Koolbit shows social mobile casino startups can still get traction in a crowd

More than 100 companies are competing in social casino games, both on Facebook and on mobile devices. That includes huge companies like Zynga, Electronic Arts, WMS, and IGT. But that doesn’t mean it’s impossible for startups to enter the market and grab traction. Consider the case of Koolbit, which launched recently and has more than a million users for its City Slots Casino game on Android mobile devices.

Koolbit has some of the highest rankings on the Google Play market, even though it is competing against bigger public companies that have big operations in Facebook games. The San Francisco-based company will launch multiple apps over the next three months leading into the holiday season, said Gerard Cunningham (pictured right), the chief executive of the company.

“We’ve done well by focusing on casino games on mobile,” said Cunningham in an interview with GamesBeat. “We’ve watched as everyone got excited about the casino genre on Facebook. We’ve got several new games in the pipeline.”

Social casino games have come on strong in the past couple of years, with SuperData predicting that the market will grow from $1.6 billion in 2012 to $2.4 billion by 2015. Cunningham believes it is because the broader market of casual players on smartphones and tablets enjoys simple games like slot machine games or poker titles. They’re an amusing way to pass the time.

Investors are stoked about the market because they believe it will grow dramatically as casinos start marketing to social players and as online gambling becomes legal in more territories.

Cunningham, who used to run the U.S. arm of online horse-racing gambling firm Betfair, has experience in real-money gambling and is personally licensed to operate gambling games in seven states. But he thinks the social casino game will grow fast whether or not real-money bets come into the picture.

“It’s easier to break into social gaming,” said Cunningham. “I know how painful it is to run a real-money gambling business.”

Cunningham said he believes his company has a fighting chance because other rivals are “trying to jam a desktop experience into mobile,” while his developers are targeting mobile first. He also tapped Tapjoy, which has the biggest installed base of games on Android. Tapjoy operates a distribution, publishing, and monetization business that makes it easy for Koolbit to reach new users every day.

“Distribution is one of the No. 1 issues that we face,” said Cunningham. “We get that through Tapjoy.”

Koolbit is also pouring a lot into consumer-oriented design, moving beyond the “childish graphics” of early casino games.

Cunningham said he believes in the long-term future of the Android platform, even though more casino game companies are operating on Facebook and iOS (Apple’s iPad, iPod Touch, and iPhone). He expects to make games for iOS and the Kindle Fire tablets, as well.

“Distribution is critical in the mobile game business, and we want players in every market and demographic,” he said. “By 2013, I think it will be a crazy successful year for Android. There are issues with payments and a huge amount of fragmentation on Android. But we decided this would be worth it.”

The company has 12 employees, and it has backing from Canaan Ventures, led by partner Maha Ibrahim, who was a seed investor in social gaming firm Kabam. Other real-money gaming investors have put money into the startup, and so has WTI. Cunningham is bullish on the future of social mobile casino games. Altogether, the company has raised $2 million.

“People around the world like playing casino games,” he said. “They are willing to search for them and find the best ones. And they’re willing to pay for them. But it’s hard work to get them.”