Can Zynga Capitalize on Social Gambling?

Zynga_PokerWith the state of Nevada legalizing online real-money gambling last week, investors are betting on the idea that social game developer Zynga (NASDAQ:ZNGA) has entered into a new phase of growth. However, it will takes months — perhaps even a year or more — before investors know for sure whether the company can monetize this new statue.

Given the provisions of the legislation, all evidence indicates that online gambling will be a great opportunity for Zynga to reform its business; its social games have obviously lost the majority of the appeal they once had, while real-money gambling has more than proven itself to be sustainably popular. If Zynga can develop a platform that draws the interest of gamblers over the competing offerings from major players like MGM (NYSE:MGM) and Caesars (NASDAQ:CZR), then the profits will follow.

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The money is already there; the global gambling market is estimated to be worth $417 billion and only 3.3 percent of those profits currently come from online gambling, suggesting that there is room to grow. Many investors see online gambling as one of the few reasonable roads to prosperity left for Zynga. The company pioneered the concept of social gaming, but the craze that surrounded Zynga’s initial offerings has worn off, and its earnings and revenues have felt the pressure of unpopularity…

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