Online Gamblers Buy Zynga

Zynga (NASDAQ:ZNGA), one of the first Facebook online gamers, is rolling the dice for online gambling. The company released the following statement to AllThingsD:

“We build games and experiences that our players want and love. Zynga Poker is the world’s largest online poker game with more than 7 million people playing every day and over 30 million each month. We know from listening to our players that there’s an interest in the real money gambling market. We’re in active conversations with potential partners to better understand and explore this new opportunity.”

While people have been winning “virtual currency” playing Zynga Poker, the company has a number of hoops to jump through for people to start playing with real money. The company has been limited to mobile and social games on Facebook, but has announced its intention to launch Zynga Casino. Giving online gamers a single point of entry for games of chance.
The jump to gambling shouldn’t be a surprise. Zynga’s social games are addictive and a natural comparison to gambling.

Poker is one of the most popular games on Facebook and Director of Game Partnerships for Facebook, Sean Ryan, referred to others as “unbelievable monsters.” Yet, a Facebook spokesperson said, “We don’t have any plans to get into real-money gambling.”
Facebook may not have plans, but others do.

Two recent deals could be the future for online gambling. Named one of Facebook’s most popular game makers for 2011, Double  Down Interactive was purchased for $500 million.  The purchaser, International Game Technology, with almost 5 million users a month playing slot, blackjack, roulette and video poker. The second deal was Caesar’s Entertainment purchase of an Israeli game company, Playtika.

Facebook users would be familiar with Playtika’s Slotomania. Not much is known about the deal, except it involves two stages. The first stage may have been up to $90 million, but Caesar’s is in a quiet period.

All of this virtual gambling may be fun, but the real interest for these companies is playing with real money.  Caesar’s Entertainment feels the U.S. has “the largest opportunity in online gaming in the near term.” They could be right.

Nelson Rose, professor, lawyer and blogger, said a day before Christmas the Department of Justice gave online gamblers an early present. Rose said, “President Barack Obama’s administration has just declared, perhaps unintentionally, that, and so may be games played interstate and even internationally.” So, now it is up to each state to determine how or if they will allow online gambling. Both Nevada and the District of Columbia acted fast. Gambling may not be so easy in other states, and don’t forget this is an election year.

How can Zynga, with only two states allowing online gambling cash in on this opportunity? Look for acquisition or partnerships with existing companies that have know how and more importantly, are already licensed. Zynga raised $1 billion in December. This was the largest IPO since Google. With a nod to a current sitcom – buy Zynga!