What is a social casino?
The term “social casino” is deeply linked with social gaming that implies playing various games that require social interaction between players, as opposed to playing in solitude. One could say that old board games of ancient civilizations are the predecessors of modern social gaming. Meanwhile, the even more recent explosion in global accessibility of mobile devices has further contributed to the increase in social gaming, via the likes of Facebook and gaming apps, and the definition most often attributed to the term “social gaming” is the activity (or practice) of playing an online game on a social media platform.
The term ‘social casinos’ can refer to gambling activities taking place via social media with countless operators continuously creating and developing games to be player specifically on these online platforms and connected to their existing social media profiles (such as Facebook).
Where it all began
Released back in 2007 when even Facebook itself hadn’t reached the peak of its popularity, Zynga Poker was undoubtedly the talk of the gambling town. Players didn’t just want to play from the comfort of their own homes—they wanted to compete and climb up those Texas Hold ‘Em leaderboards for their buddies (and maybe the rest of the world) to see.
It is considered to be one of the first popular social casino games ever, paving way for many other companies that followed it shortly.
Zynga is still one of the big names when it comes to social casinos. It’s moved on from just offering poker, with new apps for slot machine games too. Slotomania is another social casino business that allows players to play the slots for free and it’s estimated that they have over 5 million active users per month. DoubleDown Casino and Big Fish Casino are probably the best all-around casinos in operation on social media, offering card games as well as slots and other casino favorites. Furthermore, mainstream online casino brands like PartyCasino are also successfully incorporating the social aspect via tournaments, competitions, live dealer tables, and social media presence.
From those more humble beginnings, a number of social casinos have grown through, offering gamification features that appeal to players that enjoy not only casino games but the competitive element as well.
Why did social casinos appear and why they became so tremendously popular? To answer that question we have to understand, how exactly they differ from land-based and online casinos.
What makes social casinos different from regular online casinos?
In early 2000s one of the biggest markets, the United States, started cracking down on internet gambling and betting, passing a number of legislative acts (such as Unlawful Internet Gambling Enforcement Act of 2006), that made it virtually impossible for casino operators to offer their services to US citizens online.
The emergence of the largest social casino operators and brands coincides with this period of time, because the pioneers of social gaming found a way to satisfy the growing demand for casino-style games without violating laws and regulations - they introduced free-to-play games that do not involve real money betting and gambling, but had exactly the same enjoyable game mechanics of the games that had passed the test of time and were loved by many generations of players.
Nowadays we observe two clear trends - mobile platforms have gained the upper hand over desktops, while the revenues continue to rise all across the market, especially in Asia and North America regions. Facebook is one of the leading platforms for social casinos, with dozens, even hundreds, of social casino operators that serve millions of players on a daily basis.
What problems does the social casino market face?
Monetization of social casinos, most of which use freemium model (free-to-play with some options purchasable for real money, in-app purchases, advertising e.t.c.), puts certain constraints on what social casino operators can and can not do to expand their business and increase their revenue margins.
At some point, when a casino strikes the perfect balance between paid and free features, that are acceptable for their player base, they simply can not use more invasive monetizing techniques without actually losing their loyalty and forcing them to exit the game.
The market does not lack social casino operators and players have literally hundreds of options from smaller casino games to large operators, taking up to 80% of the player base as far as certain games are concerned. It is a highly competitive and unforgiving industry for new contestants, high entry barriers prevent healthy competition and ultimately lead to stagnation in some sectors, which ultimately hurts both the players and the operators.
Where can social casino operators go from here?
The target audience of social casinos are casual players, but they are clearly interested in gambling. While millions of players engage in gambling both in regular casinos and social casinos, the cost of attracting a new player to the former is way higher in comparison.
With total player base growing and revenue per player approaching that of regular casinos, this leads a lot of casino operators to a perfectly logical conclusion - using social casinos as “funnels” to convert at least a small part of their player base into regular casino clients is a reliable and sensible strategy. It is only a matter of marketing, a lot of social casinos already act as “shop windows” and demo versions for real casinos and do quite well in this role. The real question is...
...How do casino operators and developers make this transition from social casino to online casino efficiently?
Can existing social casino operators simply start accepting real money from their user base and products and call it a day? Certainly, that’s not the case, there is a number of obstacles they have to overcome over the course of this transition to online casino status.
There are complex issues related to online gambling regulations and laws, in almost every county there are different rules that you have to comply to before accepting money from clients with certain citizenship or residence, KYC and AML measures must be in place. An online gambling license needs to be obtained, which can also be a lengthy and costly process.
The gambling software itself also must undergo certification, in particular it needs to have a provably fair PRNG mechanism, that not only serves as a compliance requirement with regulatory organizations, but wins players’ confidence and trust.
For developers of social casino apps and games the transition can also be problematic, a few layers of complexity are added, such as dealing with a more advanced PRNG, real money transactions, increased security protocols and so on.
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