Meet Double Down’s Lone Investor: Ron Erickson Talks Online Gambling

8/23/12Follow @curtwoodward

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the proceeds back into further development to improve the product, as co-founder Greg Enell told me in this recap of the Double Down story.

By January of this year, the big casino industry had seen enough. IGT’s $500 million buyout landed like a meteor in the gaming scene, coming just a month after casino operator Caesar’s bought out Israeli social game developer Playtika, reportedly for around $90 million.

Both of those transactions closely followed the U.S. Justice Department’s surprise decision to drop its longstanding legal objections to online gambling, opening the door for state officials to potentially legalize and regulate online gambling in the U.S. for the first time.

Just last month, U.S. social games leader Zynga followed up a disappointing earnings report by saying that it would begin offering online gambling in legal jurisdictions overseas early next year. Seattle casual game veteran Big Fish followed suit soon after with a more concrete plan, announcing the impending release of a mobile gambling game that would process real bets in the U.K. through a partnership with licensed gambling provider Betable.

All of this has led to some trepidation in the gaming business, along with interest in the possibility of making big bucks. Those mixed emotions were thick in the air during Betable’s presentation at the Casual Connect conference in Seattle last month, as CEO Christopher Griffin fielded questions from developers about the big money that could be made and the potentially shady element of jumping into the gambling world.

From his perch, Erickson is pretty sanguine about the spread of gambling online. It’s an inevitable development, he says, noting the established precedent in the U.K., among other places, and the thirst for tax revenue by local governments.

“There’s always been something tarnished about it,” Erickson says. “It’s an activity that appeals to people’s base emotions. In this Puritan nation in which we live—and that’s really what it is—we struggle with that. And people in other parts of the world do not struggle with that, because they’re not burdened with the Puritan ethic that goes to the core of our culture.”

But, as proponents of online gambling have argued before, Erickson notes that it can be much easier to track an individual player’s spending and gambling with a connected, digital casino—if you see someone getting in too deep, it’s much easier to see that happening and perhaps cut them off than in a physical casino.

From a business perspective, the casino operators need to be worried about something more basic, Erickson says: The possibility that people will shift enough gambling online to eat into the margins of physical casinos.

“I think there are people in the real-world gaming industry that are really feeling the inevitable. If you can have a robust experience in your own home, and gamble, and win and lose money, that’s certainly a threat,” Erickson says. “The IGT purchase of Double Down was brilliant, absolutely brilliant. Clearly, the ability to extend their branded products … into the virtual space just makes so much sense.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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