Zynga Opens Vegas Casino

OMG!  Just lost $$$ 4 grand on Draw Something!  Didn’t get the cartoon of Chris Christie.  Yikes!  Went back to my spacious cornfield suite (in the Farmville Tower).  Tomorrow I am sticking to poker while touring Hoover Dam.

That’s a Tweet from me, four years from now.  Right after Zynga opened up their monster casino on the strip, where Excalibur used to stand sentry.  Sounds outrageous?  The groundwork is already underway.

How did this happen?

The answer is something you hold to your head everyday: your phone.  While most of the gaming industry focuses on yesterday’s major computing cycle, the Age of the Internet, the next wave of operators is busy changing the game.  Those players, Facebook and Zynga included, are riding today’s tectonic computing transformation: the Age of Mobile.

Too many of the old guard are still focused on the last wave, the Internet, what we technologists call “THE HOW.”  How as in how consumers access content and services…bricks and clicks, cookies and browsers, Macs and PCs.  The new guard is focused on “THE WHERE.”  They are knee deep in what Kleiner Perkins’ star analyst Mary Meeker calls the “fifth major computing cycle of mankind,” the Age of Mobile.

What matters in this age of mobile?  Not how, but where.

Zynga figured it out back in 2012.  We live in a mobile society, always on the go.  There are more mobile phone subscribers in the US than there are citizens.  Of the 7 billion people on this planet, 6.1 billion own a mobile device.  And more of those devices are smart phones, phones that can do just about anything your computer can do.

Zynga got mobile games, but virtual money didn’t drive real profits.  So they turned to the mobile device and realized that the phone in your pocket or purse has the ability to collect and stream all kinds of information about you: the calls you make, the sites you visit, what you Tweet and Like.  And while all this behavioral data is helpful for serving ads and pushing coupons, Zynga found the gold in the phone: at any time, that device knows precisely where you are.

Real-time location data is the most valuable and engaging aspect of the Age of Mobile.  Location-Based Services (LBS) are transforming every industry. Credit card issuers like VISA use mobile location to battle fraud.  Logistics companies like FedEx use location to track shipments. Big brands like Kohl’s and Miller Coors use mobile location to improve marketing campaigns.

Zynga and Facebook realized early on that mobile location would revolutionize the way we play games and place bets.

Used to be you had to be physically sitting at the card table to place a wager, or standing at the lottery machine to buy a lotto ticket.  No longer.  New Jersey, Illinois and more states in 2012 were moving to legalize mobile gambling, and allowing operators to take bets on a customer’s own smartphone.  (Disclosure: my company Locaid provides authenticated location to the only smartphone gaming apps approved by the Nevada Gaming Control Board.)

Zynga figured out that location was a critical lynchpin in the new gaming ecosystem.  They predicted the day when the house takes more bets from customer smartphones than from the casino floor.  So Zynga (with a billion dollar loan from Facebook) decided to build a house, right on the strip.

Location-as-a-Service providers made it easy for Zynga and other gaming operators back in 2012.  Take geofencing.  Draw a circle around your casino or a perimeter around your state, and when your customer crosses your “fence,” they get an alert, such as an “OK to wager” message, or a promotion to visit your casino, or an incentive not to stray into your competitor’s house.  Mobile marketing with location geofencing adds rich context and much-desired relevance to a consumer relationship with your brand.

In highly regulated industries such as gaming and banking, location is complex and evolving.  And Zynga was an alien on Planet Vegas.  In Nevada, mobile gamers must be within state lines to place bets on their mobile phone.  Smartphone location (Wi-Fi and GPS) does not meet the requirements of the Nevada Gaming Control Board because these location sources are easily spoofed.  Network location sourced from the wireless carriers (the kind Locaid provides) cannot be spoofed by an app on the device.  This location, combined with geofencing, allowed gaming operators like Zynga to extend their books and games beyond the casino walls for the first time in US history.

In 2011, a historic first was achieved by Leroy’s: the first legal real money wager was placed on a smartphone in the state Nevada.  It was only a matter of time (and money) before Zynga and Facebook started negotiating with Trump and Wynn.

Zynga saw that the legalization of online gambling had the potential to create a multi-billion dollar market in the US, with many states eager to cash in on the revenue potential. Pair legalized online gambling with location-verified mobile gaming, and Zynga saw a huge, unchartered market.  That was in 2012.

Who else saw the opportunity in mobile and location back then?  AWI (now William Hill) was an early entrant.  But others were close behind.  With fraud protection and location verification, geofencing’s role in mobile gaming’s bulging market was destined to play a crucial role to ensure compliance and safety for all players, while ensuring all gamers within state lines can get a piece of the action from the comfort of their living room, car, or favorite bar.

Perhaps it’s not too late for the major gaming operators to take notice of mobile location.  Perhaps those that run the largest betting books in the country will realize that location verification via geofencing captures enormous value from the Age of Mobile.  Perhaps those CEOs and strategists have realized that the majority of consumers are constantly interacting with their phones, day in and day out

Zynga figured it out.  They did “Draw Something” back in 2012: they drew geofences around state borders, so they could start taking real money bets.  Is Caesarsville and ParisParisville far behind?


This article originally appeared on June 22, 2012 on TotallyGaming.com.