Casino veteran MGM Resorts International (NYSE:MGM) is working on launching a social gaming website in order to grab share of the growing social gaming market. According to Lazard Capital, the social gaming industry will be worth $9 billion by 2015.  With the increasing prevalence of social media, people are spending more time on social networking websites to stay connected. Approximately 41% of the U.S. Internet users access social networking sites to play games. 
The new game will have a Las Vegas casino theme and will be on similar lines of Zynga’s (NASDAQ:ZNGA) popular online game FarmVille. This move could help MGM establish a relationship with this niche customer segment. While it will be launched as a free gaming website, MGM’s chairman James Murren asserted a possibility of monetizing it at a later stage when online casino applications gain legal status. 
Speculation about MGM planning to enter the social gaming space started last year. (See our previous post: MGM’s Social Gaming Push Could be an Engaging Marketing Tool) According to reports, the social gaming website is expected to be launched in the next three months. 
- Why is Macau market important for LVS and Wynn?
- MGM to lose market share in China, but businesses likely to revive in long term
- MGM is being cautious, but could it lose to Wynn and LVS?
- Will positive signals from Macau’s casino industry impact MGM and Wynn Resorts?
- Weakness In Macau Business Weighs Over MGM Resorts’ Q1 Earnings
- MGM Resorts Q1 Earnings Preview: Watchout For Non-Gaming Operations Growth
We consider this move as a strategy by MGM to promote its brand and acquire customers, and it has the potential to become a revenue stream in the future if and when online gambling becomes legal in the U.S.
We have a Trefis price estimate of $11.10 for MGM, about 5% above the current market price.