Facebook Ventures into Online Gambling

By Christopher Thompson, Financial Times

Facebook is venturing into the world of online gambling with the launch of its first application where punters can stake real money.

“Gambling is very popular and well regulated in the UK...for millions of bingo users it’s already a social experience [so] it makes sense [for us] to offer that as well,” said Julien Codorniou, Facebook’s head of gaming for Europe, Middle East and Africa.

There has long been speculation among investors as to whether Facebook and other social networking sites would introduce gambling products to boost revenues. Zynga , Facebook’s largest gaming partner, is hoping to introduce real-money gambling versions of its poker, bingo and slot machine games in 2013.

Many markets outside the UK can pose considerable legal risks, however, as regulations vary considerably from country to country. In the US, where the majority of Facebook revenues are generated, the market for real-money social gaming is in effect closed. Regulators only recently began opening the door to certain kinds of online gambling, and only at a state level, presenting significant technical challenges for keeping operations within the law.

Facebook’s move in the UK is a significant development, according to Clive Hawkswood, chief executive of the Remote Gambling Association, a London-based online gambling association.

“Bingo is at the softer end of the gambling spectrum and online bingo often has chat forums alongside, so it’s an obvious match for Facebook,” he said. “A lot of people have said why haven’t they done it before because there’s a difficulty in monetising what they have – this is one way of bringing in revenues.”

Facebook will launch the Bingo and Slots Friendzy app together with Gamesys, one of the UK’s largest online gambling operators, to target the social network’s large online audience.

“We are a distribution platform for Gamesys – they have the games and we bring the audience,” said Mr Codorniou.

He said Facebook was in discussions with other gambling companies about expanding its offerings which could include casino games such as blackjack and roulette, but he said “nothing concrete” had been agreed.