iGB Diary: Social, there's no money in it! Sex-betting on the light stuff and lower stakes for a lower POC tax?

8 November 2013

There’s no money in social, is there?
Great to hear there’s no money in social… er… hang on a minute didn’t IGT’s interactive division just report an 80% year-on-year increase in revenues with its social business, DoubleDown, up 151% and generating US$218.5m. The initial cash price of US$250m, rising to US$500m if all targets are hit, now seems like a snip. Along with the majority of the industry, the Diary doubted they could pull it off with the price tag blurring practically all judgement at the time. But now it seems that IGT and the likes of Caesars with its acquisition of Slotomania and Buffalo Studios (producers of Bingo Blitz) are making serious inroads into social while many others sat back and twiddled their thumbs. Many real money operators are still doing that of course while bwin party has seen its “new” fantasy football product delayed by a year.

The likes of Caesars and IGT have shown the rest of us how it can be done but it’s yet to be seen just how real money and social come together completely, if, that is, they ever do. As Morgan Stanley’s Vaughan Lewis said at iGB's most excellent (easy on the plug!, Ed) Social Gambling Conference this week; scale, a strong balance sheet, strong technology, marketing savvy and regulatory expertise will win out in the years to come. Of course the point is that none of the social studios or real money operators have the complete set of skills, so some further meaningful consolidation is likely to come first. And, it seems, mobile will lead the way, with Lewis outlining just how disruptive mobile has been to both industries as a third of real money revenues are generated via the platform. This has taken just three years so there’s no telling how different our industry will look in the next three.

Social games addictive? Nahhhhh!
The Social Gambling Conference turned out to be an entertaining affair with some great panellists on stage to offer us some pearls of wisdom. Some of the best nuggets came half way through day two of the event when the social peer-to-peer and sports betting guys decided to hang out. Responding to a thread of questions on whether or not social games should be regulated or at least examined more closely from a regulatory point of view, Adrian Brink, chief executive of social sports brand 2BET2 came up with a corker of a reply. “Some of my players play our games for hours, months on end. One player even racked up a score of 16 quadrillion and we ran out of noughts. He then started emailing me to complain.” I think the answer might well be a yes then!

Let’s talk about… sex-betting
Peer-to-peer technology platform Youbetme (which has a very interesting marketing implementation in the US) allows players to bet on anything they wish and its boss Justin Jarman gave us some expert insight into just how punters think and what prizes they prop bet for on his site. First, surprise, surprise, comes alcohol, swiftly followed by some form of “sexual outcome”. Founder Justin Jarman rightly refused to go into specifics. But seriously, after that we shouldn't be surprised a large proportion of gamblers never find true love. Then again, the majority of these guys are from over the pond and, as we know, weak beer does strange things to a man in those parts! Come on then… wanna bet… for some Coors Light perhaps? 

Lower stakes for a lower POC tax?
Councillors in Liverpool in the UK have raised a motion to ban fixed odds betting machines in the city with one of its esteemed members Nick Small suggesting this is because he has been “inundated” with stories of how residents have been affected by FOBTs. Admittedly, it’s perhaps not the best idea to allow people in recession hit areas to wager £100 per spin, an action they can theoretically do every 20 seconds, but banning them altogether seems a rather rash decision and, from a legal point of view, something that’s difficult to see ever happening. If anything’s going to happen it’ll be a lowering of the stakes and, if the government really want private bookmakers to comply surely they’ll have to be some form of compromise… a reduction in the proposed Point of Consumption Tax of 15% on gross profits due to come in next December perhaps? Only a suggestion of course.