How Digital Chocolate teamed with Betable to launch a real-money gambling game in the U.K.

In a partnership with Betable, mobile gaming firm Digital Chocolate is launching a social casino game that gives you the option of turning it into a real-money gambling game in the United Kingdom.

The move is Digital Chocolate’s first step to transform ultracompetitive casual social casino games into the potentially lucrative real-money gambling market. Real-money gambling promises to revolutionize social games as the barriers between gambling and social casino games collapse around the world. The U.K. is one of the first markets where this has happened.

San Francisco-based Betable’s aim is to disrupt traditional online gambling by making it extremely easy for companies to convert their non-real-money gambling games into gambling titles. Betable is trying to become a one-stop shop where game companies go to enter the real-money gambling market on mobile devices in the U.K. It has ambitions to move to other territories too.

“We are charging real fast into social mobile gaming, and part of our strategy is real-money gaming,” said Jason Loia, the chief operating officer at Digital Chocolate in San Mateo, Calif., said in an interview with GamesBeat. “Real-money gambling is a real part of our strategy in 2013.”

The new Slots! Pocket U.K. game — the first combination virtual goods and real-money gambling title for Digital Chocolate — is launching today on the iPad and iPhone. Another title coming soon from Digital Chocolate is a real-money Blackjack game on iOS. As you can see from the image at the top, Slots! gives players based in the U.K. the option to bet real money or virtual currency and chips on pulls of the slot machine. There are seven different types of slot machines in the title.

Loia said that Digital Chocolate considered the consequence of having another company in between it and its customers. That always carries risks, such as a potential loss of privacy or  But Betable has expertise in complying with the law by checking to see if the person who is making the request can legally gamble from the location where he or she is. It has to be crystal clear that someone is playing for real money, and Betable knows how to do that. Loia said his own company doesn’t have the same kind of ability.

“After talking with our lawyers, it was pretty clear we couldn’t do real-money gambling ourselves,” Loia said. “So we formed the partnership with Betable.”

The companies have been working on the project since they announced a deal in December. Digital Chocolate took an existing social slots game and modified it. The real-money gambling game had to be random and comply with strict laws governing slot machines. But the social casino game can be different in that it can reward players with a lot more winnings or gifts in the early part of the game to entice them to keep playing. Loia said his team did not have to spend a lot of time recreating the foundation of the game in order to meet those different goals and to meet regulations.

“We could plug in real-money gaming as a separate game that sits alongside the social casino game,” Loia said. “Players can participate in virtual goods gaming or real-money gaming. We like the idea of attracting a large audience for social casino gaming and then finding the smaller number of people who want to play with real money.”

Betable provides the backend processing to enable a person to bet real money in what would otherwise be a non-real-money casino game. It detects where the player is and then checks to see if that person can legally gamble where they are. If the player can, it asks if the player wants to play for real money. Then the game executes the random gambling round and pays out coins that can be converted into real money.

Betable handles compliance, fraud prevention, identity checks, wagering and gambling results.

Earlier this year, Beatable chief executive Chris Griffin said that it was getting great results from its first customers in the United Kingdom. At the time, he said that the company was seeing “incredible performance” in converting social gamers to gamblers.

About 80 percent of the gamblers had never spent money in a social casino game before. And the engagement is about 10 times better for real-money gambling games than normal social casino games. The daily average revenue per paying player is 10 times higher with real-money gambling games compared to the same games without it.

Regulatory barriers have fallen in the U.K., and the gambling and game industries are hoping the same will happen in the U.S. States such as Nevada, New Jersey, and Delaware have authorized real-money online gambling, but change is happening more slowly here. So the U.K. market has become an experimental market of great significance.

If the walls come down, then both sides could benefit. Real-money gambling companies could find new recruits among the larger audience for the social casino games, and social casino game companies could enjoy much higher average revenues per paying player associated with real-money online gambling metrics. Griffin says the lifetime value of a user in social casino games may be $2, but the lifetime value of a gambler could be $1,800.

Digital Chocolate will compete against other customers of Betable, such as Big Fish Games. Betable has 10 announced customers so far, including some that launched in December.

Loia said his company has more real-money gambling games in the works. He won’t say what those games are, but he looks forward to the possibility of creating betting games that have nothing to do with casino titles.