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02 June 2012

Social Gaming and Gambling Converging

Bwin.party's move to social games is just another step toward two converging gaming businesses.

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Maybe the most social of popular casual games is breeding a new competitor in the social gaming space as bwin.party sets its sights on this growing part of the market. The company is more known for poker, a game played with friends around dining room tables around the world, but it has set aside $50 million to develop a new game studio called Win that will develop social games.

Zynga is probably the most well known social gaming company with games like Texas Hold 'Em Poker and Slingo, so the connection between gambling and social games isn't new. This move is just another step that slowly blurs the lines between social gaming and online gambling as companies jockey for position just as the U.S. market looks like it may open up.

The fight for eyeballs

Like any other social network, a gambling site is all about the number of eyeballs you can bring to the table. Zynga has 6.9 million users that play Texas Hold 'Em every day, a giant number when compared to online gaming companies.

But it won't only be online gaming specialists and social gaming companies vying for position in the space. Wynn Resorts, Caesars Entertainment, and MGM Resorts will also want a piece of the pie. How exactly all of these companies coexist will be interesting to watch, but they're all taking different paths into the market. One thing is for sure, though; each has the brand power to put some kick in any social media platform and could help drive real, heavy-betting players instead of casual gamers.
Bwin.party, MGM, and Boyd Gaming have already agreed on terms for a start-up company that would offer poker in the U.S. if the game is ever made legal. If social gaming is successful, bwin.party could help bring users in from free social games into the paid site. MGM and Boyd would be along for the ride.

Caesars will likely leverage its World Series of Poker brand to players around the world. There's no stronger brand in poker and the company would be a strong contender.

Eyes on a big prize

When and if online gambling will become legal in the U.S. is anybody's guess, but the prize is worth the jockeying that's going on. Last year, I estimated that that small segment of the market could be worth as much as $4 billion in EBITDA to those who can capture share. That's a big number for companies like bwin.party, Zynga, and Boyd Gaming. Keep an eye on developments and further jockeying in the industry.

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