I can't count the number of times I've typed the word startup since Monday. This week, for better or worse, has belonged to the industry’s nascent players.
Jacky Betting Ltd., a Maltese company comprised of Swedish gambling and I.T. entrepreneurs, is the latest stop on the social betting train. Perhaps acknowledging the perils of taking a pools betting variant to consumers, exclusively, these guys have also hatched a business-to-business strategy they hope will eventually become the company’s primary source of income.
After hearing rumblings from readers that Betjacky didn’t sell the product well in our interview with them, I was also skeptical, but for a different reason: With Social Anything quick to generate a buzz these days, how easily can that buzz be monetized successfully in an industry as competitive as online betting?
Not easily, as Pikum, also a social betting startup, discovered this week. The company, founded by the South African-born entrepreneur Sean Glass, went over well with a panel of Launchpad judges at EiG in October but failed to attract the critical mass of players necessary to generate revenue profitably.
The company appears to have burned some cash on marketing, but according to an e-mail sent by Mr. Glass to the Tech Crunch blog, legal and infrastructure-related costs -- presumably on Alderney, where it was licensed -- also became a serious drain.
Two members of the online betting community we spoke with this week, Dave McDowell of FSB Technology and Brian MacSweeney of Boolabus, both expressed misgivings about Pikum’s decision to adopt business-to-consumer as its operational philosophy.
"I think they had a really nice product, but I think they chose the wrong business model in that they went direct to consumers when there's a lot of gaming operators out there who are quite open for innovative products," Mr. MacSweeney told IGamingNews Tuesday.
Mr. Glass indicated in his e-mail to Tech Crunch that the company could not find a new source of funding or a buyer before winding up.
Does Pikum’s demise toll the knell for social betting? Certainly not.
Lawrence G. Walters, a Florida attorney specializing in Internet gambling, told IGamingNews Tuesday that he’s regularly in contact with entrepreneurs who are looking to exploit the next regulatory loophole in the United States. And one carveout may be in the works now that would accommodate a unique take on social betting.
A Court of Appeals in Washington State ruled Tuesday that Betcha.com, a Seattle betting startup, had not violated state gambling law before it was forced to close nearly two years ago.
Betcha's model was novel because it facilitated person-to-person bets (and took a small commission on those bets) but didn't oblige losers to pay out. The company's founder, Nicholas Jenkins, argued that because losers weren't forced to pay, the services Betcha rendered were indeed compliant with Washington’s Gambling Act.
"This guy has been right, technically, all along in his analysis of the gambling statutes," Mr. Walters said about Mr. Jenkins, who holds a law degree from Georgetown University. "There's betting here, but there's not gambling as it's been defined traditionally. Since there's no obligation to pay, you never actually stake anything and expect to lose anything."
A stretch, but assuming Washington’s Gambling Commission appeals then loses at the State Supreme Court, the way could be paved for online betting -- without consideration, of course -- in Washington. Though I doubt seriously things will play out this seamlessly. (“King of Wishful Thinking,” by the atrocious British pop band Go West, is on repeat in my brain after writing this graph.)
Anyway, Mr. Jenkins (clearly not a Sovereign of Fancy) told The Seattle Times Wednesday that he had no intention of relaunching Betcha, so a positive outcome in his case could result in a bid for the company’s intellectual property.
Finally, to one of the stranger startup stories of 2008: Pokertrillion.
The company, a small poker operator that launched in late 2007, was involved in a well publicized but little understood battle with Boss Media A.B. last spring that occurred entirely via a heated exchange of press releases.
Andrew Pyrah, C.E.O. of Pokertrillion, emerged an outspoken critic of Boss after his company was allegedly thrown off Boss’ International Poker Network for rakeback violations. The dispute was headed for court on Malta, but before the gloves came off Pokertrillion abruptly dropped its case last September.
By then, it had a new network partner on Malta, Everleaf Gaming Ltd. But according to Everleaf’s C.E.O. George Aghajanyan, who spoke exclusively with IGamingNews this week, the relationship went sour recently.
“The real story is that Everleaf ended up being owed a large amount of money by Trillion and the owners of Trillion simply washed their hands off, leaving the players and the cardroom on their own,” he said. “We had no choice but to close their cardroom. However, as a responsible network operator, Everleaf found a solution for the players. They were taken over along with the debt owed to us by another operator.”
Sick of the word startup? Me too. But it’s one IGamingNews hopes to continue affixing to the new, daring and sometimes crooked companies that Internet gambling perennially attracts.