In Silicon Valley the tech industry has set its sights on internet gambling. Silicon Valley game developers believe that internet gambling will be the next multi-billion dollar industry similar to the dot com boom of the 90′s and early 21st century. Developers throughout the industry are turning casual and social games into real money gambling games. Currently the games are played overseas thanks to puritanical gaming laws in the United States. Social networking sites like Facebook and game developers like Zynga has launched games in the UK which has a mature and highly regulated internet gambling market.

The UK and European game releases have been highly successful but game developers and social networking sites have their eye on the biggest prize of all: the US online gaming market. Currently Americans spend billions annually at offshore websites. Companies that want to eventually enter the US gaming market avoid violating US laws and usually block players from the United States. A clean record puts companies in a good position to obtain a gaming license once internet gaming is legalized in the US.

In 2011 the justice department issued an opinion that cleared the way for legal intrastate internet gambling. This week Nevada became the first state to legalize online gaming and is issuing licenses to online gaming companies. Several major Las Vegas casinos have applied for online gaming licenses. The state of Delaware is seeking bids from companies to establish a framework for internet gaming in the state. New Jersey will probably legalize online gaming next week.

The legalization process has been slow and online gambling has some very powerful opponents. Many in the casino industry are opposed to online gambling. Sands owner Sheldon Adelson is a fierce foe of online gambling but then Adelson has a history of backing losing causes. Social conservatives are doing their usual whining about ‘morality’ and gambling as a ‘tax on the poor.’ Opponents have not discouraged Silicon Valley. Most companies believe that in the very near future online gambling will be as simple as shopping on the internet or streaming a movie. It will also attract a new generation of tech savvy players.

For now most states plan to limit online gaming to poker. If poker is successful some states plan to add additional games like online bingo, keno, slots and other casino and table games. Internet gambling could easily produce the next crop of Silicon Valley billionaires.

The social gaming sector is heating up. Recently San Francisco game developed filed licensing papers with the Nevada Gaming Commission and announced plans to offer real money gaming. Zynga plans to launch the games in the UK early next year. Zynga will face some stiff competition. Facebook has partnered with 888 Holdings to offer real money gambling in the site. Facebook has about 900 million active users around the world to the potential can easily be seen. Facebook chose the UK for the launch of real money gaming because the country has a mature and regulated online gambling industry.

Facebook users 18 and over in the UK will be able to play games and cash out their winnings. 888 Holdings is a publicly traded company and the announcement of the deal with Facebook gave the company’s stock a nice boost. 888 already offers games on Facebook but the games are free. 888 plans on offering online bingo, casino, and slot games. No mention of poker raised some eyebrows and some experts believe that Zynga’s first real money game will be poker. Earlier Facebook had partnered with another gambling firm, Gamesys. Gamesys was the first company to use Facebook apps for real money gaming. In August Gamesys offered 90 bingo and slot games on Facebook.

For Facebook real money gaming is a great opportunity. Currently Facebook offers thousands of games on its network. Some gaming companies are worried that real money gaming on Facebook will take some revenues away from British online gaming companies. Facebook will be watching for the result of Zynga’s entry into the Nevada online gaming market. If the move is successful most experts say that Facebook will follow. Facebook and Zynga have been partners for years and Zynga’s entry into real money gaming has put a strain on the relationship between the two companies.

Not everyone in Britain is thrilled with Facebook’s game launch. Critics say that Facebook is “tempting the young to gamble.” Anti-gambling activists are worried that the games could be accessed by those under 18. They also believe that Facebook games will make gambling seem more acceptable to the young. They also believe that insufficient safeguards are in place to deter underage gambling. Facebook contends that adequate safeguards are already in place. Itai Frieberger, chief operating officer of 888, told reporters “Our Facebook play for fun offerings have found a significant audience, and we are very excited by the opportunity real money gaming on Facebook provides.” Frieberger also said his company will take steps to prevent underage gambling.

Since late summer Facebook users 18 and over have had access to real money gambling in the UK. Legal restrictions in other countries have prevented the social networking giant from offering real money gaming services. The world’s largest gambling market, the United States, remains closed to Facebook thanks to federal laws. The chief executive of the Remote Gambling Association, Clive Hawkswood, pointed out that the Bingo and Slots Friendzy app is a perfect combination in the UK due to the immense popularity of bingo. Hawkswood stated “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.”

Facebook has high hopes for real money gambling. Earlier in the year Facebook CEO Mark Zuckerberg said “When online gambling is legalized, Facebook will be a $100 billion company.” Zuckerberg was referring to revenues generated not the company’s market value. Zuckerberg also said that Facebook is generating about $400 million in gaming revenues from Zynga games. Zynga is also hoping to cash in on internet gambling. The company announced that it will launch an internet gambling initiative in the UK during the first half of 2013.

Zynga has had many recent problems. The company has been forced to lay off 5% of its employees and close three offices in the UK, Boston and Japan. Zynga has had problems maintaining its [player base and has failed to meet growth expectations. Zynga CEO Mark Pincus told a group of investors “We didn’t create enough new heat for our players by innovating on content and features.” Zynga CFO David Wehner said the company plans to cut back on advertising and network spending.

Zynga has partnered with a major player in the UK remote gaming industry, Bwin party. Zynga is hoping to build a large online gambling empire. CFO Wehner said “We view this as a first step into real money gaming, and we believe that it’s a good first step. But it’s only a first step toward what we think is a large opportunity for Zynga.” The decision to offer real money bingo in the UK was a wise one. Bingo is considered a part of British culture and has been popular for over half a century. Currently there are about 400 online bingo sites competing for players so it remains to be seen how successful Facebook’s offering will be.

Online bingo has really hit the big time! Buffalo Studios’ Bingo Blitz was spotlighted on Facebook’s blog. The blog article explained hos the online bingo game’s use of Facebook features has helped the game become one of the most popular on the social networking site and iOS and Android. According to Facebook’s blog 80% of Bingo Blitz’s mobile revenue is generated by players who have logged on using Facebook Connect. Players logging on using Facebook Connect are spending three times more than other players and also play twice as much as other players.

Facebook said that Bingo Blitz has seen ‘likes’ and comments increase by 20% and unique clicks to the popular bingo games are up a whopping 500%! The use of Facebook’s application subscription payment model has prompted 85% of Bingo Blitz players to return to the site daily to collect rewards and win prizes. In the developer blog post Facebook stated “Consistent gaming experience across platforms: Bingo Blitz uses Facebook to connect players and give them a consistent user experience on all devices. People will soon be able to find and invite friends on any device. Also, people who start playing on the desktop can switch to playing on their mobile device.”

Adopting Facebook’s unique features and providing fresh content has kept about 25% of the games users playing for over a year. Buffalo Studios vice president of studio operations Brooke Olson said the key to keeping long term players is to integrate Facebook on all available platforms. By taking this action developers are able to provide players with “a connected game experience to players who use multiple devices or want to play with friends on different platforms.”

An independent tracking service showed that Bingo Blitz is benefiting from the integration of new features on Facebook. The game’s traffic fell after the numbers peaked in February 2012. In February the game had 3.7 million monthly active users and 1.1 million daily active users.  Traffic continued to decline until September when the numbers started to turn around. Now the game is up to 2.7 million monthly active users and 1.1 million daily active users. Making connection easy for mobile users has kept Bingo Blitz’s players more engaged.  Bingo Blitz is also driving player retention using subscriptions. According to Facebook the game makes more money by offering a monthly subscription service for players.

An August article in Forbes asks the question; could Facebook build the world’s largest online casino? Players in the UK are now able to play real money games on Facebook. Facebook launched a trial of Bingo Friendzys which was created by game developed Gamesys. According to the article the implications for Facebook could be hugs. While investors are asking the now public company where its next revenue increase is going to come from real money gaming offers Facebook a well-tested method to increase profits. Real money gaming is seen as less risky than depending on advertising revenues.

Social gaming is a major part of part of Facebook’s revenue stream and offering real money gaming gives Facebook the opportunity to monetize a larger part of its user base. Gamesys contends that the social aspect of online bingo makes it the perfect game for a UK audience. A spokesperson for Gamesys stated “Almost every town and city in the UK has a bingo hall, where friends and family members come together for a night out to have fun and a little flutter. Online bingo has been immensely popular in the UK for years and lends itself very well to Facebook, as the cornerstone for its attraction is the sense of community that it builds for members.”

Many in the industry are asking whether Facebook could become a dominant force in the online gaming industry. Gamesys pointed out that the online gaming market in the UK is mature and already has a ready community of bingo players and well established online bingo sites. For years Facebook has led the development of a new era of social media. On the other hand Facebook faces some serious challenges from established gaming sites and is entering the UK market without any advantages over established operators.

Facebook faces another major obstacle. A survey taken earlier this year showed that 59% of Facebook users surveyed did not trust the company to keep their personal details private. Facebook has stressed that the online bingo games were designed by Gamesys. A Facebook spokeswoman told the BBC “Real money gaming is a popular and well-regulated activity in the UK, and we are allowing a partner to offer their games to adult users on the Facebook platform in a safe and controlled manner.” Online bingo players in the United States will not see these new games anytime soon. Online gaming remains a legal grey area in the US and the outcome of the presidential elections could determine the fate of online gaming in the US.

In August Facebook took a gamble and added a real money gambling application that is only available in the UK. Facebook has been struggling ever since the company’s IPO did not go as planned. Facebook is now looking for quick revenue sources which includes real money gaming. The new app called Bingo Friendzy allows players to wager real money instead of Facebook credits. For now the games will only be available in the UK and only to those over 18 which is the legal gambling age in the UK.

Like many apps on the site Facebook was not directly involved in the creation or operation of the real money gaming app. The company has permitted gaming giant Gamesys to offer the app to players. Many believe Facebook is testing the waters and will add more real money games if Bingo Friendzy is successful. Financial details of the agreement between Facebook and Gamesys are confidential. It is not clear whether the agreement will follow the usual 30/70 revenue split that applies to most Facebook games. A Facebook spokesperson told an interviewer from TechCrunch “Facebook is a place that allows people to connect and share. Real money gaming is a popular and well-regulated activity in the UK and we are allowing a partner to offer their games to adult users on the Facebook platform in a safe and controlled manner.”

In addition to the new real money games Gamesys also offers other Facebook games such as Sun Bingo and Heart Bingo. Many see the move into real money gaming as risky. In many countries, including the US, restrictions on internet gambling are strict. So far Gamesys has gone to great lengths to make sure that only legal players will be able to use the app. Before playing users must verify their identity, prove they are over 18 and are located in the UK. Facebook is making sure that ads for the games are not served to underage users. A Facebook source stated Young people are far more likely to see an ad for Bingo on the TV or in a betting shop window as they walk to school than they are on Facebook,.” Users outside the UK will not be able to see the ads.

The UK is the perfect test market for Facebook. The UK has strong gambling culture and a mature regulated online gambling market. Julien Codorniou, Facebook’s head of gaming for Europe, Middle East and Africa, told The Financial Times “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.” In the meantime the Republican Party in the US has proposed a total ban on internet gambling and a victory in November could derail plans for legalization in the US.

For years BingoPort has been the UK’s most reliable source for all things bingo. The most recent study by Bingoport has shown that among online bingo players Google is the most popular non-bingo website just ahead of Facebook. Google is easily the world’s most popular and used search engine. Google has built a unique corporate culture and turnover is very low due to the many perks enjoyed by Google employees.

The new data compiled by Bingo port was compiled by surveying the company’s extensive database of internet bingo players. The database represents a broad and unbiased section of the online bingo sector. The survey showed that 70% of all online bingo players regularly use Google and that 69% of all players use Facebook. In the wider UK online population 90% use Google’s search engine and 77.7% use Facebook. It should come as no surprise that Facebook is popular with online bingo players. Facebook has over 900 million active users and offers several bingo games.

Recently Facebook decided to join the world of real money gaming. Zynga’s bingo game is one of the most popular Facebook games ranking just under Zynga’s poker games on the social networking site. Most of the major UK online bingo providers maintain Facebook pages. The lower Google share among online bingo players can be attributed to the use of other search engines. According to the survey 16% of online bingo players use Bing/MSN and about 22% use Yahoo.

Bingoport’s Operations Manager, Andrew Housego believes the lower rate of Facebook usage is indicative of the social nature of most online bingo sites. Housego stated “Although most online bingo players use Facebook to keep in touch with friends and family, there are plenty whose sole point of online social contact is their favourite bingo site. In fact, there are plenty of online bingo players whose only activity on the internet is accessing their favourite bingo site.”

Other non-bingo sites popular with players include Amazon.com, eBay and YouTube. Other sites frequented by bingo players included banking sites, news and travel websites. The survey should be of particular interest to marketers targeting online bingo players.