Editorial: Casual Betting, Meet Social Networking

31 August 2007

The changing Internet gambling industry (a direct result of the U.S. Unlawful Internet Gambling Enforcement Act) has given way to some emerging new markets, not the least of which combines the popular worlds of gambling and social networking.

Social "netbetting," as it has come to be called, blends an online social networking model (MySpace or Facebook, for instance) with casual betting. Bettors, however, are not wagering on sporting events--rather, they're creating their own bets on topics ranging from celebrities to politics to personal challenges, such as whether or not a person can quit smoking.

Since this is still a burgeoning market, there are only a handful sites offering this service. It stands to reason, though, that as social networking and virtual "gentleman's" bets continue to gain popularity among former U.S.-facing businesses, more sites will crop up.

The term "social network" was defined in the 1950s by Professor J. A. Barnes as an association of people drawn together by family, work or hobby. Early social networking Web sites include Classmates.com, which launched in 1995 to connect former school mates.

The more familiar format, in which the user is in control of the content instead of the computer, arose with Friendster in 2002, followed by MySpace in 2003. By 2005 MySpace was reportedly getting more page views than Google, while its competitor, Facebook, was quickly growing in size. Meanwhile, Facebook this year began allowing externally-developed add-on applications.

One such application is social networking betting site BetsGoWild. Based in New York, BetsGoWild enables its users to create and wager on bets using "WildBucks" instead of real cash. When users sign up (for free), they are immediately credited 1,500 "WildBucks" with which to wager on other users' bets. The site uses Vegas-like odds to determine the pay-out for bets based on the number of users participating. Furthermore, if a player runs out of "money," he or she can earn more by visiting sponsors, sending invites to others to join the site, doing surveys, or sending feedback.

London-based GottaBet is similar to BetsGoWild in that it is a social network that handles small, friendly bets. Similarly, bettors can create their own bets and wager with GottaBet currency, called "Peanuts." But, unlike BetsGoWild, GottaBet offers real-money bets as well, but only to users in countries where the laws permit online betting. Moreover, GottaBet's real-money wagers are very small and the company takes a 5 percent commission of the winnings, according to the site's FAQ page.

Other sites include San Francisco-based BluBet, which does not offer money bets, and Las Vegas-based Swamble, which is still in beta testing. Swamble differs from the others in that it absolutely prohibits the exchange of cash between users, though there is no evidence of how that rule is enforced.

Swamble users control the bets and the stakes. For instance, one bettor asked: "Will the (New Orleans) Saints win the Super Bowl?" He staked a round on drinks on New Orleans' famous Bourbon Street.

The use of virtual cash or non-cash wagers is arguably what could keep these sites from being shut down, unlike Seattle-based Betcha.com which in July was shut down by authorities from the Washington Gaming Commission, who stated that the site's honor-based mode of betting violated the state's 2006 online gambling ban. While Betcha.com took friendly wagers, it also reportedly facilitated real-money bets between U.S.-based bettors.

Betcha.com founder Nicholas Jenkins and two other Betcha employees now face possible extradition to from Washington to Louisiana after the site allegedly facilitated $35 in Internet bets from a Louisiana resident, according to Jenkins' blog on Betcha's Web site. The extradition hearing is scheduled for Sept. 5.

Is the social networking model the future of casual betting? That remains to be seen. But it is a lot of fun to find out who is willing to make a friendly wager on the next time Paris Hilton will go to jail.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.