News Column

Zynga Bets on Real-money Gambling

Dec. 7, 2012

Scott Martin, USA TODAY

online gambling

Zynga is trying its luck at gambling with real money in the U.S., asking Nevada's gaming regulators for a place at the table.

The online games company has filed an application for a license with the Nevada Gaming Control Board, a process that could take up to 18 months. The bid for a stake of virtual casino dollars in the U.S. comes after Zynga struck a deal in October to offer poker and casino games for money in the U.K., starting in 2013.

Shares of Zynga rose 7% to close at $2.49 after the announcement.

"The broader U.S. market is an opportunity that's further out on the horizon based on legislative developments, but we are preparing for a regulated market, said Barry Cottle, chief revenue officer at Zynga, in a statement.

Approval to move into U.S. gambling markets for real money would be a much-needed hand for the online casual games company, whose fortunes have struggled of late.

"I definitely believe the gambling market is going to continue to grow year over year, and companies that are analytics-driven like Zynga are more likely to succeed," said Roxanne Gibert, founder and CEO at gaming upstart Spyra.

Zynga's growth has stalled on lackluster interest in its game titles. The company informed users last week that its Mafia Wars 2 title was shutting down on Facebook, following lagging interest for its release of The Ville. The company shuttered 13 games in October and let go of employees in Boston and Austin offices in layoffs that overall claimed 5% of staff, or 150 employees.

CEO Mark Pincus said in a company memo that Zynga's belt-tightening is part of an effort to "reinvest in great games and our Zynga network on the Web and mobile."

Zynga's stock has nose-dived 84% since reaching a 52-week high of $15.91.

The online games giant, whose business ballooned on Facebook in years past, is now facing a flood of rivals. At the same time, many of its titles lack interest from users. Zynga needs to move fast to reinvent itself or face a further erosion of its business, says P.J. McNealy, CEO of Digital World Research.

Zynga reported a $52.7 million loss on revenue that increased 3% to $316.6 million in its third quarter.

The company needs to invest in new studios and build new types of games, says McNealy. It also better "hope that online real-money gambling games become real in the U.S."

Zynga's Texas HoldEm Poker remains a hit, with 33.7 million monthly active users, according to AppData.

(c) Copyright 2012 USA TODAY, a division of Gannett Co. Inc.


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Source: Copyright USA TODAY 2012


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