William Hill chief backs social gaming regulation

Social gaming on platforms such as Facebook should be subject to the same controls as real-money gambling, the boss of the UK’s largest bookmaker has argued.

Explaining why his company had decided to adopt a “watching brief” on this “potentially lucrative business opportunity,” William Hill CEO Ralph Topping said today:

“The problem is that it is not currently regulated as a product group and we think it should be. It cannot be right that a child can buy chips to play on an online slot which is (almost) as good as anything you’ll find on williamhill.com. In fact, it might even pay out more than a slot you might find on an online gambling site, which could also encourage the vulnerable.”

Topping dismissed the argument that this wasn’t potentially harmful on the basis they were not actually playing to win real money, given there were no restrictions on repeat purchases and chips could be gifted to others.

“That sounds like a vehicle for virtual money to me, which some unscrupulous operators might, just might, be tempted to use to make ‘social gaming’ a form of real money gaming with no regulation – even available to children.”

Further, added Topping, should the government not include these types of games in its forthcoming regulation and taxation of real-money online gambling, currently slated for introduction in December 2014, he predicted the amount of unscrupulous companies cashing on this gap in regulation would increase and lead to a real issue of problem gambling among the more vulnerable members of society, as opposed to what Topping called the mainly “imaginary” problem the new regulation of the industry by the Gambling Commission from 2014 was supposed to prevent.

The UK Gambling Commission was last month forced to play down rumours it was looking at possibly licensing gambling-style social games after its corporate affairs manager John Travers told the Daily Mail social gaming was “at the perimeter” of its current remit, and that it was  “assessing any wider implications for licensing objectives”.

One of the issues believed to have spurred the Commission to look at whether or not the social gaming sector required greater regulation is the growth of games for which customers are able to convert virtual winnings to physical prizes or cash in the real world, as well as a reputed black market in which players can buy and sell virtual credits and winnings to each other. Players of social gambling games on Facebook such as Zynga Poker are currently unable to play for or cash out real money from the platform.

The rapid growth of the social gaming sector, or more specifically of poker and casino-style games on Facebook, has led real money gambling companies to invest large sums in acquiring the providers of these games in the last 18 months. US land-based casino operator Caesars’ interactive division recently parted with around US$200m to acquire Slotomania developer Playtika, while supplier IGT is spending US$500m on DoubleDown Casino. PartyPoker, PartyCasino and bwin owner bwin.party, scared off by the huge valuations placed on social gaming companies, recently unveiled a strategy to spend US$50m on developing its own standalone social gaming division. The social gaming unit, called Win, will be headed up by former Mytopia and Amuso CEO Barak Rabinowitz. Other operators such as Jackpotjoy owner Gamesys have also built thriving social slots businesses.

Such games, in which players can play for free to win points or virtual prizes but pay extra for credits to bet more – are now the fastest growing segment of games on Facebook, now accounting for 13% of all players, up from 8% last year, according to data from US consultancy Kontagent. Zynga’s Texas Hold’Em, recently returned to the top spot as the most popular game on Facebook, played by 33.4m monthly active players, following the drop-off in popularity for games such as Farmville.

However, reports that growth in social gaming as a whole is slowing down has hit the share prices of companies such as Zynga, by far the largest developer of games on social networks, with 246 million monthly users at the time of writing, down from 253 million a month ago.

Zynga generated 93% of its revenue through the social network last year, with 19% of Facebook’s tied to Zynga, according to a filing with the Securities and Exchange Commission ahead of its recent IPO, either through the 30% cut the social network takes from Zynga’s games revenue on the platform or from ads bought by Zynga on Facebook to promote its games.

Zynga has reportedly been discussing possible deals with real-money casino groups in the US, such as Wynn, to take advantage of the future regulation of online poker in the US. However, experts have argued that the transition to real-money models for successful Facebook gambling formats such as Zynga is far from assured.

One such expert, Simon Collins of social and mobile gaming investment fund NewGame, told April’s Online Bingo Summit in London that while it was an obvious opportunity for the owner of the world’s largest online poker game, the transition to real-money play would bring lots of challenges. “In trying to access 300m users playing Facebook gambling formats, you are hindered not just by Facebook policy and geographic regulations, but also by the fact you can make great money just selling Facebook credits. It won’t be as easy for these companies to potentially go straight into real money-gambling, and there may not be the desire for it, as they are generating good money as they stand,” he said.

Casino Choice journalist

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