Finally, a Business Model for Facebook: Gambling

Apps that use Facebook's platform could provide a big boost

   

One of the nagging issues for investors is the business model for Facebook (NASDAQ:FB). Can it find a way to leverage its huge user base, especially as it rapidly moves to mobile platforms? So far, investors have been skeptical, and as a result, the stock price has suffered.

But one area could have massive potential — gambling. Today, U.K. online operator Gamesys launched a Facebook app called Bingo & Slots Friendzy, which allows users to win cash prizes.

It looks like several other apps will hit the market soon. And they should be a nice revenue generator for Facebook. Keep in mind that it gets a 30% cut of gross revenues from its Payments system.

In fact, the U.S. may allow online gambling as well. For example, Zynga (NASDAQ:ZNGA) has already said it’s working on its own offerings for next year. No doubt, this could provide a much-need boost for the ailing social game maker. Consider that one of its most popular games is Zynga Poker.

But a key to rolling out these apps will be the support of traditional casinos. They already have the necessary licenses (which are extremely tough to acquire and hold on to). Thus, it probably makes sense for Zynga to partner with a company like Caesars Entertainment (NASDAQ:CZR) or Wynn Resorts (NASDAQ:WYNN).

But for Facebook, it does not matter whose gambling app prevails. By being the core platform, Zuck & Co. will be a winner either way.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/finally-a-business-model-for-facebook-gambling/.

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