Turns out gambling with digital money can pay off pretty big, too. Seattle’s Double Down Interactive, maker of casino-style videogames for social networks, is being purchased by slot-machine giant International Game Technology for up to $500 million.
Rumors of the sale started trickling out this afternoon, and IGT (NYSE: [[ticker:IGT]]) confirmed the purchase just after markets closed. The price includes $250 million in cash, $85 million in retention payments over two years, and $165 million in performance incentives over the next three years.
Like many of the top Facebook games, DoubleDown Casino is free to play. Once they get hooked, players pony up for virtual currency to keep their streak going. They can’t cash it out, since that would be actual gambling—but rules on that front are changing quickly, which helped push IGT to grab the startup.
For years, the federal Justice Department has forbidden online gambling under an interpretation of the federal Wire Act. But the DOJ recently flip-flopped on that stance, opening the door for the possibility of regulated online gambling in the near future. That brings us to today’s Double Down deal.
Even without those regulatory factors, the startup was doing pretty well. Double Down’s sole game, which has several casino-style games inside it, was named by Facebook as its No. 4 most popular game of 2011. Independent tracking from AppData says the DoubleDown Casino had 4.7 million monthly active users. Earlier this year, Tricia Duryee of AllThingsD reported from unnamed sources that Double Down was on a path for about $50 million in annual revenue.
It’s a big win for Double Down, which was founded in 2010 and has about 80 people—including a pair of executives lured away from fellow Seattle casual game company BigFish Games. But it’s not a jackpot for the area’s VCs—Double Down was started with the profits from founders Greg Enell and Cooper DuBois’ previous gaming company, along with one other (unnamed) investor, but that’s it.
In its release, IGT says Double Down CEO Enell will remain in charge of the operation in Seattle, and that it will run the property with “the appropriate level of independence needed to continue to foster exceptional growth.”
We expect to hear more on this deal, and the dramatic rise of social gaming, tomorrow as the executives give interviews. But it’s safe to say that one of the Seattle area’s traditional tech strengths, gaming, is leading the pack these days—take a look back to 2011’s megabucks sale of PopCap Games to Electronic Arts, and a group of smaller acquisitions along the way.
