Zynga CEO Confirms Interest in Online Gambling

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Zynga‘s (NASDAQ:ZNGA) CEO, Mark Pincus, added more fuel to the speculation that Zynga plans to enter the online gambling space by stating that he sees mind blowing possibilities in the online gambling space. [1] Zynga is the world’s largest social gaming company with more than 240 million active users. It competes primarily with Electronic Arts (NASDAQ:EA), Playdom which was recently acquired by Disney (NYSE:DIS) and other independent social gaming studios. A Zynga spokesman had earlier expressed interest in online gambling, but with the recent statement by its CEO, Zynga’s move in the space is almost confirmed.

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Zynga Stands to Benefit the Most from Online Gambling

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Zynga’s CEO stated at the Morgan Stanley TMT Conference:

The amount of innovation you’re going to see around gambling as an entertainment mechanic is going to be mind blowing. We’re definitely talking to all of the players that you would suspect. We have incredible respect and admiration for brands and groups like the Wynn… I would expect that you’ll see a lot of these players kind of figure out their go-to-market partnerships for sure before the end of this year.

Zynga currently has more than 33 million monthly active users for Texas HoldEm Poker, the most popular casino themed game on Facebook. It recently launched two more casino games – Bingo and Slingo. Venturing into real money online gambling would be a natural fit for Zynga, which already has a massive user base and is best positioned to make such a move. It recently launched its own Zynga Platform, which could also help it host its own online gambling games and setup its own payment infrastructure to boost revenues. Zynga is currently planning to partner with traditional casino firms like Wynn (NASDAQ:WYNN), rather than going solo.

Texas HoldEm Poker is already Zynga’s most valuable game, and stands to become its largest revenue driver if it successfully makes the move into online gambling, as the average player spend is significantly higher in real money gambling games.

We currently have a $13 Trefis price estimate for Zynga, which stands nearly 10% below its current market price. Gambling games like Texas HoldEm Poker account for almost 30% of its total value.

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Notes:
  1. Zynga CEO Suggests Firm May Partner In Gambling Venture, WSJ []