Zynga (NASDAQ:ZNGA) ended 2012 with an unexpected win as its poker app was named the top grossing iPhone app in the U.S. and the U.K. This is no small feat as the game has been around for two years and is still finding a large number of users, which bodes well for Zynga’s real money gaming initiative. Facebook recently made changes in the way it reports usage metrics for apps and games that operate on its platform. And according to the latest game-play stats, King.com’s Candy Crush Saga has overtaken Farmville 2 to become the top played app on Facebook. Candy Crush Saga has 9.7 million daily users and this is significantly higher than 8.8 million daily users for Farmville 2. 
However, there is some good news for the social game maker as the company has started work on its U.K. gambling initiative ZyngaPlusCasino. The website currently just has a preview page but will soon feature games such as Blackjack, Roulette, Baccarat, Video Slots and more. This initiative is currently open only for U.K. residents 18 years and above. 
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Zynga Will Also Roll Out Real Money Games In The U.S
The company has officially filed papers with the Nevada Gaming Control Board for a gaming license in the state, which will be subject to Zynga’s financial standing and regulatory track record. The company was also in talks with Wynn Resorts in early 2012 for an online gambling partnership. We expect to see significant growth in Zynga’s revenues from real money gaming if the license and partnership deals go through.  It plans to launch a real-money version of Texas Hold’em Poker and FarmVille themed slots in the country.
Zynga’s Mobile Growth Can Be Monetized By Using Real Money Games
Zynga has significant market and mind share when it comes to poker and with real money gaming. Its top spot as a popular mobile game can drive significant revenues once it begins to offer real money gaming on the mobile platform. The biggest issue faced by most app developers is the inability to monetize mobile apps. Most mobile games are free-to-play and monetization is mainly through ads. This is not ideal as ads tend to be intrusive to the gaming experience. Only top games such as Rovio’s Angry Birds can successfully monetize through paid versions of the game, and this is not ideal for Zynga as its games are free-to-play. While the company monetizes via ads and in-game purchases on Facebook, the introduction of mobile-based real money games provides a much better avenue for monetization of the mobile app as the company can make the game free and charge a fee for real money gaming features.
We have a $3.20 Trefis price estimate for Zynga, which stands significantly above its market price. We expect Zynga’s new platform and gaming network as well as online gambling initiatives to account for much of its future earnings potential.Notes: