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Wednesday, August 24, 2011

Is It Time For An Internet Gambling Social Network?

We have seen the meteoric rise of social games taking over the Internet gaming space. They have leveraged social networks using notifications, friend connections, social advertising and virtual currency transactions growing large game communities. They are generating billions of dollars a year and growing rapidly.

Conversely, the Internet gambling space has become marginalized and fractured. Gambling is not allowed in social networks prohibiting Internet gambling from growing large and vibrant gaming communities within social networks. Ironically, this prohibition is not a legal issue. Facebook has decided it does not want gambling in its community. It is interesting to not that Zynga has now lost interest in getting involved in the Internet gambling space even if it becomes legal in the US. They do not have to they are already running a highly profitable social gambling operation in Facebook using virtual currency transactions.

Without a strong presence in social networks other factors that contribute to fractured and bifurcated Internet gambling markets get magnified. The continuing trend for regions such as Europe and potentially the US, if Internet gambling becomes legal, to view the Internet world on a state to state or country to country basis makes it very hard for Internet gambling to be a viable business model. This notion that each country and each state will have its own Internet gambling laws, legal requirements and tax structures has a decidedly negative impact on Internet gambling. If the same thing was occurring in Internet E-commerce their would barely be an industry. This is why Amazon is so opposed to state and country regulation and tax regimes.

What should the Internet gambling industry do to remain relevant is a social cross border and country Internet world? Should the Internet gambling industry pull together its own social network? I would argue that it should and has to if this business sector is to grow and thrive.

There are certainly many obstacles to this approach primarily because the industry has been so conservative in its business practices. Much if this conservatism is dictated by external legal and political structures that have attempted to create fictional closed networks in the Internet space to control and tax Internet gambling. Of course none of these structures work very well and are almost impossible to monitor and to control despite the best intentions of government agencies and legitimate Internet gambling businesses. Ironically, Facebook can do a better job of controlling content in its world because it only allows certified applications in its environment. Essentially, Facebook is a "closed" Internet environment. This is a topic in and of itself. However, this is the world as we know it and the Internet gambling industry should react and respond to this brave new world.

A gambling social network will not only improve the overall health of the Internet gambling industry it could be a real life saver for governments trying to figure out how to control the Internet gambling industry. If the Internet gambling industry copied Facebook's model government could at least go to one environment to extract their tariff.

It is clearly time to stop fighting the inevitable dominance of the Internet gaming world by social networks. The Internet gambling world will soon have to make a decision  if the are going to join in on the social gaming party, remain marginalized or get creative and start to think about what an Internet gambling social network would look like.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

2 comments:

OliverJonCross said...

Take a look at www.Yazino.com which is only play money model but a very interesting concept for gambling and social networking.

Online gambling is always a hot bed when it comes down to legality but if they think there is money in a project it wont stop them from launching.

Kevin Flood said...

I checked out Yazino and it is an example of virtual currency gambling style games. there are a number of these properties up and running at tis time. They are legal in Facebook and they can take advantage of the social graph if so desired.

However, what I am suggesting is an actually Internet gambling social network that also allows for real cash transactions in addition to free and virtual currency play.