Scamville Shakeout: Was Gambit The Right Fall Guy?

I’m not sure any lasting change will come from our series of Scamville posts. For now the most egregious of the social gaming offers are gone, which is a good thing. But none of the big players seem to have felt much pain. And, importantly, Facebook’s rules still allow most of the really bad stuff (as long as users are being told in the fine print exactly how they’re being screwed). It’s only a matter of time before business as usual kicks in.

Four companies have felt the wrath of Facebook in the wake of Scamville: Tattoo, Gambit, Social Hour and Social Reach. Facebook doesn’t openly talk about the fact that these companies have been “banned,” but they’ve let the app developers know – work with these guys and there will be trouble.

Zynga also got a slap on the wrist with the suspension of Fishville for a few days, but their cash cows, like Farmville, were never touched. And that’s despite the fact that we showed clear violations of Facebook’s rules on Zynga games via DoubleDing, an offer provider that Zynga has some control over.

Gambit Gets A Firing Squad

Ultimately only those four companies took a permanent hit. And we’re still scratching our heads over Gambit.

Because nearly everyone in the industry, including Gambit’s direct competitors, told us before and after the ban that Gambit, along with TrialPay, were among the good guys in the offer industry.

So why did Facebook ban them? And what has happened to Gambit since the ban?

Some people we’ve spoken with say that Gambit pushed Facebook too far with gambling and tobacco ads, and tried to hide those ads in other countries where Facebook may not see them.

Fair enough, but all the other guys were doing the same thing. We even caught Zynga/DoubleDing red handed when ads were being filtered away from my personal account, but showed up for everyone else

But on November 5 Facebook sent a cease and desist letter to Gambit, telling them that they could “no longer…access the facebook website, use the Facebook development platform, advertise on Facebook or use any of the services offered by Facebook…for any reason:”

Kickflip Cease and Desist –

Whatever Gambit did, it was certainly less egregious than what Zynga pulled immediately afterwards. Why didn’t Zynga get the same letter?

It’s also clear that Gambit and Facebook were getting along just fine even a couple of days before the cease and desist letter was sent. We’ve seen emails between the Facebook and Gambit discussing whether certain ads are ok under Facebook’s guidelines, and a Facebook representative was emailing back saying everything looked just fine.

There’s one easy explanation – Gambit was a smaller player in the ecosystem, and an easy one to step one. SuperRewards, Offerplay, Zynga and others are making way too much money – much of which eventually makes its way to Facebook indirectly through advertising.

People close to Facebook say this is ridiculous, and that Facebook would never put users at risk for a few tens of millions of dollars of advertising revenue. Which makes some sense. Until you watch this video and read this post. Banning DoubleDing at least seems like an easy decision.

Gambit’s Business Disintegrates

It didn’t take long for the vultures to circle Gambit when the news got out that they were banned by Facebook. SuperRewards, one of the large scale bad guys in the whole Scamville ecosystem, raided Gambit’s customer list with emails and calls that any app developers using Gambit were at risk.

SuperRewards grabbed a lot of business, which explains why the founder was recently boasting that SuperRewards revenue and profitability has increased dramatically since Scamville (watch video here).

In about a week, we’ve heard from sources close to Gambit, the company lost nearly every customer and most of their revenue. Their business disintegrated, and app developers moved over to one of the worst Scamville offenders, SuperRewards.

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