Zynga Doubles Down on Online Gambling
Sep 4th 2012 12:15PM
Updated Sep 4th 2012 12:22PM
August was not a pretty month for Zynga (NAS: ZNGA) . The social-game maker lost a whole slew of high-level execs, including Chief Operating Officer John Schappert, who it poached from Electronic Arts just over a year ago. Schappert was just the beginning, as an exec exodus officially began shortly thereafter.
Apparently, this isn't a one-way street, though, because AllThingsD is reporting that Zynga has now scored a COO of new markets, Maytal Ginzburg. "New markets" really refers to Zynga's interest in entering the world of real-money gambling. CEO Mark Pincus said the company plans on launching its first real-money gaming products internationally in the first half of 2013, assuming it can procure all the licensing and regulatory approvals necessary.
Zynga has already built a respectable following for its freemium offering, Zynga Poker, despite the fact that the chips that players buy are worth exactly nothing and cannot be cashed out or redeemed, which you'd think would defeat the purpose of the game for everyone except Zynga. Nevertheless, Zynga does have a large player base that's willing to trade hard-earned actual dollars for worthless cyber chips.
This hire is important because Ginzburg comes from 888 Holdings, the operator of an online gambling site that offers everything from casino table games to poker to bingo. She spent five years there focused on customer acquisition and business development, valuable experience that can be applied toward Zynga's real-money aspirations.
Zynga has also recently begun lobbying in Washington and California and exploring various partnerships, as a ruling last year from the U.S. Department of Justice potentially paved the way for legalized online gambling domestically.
Of course, that's a major shift in the legal landscape that could herald a gold rush into the world of online gambling. Numerous gaming incumbents are already eyeing cyberspace, including Caesars Entertainment (NAS: CZR) . Caesars operates online gambling services in Europe, and also bought social and mobile game maker Playtika last year. Last quarter's modest revenue gains were mostly attributed to its international and online operations. Earlier this summer, Bally Technologies (NYS: BYI) and International Game Technology (NYS: IGT) were granted the first online gaming licenses in the U.S., so Zynga will be trying to enter a ring with heavyweights that carry more brand strength in the gambling world.
Still, this is one of the most meaningful initiatives that may spur Zynga's shift away from Facebook's (NAS: FB) platform, and one that could potentially be very lucrative. With the company ramping up lobbying efforts and picking up gambling execs, Zynga is doubling down.
Online gaming is one of the few potential bright spots in Zynga's future, but there are still other aspects any investor considering buying the stock needs to understand. In our latest premium report, we break down key areas that could have a tremendous effect on Zynga's share price. You can read all about the flaws in Zynga's business in right here. Sign up today and get regular updates at no additional cost.
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