At a party this evening in Munich, an industry insider close to Facebook made the following prediction:
“When online gambling is legalized, Facebook will be a $100 billion company.”
That’s $100 billion of revenue, not $100 billion in market value (Facebook’s already close to the latter.)
For context, Google is a $40 billion company. And Facebook did about $4 billion of revenue last year.
The insider’s theory?
Given the popularity of social gaming on Facebook’s platform already, the insider figures that legalized online gambling (poker, etc.) will drive Facebook’s revenue to the moon.
Facebook currently gets a 30% cut of all virtual goods purchased using Facebook Credits through companies like Zynga. With Zynga netting about $1 billion of revenue per year, this suggests that Facebook is currently generating about $400 million of gaming revenue through Zynga alone. (Most of Facebook’s revenue is ad revenue, but the “Credits” business is meaningful.)
There would have to be a LOT of gambling done through Facebook for the company to generate $100 billion in revenue. But given how nuts people are about gambling, and how powerful Facebook’s social platform could be for this, gambling would likely be a big opportunity.
Toward the end of last year, Facebook was rumoured to be looking into hosting gambling in the U.K., where online gambling is already legal.
The big opportunity, though, will come in the United States, if and when online gambling is legalized.
According to a Wall Street Journal article earlier this week about Zynga potentially getting into gambling, many U.S. states are now pushing for online gambling to be legalized. Some of the big casino companies are trying to get Federal laws changed, and Indian tribes and lottery groups are lobbying for changes at the state level. With states desperate for new sources of revenue, changes to these laws could actually be on the way.
So could online gambling make Facebook a $100 billion company?
$100 billion is a lot.
But it seems safe to say it could make Facebook a much, much bigger company.