Israeli social gamer Diwip sells for $100 million

Another Israeli social gaming firm is being acquired by a major international gaming company. Imperus Technologies of Canada (the company changed its name from Isis Lab in September, for obvious reasons) announced this week that it would spend up to $100 million for Diwip, a Tel Aviv-based company that runs, among other things, Best Casino, a series of top-grossing Facebook gambling-but-not-for-money games.

Social gaming – which provides users with the experience of playing casino games, but without actually betting – is a multi-billion dollar business worldwide. In the US alone in 2012, social gaming generated $1.9 billion in revenues. Facebook and other social media sites don’t permit gambling, and on-line casinos are not considered wholesome places to hang out on line. Many of them also require membership fees, and regulators make it difficult for users to join. So casual gamblers – the kind that keep Las Vegas, Atlantic City, and numerous Native American-run casinos in business – avoid them for the most part.

Social gaming apps, many of them on Facebook, provide the same games and experience as their casino brethren, but without requiring users to put up money to bet or fork out funds for membership. Diwip’s games, including video slots, blackjack, poker, roulette, and others, are free, as are the games offered by other social gaming companies. Although users don’t put up money to play, they do spend money on virtual goods to enhance their playing experience. The games attract millions of users each month, so there are plenty of advertising and partnership opportunities for companies to pursue.

Israel is home to some of the most important firms in the social gaming business. Diwip is the third Israel social gaming site to be bought out by a big gaming company in the past several years. In 2011, Caesar’s Interactive Entertainment, the on-line gambling division of Caesar’s Entertainment, the biggest casino and gaming company in the US, bought out Israel’s Playtika, And earlier this year, Bally Technologies, another giant casino-management and gaming company, acquired Israel’s Dragonplay, also for as much as $100 million. Imperus isn’t as big as Caesar’s or Bally’s, but it’s on its way, running some 400 on-line games.

Diwip, established in 2010, is privately held by Ehud Kantzuker and Yaniv Gamzo. Gamzo, Diwip’s CTO and co-CEO, worked as a software engineer for several large firms, including NICE Actimize, a public company that provides financial crime, risk and compliance solutions for regional and global financial institutions and government regulators. Kantzuker, CPO and co-CEO, developed several start-ups before Diwip.

Under the deal, Imperus will pay $50 million in cash and stocks up front for Diwip, with up to $50 million due over the next several years, depending on performance and revenue. The deal needs to be approved by Imperus shareholders.

“We are very excited about this transaction, and the tremendous value it brings to both parties and their shareholders,” said Daniel Kajouie, president and CEO of Imperus. “The acquisition of Diwip provides Imperus immediate access to a broad market base. Diwip’s proprietary on-line social gaming and mobile gaming products are synergistic with the Imperus product line and our philosophies. Messrs. Gamzo and Kantzuker have built a great company to date, and we are thrilled to have them join our team with a common vision of building Imperus to great new heights.”