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December 14, 2017

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Even when dealing free games, the house finds a way to win

Image

Mikayla Whitmore

A view of the “Sex and the City”-themed slots in Zynga’s Hit it Rich! game.

Free social casino games brought in billions of dollars in revenue last year.

It sounds paradoxical, but it’s true.

Social casino games essentially are free versions of table games and slots that anyone can download on a mobile phone or computer. Typically, users are given free tokens to start, and win or lose tokens as they play.

Developers make money when players buy additional tokens.

Consider Caesars Interactive’s social poker game as an example: Players receive a set number of free chips per day. To enter some tournaments, however, they need more. Players can try to win chips by gambling with their allotted free chips, or pay to get more.

Seth Palansky, a spokesman for Caesars Interactive, compared social casinos to arcade games. You put in a quarter, play and lose. You can pay 50 cents to keep playing from your stopping point or start over. Only with social casino games, you never have to put in that initial quarter.

“All this is, is arcade games for the digital generation,” Palansky said, except “they no longer have to go down to an arcade. The arcade is on their phone, tablet or computer.”

Unlike online gambling, players can’t cash out social gaming chips for real money. The closest a social casino comes to paying out real money is PlayStudios’ myVegas app, in which players can win real perks at brick-and-mortar casinos. MGM Resorts International and Station Casinos partnered with myVegas.

Social gaming players may not make any real money, but game developers do.

The global social casino market last year netted $2.8 billion in revenue, up 37 percent from the previous year, according to Eilers Research. In the fourth quarter alone, revenue reached $759 million, a 3 percent increase from the year earlier.

And the industry seems to have plenty of wind left in its sails.

“The social casino sector certainly has its own share of risks, but we do not believe revenue deceleration is one of them,” an Eilers Research report concluded.

The revenue comes despite the fact that the overwhelming majority of people who play social casino games never spend any money. Palansky said about 96 percent of social casino players at Caesars Interactive, which dominates the market, don’t pay a cent.

To explain the disparity, Palansky returned to his arcade example. Whereas an arcade is limited in that only people who are within driving or walking distance can play, a social casino is open to the world. Even if only 4 percent of players spend money, that 4 percent comprises hundreds of thousands of people.

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