a small percentage of the players pay $2 or $3 a month for virtual currency. In online gambling, a smaller number of players often spend $100 or more a month to play the same type of digital casino games — poker, slots, or blackjack. As the legal separations come down between these businesses, a land grab is happening. More than 100 companies are fighting each other, with plenty of  territorial expansion opportunities, platform opportunities, partnership opportunities, M&A possibilities, and other paths to disruption.

Our debate highlighted the blurring lines. And Betable was a hot topic, so I’ve decided to focus on that discussion here. Jill Schneiderman, the vice president of games for Social Gaming Network (SGN), said that her company’s partnership with Betable enables the company to focus on making games and to delegate the expertise in gambling regulations to Betable.

“We’re experts in making fun and engaging social games,” Schneiderman [holding microphone] said. “We’re leveraging their backend and their expertise in this world to be able to enter it with traditional types of casino games, but we’re also exploring a hybrid of skill games and casino games.”

SGN hasn’t yet launched a game with Betable. But both Digital Chocolate and Big Fish Games have sung the praises of Betable in bringing their social casino games to the U.K. as real-money gambling games.

But Jez San [middle, in white shirt], the chief executive of real-money online gambling firm PKR, said, ” I think that Betable and companies like that are a real threat. What it effectively enables any gaming company to do is to take their existing social game and make it playable for real money. The problem is that those existing social games weren’t designed to be played for real money. They’re not designed around fairness. All the mechanics that real-money games go through – the auditing and the verification and everything else – are all missing from the development side of those social games.”

Schneiderman said that Betable had enough documentation to be able to satisfy regulators in the U.K. She said that Betable is very responsible when it comes to handling any problems with users.

Sumit Gupta [second from right], the CEO of social casino game firm Bash Gaming, said, “I think it goes beyond that. It goes beyond technology and altering the random number generators (RNG) and so forth, because I’m pretty sure that these games are at least mostly compliant. The bigger issue is that we know that there are certain people who are potentially vulnerable and may spend too much money. There’s a whole framework in real-money gaming, as part of the licensing requirements, to deal with that responsibility. Say somebody plays a Betable-enabled real-money game and spends too much money. Their husband or their wife finds out about it and tries to get in touch with the operator to say, ‘Stop this.’ Who are they going to call? Do they call SGN? Do they call Betable?”

San added, “When you’re regulated, the games are audited. The source code is investigated. The RNG is analyzed. Betable’s not doing any of that. And if they are, who is regulating that process? Betable’s just some company that’s got a gaming license. That doesn’t automatically mean that every game ever made should automatically be licensed. It doesn’t work like that in the real-money world.”

After knocking Betable, San added, “I’m not knocking Betable in any way, but I am really worried that it’s a shortcut to avoid regulation. You can do a real-money game without being regulated just by saying, “Well, Betable’s our real-money partner.”

Raf Keustermans (far right), CEO of London-based Plumbee, a maker of both real-money online gambling and social casino games, said, “My concern about Betable is not so much about the technology layer in the product, because I’m pretty sure they know what they’re doing on that level. My concern is more that to be a gambling operator, you need to be very responsible. You need to cover a lot of different areas. It’s not just product technology. It’s all about what kind of skeleton you create the company around. How do you offer gambling services? A lot of companies, big companies, have been working a very long time to get that right. It’s been a combination of making good products and being very responsible. To just allow anyone to become a gambling company, I think, is extremely dangerous. There’s a reason why gambling is regulated. There are certain risks. You can’t just make those disappear with a technology platform.”

Chris Griffin, the chief executive of Betable, said in response to the panel comments in an email to GamesBeat, “This isn’t the first time, and unfortunately it won’t be the last time that online gambling companies who have zero expertise about Betable aim to deposition us publicly. Unsurprisingly, the falsehoods they spread are exactly that: false. In fact aside from our partner SGN, none of the [Social Casino Summit] panelists have even seen a demo of our platform. This is the oldest trick in the anticompetitive gambling book – misinformation and distortion. These gambling companies rely on lies and innuendo as a competitive tactic because of their inability to compete with Betable on a product or technological level.”

He added, “Here are the facts as they relate to comments made on the panel. The real-money mechanics in any Betable-powered game are exactly that: Betable-powered, meaning Betable handles all real-money activities and services, and its random number generator is audited and certified as required by the United Kingdom Gambling Commission. Every Betable-powered game is held to the highest regulatory standards for compliance and social responsibility and is rigorously tested by third-party testing houses that are approved by the United Kingdom Gambling Commission. These are the same third-party testing houses that all online gambling companies use.”

He also said, “Betable takes safety and security very seriously. As the operator of all real-money play within our partners’ games, Betable handles all player issues or concerns directly while providing industry leading safeguards to protect both players and partners.”

Schneiderman said, “One thing, Dean, that you were hinting at before is that politics are involved. It’s easy for real-money gambling institutions to have good relationships with regulators. What Betable does that we’re not talking about, it’s allowed underdogs and small companies who don’t have seated relationships with these regulators to be able to participate on the space through them.”

Keustermans replied, “I really disagree with that. We are a 40-person company. We’re 20 months old. We didn’t raise that much. You guys are better-funded than us, right? We’re already a fully licensed gambling operation.”

In closing, Keustermans said, “I appreciate that there are concerns. Some of these concerns are valid and some of these concerns, I think, are primarily perception issues. But let’s not forget that social gaming, and the social casino games within that, is an extremely young industry. It’s a bit unfair to demand that social casino should organize itself in the same way that real-money gambling operators have. They’ve been around for decades. I think we can have a little bit of time to get our act together.”