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Online-Gambling Startup Betable Recruits 3 Zynga Rivals

Betable Ltd., the online-gambling
startup backed by venture capital, reached agreements with three
social-gaming companies that will use its platform to expand
into real-money betting in competition with Zynga Inc. (ZNGA)

Slingo Inc., a maker of virtual-wagering slots and bingo
titles with 54 million monthly users worldwide, will use the
company’s U.K. gambling license and technology, according to a
statement today from London-based Betable. Digital Chocolate
Inc., started by Electronic Arts Inc. (EA) founder Trip Hawkins, and
Murka Ltd., the maker of “Slots Journey,” also signed on.

Video game companies are racing to establish themselves in
the developing market for online gambling in the U.K. and other
countries where it is legal. Zynga, seeking to reignite growth,
formed an online-betting partnership last week with Bwin.Party
Digital Entertainment Plc. (BPTY)
Betable says it can streamline the
licensing and offer developers a technology framework they can
plug in to and quickly get started.

“This is really a tectonic change,” Betable Chief
Executive Officer Chris Griffin said in an interview. “This is
not going to lead to an incremental shift in the market.”

An early Betable partner, Seattle-based Big Fish Games
Inc., said on Oct. 29 its casino slot-machine game in the U.K.
is taking real-money wagers for the first time.

Zynga fell 3 percent to $2.24 at the close in New York, on
the first day of trading after Hurricane Sandy forced the
markets to shut down this week. The shares are down 76 percent
so far in 2012.

‘Move Quicker’

Online gambling isn’t legal in the U.S. Until recently,
when some countries began allowing real-money Internet wagering,
online gamers could purchase virtual currency and gamble, but
couldn’t cash out their winnings.

Mobile gambling will grow to $100 billion worldwide by
2017, driven by surge in social-website gambling and
legalization in key U.S. states, Juniper Research estimated in

In the U.K., where online gambling has been legal since
2005, the market has reached $2 billion, said Doug Creutz, an
analyst with Cowen Co. in San Francisco. Competition among
social game-makers could make it hard for any one company to
stand out, he said.

“Our goal would be to transition online players into
gamblers of our content,” Slingo CEO Rich Roberts said in an
interview. “Betable gives us an opportunity to move a little
bit quicker than we could on our own.”

Gambling Growth

About 2 percent of the people who play titles such as
Zynga’s “Farmville” end up buying virtual goods, according to
analysts. Online gamblers spend about $75 to $100 a month,
according to Betable’s Griffin.

The market is crucial for San Francisco-based Zynga, which
is looking to wean itself from reliance on Facebook Inc. (FB)’s
social-media website for revenue.

Makers of social games are grappling with a 5 percent
annual U.S. decline in game play, led by casual players,
according to researcher NPD Group Inc. They are looking to offer
cash prizes to revive consumer interest and boost profit.
Partnerships with companies that are focused on gambling allow
them to meet the licensing requirements in various countries
where they would operate.

Betable, whose investors include Greylock Partners, Yuri Milner of Digital Sky Technologies and Michael Arrington’s
CrunchFund, handles the infrastructure, payment system,
licenses, anti-fraud procedures and verification needed to prove
whether a given consumer can legally play an online gambling
game in a given location. The games can be played on a PC’s web
browser, or on mobile devices running Google Inc. (GOOG)’s Android or
Apple (AAPL)’s iOS.

No Guarantee

Game developers still must adhere to rules for Apple’s App
that prevent them from selling gambling titles in
countries where online wagering remains illegal. Betable is
working to get licenses outside of the U.K., Griffin said.

“Social gaming companies are not just going to be
competing with each other, but they’re going to be competing
with traditional enterprises,” Creutz said. “Gambling games
are a commodity, and there’s no guarantee of success for that

To contact the reporter on this story:
Cliff Edwards in San Francisco at

To contact the editor responsible for this story:
Anthony Palazzo at

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