Gambling goes mainstream

Interesting to read how video game producer Sega recently secured an online gambling license with the Alderney Gambling Control Commission.

Is this a sign that gambling is becoming an increasingly mainstream activity? Or is it just that Sega are finding the video games market tough and are looking for new high growth markets? I suspect the latter.

Certainly, there are plenty of synergies between a video game producer and a producer of gambling games. And I'm sure the online gambling cash flows are tempting to senior management at Sega. However, there are also some crucial differences. There is a special skill in separating a punter from his cash in a game and I wonder if Sega can really compete in an already crowded marketplace? It will be interesting to see if Sega's experience with pachinko games and parlors can help them break into the market.

Down on the farm

Zynga have done it again. Farmville has 62,304,652 monthly active users on Facebook. Absolutely incredible. What is worse, I'm one of them. I started playing a few weeks ago and now I have to check it everyday to see how my pumkins and strawberries are getting on.

What is it about these games that make them so sticky and popular? Well I'll pick out a few characteristics that I think lead to success:

1. The game format is universally recognisable, e.g. everybody knows what a farm is and roughly what happens on a farm. This has several benefits:
a) Simplicity. Almost no learning curve
b) Common language. The vernacular is instantly recognisable
c) Universal appeal. Including, different ages and nationalities

2. Time limited features. The strawberries are ready to harvest every 4 hours. If you don't harvest they will wither and die!

3. Hoarding psychology. The more you play Farmville the bigger your farm gets. You acquire more stuff. This appeals to a deep seated psychological trait that I'm only starting to fully appreciate. As I have mentioned in previous posts, the psychology is very similar to gambling.

4. Social. You are playing with your friends. This has a number of knock-on benefits:
a) Competition. You want to out perform your neighbours
b) Fun. It is fun to compare notes and just to talk about the fact that you are playing this game (like I am now)

5. Facebook. Huge international audience. Quick and cheap distribution platform. Built in viral features mean limited marketing spend required.

So Zynga have a template that they can apply to any universal format. A template that is being continually refined to greater and greater effect. However, as people dissect and copy the template the question is whether they can maintain a dominant position? I also wonder how the evolving Facebook platform will impact Zynga going forward.

Personally, I think they should be able to dominate just about long enough to IPO. If I were them I'd be planning to do this soon, before the competition demonstrate that there is no magic behind creating these apps.

I think it would be great to learn from Zynga's template and apply it to online gambling. Facebook Ts&Cs preclude gambling. However, there may be new revenue models and game formats out there that are acceptable to Facebook. The Zynga template is one example.

Internet video falls short

I chose to experience Ukraine versus England match yesterday on the Bet365 website. Not that I was so desperate to watch the game Live but I didn't have anything else to do and I was interested in the experience of watching sport online.

I have to report that I was very disappointed by the whole experience. I decided to join Bet365 rather than pay the £11.99 to watch the game. As well as getting the game for free (I did have to fund the account to £10) I was also interested in how Bet365 presented the game.

Initially, when I arrived on the site to watch the game I could only see it in the Live betting window. I then managed to find the live streaming popup which provided a larger window. However, the site was obviously struggling with the traffic. The live streaming window failed to load and it took me 5-10 attempts to get a picture.

Although the picture quality was actually very good the window was about 4x4 inches and could not be extended. Something of a step down from the 42 inch widescreen I was watching at the same time.

Later in the 2nd half the streaming started to freeze. This became gradually worse and made the final 20 minutes difficult to follow.

Overall, live online streaming has a long way to go. I favour the 2 screen model of having the match on the TV and the betting on the laptop. Betting on a TV or video on a laptop just doesn't provide the same quality of experience.

I also lost my draw bet. Not free after all.

Gambling is just a game

Gambling has a lot of similarities with gaming. The similarities in the psychology is striking. Growing your gambling bank can be compared to moving up the levels in a game, or increasing your points. I see gambling products becoming increasingly game like. Having play for fun game that teaches people how to gamble is very useful from an acquisition and monetization perspective.

I think that the similarity has been recognised by operators like Zynga, who have begun to integrate gambling features into their popular games like Mafia Wars (see previous post). Bwin have also recently purchased a majority stake in United Games, an MMORPG games company.

People who play Mafia Wars, or MMORPG games, are predisposed to gamble because the gaming dynamics press the same psychological buttons. Owning such games provides operators with a huge audience of pre-screened, high quality prospects from which they can convert to their pay for real offerings.

From a product development perspective it means monitoring the gaming industry for developments and ideas that are relevant for gambling. A recent article by New Scientist about adaptive games is a good example. Developing an adaptive gambling website would have the same benefits. Matching the site features to the level of expertise of it's user to maximise relevancy and engagement.

Create your own gaming site

I came across Nonoba Gamerise this afternoon on Techcrunch. This is a great concept. The platform allows you to create your own customized game website. You choose your content from a wide range of flash games which are uploaded by a raft of developers.

The platform is a bit clunky. Whilst there is a wide range of games it isn't wide enough and there is a lack of quality. However, I completely see where they are heading. This my game site that I created in about 10 minutes (you can tell) http://playzerv.joyem.com/.

How long will it be until somebody creates the gambling version of this platform? The closest I can think of is the Orbis OpenBet platform. However, this is not open in the true sense of the word. Yes, it allows 3rd parties to create games for the platform. However, Orbis retain a lot of control over the games that leverage their platform.

The main issues I can think of are around the licensing aspects. Regulators like to know exactly what is going to appear on a gambling site. A truly open platform is in conflict to this need for control. Not an insurmountable issue, just more complicated.

Mobile is more than a channel

I spent Tuesday evening at the British Computer Society, attending the latest mashup event - Investment Opportunities in Digital. This was certainly one of the better entrepreneur events I have attended in London. Offering a good blend of expert insight and early stage entrepreneurial ventures.



One of the macro trends that was discussed was the importance of mobile. This struck a chord with my recent thinking around football fandom and betting. Responding to a comment from the audience Sean Seton-Rogers (PROfounders Capital) made a case for mobile as a channel extension of existing web based services. This view is supported by the current mobile betting applications which allow people to place bets on the move. A simple extension of the operators website.

However, mobile offers unique capabilities that move it way beyond being just a channel:

1. People carry their mobiles with them all the time.
2. Mobiles have cameras for taking photos and video.
3. Mobiles know where they are.
4. Mobiles can detect and transmit noise.
5. Mobiles (at least Iphones) know when and how hard they are being moved.

How can we leverage these capabilities to generate novel mobile based services? Watch any Premiership football game and you see 50,000+ passionate fans supporting their team at the game. Mobile offers the unique opportunity to recreate that intense fan experience online. Something that really doesn't exist. So what features could be created that leverage the unique capabilities?

a) Fans taking and uploading content Live from the game and sharing the content with fans who can't be at the game. Either on a website or with other mobile users.
b) Fans talking about the game on their mobiles.
c) Fans showing their passion through the movement of the handsets. Imagine an online chart (could be shown on the big screen at the game) displaying fan excitement levels based on cumulative movement of the handsets held by each group of fans.
d) Same as 'c' but based on cumulative noise coming through the handsets.

By creating a mobile fan application the mobile becomes much more than just another channel. Mobile becomes an entry point feeding a real-time fan experience. And how do we make money from this? Betting. Where there are fans their are selling opportunities for operators. Furthermore, tapping directly into fandom helps build a connection between the fans and the brand.

Want to know what this kind of mobile app might look like? Check out some of the startups playing with the concept like Fan Chatter.

Who are the future competitors?

It is interesting to observe how Mafia Wars continues to develop gambling features within the game. At first, the daily lottery draws felt like a random feature to have in a Mafia style social media game. However, I am starting to realize the power of the Zynga strategy.



According to Facebook the Mafia Wars game has 19.6M monthly actives. This is incredible. This represents around 10 times Betfair's registered user base.

I have to admit that I've been through periods when I've been checking the game hourly. Why? What brings people back to the game again and again? In comparison with modern day console or PC games Mafia Wars looks very primitive. However, what Zynga have perfected is a rewards and reputation system that rivals any gambling product in terms of stickiness.

On the face of it, earning dollars by robbing people in Mafia Wars and building a gambling bank by betting on Football may appear to be quite distant. However, both activities are pressing the same psychological reward buttons in users brains.

Therefore, it is a natural extension of Mafia Wars to introduce features like lotteries. Customers who become absorbed with accumulating points and virtual currency in the game are a natural audience for risk based games like lotteries.

You can buy lottery tickets in Mafia Wars for 2 reward points. Reward points can be earned, or bought using a credit card. The lottery prizes are virtual goods or more reward points. Wait, Zynga have created a lottery where you can use real money to buy a ticket and they create the prizes. Sounds like a great business.

With a potentially massive target market of prescreened customers I see huge potential in the Zynga model. This is a great example of how to integrate gambling with mass market social media.

The only question I have is why don't Facebook shut them down? Perhaps Zynga have found a socially acceptable model of gambling that is accetpable to Facebook. If this is the case then they are certainly on to something big.

Gambling Fans

Yesterday Betfair launched a football fan website at www.betfairfootball.com. We recognize that for footy fans gambling is a secondary activity after the sport itself. Fans spend their online time looking for information about their team, fixture information or just good old fashioned banter. The site will provide a range of unique editorial to feed this appetite, along with some social features like commenting and polls.

So check it out and get involved now.

Facebook fan pages

Facebook fan pages are a flexible and economical way to promote your brand. The Betfair fan page has just been revamped and I think it looks great. Not that I am biased.

The fan page acts as a hub for Betfair's Facebook presence. Sure, it is a marketing tool and we have a lot of promotions and branding on it. However, it is offers something deeper and more valuable. The fan page allows us to tap into the fan experience of our customer base. Todays response on the page to the sad news about Bobby Robson is a case in point.

For the forseeable future Facebook will continue to grow in importance as a marketing and engagement channel. This stuff is somewhat experimental but by basing your approach on sound social media principles it should gain traction and payoff. Compared to Facebook application development fan pages may provide a better ROI.

Twitter - risks and opportunities

Twitter is undoubtedly the hot platform right now. Recently, I have been playing around with Twitter by creating an automated price alerts feed (BetfairAlerts) from our public API. BetfairAlerts monitors the Betfair market prices and tweets when the price changes by a preconfigured amount.

Because Betfair prices relate to real world and real time observations they are very well suited to being part of the Twitter stream. For example, when a goal is scored the BBC might tweet "Ronaldo scores, Man United 1 - Liverpool 0", then BetfairAlerts tweets "Punters think the chances of Man United winning are increasing: ManU 1.24 to win". These tweets could be linked together via a Twitter meme or rely on search or following to be found by punters. Punters can follow the alerts through the standard Tweet apps (e.g. Tweetdeck) online or on their mobile phones.

BetfairAlerts had some success in gathering a following. Although it is obvious that the vast majority of followers are spam machines. From my experience with Twitter it seems that +90% of accounts and the tweets they produce are absolute garbage. However, you have to remember that Twitter is a 2 step process - publish and subscribe. Providing application developers continue to find interesting ways to filter and leverage the data then the amount of spam is irrelevant. I think Twitter as a platform has a long way to go.

So what are the risks? If you are too agressive at raising the profile of your account you may find that Twitter switch it off. If you visit BetfairAlerts on Twitter right now, you will see the standard Twitter suspended message. How did this happen? Well let's just say that there are no shortcuts to building a following. Beware automated applications that purport to rapidly increase your following. Twitter are wise to these apps and you may find yourself in Twitter jail for at least 30 days. Hopefully, we can get this resolved soon and start our tweeting experiment again.

Also, if you are a cricket fan check out our Ashes ticket competition on Twitter.

Virgin social media revamp

Interesting to see Virgin's new website is based all around social media. Overall, I think this is a good example of well integrated social media features. But, is that really Richard Branson answering your questions in the Ask Richard widget? Sceptical.

It is only a matter of time before a gambling website achieves the same level of social media integration.

Social betting for football punters

Following on from my previous post, Sportech announce a move into Fantasy Football. The game includes many social media features such as instant messaging.

Social betting redux

A blast from the past...


In 2000 a bold new startup attempted to change the gambling world by creating an online betting community where people bet against their friends. The company was Flutter. Betfair was also a peer to peer gambling exchange but had a different proposition. Betfair focused less on the social aspects and more on the market trading dynamics. Betfair quickly established a beach head with serious horse racing punters, who had a pressing need for the new service. After a brief head to head battle, Betfair and Flutter merged. Although based on the concept of a peer to peer exchange, the only truly social feature of the Betfair website today is the forum.

Roll forward to 2009...

There have been an influx of social betting startups into the market in the past 12 months. A good example of this move towards social betting is the new football pools. Football pools has always been something of a social betting game. I remember the days when the pools man used to visit our house to collect the coupon and £1 each week.

As part of the strategy to bring football pools online, the umbrella company Sportech purchased a football fan site called 4thegame back in Nov 2008. Over the past 12 months 4thegame.com has been integrated with the football pools website to offer a more social fan based experience.

As part of their social betting strategy, football pools have added many social media features to their website, including forums, profile pages, league tables and mini leagues.

In the exchange world, Smarkets is a new start-up aiming to offer a social based gambling experience. I admire their ambition. It is a daunting task to create a betting exchange from scratch but that is what they appear to be doing.

Will combining social media and community with betting work? Yes. But social features will only appeal to specific market segments. Betfair dominated because it was well suited to serious horse racing punters. Likewise, the football pools social strategy may be well suited for the average football punter. The general rule is that no size fits all.

Betfair dominated Flutter because serious horse racing punters bet significantly more than the average social bettor. Betting is a low margin, high volume business. Will the investment in social betting pay off if it attracts a large mass market audience who spend more time talking than punting? We will wait and find out.

Writing on the wall for US online gambling ban

Several strong signs in the past few days that the US ban on online gambling will be repealed in the near future. The recent settlements the US authorities have come to with Party Gaming and its founder (Anurag Dikshit) indicate to me that the US Government is preparing for a reversal of the ban.

News today that Democratic lawmaker Barney Frank is about to put forward legislation to repeal the ban by the end of the year.

There are many reasons that the US ban doesn't make sense. These include freedom of trade, lost tax revenue and the fact that the void is being filled with illegal unregulated operators. I think it is only a matter of time before the unregulated black market in the US is replaced by a regulated market that derives substantial tax revenue for the US Government.