Virtual casino on Facebook is just for fun
16 May 2011
By Chris Sieroty
By Chris Sieroty
Meanwhile, the Seattle startup just surpassed 1.2 million monthly users on Facebook. It's all legal, and more important, it's profitable.
"We set out to build the most realistic virtual casino possible," said Greg Enell, co-founder and chief executive officer at DoubleDown Interactive.
But online gambling is illegal, and without taking real wagers from customers, the company initially didn't see a path to profitability.
Then with the popularity of free-play poker games on Facebook, Enell, along with his co-founder Cooper DuBois, quickly realized that "virtual currency" was the way to remove the illegal gambling aspect while retaining an opportunity to monetize their business.
Enell and DuBois began developing the company in December 2009, before launching the online casino in March 2010 with a multiplayer blackjack game.
In September, DoubleDown Interactive introduced slots and then roulette. The company recently added video poker to its lineup of social games.
"We've been growing fairly quickly," Enell said. "It has taken us 15 months to grow to more than 1.2 million active monthly players. We also have 400,000 daily players."
He said the key to that growth was developing games with high retention rates. Enell said DoubleDown Interactive has also benefited from 1.1 million people who have "liked" the company's casino on Facebook.
"That's important, because when we post news on our wall that's 1.1 million who have access to that information," he said.
However, the casino uses a "virtual currency model" with each player receiving a minimum of 20,000 chips daily.
"If you need more, we will sell then for between $3 and $100," he said. "For $3, a player will receive 15,000 chips or for $99 they'll get a million chips."
Players can win more chips, they can even check their balance. But they can never cash out.
"It's illegal to operate a gambling site," Enell said. "That's why we are not a real-money gaming site."
In April, the company introduced video poker to social gaming. The launch of the three new video poker games was announced three days after the federal government seized PokerStars, Full Tilt Poker and Absolute Poker, and indicted their founders with operating illegal gambling businesses.
"We haven't seen any migration to our casino following Black Friday (April 15, the day of the indictments)," said Enell, adding that his company would introduce a multiplayer, online poker game by the end of next month.
DoubleDown Interactive's biggest challenge is figuring out what new features to add to the casino. Enell said the company reached profitability within four months and today has 35 employees. Now, he said, most of the profit comes from people buying chips.
He said the company was looking to hire 15 people, mostly developers, which would give it 50 employees in less than two years.
Enell said the company has benefited from its Seattle location, a place he described as "a hotbed for casual gaming companies."
"There are a lot of skilled people in this town," he said. "We have a lot of well-paid people working here."
Enell explained that every game available on DoubleDown Casino was developed and built internally. The typical game takes about 90 days to develop and test before it's released on Facebook.
"We have millions of dollars invested in the casino at this point," he said. "The development cost for a single-player game is in the hundreds of thousands of dollars and multiplayer games are in the millions of dollars."
How much capital did DoubleDown Interactive need to raise initially? Enell said none. The company was funded by its co-founders, who are still reinvesting profits back into the company.
"We are looking to grow our audience to 1 million daily players and 3 million active monthly players," he said. "We are looking to grow organically."
However, Enell didn't dismiss the possibility of future marketing or branding deals with bigger gaming companies in Las Vegas.
"An interesting fact, we are the largest casino land-based or online with 400,000 daily active players," he said.