Thursday, December 08, 2011

facebook will dismantle the online gambling industry

I just finished reading a brief article about how facebook is drawing advertising revenue from online gambling companies.  It got me to thinking.  Yeah, I know online gambling is illegal in the U.S.  Hell, our legislators have deemed it immoral.  If people gambled on pro sports, it could take a bite out of the church bingo circuit and hurt the scratch-off nonsense and state mega-lottery ticket sales.  Thank god we have a noble Congress that can enact laws on which type of gambling is morally acceptable.  And they've done a great job... because nobody can gamble on pro-sports.  Everyone knows it's illegal, thus nobody will be wagering on the Thursday night game (except about 200,000 people). 

The point - if you really want to gamble, you don't need to go down to the Sportsman's in downtown Wheeling and broker a bet with some guy named Lefty "Quick Draw" McSweeny.  All you do is go online, set up an account with a reputable company based in Costa Rica or Barbados (really anywhere), and they will be more than happy to extract 10% (even up to 15%) off you for every losing wager. 

But facebook has an unusual distinction.  Hundreds of millions of registered users.  They have the potential to turn the entire gambling world upside down.  How?  Pier-to-pier gambling.  It's a concept I invented this morning.  It has always been out there.  Think of it more like a toned-down office pool or just betting amongst your friends.  What if facebook set up a neutral, age-verified gaming site of their own?  In the meantime, they could just set up their subsidiary office outside the U.S. 

But here's the kicker designed to reek absolute havoc with all the conventional gambling sites.  It would be based on safely and securely wagering against your friends.  A regular gambling site sets you up with an initial amount of money (via credit card or bank draft) and then it takes its cut off your losing bets.  Facebook has the potential to completely dismantle this business model.  They could set you up with an intermediary account (much like paypal) and take a far less significant cut.  Their percentage could be more like 1%-2%, because they would make it up in VOLUME.  They already have the largest established user base on the planet.  My idea is "friends betting directly against their friends."  Instead of the traditional bookie making pay-outs or collections, you take the money directly from one of your facebook friends.

And it would be virtually impossible for U.S. legislators to crack down on this practice.  All the laws and regulation in the world can't do away with that NCAA Final Four office pool.  Of course, my idea has some far-reaching consequences.  But it's all based along the simple premise - is it okay if the government comes knocking on your door and says, "Hey, you made a personal wager with a friend of yours on the Browns-Steelers Thursday night game.  Guess what, you're under arrest!"  Although I'm sure this might appeal to a few Mormon Iowa caucus-goers, I don't see it happening from a practical perspective. 

Of course, the legal hurdles are problematic.  But once you get past the age verification issues, it just becomes a form of widespread, DECENTRALIZED online gambling.  I'm going to make a bold prediction here.  The U.S. Congress and the courts will eventually realize that these online gaming companies aren't going away.  They'll have to make it legal at some point.  The internet has transformed the gambling industry.  Of course there will be the customary resistance to the status quo... but eventually it's gonna happen.  At that instant in time, facebook will instantly become the biggest bookie on the planet.

And they can even target you based on your all your past posts.  Everyone knows who just checked-in at Heinz Field.  Here we go Steelers, here we go.  Yeah, I'd probably take Pittsburgh tonight.  The spread is -14.  Let's say 31-10.

1 comment:

sonofsaf said...

I think I over-emphasized the pier-to-pier (or friend) aspect. All the money really goes into a giant pool, but you could make it disingenuously appear as though it's just friends betting against each other. This would help neutralize the "seediness" aspect. Facebook might not want to be affiliated with gambling due to the "immorality" charges. But in reality, facebook becomes a monster bookie. Kind of like a super-empowered Walmart of online gambling, instantly destroying all the competition.