Will Developers Ante Up for a Gambling API?

http://blog.programmableweb.com/2012/07/09/will-developers-ante-up-for-a-gambling-api/

by coloneltcb • 14 years ago

57 32 14 years ago

blog.programmableweb.com

For a couple of years I've been cooking a gambling API and while there is a huuuge market for that, execution is what separates wheat from chaff. Here are two key things I believe will make it a winner:

1. Make it easy for developers to integrate in their apps.

2. Make it easy for users to deposit/withdraw/bet money.

So, if I am playing online poker on my iPad, I may call, raise or go all-in on very single hand. Can your API do that? What means all-in in that case? All I have in the bank?

Allow me to move $100 from my account to any game I feel in the mood to play. Let me deplete that bag and go for more or just quit in the middle and get the rest back. Can your API do that?

Btw, call it iChips and put it on the app store (there is already one app with that name, but fight for the name) and use colorful casino chips everywhere.

Again, execution is king...

Domenic_S• 14 years ago

These are solved problems both in meatspace and online gambling. Your buy-in is separate from your wallet:

> I may call, raise or go all-in on very single hand. Can your API do that? What means all-in in that case? All I have in the bank?

When you "sit down" at the table, you specify how much you're buying in with, between $TABLE_MIN and the lesser of ($TABLE_MAX || $YOUR_WALLET). Your all-in bet is a bet of whatever you've got at the table (not in your wallet). That's a fundamental rule of poker games.

> Allow me to move $100 from my account to any game I feel in the mood to play. Let me deplete that bag and go for more or just quit in the middle and get the rest back. Can your API do that?

Again, that's a fundamental gaming paradigm that online gaming clients have done well forever.

Making a gambling API is IMO a developer's dream because all the rules are very clearly delineated already, and have been mostly agreed upon by decades of IRL usage and regulation. In other words, the spec's been written, tried, iterated on, and verified. As far as specs go, gaming rules are a thing of beauty.

These are the two things that will make a winning API:

1) Trust and integrity (including auditing).

2) Easy transactions.

The big blocker here is client integrity. What if I wrote a slot machine program that took 1% of winning rolls and displayed a loser to the player and took the winnings for myself?

davidtyleryork10• 14 years ago

Hey Domenic_S

So you know, that example of poor client integrity is something that we 100% prohibit. We audit every game before it goes live for real money on our platform, and since we control the gambling transactions, we make sure players get correctly paid out.

Also, we are audited by the UK Gambling Commission annually, so our gambling licenses are testament to our own integrity as a service (the UKGC does not take the license-holder commitment lightly!).

seminatore• 14 years ago

Interesting solution to the regulation "problem"

I think the big question here is not whether developers ante up for a gambling API. Certainly some will, given the prospect of making more money. The real question to me is whether it becomes 'required' in the sense that in order to compete, they need to use it (or a competitor's equivalent). The social game industry seems to be all about fast-following on features, especially monetization

daeken• 14 years ago

> According to Betable’s Griffin, social games average $1 of monthly revenue per user. Existing gambling games, which Griffin says are mostly boring, average $300 of monthly revenue per user.

That seems way, way off. $300 average would require either all of your players are hardcore and put in a lot of money, or you have a decent number of players at the high end skewing it. Assuming they're getting something out of it (at least some of the time), this number seems to be quite... deceptive. I'd love to see the data behind it.

TY2• 14 years ago

It's the latter. A small number of big spenders ("whales" in the industry lingo) can easily skew average number. Median is a better metric than average here.

objclxt• 14 years ago

Of course, the social games metric includes a large number of players who are paying nothing. I suspect it wouldn't be quite so low if you discounted those players, which would make it a more fair comparison (as gambling would in the majority of cases require you to actual put some money up).

hollerith2• 14 years ago

>Median is a better metric than average here.

Not in this case! Remember that the goal here is to maximize revenue (see footnote) so it is a bad move to ignore the existence of the whales -- because whales represent a big fraction of our potential revenue.

Footnote: since most of the costs for this kind of business are "fixed" costs, e.g., the cost of paying the developers to built the site, the way to maximize profit is to maximize revenue.

dminor• 14 years ago

The main problem (as I see it) is you're limited by the types of games offered by the API. It would be cool if you could provide your own logic for a game, but of course that's a difficult problem for Betable to solve since they need to know that the house has an edge.

Multiplayer games would also be fun but then you have to guard against collusion and other exploits.

davidtyleryork10• 14 years ago

Hey dminor, you'll be happy to know that one of our company goals to to break real-money games free from the traditional gambling gameplay models (slots, roulette, etc). We strongly encourage and support developers that build innovative new real-money game mechanics into their game

bhousel• 14 years ago

Casinos regularly dedicate 80% or more of their floor space to slot machines because those games are the most lucrative and easiest for people to play. The Betable API probably offers a "good enough" solution for building these simple games that make up the majority of what casual gamers will want to play.

aslewofmice• 14 years ago

I'm curious as to how this model will work if users can't easily deposit money online. I can only imagine they will inevitably face the same problems as online poker where credit card companies and banks will block any transaction related to gambling sites or 3rd party eWallet proxies.

In the early online poker years, you could easily deposit directly from your bank or credit card. Then banks started blocking these transactions. The online casinos came up with the eWallet proxies such as Neteller that served as an intermediary between the banks and the poker sites. Those too were blocked. Then gift cards became the main funding source, and eventually those were blocked. Eventually the process ended up with direct wire transfers or payment-by-phone. As each deposit method was blocked, it became harder for the casual players to get money online and they stopped playing.

davidtyleryork10• 14 years ago

You are correct, credit card companies in the US will block transactions to gambling sites. However, I must make it clear that Betable does NOT facilitate illegal online gambling. We only let players from legal gambling jurisdictions play games for real money. All other players can still play, but for virtual currency.

adamio• 14 years ago

This is very interesting for use with a mock gambling game - one where users cannot cash out. Users can buy in-app chips to keep playing. Is this the entire purpose of it? I'd think actual gambling online, even with no house edge, has proven to be a "den of thieves" (Full Tilt, Ultimate Bet) how would this actually solve the problem of trust?

davidtyleryork10• 14 years ago

One of our primary goals as a company is to be entirely white hat and trustworthy. Our investors, partners and the lawmaking body that granted us our gambling licenses all fully support our product and the service it provides. We worked hard to earn the trust of these institutions, and we will work hard to earn consumers' trust as well :)

smashing2• 14 years ago

Gambling winners are most likely money laundering* recipients. In the overwhelming majority of cases, gamblers lose.

* http://www.library.ca.gov/crb/97/03/Chapt11.html

davidtyleryork10• 14 years ago

This is sensationalist, but I'll give you a little more background on what we do (even though many of these practices are not nearly as prominent as the article says they were in the 1960s - 1990s). In order to operate as a legal gambling entity, we have to build and maintain a host of elaborate security, anti-money laundering and counter-terrorist protocols (one of the things that comes with the territory in the gambling space). We work with top partners in the industry, who have decades of experience dealing with these problems. While security and anti-fraud measures have improved significantly, this is a very high priority for us internally that we've put considerable time into.

smashing2• 14 years ago

Sensationalist?

It is a link to the California State Library.

AsylumWarden• 14 years ago

I'm curious how this would work. If I were to use this API to create, let's say, Bingo for money. How would I use the API without going to jail for running a gambling operation? I mean, I'm in the US so I guess I could always find an indian casino to back but that isn't likely without them taking a huge cut.

davidtyleryork10• 14 years ago

AsylumWarden, with us you don't need a gambling license and you run no risk of "going to jail" in the US. Betable handles and hosts all of the gambling transactions, so you don't touch any gambling. Therefore, you don't need a license and can be anywhere in the world.

rprasad• 14 years ago

That's not true in the U.S. If he uses your site's gambling API, he is engaged in the business of gambling and must have a license. Since the U.S. generally does not allow online gambling, it is effectively illegal regardless of where the servers are physically stored.

FultTiltPoker and Bodog were both hosted from offshore (and generally run from offshore), but that did not help their U.S. owners in the slightest when the FBI came knocking.

Moreover, by using a gambling API on your own site, you place all of your bank accounts at risk of being frozen by your financial institution (if they are U.S. based) as U.S. financial institutions are not permitted to transfer funds to gambling sites. You could use an offshore bank, but this would increase compliance costs and guarantee an annual audit by the IRS.

EDIT: This assumes games are played for cash. Games played for virtual currency are not considered gambling unless they are easily convertible back into cash.

drivingmenuts• 14 years ago

That's a good question, but I don't think it's the right question.

It all depends on how secure it is. You can have a very unsecure API that no one will touch or an incredibly secure API that no one will use because it's too difficult.

Creating an API is not the problem. Finding the right balance of security and convenience is the problem.

Tichy• 14 years ago

Do they want me to pay for a random number generator? I don't understand it?

Jare• 14 years ago

The way I understand it, they handle money and regulations, i.e. collecting money from the player, giving the player actual money back when the player wins, in a way that is 100% legal considering gambling laws in all countries involved in each transaction. That's a lot of stuff for a regular developer to take care of.

The part where they also run the gambling logic & randomness is probably necessary because regulations on gambling often require certain guarantees and auditability that, again, a regular developer may not (want to) be aware of. It's much simpler to be compliant if the dev only has to establish f.ex. win rates for different actions, and the gambling provider runs the actual processes with methods and random generators that comply with applicable laws.

davidtyleryork10• 14 years ago

Jare, you nailed it. My only clarification on your second paragraph is that the RNG needs to be audited and certified in ordered to get your license granted/renewed. The idea here is that it prevents shady gambling companies from defrauding players.

SoftwareMaven• 14 years ago

You are not paying for the RNG, you are paying for the knowledge of when and where it is legal to use it.

jjwoward• 14 years ago

Interesting stuff and the ARPU generated from gambling revs will ofcourse be a massive draw to devs looking to use the Betable API. We're working on a social sports prediction game with a football(soccer) focus at launch but have consciously avoided building in gambling mechanics. We will run with an affiliate model where we can achieve around 15-30% of a users lifetime value from the provider.

Our aim is to focus on the gameplay and have the cash betting as an extra. With such tricky global regulations this frees us up to pick and choose partners that meet local laws and expand into regulated markets with new models.Of course Betable would prove a great expansion of our product in future.

Interested to hear HN's thoughts (affiliate vs betable) and would love you all to play and inform our beta later in the year: www.betstars.co.uk

Will Developers Ante Up for a Gambling API?

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