Video Poker Giant Bets $500 Million on Facebook Game Maker Double Down

Seattle-based Double Down Interactive (DDI) has been acquired by video poker giant International Game Technology for $500 million.

CNBC first reported the rumor during an afternoon broadcast, but an official announcement is expected after the markets close. A Double Down spokesperson declined to comment.

UPDATE: The two companies have confirmed the transaction. The deal includes $250 million in cash, $85 million in retention payments over the next two years and up to $165 million in cash payable over the next three years subject to Double Down meeting certain targets.

As it turns out, casino games on Facebook have quietly been ringing up a pretty healthy business.

Even though gambling isn’t legal online — yet — players are still finding slots, cards and other casino games addictive. Most of the games are free to play, and of course, players don’t ever get to cash out their winnings.

DoubleDown Casino has 1.3 million daily active users and 4.7 million monthly active users, according to AppData.

While that doesn’t rank it as one of the most-played games, it is frequently mentioned as one of the most popular and could be one of the more profitable.

Facebook named DoubleDown Casino as the fourth-most popular game of 2011, based on user reviews, and in October, I reported that DoubleDown was generating $140,000 a day in revenue, according to sources close to the company.

DDI’s game on Facebook is like visiting the Las Vegas strip.

Over the past year, it has added several casino games to its app, including blackjack, slots, video poker and roulette.

The deal closely follows Caesars’ purchase of Playtika, an Israeli game company known for its Facebook title, Slotomania. Caesars purchased the company in two stages, the first of which was rumored to be sold for up to $90 million.

With both Caesars and IGT putting their hats into the social gaming ring, it’s hard not to wonder if — or when — gambling will become legal on the Internet. Clearly, they are betting that Facebook could be one of the dominant platforms where it takes off first — if not in the U.S., then maybe in one of the more than 30 countries where Double Down operates.

IGT designs, develops and manufactures gaming machines, making it a strong candidate for merging legal gambling with online efforts, especially now with the expertise of Double Down behind it.

DDI was co-founded by Greg Enell and Cooper DuBois. The two founders used the profits from a previous company, Pickjam, to fund the Facebook game start-up.

Enell will continue the company’s operations from its Seattle offices, where it has 70 employees.

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus