Let’s put a dollar on it: Skillz brings real-money cash wagering to Android

Everything is more fun when you put a little cash on it. Games of skill only get more intense when you’re wagering actual currency on your abilities.

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Following that logic, mobile games are probably a lot more fun if you could bet money on them. That’sa what software company Skillz is bringing to Android. Skillz is a multiplayer platform that matches up players online for real-money games. That means, for example, players can wager $1 in a match of the motorbike racing game GnarBike Trials against three other players. Skillz and the developer take a cut of those wagers, around 10 percent total, and then the winner of the race takes everything else.

That means Skillz is making money, the developer has a new revenue stream, and the player even has a way to make (or lose) money. It’s a quick way to solve a lot of issues for mobile games in terms of keeping players’ attention and then making money from those players.

“Some of the stats we’ve seen from the early games show that we increased user retention from below 4 percent to over 18 percent,” Skillz chief executive officer Andrew Paradise told GamesBeat. “That’s a 330 percent increase just by integrating our software-development kit.”

Skillz is already live in nearly a dozen titles on the Google Play market. They are games like Bubble Shooter, Big Sports Fishing 3D Lite, and 3D Cave Runner — many are similar to other, bigger titles. By supporting the Skillz cash-game platform, they may draw in an audience that wants to test their skills against other users with some actual money on the line.

“In another game, we saw a 260 percent increase in engagement,” said Paradise. “That’s basically a 260 percent increase in the number of minutes spent in app per user.”

In GnarBike, Skillz is finding that players who are using its multiplayer platform, which it bakes right into the game, are logging four times as many sessions as those that are just playing the single-player mode.

The potential for developers is clear: Skill-based gambling can attract an audience while simultaneously monetizing the most engaged players.

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“By the end of the first weekend of [GnarBike’s release], we had users complete 400 tournaments,” said Paradise.

That may seem like a cheddar. Gamers can enter tournaments for as little as 25 cents. Even if those most dedicated players only wagered the minimum, that’s $100 worth of wagers for the weekend. Skillz and developer Gnarly Games then split the 10 percent of that (on average) for around $10 just from one player.

You might be wondering about the legality of all of this. Skillz only operates currently in “games of skill.” That means games where skilled players win the majority of the time. The company works hard to verify that all of the apps that use Skillz meet a certain standard of skill-based gaming.

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“One of the things we’ve spent the last year developing is a statistical model that shows us what percentage a games outcome is skill or chance,” said Paradise. “We’ve been able to use a big-data technique using a tracking code in our SDK that processes game results. Once we reach a statistically significant sample size, we can say what percentage a game is skill versus chance.”

Unlike games of chance, games of skill gambling is legal in a majority of U.S. states.

“You can play for either virtual currency or for cash if you’re in a legal state,” said Paradise. “Or if you’re in a state like Montana, you can play only for virtual currency.”

Skillz uses your Android device’s built-in GPS to determine if you are in a state where real-money gaming is legal. Once it verifies that, however, you can put money into your Skillz account and start wagering as much as you desire.

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For comparison, publishers like Zynga are struggling to bring real-money gambling to the U.S. for many games of chance. It’s making progress with that, but while it is waiting for politicians and courts to clear a legal path, Skillz is already live on my phone. I literally just lost $1 (which the Skillz platform gifted me for signing up) over two matches of GnarBike.

The benefits for developers is clear. For gamers who want to add a bit of exhilaration to their mobile gaming, it’s also pretty obvious what Skillz provides. Besides just offering the capability to make the wagers, Skillz is also doing the legwork to make sure each game is fair and on the up-and-up.

Paradise claims that mobile games using his company’s SDK actually provide a more level playing field than even real-world competitions. For each tournaments, Skillz can standardized random elements to ensure that players will have the exact same conditions when they play their game.

“In real-world fishing tournaments, you and I could both go out to fish in the lake and there may only be a single 100-pound bass in the entire lake,” said Paradise. “In Big Sport Fishing 3D Lite, all the fish are the same and in the same places.”

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Mobile monetization is in such a state that even if only a fraction want in on cash games, Skillz can justify itself to developers. If the smaller games that support it start rising to the top because they offer a coveted functionality, expect cash-game modes in a wave of upcoming titles.

Finally, Paradise doesn’t see this ending at games of skill. He thinks he is positioning Skillz as a prime platform if the U.S. begins to legalize casino games and other games of chance.

“While companies like Zynga are experimenting with games of chance and how to enable them, gamers are already engaging with Skillz right now,” said Paradise. “We have a survey that shows 41 percent of consumers want to play in real-money competitions in their favorite iPhone or Android games. It’s a staggering number. If everyone already has a balance established with a known company, like Skillz, when games of chance enter the U.S., it creates an interesting dynamic for us to capture some of that.”